The IMF have released a great new working paper.
Pay particular attention to page 28 and 29 which shows the cost in % of GDP,the net outlays(recapitalisations and asset purchases minus returns) given to solve banking crises between 2007 and 2011.
While the Swiss managed to make money as usual!!,a margin,1.1% of GDP on convertible UBS bonds!!,some of the others are quite staggering in their size comparable to National output
Ireland 40.7% of GDP
Greece 27.3% of GDP
Iceland 20.5% of GDP
Holland 12.7% of GDP
Nigeria 11.8% of GDP
Two of the above,Ireland and Greece,of course are unable to monetise their debt by printing money as they no longer have their own currency,nor can they reduce interest rates,so this is why the temptation to leave the Eurozone is strong
By contrast ,the “least costly” bailouts,apart from the Swiss!, were:-
Hungary 1.1% of GDP
France 1.0% of GDP
Sweden 0.7% of GDP
Essentially,Ireland is dealing with a problem 40 times the size of the above.
This is like
Comparing a magnitude 10 on the Richter scale earthquake with the rumbling vibration of a mobile phone
This is unsustainable and Greece and Ireland’s banking debt must be dealt with immediately.
It is in Spain,Italy and the rest of the Eurozone’s best interests to do this-for two reasons
1.To keep the Eurozone together
2.To allow Spain and Italy continued access to international credit marks
Any talk of a stimulus,like the one announced today,(0.6% of Eurozone GDP) is merely window dressing,this money already existed,is not a new fund,and will only represent an import subsidy in countries like Ireland and Greece.
It’s the banks,stupid!,not the economy