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Comment by jackgavigan | Hacker News Reader

It's also worth remembering that the asset bubbles in Portugal, Ireland, Greece and Spain were inflated by the Eurozone's low interest rates. The reason those interest rates were set so low was to boost the German economy, which was in the doldrums, post-reunification.

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Greece did not suffer from an asset bubble, the other countries you mentioned did.

Interest rate convergence was one of the criteria for introduction of the Euro:

https://en.wikipedia.org/wiki/Euro_convergence_criteria#Crit...

Point 5, long-term interest rates

The ECB's mandate is to worry about price-stability, not the German economy

https://www.ecb.europa.eu/mopo/intro/objective/html/index.en...

Practice may of course deviate from theory, but i don't think it did much here.

German unification was 1990, we are talking about the time around 2000. Many central banks in the world lowered interest rates after the dot-com crash & 9-11 and the economic slowdown that followed.

You might argue that this caused asset bubbles, and i would tend to agree.

If it were up to me, i would add "avoiding asset bubbles" to the ECB mandate, if you want to you could regard it as a kind of price-stability mandate for assets.

> Greece did not suffer from an asset bubble...

Greece's House price index (2007=100) shows a cumulative rise of 44.3 from 2001 thru 2007, and a cumulative drop of 49 from 2008 thru 2014 - http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=129.RPP.A.G...

As of February 2014, "Greece [had] suffered the second biggest property crash in the EU since the debt crisis began." - http://www.theguardian.com/world/2014/feb/28/home-ownership-...

From Q3'08 to Q2'14, Greek house prices declined by 41.6% in real terms - http://www.bankofgreece.gr/BogDocumentEn/PRODEXPO_Oct_2014.p...

Thanks for the numbers, you are right.

The charts are remarkably similar for

Greece http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=129.RPP.Q.G...

Spain http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=129.RPP.Q.E...

Portugal http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=129.RPP.Q.P...

But i would still claim that in the case of Greece, the (masked) public debt crisis preceded the asset bubble whereas in Spain, Portugal and Ireland the public debt crisis followed the asset bubble.

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