# Why is Europe/EUs economy doing so poorly?
**URL:** https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641
**Category:** Factual Questions
**Created:** [December 31, 2014, 8:42pm UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641 "2014-12-31T20:42:16Z")
**Posts on this page:** 19
**Page:** 3
### Author:  [@BrightNShiny](https://boards.straightdope.com/u/BrightNShiny)
#### Post date: [January 2, 2015, 11:56pm UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/41 "2015-01-02T23:56:41Z")
> [@Nava](#):
>
> When you talk about surplus, are you talking about the central government only, or taking all levels into account? If the top level has surplus but 15 of the 17 elements right underneath have deficits, the situation is very different than if all 18 have surpluses.
Do you mean subdivisions of the government (like provinces, states, counties, etc.)? There’s data for all government spending. But I can’t find any data that indicates that Spanish subsdivisions were overspending as a whole prior to the crash. If you have some, I’d be interested to look at it.
> [@](#):
>
> And to those who say the issue was “government overspending”: no, not only. There was also a big issue of general overspending in the wrong things - by this I refer mostly to people getting mortgages for 120% the value of the house and to people going into the mindset of “buy three houses to sell two”. Sell two to whom, if everybody is in buy-to-sell mode?
Private overspending is a regulatory failure or perhaps a monetary policy failure. Since monetary policy is controlled by the ECB, that’s the ECB’s fault. But if you want to criticize Spain for not regulating its banks and mortgages properly, I’m right there with you. But, for a lot of people, regulation is always bad, and so they point the finger at government spending, facts-be-damned.
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### Author:  [@Nava](https://boards.straightdope.com/u/Nava)
#### Post date: [January 3, 2015, 8:17am UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/42 "2015-01-03T08:17:46Z")
> [@BrightNShiny](#):
>
> Do you mean subdivisions of the government (like provinces, states, counties, etc.)? There’s data for all government spending. But I can’t find any data that indicates that Spanish subsdivisions were overspending as a whole prior to the crash. If you have some, I’d be interested to look at it.
Yes, they were… all 17 autonomous regions, although in some cases the accounting comes up surplus once you account “what we’re advancing to the central government” as “not passive”.
I’ll see if I can find something.
PS: you know so much about Spain’s economy and you couldn’t even be arsed find out what our second-level of government is called? Really?
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### Author:  [@Nava](https://boards.straightdope.com/u/Nava)
#### Post date: [January 3, 2015, 8:34am UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/43 "2015-01-03T08:34:24Z")
This is a [report](http://www.meh.es/Documentacion/Publico/PortalVarios/FinanciacionTerritorial/Autonomica/Deficit_2010.pdf) from our Ministerio de Economía y Hacienda (think Treasury). It’s a summation of budgetary projections for 2010; the second groups re-calculate using as their basis the incomes from 2008 (the last year for which complete data was available) and 2000.
[An article](http://www.elmundo.es/elmundo/2008/07/15/barcelona/1216117691.html) about deficit in Catalonia, one of our richest regions, for 2005. The TLDR is “the central government calculates Catalonia’s deficit for 2005 as 8.69 or 8.7%, while Catalonia’s own government was expecting 9.8%”. The graphic shows the surplus or deficit for each C.A. (autonomous region) in 2005.
[Another report from MEH](http://www.meh.es/Documentacion/Publico/GabineteMinistro/Varios/BalanzasFiscalesCCAA.pdf), this one listing the data which eventually ended up in the previous article’s all-CC.AA.-graphic and describing the methodology.
Those are all data from before the accounting got re-accounted. The re-accounting moved things to the red, as suddenly the same central government which is now supposed to take over everybody’s debt was not making its payments to the CC.AA.s on the agreed dates.
I searched for deficit autonomias 2008, deficit autonomias 2005. Sources in Spanish galore.
C.A.: _Comunidad Autónoma_, autonomous region.
CC.AA.s: _Comunidades Autónomas_.
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### Author:  [@Fuzzy\_wuzzy](https://boards.straightdope.com/u/Fuzzy_wuzzy)
#### Post date: [January 3, 2015, 6:35pm UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/44 "2015-01-03T18:35:53Z")
> [@Nava](#):
>
> This is a [report](http://www.meh.es/Documentacion/Publico/PortalVarios/FinanciacionTerritorial/Autonomica/Deficit_2010.pdf) from our Ministerio de Economía y Hacienda (think Treasury). It’s a summation of budgetary projections for 2010; the second groups re-calculate using as their basis the incomes from 2008 (the last year for which complete data was available) and 2000.
>
> [An article](http://www.elmundo.es/elmundo/2008/07/15/barcelona/1216117691.html) about deficit in Catalonia, one of our richest regions, for 2005. The TLDR is “the central government calculates Catalonia’s deficit for 2005 as 8.69 or 8.7%, while Catalonia’s own government was expecting 9.8%”. The graphic shows the surplus or deficit for each C.A. (autonomous region) in 2005.
>
> [Another report from MEH](http://www.meh.es/Documentacion/Publico/GabineteMinistro/Varios/BalanzasFiscalesCCAA.pdf), this one listing the data which eventually ended up in the previous article’s all-CC.AA.-graphic and describing the methodology.
>
> Those are all data from before the accounting got re-accounted. The re-accounting moved things to the red, as suddenly the same central government which is now supposed to take over everybody’s debt was not making its payments to the CC.AA.s on the agreed dates.
>
> I searched for deficit autonomias 2008, deficit autonomias 2005. Sources in Spanish galore.
>
> C.A.: _Comunidad Autónoma_, autonomous region.
> CC.AA.s: _Comunidades Autónomas_.
Thanks for these links.
I have also found this interesting nugget.
1. The economic model was excessively based on the shaky foundations of bricks and mortar.
[http://blog.oup.com/2014/05/five-reasons-why-spain-has-stubbornly-high-unemployment-rate-26/](http://blog.oup.com/2014/05/five-reasons-why-spain-has-stubbornly-high-unemployment-rate-26/)
“Between 2000 and 2009, Spain accounted for around 30% of all new homes built in the European Union (EU), although its economy only generated around 10% of the EU’s total GDP.\*\* In one year alone (2006), the number of housing starts (762,214) was more than Germany, France, and Italy combined.\*\* After Spain joined the euro in 1999, interest rates were low, property was seen as a good investment in a country with very high home ownership (85%), and there was a high foreign demand for holiday and retirement homes due to the 60 million tourists who visited Spain annually.”
I think it fair to say the Spanish state was partying as a result of a commodity bubble, even if this partying did produce a government surplus. A look at Spanish Govt tax receipts in the link below. It’s worth looking at the figures of 2007 and 2009.
[http://stats.oecd.org/Index.aspx?DataSetCode=REVESP](http://stats.oecd.org/Index.aspx?DataSetCode=REVESP)
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### Author:  [@Chefguy](https://boards.straightdope.com/u/Chefguy)
#### Post date: [January 3, 2015, 7:02pm UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/45 "2015-01-03T19:02:15Z")
> [@Shodan](#):
>
> Debt, mostly. Nobody except Germany wants the austerity necessary, or rather wants the austerity needed to be endured by someone else. Employment is slower to recover in the EU because labor laws make it harder to cut and therefore harder to justify hiring. The Russian rouble crisis is looming.
Your comment about austerity is not borne out by the article you linked to. Quite the contrary: austerity is a big part of the problem over there, and not just in Germany.
> [@](#):
>
> The euro zone is particularly vulnerable to deflation because of Germany’s insistence on **too much fiscal austerity** and the ECB’s timidity.
Most economists have no problem with deficit spending by the government to bolster a sagging economy, the opinions of some of our friends on the right notwithstanding. Austerity in this country is one of the reasons that the economy hasn’t been faster in its recovery. Now that Congress has other priorities other than slashing the budget, home prices are rising, more people are being employed, and people are generally doing better. An influx of money, regardless of the source, is beneficial. Tax breaks and cutting spending is not.
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### Author:  [@Shodan](https://boards.straightdope.com/u/Shodan)
#### Post date: [January 3, 2015, 7:59pm UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/46 "2015-01-03T19:59:56Z")
> [@Chefguy](#):
>
> Your comment about austerity is not borne out by the article you linked to.
> [@](#):
>
> The French and the Italians have dodged structural reforms, while the Germans have insisted on too much austerity.
Regards.
Shodan
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### Author:  [@BrightNShiny](https://boards.straightdope.com/u/BrightNShiny)
#### Post date: [January 4, 2015, 2:22am UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/47 "2015-01-04T02:22:54Z")
> [@](#):
>
> PS: you know so much about Spain’s economy and you couldn’t even be arsed find out what our second-level of government is called? Really?
What a fucking stupid thing to say. The data uses generalized terms so that you can do cross-country comparisons, and I was trying to clarify what you were asking. But since you can’t be arsed to know what you are talking about, I’m not going to respond to you further. You know what you can do with yourself.
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### Author:  [@usedtobe](https://boards.straightdope.com/u/usedtobe)
#### Post date: [January 4, 2015, 5:41am UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/48 "2015-01-04T05:41:34Z")
47 posts, and temps rising, but all still take as a given that the EU, as it is constituted today, will continue indefinitely.
Has nobody suggested “taking our (name of original National currency) and leaving”? (UK took its Pounds, but did not go home - yet).
It seems like there has to be a large amount of resentment among the Northern States - any rumblings in Germany or France about leaving? Yes I know the idea is to keep France and Germany bound together - unpleasant things traditionally happen if they are left to their own devices.
Any calls to re-negotiate the agreement to allow a member to be expelled?
I’m guessing the arms aren’t quite as open to the former Warsaw Pact countries as they once were. Correct?
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### Author:  [@Fuzzy\_wuzzy](https://boards.straightdope.com/u/Fuzzy_wuzzy)
#### Post date: [January 4, 2015, 1:08pm UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/49 "2015-01-04T13:08:28Z")
> [@usedtobe](#):
>
> 47 posts, and temps rising, but all still take as a given that the EU, as it is constituted today, will continue indefinitely.
>
> Has nobody suggested “taking our (name of original National currency) and leaving”? (UK took its Pounds, but did not go home - yet).
>
> It seems like there has to be a large amount of resentment among the Northern States - any rumblings in Germany or France about leaving? Yes I know the idea is to keep France and Germany bound together - unpleasant things traditionally happen if they are left to their own devices.
>
> Any calls to re-negotiate the agreement to allow a member to be expelled?
>
> I’m guessing the arms aren’t quite as open to the former Warsaw Pact countries as they once were. Correct?
There have been rumblings in France about leaving, though these have possibly been exaggerated. My guess, and it is only a guess, is that the Euro will survive for the forseeable future with most of it’s major players remaining, but it’s economy will simply limp along at a less than impressive rate of growth. If staying in the Euro scares Europeans then leaving the Euro scares them even more.
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### Author:  [@even\_sven](https://boards.straightdope.com/u/even_sven)
#### Post date: [January 4, 2015, 2:36pm UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/50 "2015-01-04T14:36:51Z")
To the OP:
As you may have noticed, there is little agreement in economics, and the fundamental divide is essentially religious in nature-- complete with narratives posed in terms of morality.
The truth is that we’ve only been systematically studying economics for a short time, and the world has undergone rapid change throughout that period, so we don’t have a ton of relevant historical data to extrapolate from. At best we are all working off just-so stories we use to justify our worldview.
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### Author:  [@engineer\_comp\_geek](https://boards.straightdope.com/u/engineer_comp_geek)
#### Post date: [July 25, 2015, 1:28pm UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/51 "2015-07-25T13:28:44Z")
**Moderator Note**
> [@BrightNShiny](#):
>
> What a fucking stupid thing to say. The data uses generalized terms so that you can do cross-country comparisons, and I was trying to clarify what you were asking. But since you can’t be arsed to know what you are talking about, I’m not going to respond to you further. You know what you can do with yourself.
This is not appropriate for GQ. Attack the post, not the poster, or take it to the Pit.
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### Author:  [@madsircool](https://boards.straightdope.com/u/madsircool)
#### Post date: [July 26, 2015, 2:09am UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/52 "2015-07-26T02:09:11Z")
A mod note 7 months after the fact…the statute of limitations should have run out.
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### Author:  [@dr\_zippermeyer](https://boards.straightdope.com/u/dr_zippermeyer)
#### Post date: [July 28, 2015, 1:47am UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/53 "2015-07-28T01:47:30Z")
> [@PastTense](#):
>
> Rigid labor market policies is often cited as one reason for high unemployment in Europe.
I think this is the biggest reason. Western Europeans pretend it is still 1969 when their only economical rival was USA. They lost even then but at least they were still number two. Not anymore but they can’t admit it and still expect to be paid 10x more than Vietnamese for example.
Another reason is euro currency which makes it impossible to inflate currency of economy that is in troubles.
Many Eastern European countries have generally more positive future ahead. They are not so delusional and full of themselves.
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### Author:  [@Urbanredneck](https://boards.straightdope.com/u/Urbanredneck)
#### Post date: [July 28, 2015, 4:40am UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/54 "2015-07-28T04:40:36Z")
In Europe most college educations are free.
Do you think that will end?
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### Author:  [@FoieGrasIsEvil](https://boards.straightdope.com/u/FoieGrasIsEvil)
#### Post date: [July 28, 2015, 6:18am UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/55 "2015-07-28T06:18:45Z")
> [@dr\_zippermeyer](#):
>
> I think this is the biggest reason. Western Europeans pretend it is still 1969 when their only economical rival was USA. They lost even then but at least they were still number two. Not anymore but they can’t admit it and still expect to be paid 10x more than Vietnamese for example.
>
> Another reason is euro currency which makes it impossible to inflate currency of economy that is in troubles.
>
> Many Eastern European countries have generally more positive future ahead. They are not so delusional and full of themselves.
This reads like a fortune cookie.
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### Author:  [@bob\_2](https://boards.straightdope.com/u/bob_2)
#### Post date: [July 28, 2015, 9:08am UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/56 "2015-07-28T09:08:02Z")
In my paper this morning "_Margin debt on the Chinese stock market has reached $1.2 trillion. ‘We suspect that it’s a matter of time before banks may have to face the music,’ Bank of America says"_
Maybe we are looking in the wrong direction now.
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### Author:  [@dr\_zippermeyer](https://boards.straightdope.com/u/dr_zippermeyer)
#### Post date: [July 28, 2015, 11:29am UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/57 "2015-07-28T11:29:10Z")
> [@FoieGrasIsEvil](#):
>
> This reads like a fortune cookie.
Now that I look at it the text is quite bad even at my standards. But you know not everyone here is from English speaking countries. So the chances are there is at least one language I write better than you… 😉
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### Author:  [@Gyrate](https://boards.straightdope.com/u/Gyrate)
#### Post date: [July 28, 2015, 11:32am UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/58 "2015-07-28T11:32:55Z")
> [@bob\_2](#):
>
> In my paper this morning "_Margin debt on the Chinese stock market has reached $1.2 trillion. ‘We suspect that it’s a matter of time before banks may have to face the music,’ Bank of America says"_
>
> Maybe we are looking in the wrong direction now.
China is currently heavily propping up its stock market - things are looking a tad parlous there at the moment.
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### Author:  [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)
#### Post date: [July 28, 2015, 3:29pm UTC](https://boards.straightdope.com/t/why-is-europe-eus-economy-doing-so-poorly/708641/59 "2015-07-28T15:29:49Z")
> [@Capt.Ridley\_s\_Shooting\_Party](#):
>
> …there’s a strong narrative in Northern Europe that Southern Europeans are lazy and workshy, and that Southern Europe is one amorphous block of indistinguishable countries and economies. The nuance that Italy is a manufacturing economy specialising in high-end goods such as Ferraris and top of the range industrial machinery with different needs to Greece or Portugal seems to be lost on a lot of Northern Europeans.
_Northern_ Italy is a manufacturing economy that produces cars and industrial tooling and aircraft and so on. Southern Italy is an agrarian economy that produces very little other than debt.
> [@bob\_2](#):
>
> In my paper this morning "_Margin debt on the Chinese stock market has reached $1.2 trillion. ‘We suspect that it’s a matter of time before banks may have to face the music,’ Bank of America says"_
>
> Maybe we are looking in the wrong direction now.
China’s stock market is a relatively small part of its economy. The Chinese stock market could tank tomorrow and things would go on more or less as usual within China for all but a small percentage of the population.
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