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Home Publications Blogs Beat the Press Reuters Reinvents the Euro Zone Debt Crisis

Reuters Reinvents the Euro Zone Debt Crisis

Wednesday, 23 January 2013 08:40

Deficits throughout the euro zone were relatively modest prior to the economic collapse in 2008 according to data from the IMF. In fact, some euro zone countries, like Spain and Ireland, were even running budget surpluses. This didn't stop Reuters from telling readers in the first line of an article picked up by the NYT:

"Public debt levels in the euro zone neared their projected peak last year after more than a decade of huge borrowing."

This is seriously misleading since it implies that large deficits were a longstanding problem as opposed to an outgrowth of the economic crisis.


Comments (5)Add Comment
I'm surprised at this.
written by S.D. Jeffries, January 23, 2013 9:21
Reuters is usually a reliable news service regarding subjects that need some explaining. I think Krugman is right when he says the truth has been turned on its head and "conventional wisdom" now consists of blaming countries' debt levels for all the economic ills that should rightly be laid at the feet of the bursting of the housing bubble and the flouting of what little regulation of the financial markets existed.
written by JDM, January 23, 2013 9:21
Charles Darwin said "False facts are highly injurious to the progress of science, for they often endure long"; nowadays these zombie claims have gone well past enduring long: they never ever seem to die. They'd be just an odd little curiosity if people didn't build policy on them, and run campaigns -- and get elected -- based on them.
written by kharris, January 23, 2013 2:20

Sorry, but if we begin stop blaming economic ills on debt, we might end up blaming debt on economic ills. Then, rather than insisting on deficit reduction as the cure - harder than it looks, but easy conceptually - policy makers might be forced to find a way to boost growth. That may not be harder than reducing deficits in reality, but it's harder conceptually if you make it harder. Lots of European leaders have gone so far down the austerity tube that they can't see a way out.
caught up in the bubble....
written by pete, January 23, 2013 2:54
As with rising California pensions during the 90s, everybody mistook rising asset prices for real stuff. Sure, "surpluses"...yeah, U.S. had some in the late 90s sort of too...but only due to a bubbled economy. Bottom line: leveraging up during the bubbles is really a bad idea. Indeed, the bursting of the bubblew let everyone know who was swimming naked, as Warren B. woud say. To be fair, and maybe this is Dean's point, Spain/Ireland etc. were no more irresponsible in failing to recognize the phoniness of their future prosepects than Lehman and Bare Sterns. And of course Greece actually lied about their debt to the ECB using off market swap trades...sigh.
wampin' borrowing
written by frankenduf, January 24, 2013 8:18
indeed- even pbs' frontline seems to be infected with the propaganda- their recent review of obama's first term contextualized his efforts to governing under the "huge" deficit

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.