December 2011_issue_07
This startling chart, published by analysts at Société Générale, highlights the worrying reality that, while Italy might have recently stolen the headlines for being close to collapse, other EU economies – including France, Germany and the UK – actually have a far worse ratio of off-to-on-balance sheet net government liabilities. In the accompanying research note, author Albert Edwards is dismayed that I taly has been dragged into the crisis given it never suffered from inappropriately low interest rates during the 2003-07 period and, as the chart illustrates, Italian public sector debt fares well on cross-country comparisons. “If investors believe the governments in Spain and Italy are bust, then Germany, France, and not forgetting the UK and US, are far, far worse,” he says.
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