Europe’s rising debt ratios resulted from private financial crisis, not government profligacy

Evidence

Yet today, all we hear about is the profligacy of the Greek government and work-shy and uncompetitive Greek workers as the root cause of Europe’s so-called sovereign debt crisis. Again, I stress “so-called” because although the debt-to-GDP ratios of European states have grown substantially since the start of the crisis, from an average of 70 percent in 2008 to 90 percent at the end of 2012, this is the result of the financial crisis that began in the United States in 2007 hitting European shores in 2008 and pushing the European economy into recession. Just as occurred in the United States, the private debt of highly leveraged financial institutions became the public debt of states for two reasons, one already familiar and one generated by the project of European monetary union itself. — Mark Blyth, Austerity, 149

Categorization

• XREF: Directly supports and refines the book’s central austerity thesis that deficits stem from banking crises being socialized, connecting to Mattei’s critique of austerity. — connects to: Austerity cuts raised the debt-to-GDP ratios of Eurozone crisis states. — Mark Blyth, Austerity: The History of a Dangerous…, 30; The European debt crisis resulted from banking losses, not sovereign overspending — Mark Blyth, Austerity: The History of a Dangerous…, 40; European fiscal crises were consequences of private banking crises, not their cause — Mark Blyth, Austerity: The History of a Dangerous…, 205 (+9 more)
• ADDENDUM: Relevant to the sacrifice/crisis socialization theme; also echoes the private-debt-becomes-public-debt mechanism central to the austerity book’s opening chapters.

Broader Connections

• European fiscal crises were consequences of private banking crises, not their cause #corroborates (0.97) — Mark Blyth, Austerity, 205
• The Eurozone crisis was private, not public, debt #corroborates (0.95) — Mark Blyth, Austerity, 190
• European banking crisis was mostly private-sector exposure, not sovereign over-spending #corroborates (0.95) — Mark Blyth, Austerity, 240
• Ireland and Spain’s crises stemmed from bank real-estate lending, not fiscal profligacy #exemplifies (0.92) — Mark Blyth, Austerity, 181
• The Eurozone crisis was wrongly blamed on sovereign fiscal profligacy #corroborates (0.90) — Mark Blyth, Austerity, 152
• States were complicit but did not cause the European debt crisis #corroborates (0.85) — Mark Blyth, Austerity, 199
• The euro created bank incentives that produced a private crisis #expands (0.80) — Mark Blyth, Austerity, 153
• Budget surplus rules ignore that private debt often causes more damage #expands (0.76)