Research (Investicniweb.cz)
Macroeconomics  |  June 01, 2012 13:45:20

Euroexperiment foiled in two graphs



Euro European nations should unite more, but instead is dispersed. What went wrong? The two graphs clearly seen an alarming difference in the economic fate of Germany and Greece. Germany vs. Greece

In 2001 Greece drachma surrendered and adopted the single European currency. From day to day and became the darling of investors, Germany was shut down in the cold and the money poured into Greece.

Greek miracle, however, began to crumble in 2009 when the socialist government took over the scepter, which announced that the previous government did not comply with budget rules. Interest rates started rising and stifle economic growth.

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End of the Greek miracle

The second graph shows the development of government bond yields in both countries. Everyone should impress that regardless of the long history of political crises and bankruptcies to Greece almost a decade could borrow money with a similar interest as Germany.

In March this year Greek bond yields fell from the agreement on writing off a large part of debt. Subsequently, however, began to grow again, as investors began to worry that it will take one more blanket debt relief. When investors lost confidence in Greece, started strong capital drain back to Germany. German bond yields fell, while in the same period of the Greek bond yields flew steeply upward.

Greece had probably never be able to adopt the euro. What is sadder still, unfortunately, that the Greek crisis znejisťuje investors who are worried about the fate of the stronger euro area countries.

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