28 Apr 2017

European Public Sector Debt and Interest payments for 2016

On the 25th of April, Eurostat published the latest figures for European Public Sector Debt and Interest payments for 2016. I've extratcted all the numbers and posted them in a Google Sheet file that you can find here.  I have arranged that file so that you find both the Debt and Interest numbers in three different forms : in euros, in units of the national currency, or as a percentage of GDP.

I've extracted the key figures are in the following table

Public sector in the 28 European Union countriees is nearly 12.4 trillion euros. For the 19 Eurozone countries, the total is 9.6 trillion euros. Four countries now have well over 2 trillion euros of debt each. Italy tops the list with 2218 billion, followed closely by France and Germany with 2147 billion and 2140 billion each, and the UK with 2022 billion.

The other impressive figures concerns interest payments on that debt. For the entire European Union, those payments topped €317 billion in 2016, of which €236 billion was in the Eurozone. The effective interest rates being paid by each country vary, with Hungary, Romania and Slovenia all paying over 4%. On average, the interest rate was about 2.5%.

2.5% might not seem too bad. But remember that the figure refers to compound interest. And since European Public Sector has been climbing almost continuously for decades, the total amount of interest paid out has reached staggering numbers.

Since the Eurostat office provides  figures for most places since 1995, I was able to calculate the increase in debt over the 21 year period, and compare that figure with the total amount of interest paid over the same period (see the fourth and fifth columns in the table).

For the Eurozone, public sector has ramped up by over €5.5 trillion in that 21 year period. Over that same period our governments have paid out €5.95 trillion in interest payments, meaning that effectively, ALL the net borrowing of our governments has gone to pay interest on public sector debt.

This is a truly ridiculous situation when you realize that the banks that lend money to our governments don't need to use pre-existing money to make the loans. They have the right to simply create money out of thin air, meaning that the nearly €6 trillion of money that taxpayers have paid the banking system since 1995 was effectively a complete fraud.

Essentially, if banks can find a bunch of politicians sufficiently gullible to take on extra debt, those banks are then guaranteed to be able to earn of very comforable stream of unearned income, amounting to well over €300 billion every year. Europe's taxpayers are really being ripped off by this system. Could France's probable future president, Emmanuel Macron, be someone motivated to end this scam and save the French taxpayer nearly €42 billion a year? It would be great if he did. But given his background at Rothschild's bank, he may not be particularly interested in ending the bankers' gravy train in a hurry. We'll see.

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