For example, since 2007, public debt in Spain increased by 30 percentage points of GDP, in Portugal by 40 percentage points, in Greece by 50 percentage points and in Ireland by 80 percentage points...and counting. Much of these increases are the consequence of private losses in real estate and banking sectors.
Indeed, the euro crisis reminds us that, one way or another, excessive private debts usually end up in the public sector. Further, price stability across the euro area has been composed of large differences in national inflation rates. In the eight-year run-up to the crisis, inflation in the crisis economies was about twice that of the core countries.