Source: The Economist, 22nd November 2011
Observe the obvious differences between the North (Gernmany, France, Netherlands, Belgium, Austria, Ireland) and the South (Greece, Italy, Portugal, Spain) in the eurozone. The set of graphs itself don't necessarily prove any causal relationship (that geography or a relaxed southern lifestyle has something to do with it for example), but they can provide an interesting comparison. They can also provide support for the claim on too large differences between these countries to have a single currency, or the net borrowing effect on the international markets that led to high current account deficits of the 'South'.
The graphs can make an inference on one thing emphasised in the last three posts on the eurozone debt crisis - a welfare state used to fund populist policies cannot lead to a sustainable growth path, only a temporary boom; it will result in increasing existing domestic instabilities, loss of confidence in the bond market and a deteriorating economic performance. The 'South' experienced crony capitalism and increased political rent-seeking. Any wealth that was supposedly created proved to be artificial. The unfortunate thing now is that we all need to pay the price.
The final part of the eurozone debt analysis concerning total outcomes and possible remedies will be published tomorrow.