Greek Deal - How the Contagion Could Spread

Well, it looks like Europe got its act together at the last minute and put off the ugly end to the Greek crisis - at least for now.  Although, the details that make up the deal have yet to be released or have opened up a new bag of questions.  Below is a good graphic from the New York Times shows how the Greek crisis could affect the world - good teaching tool. 

Eurozone Public and Private Debt

Floyd Norris in the New York Times has a good article comparing the levels of public and private debt in eurozone countries.  The article makes the point that the amount of private debts in these countries is important in the current crisis because it directly affects the ability of these counties to grow their economies (which is harder if the population is trying to dig itself out from a pile of debt).  The article also has this good chart:

Greek-Euro Crisis

Greece is heading for a crisis point (again).  As always, it looks like the big crisis point, but we shall see if the Europeans come up with another way of kicking the can down the road.  The New York Times has a good graphic (shown below) that explains the basics of the crisis.

Interactive Euro Crisis Map

The New York Times has a good set of interactive maps of the Euro Crisis. The crisis seemed to be heading to some type of resolution this week until Germany changed its mind on forcing some of the losses on bond holders. Now it appears that bond holders will be protected and the crisis has been pushed down the road. However, the crisis is far from resolved - it price tag has just been pushed more on the European taxpayers. The big lingering question is when this crisis will explode. The maps are informative.

Euro Bond Graphics

Throughout the whole eurozone crisis, there has been the talk of setting up euro bonds. The idea is that instead of each euro country issuing bonds based on their individual credit, they could borrow based on the credit of the entire euro zone. This would allow the smaller poorer countries to benefit from Germany's lower rates. Since it is now clear, after Greece and Ireland, that the eurozone will bail out countries at risk of default, this idea is seeming more credible than it did a few months ago. The German magazine Spiegel posted this good graphic describing how this would work:

Irish Crisis - Good Graphs

The German on-line magazine Spiegel has a series of good charts showing the problems in Ireland and comparing the Irish situation to the rest of the euro-zone. Here is the interesting part - clearly Ireland is in trouble with high unemployment and a very high deficit (30% of GDP), but its overall debt to GDP is low (lower than Germany's). So, why is this a sudden crisis? Why is there a sudden jump in Irish interest rates?
Look at the charts:

Ireland's growing deficit - and crisis

Last spring Ireland was held up as the model of what countries should be doing - engaging in an austerity package in the face of a deep recession. They were doing this to stay within the bounds of the euro-zone treaties that limit deficits and debt. It was clear that the budget cuts and tax increases would be painful. Still, it was seen as the responsible thing to do. During the Greek crisis last spring, the Greeks were constantly reminded that the Irish were doing the noble thing. Even more oddly, given the current state of things, some people said that austerity would cause economic growth.

Now, it looks like Ireland will be the next point of the euro-crisis. The Irish deficit has been sky-rocketing and this has been compounded by rising interest rates. Clearly, Ireland is in trouble. Two charts from the Wall Street Journal get to the crisis. The first shows the history of the banking crisis in Ireland - it may be, as Simon Johnson has said, that Ireland's banks are "too big to save" (as opposed to the American banks which are said to be "too big to fail". The second chart shows Irish deficit compared to the rest of the euro-zone average.


This is about to get ugly.