Here’s a simply reminder of how essentially the entire euro currency bloc is a classic case of ‘tragedy of the commons.‘ Euro bloc rules state that no country should have an annual budget deficit in excess of 3% of their GDP. This is meant to ensure that the euro’s strength isn’t undermined by member nations rampantly spending beyond their means and ruining the Eurozone’s collective financial situation.
Well, as shown below almost every major economy has completely blown through the spending cap with deficits well in excess of 3% of GDP (shown in red). The only major economy missing from the chart is France, who nevertheless appears to have had a budget deficit of nearly 8% of GDP in 2009.
The U.S. 2009 $1.3 trillion budget deficit came in at 9.2% of GDP, which is bad, but the point is that the euro currency bloc looks pretty horrible as well:
(Chart via the BBC)
[image url="http://static.businessinsider.com/image/4b694fd10000000000683d07/image.jpg" link="lightbox" caption="" source="" alt="Chart" align="left" size="xlarge" nocrop="true" clear="true"]
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