Southern European credit booms were fueled by recycled German surplus profits

Evidence

The credit haze was as global as the growth model it was latched onto. The dream of generalized home ownership was not restricted to the United States: on the eve of the crisis in Spain, for instance, the construction sector accounted for 14 percent of total employment and 16 percent of GDP. For years, it had been the main driver of Iberian growth, with the Irish situation much the same. Between 2004 and 2007, 5 million mortgage loans had been granted in Spain. If the United States was the “consumer of last resort” of the production coming from developing countries, the cheap money sustaining the economic miracles of Spain and the “Celtic tiger” had another name: German profits. — Arthur Borriello and Anton Jäger, The Populist Moment, 105