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Real-Time Insight … E. U. Sovereign Debt Crisis ( PART 2 OF 2 )


Another point that I would like to make is that, when viewing that macro – level view of the EU Sovereign Debt Crisis, arguably the most important data to look at include the following :

1. Each E.U. country’s current and projected Gross Domestic Product

2. Each E.U. country’s current and projected GDP / public debt ratio

3. Each E.U. country’s current and projected GDP as a % of total EU GDP

This 3rd issue underscores the fact that by far the biggest realistic threat to the EU Sovereign Debt Crisis is not Greece, Ireland or Portugal. KEY POINT AGAIN ! The biggest threat is Sovereign debt issues is Spain. Apparently Italy is / may be in some danger as well. Spain GDP constitutes 10-15% of total EU GDP. I am currently not aware of Italy’s GDP / Debt ratio as well as Italy’s GDP / EU GDP ratio. I do not believe the GDP / Debt ratio is as large as Spain’s. I also think that Italy GDP / EU GDP ratio is larger than that of Spain.

It is important to remember that data can be manipulated ( for good and bad purposes ) to serve the needs of promoting an argument or point of view. However, the preceding  3 GDP based ratios are a relatively straight-forward, accurate, precise and simple way to frame and view the E. U. Sovereign Debt Crisis. Simplicity, clarification, due diligence, independent thinking and common sense are often  ( but not always ) better measures than  ‘ paralysis by analysis. ‘ Hopefully this article clarifies some of the issues involved so people can intelligently view the risks and problems and not be consumed by fear and doubt. We will see what happens.

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About Neven's Blog

My blog focuses on FINANCIAL MARKET ANALYSIS & INSIGHT from a macro as well as a micro - level point of view. The information is straight forward, honest, simplifies complex matters, questions some oversimplified matters, all while being as easy as possible for readers to understand. I primarily focus on capital and currency markets by combining insights, analysis & ideas from the fields of finance, economics and geopolitics.

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