Friday, 19 February 2010

Bloomberg Article Exposes Creative EU Member Accounting

It seems the unspeakable is now being spoken. How did countries that were effectively bankrupt manage to meet the fiscal criteria to join the Euro. This article exposes how it happened.

'When the European Union predicted in 1997 that Italy’s budget deficit would exceed the threshold to qualify for the single currency, it buried in the fine print the observation that with “additional measures” the Italians could pass.

They did, thanks to a one-time tax and a yen-denominated swap. It was an early example of the balance-sheet fiddling deployed since then by countries eager to share the benefits of a $13-trillion market and lower borrowing costs, yet unwilling to cede control over their budgets, wages and welfare systems.'

Click on title link for full article.