EU financial stabilization fund set up in May this year, the total amount of 7,500 million euros; However, once Portugal and Spain also needed help, this stabilization fund will be depleted; euro single currency and unified implementation of monetary policy, while the euro-zone countries has their own way on fiscal policy, the EU, \”Stability and Growth Pact\” to the fiscal deficit limits are strictly enforced, and that institutional deficiencies must be changed
Greek debt crisis worsened this spring, and later spread to Ireland, in December, released the Irish rescue plan, the amount of up to 850 million euros. Meanwhile, the European debt crisis \”high-risk country\” Portugal and Spain have begun to issue bonds, is expected to scale up to 230 million euros. While Portugal, Spain and Belgium full-blown debt crisis may be at higher risk followed the steps of Greece and Ireland to apply for international assistance. Portugal, 2009 budget deficit accounted for 9.4% of GDP, well above the EU ceiling of 3% in required; public debt accounted for 86% of GDP; even more amazing is that the country GDP, private debt of up to 239%; Portugal, the current account deficit in 2010 is expected to reach 10.3% of GDP, compared to 8.8% next year. Meanwhile, the Portuguese banking sector\’s dependence on external capital accounts for 40% of its total assets; In addition, the country\’s labor market there is a big risk, the unemployment rate up to 10%, so the Portuguese economy is facing serious challenges. Economies of scale in Greece, Spain, Ireland and the sum of twice the size of the Portuguese economy, banking assets, higher than the sum of the three countries, one trillion euros of assets, the annual GDP accounted for 8.9% of total EU GDP. Strong in the European Central Bank intervention, Ireland, Portugal and Spain and other countries has finally stop rising bond yields fall more than 3 months continued to decline in the euro exchange rate has also come to rebound.
Belgium\’s situation is not optimistic. In 2009, the Belgian Government\’s total debt of up to 334.7 billion euros, accounting for 98% of GDP, ranking third in EU member states. 28,000 euros of government debt per capita, higher than U.S. government debt per capita of 2.6 million euros. Belgian government deficit in 2009 accounted for 6% of GDP, well above the eurozone\’s 3% requirement. 2010, the Government\’s commitment to the deficit in 2012 at 3%, but this is very unlikely to honor promises. Belgium has the highest tax countries in Europe, in the overall economic downturn, can no longer raise taxes to increase revenue. To control the budget deficit is only through massive cuts, which will cause strife between political parties in Belgium.
Belgian family and private debt is relatively low household savings rate as high as 20%. Although the government debt is high, but the Belgian government bonds are held by nationals and enterprises, equivalent to the transfer of money from left pocket to right pocket. Belgium is now an international net creditor, net foreign assets accounted for about 30% of GDP, during the crisis is a good buffer. But if things develop in the direction toward the poor, the Belgian government revenue continued to decline, the deficit continued to expand, then the Belgian converted from the international net debtor to net creditor of the day, that is, when the Belgian crisis.
In the face of European sovereign debt crisis of the potential risk, and market intervention alone can rescue the existing means can not cure. European Central Bank to increase efforts to buy euro zone government bonds has so far bought 67 billion euros debt. EU financial stabilization fund set up in May this year, the total amount of 7,500 million euros. However, once Portugal and Spain are also in need of help, this stabilization fund will be depleted. The euro zone single currency and unified implementation of monetary policy, fiscal policy in the euro-zone countries have their own ways, the European Union, \”Stability and Growth Pact\” to the fiscal deficit limits are strictly enforced, such institutional shortcomings must be changed.