Chart of the day: Debt deflation in the eurozone periphery

Just to follow up on the last post, which was relatively optimistic about the eurozone, I want to show you this chart of non-performing loans in the periphery. I believe it tells a story of debt deflation and explain why the contraction in GDP has been so sharp.

I believe the improving second derivative numbers will put a halt to this and turn these numbers around. We are already seeing some signs of this in Spain. In Portugal, the bad loans keep rising though. Italy is where the rubber meets...

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