REBLL states cut sovereign debt while private sectors borrowed hugely for construction
Evidence
This transnational credit pump created a phenomenal construction bubble that made the Spanish and Irish property experiences look tame by comparison. Spain and Ireland managed a paltry 6 and 8 percent annual growth in construction expenditures, respectively, in the 2000s. Romania was the laggard with 11 percent yearly increases. Bulgaria busted the curve with a near 20-percent-a-year increase. Therefore, while REBLL states busily cut their debt even before the crisis, their citizens and firms increased it exponentially in the form of nonproductive assets, on the back of weak exports and current account deficits, using foreign sourced cheap credit. All that was needed to make this whole system explode was a detonator—and the foreign banks provided that too. — Mark Blyth, Austerity, 598
Categorization
- XREF: Connects to Mattei’s account of the crisis and to the broader point about austerity solving problems private debt created. — connects to: REBLL growth was built on foreign borrowing and structurally vulnerable to external shocks — Mark Blyth, Austerity: The History of a Dangerous…, 595; REBLL recoveries disprove expansionary austerity and left states deeper in debt — Mark Blyth, Austerity: The History of a Dangerous…, 612; Crisis rescue shifted private sector insolvency onto sovereign state accounts — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 49 (+2 more)
- DEFINE: Introduces and explains the REBLL acronym and its role in the crisis.
Broader Connections
- REBLL recoveries disprove expansionary austerity and left states deeper in debt
#qualifies(0.80) — Mark Blyth, Austerity, 612 - Crisis rescue shifted private sector insolvency onto sovereign state accounts
#expands(0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 49 - Bank debt transformed into state debt through lost revenue, not profligate spending
#corroborates(0.78) — Mark Blyth, Austerity, 139 - A banking guarantee transformed private debt into sovereign debt overnight
#expands(0.78) — Mark Blyth, Austerity, 184