The “bad” convergence I referred to was the speed at which income increased in the catching-up countries, which largely took place through debt, either public or private. As a result, their debt with the rest of the world increased tremendously over the past decade.
The most dramatic development took place in Ireland, which moved from a net creditor position of 52% of GDP in 1999 to a net debtor position of 71% of GDP in 2008. Greece increased its net debtor position from 33% to 76% of GDP; Portugal from 32% to 96% and Spain from 28% to 79%.