Chart Of The Day: Europe's Resolution To Unpaid Bills? Ignore Them
January 2, 2013 - 7:47am
Curious how Europe's insolvent peripheral countries, where the government is increasingly the only source of demand (if not funding), have managed to avoid falling into a primary budget deficit abyss? Simple: instead of paying their outstanding bills, Europe's insolvent nations are simply not paying them. And with the entire European bond market now a central bank controlled policy mechanism, meaning there are no longer any checks and balances to keep governments honest, there is no pressure on said countries to actually pay. Hopefully those companies on the other end of these unpaid invoices have as generous a benefactor as the ECB to fund their now persistent and growing undercapitalization. From the WSJ: Overdue payments have long been a bigger problem in southern Europe than in the north. The debt crisis that has restricted lending to peripheral euro-zone governments is aggrav...
Continue reading this article »
Share This Article: