What beer tells us about the euro crisis

Source: Business Insider

Via Business Insider comes a nifty graphic that highlights one of the big challenges policy makers face in dealing with Europe’s seemingly intractable debt crisis.

Using the Federal Reserve Bank of St Louis’ FRED economic research website, BI has pulled out the numbers on beer prices in the euro zone to show a staggering divergence between Germany (black line), Spain (red), Italy (orange) and Greece (blue).

Explaining how the graphic works, BI’s Joe Weisenthal writes, “What basically happened over the past several years is: Prices of everything surged in the periphery of Europe, while staying incredibly stable in Germany. This has been a boon to Corporate Deutschland, as it is far more competitive—on a price basis—than all of its peers.

“Now the peripheral countries are being asked to devalue and regain competitiveness, but it is a difficult if not impossible task.”

As the chart’s green line shows, Ireland has made great strides in regaining competitiveness, which is reflected in the broad view that the country is mounting a recovery from its economic woes, even if it’s not completely out of the woods.

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