There is a double helix of causes of the eurozone debt crisis.
On one chain (Greece and Portugal) it is a problem of a bloated government sector, chronic fiscal profligacy and weak competitiveness. On the other chain (Ireland and Spain), it is a credit-fuelled asset bubble that burst, leaving the banking system in tatters. So the solutions are also different: cleansing the banking sector for Spain and Ireland; downsizing the state sector and increasing productivity for Greece and Portugal.
The eurozone crisis four (Greece, Ireland, Portugal and Spain) have been running budget deficits of between 8% and 12% of GDP, compared with the eurozone average of about 6.5%. Their gross public debt to GDP has reached between 75% and 130% of GDP. Only Spain will be below 100% of GDP in 2011. And gross financing requirements over the next year are around 20% of GDP.
In Greece and Portugal,...
