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#Post#: 296--------------------------------------------------
Great Graphic: EU Budget Balance Forecasts for 2015
By: Marc Chandler Date: January 5, 2015, 9:01 am
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HTML http://2.bp.blogspot.com/-FBfEGjQ_I-w/VKqT54xzO_I/AAAAAAAAO0k/1IGWyA_y-UE/s1600/2015%2Bbudget%2Bforecasts.jpg
This Great Graphic was tweeted by Ian Bremmer. It shows the
budget balances projected for 2015. Spain, France and UK
project the highest shortfalls. Given the growth that the UK
and Spain reported for 2014 and project for 2015 on a cyclical
basis, the size of those shortfalls are particularly
problematic.
Greece, Germany and Estonia project the smallest deficits,
followed by Latvia, Lithuania, Sweden and Austria. Germany has
a grand coalition government (CDU and SPD), and it agreed to a
balanced budget this year. Some increased spending has been
agreed upon but it will be financed with current revenues and
the savings created by lower interest rates.
A problem that is widely recognized is that the needed reforms
in the periphery ought to offset by some easing among those
countries that have room to work fiscally. Germany rejects this
logic: It is not clear how an increased budget deficit in
Germany helps Italy or France, for example, become more
competitive, or expedite the strengthening of banks' balance
sheets. Nevertheless, if every one pursues austerity, it is not
clear how growth and price stability can be achieved.
This is a version of the fallacy of composition. What is good
for the parts is not necessarily good for the whole.
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