We can find them at both the national and the European levels. Let us first take a look at the national level; in other words, the countries themselves. Following the introduction of the euro, a large amount of capital flowed into the countries which are now at the centre of the crisis such as Greece, Ireland, Portugal, Spain and Cyprus.
First of all, that is economically plausible: capital flows from highly developed countries into countries that are catching up economically. In our case, however, the inflowing capital did not finance a sound catching-up process. Instead, it financed house price bubbles in some countries – such as Ireland and Spain. Elsewhere, it funded excessive government consumption – for example, in Greece.