(EIRNS) — The gap between the financial economy and the physical economy is now reaching an unsustainable level. While central banks’ actions pump in financial aggregates, increasing the overall debt, the austerity policies they impose on nations have collapsed the physical economy, thereby accelerating the collapse of that very debt which is ultimately based on physical production.
The data on industrial production and private consumption of the trans-Atlantic economy show that clearly. Especially in the “periphery” of the euro system, the collapse has accelerated dramatically.
Industrial production in Italy has fallen by 7.5% on a yearly basis. For Spain, that same figure is 5.4% and for Greece 5.3% (although in July, it fell 7.8%). In France, industrial production is down by 3.3% and in Germany by 1.7%.
The most dramatic figure, however, is the 10% collapse of private consumption of durable goods in Italy.
While the physical economy collapses, state and private debts in the Eurozone have ballooned. Spanish government debt reached a record 75.9% of GDP in the second quarter of the year. And while the Italian debt slightly decreased in July (by EU5 billion), it has steady increased from EU1.882 trillions in September 2011 to EU1.972.9 trillion in June 2012. Despite the slight drop of 5 billion in July, its percentage of the GDP has risen, due to a GDP drop of -2.6% in the second quarter.