Referring to doubts concerning the viability of sovereign debt, Alphaville's Izabella Kaminska points us to the chart on the left (courtesy of Morgan Stanley) which intends '...to illustrate which countries are likely to come under more pressure than others...'.Would someone like to argue that the acronym 'PIGS' is anything more than your standard wog-baiting from the British press? Takers should feel free to make their point in the comments section.
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8 Comments:
I wonder how big Greece's GDP would be if they counted the black market?
Whoops. Looks like they already did that (this little gem from 2006.
At least Spain could always add another 25% to our GDP numbers if we decided to count the black market.
Yes. We'll be dealing with that - yet again - very shortly.
Yes. The UK can print its own currency. The PIGS cannot.
The acronym is unfortunate but being able to borrow in your own currency and print that currency has economic advantages.
Latvia blew itself sky-high. Norway (them ultra conservative types) blew themselves up on a fixed currency and a current account deficit.
Norway is infinitely better managed than Greece.
It is not about ethnicity. It is about fixed exchange rates and deflation.
John Hempton
From a foreign creditor's perspective, there is little difference between a country printing money and defaulting. Printing money is just an easy and quick way to implement an extremely regressive tax, since the new money is most likely to end up in the hands of the most connected and powerful.
For small countries, I don't think having a separate currency is a big advantage. You are subject to speculative attacks, you pay more interest, and your citizens (or government) will probably do stupid stuff like get loans in foreign currencies.
John,
Noting the very obvious (and probably intentional) exclusion of Ireland from the original acronym, CA deficits may have been the premise at first but PIGS has descended into a geographic catch-all for a widely differing set of situations. Clumping them together conveys very little of any use.
Without outright stating that Italy might have been included because an 'I' looks mighty fine between a 'P' and a 'G', it's worth noting that that country's 2008 deficit was 4.24% - 1.2 above France and 11.5 below that of Greece. We can say with some certainty that 2009 figures will not add weight to the argument.
On the other hand, they do all dance really well.
Olive subsidy fraud is still proving a challenge to the Irish.
I think the guys from Bridgewater could be considered "takers" of your challenge, as shown in this already famous paragraph :
"On net, Spain owes the world about 80% of GDP more than it has external assets. As a frame of reference, the degree of net external debt Spain has piled up in a currency it cannot print has few historical precedents among significant countries and is akin to the level of reparations imposed on Germany after World War I. We don’t know of precedents for these types of external imbalances being paid back in real terms."
I know they are not talking about sovereign debt here, but still...If they are right, then, well, we look a little porcine, indeed.
By the way, the saying "Del cerdo me gustan hasta los andares" is as Spanish as it gets. Some consolation.
Artista,
We haven't heard from your for a long time. Love the one input model, btw.
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