Wednesday, January 12, 2011

EU has wasted its wealth in 'saving' banks

EU has wasted 1/3 of all its GDP in saving (??) rotten banks. According to M. Louis at Bloomberg the total spent in banks' bailouts and similar rescue operations totals USD 5.3 trillion, which is quite more than all the German GDP and almost exactly 33% of the Union's nominal GDP.

However the figures vary quite a bit state by state and there are some surprises on which are most indebted because of their generosity to the banks. The list is notably lead by the only two states of the EU-15 that have postponed their adhesion to the euro (all figures in billions of euros, multiply by 1.4 to get approx. USD figures):

United Kingdom 781.2 (48% GDP)
Denmark 593.9 (274% GDP)
Germany 554.2 (23% GDP)
Ireland 384.5 (264% GDP)
France 350.1 (19%)
Belgium 264.5 (80%)
Netherlands 246.1 (45%)
Austria 165 (63%)
Sweden 142 (45%)
Spain 130 (13%)

While the outstanding case of Ireland (264% GDP wasted in "saving" the banks) is well known, that of Denmark, which is out of the Eurozone but with its currency pegged to the euro (what is about the same), is never debated. Yet it is very similar: its bailout waste is 274% GDP and compromises many years of public budget. 

Next in line is not any European state but nothing less than the USA, which has committed to bailout measures nothing less than 88% of its GDP: $12.8 trillion. Belgium follows close however and then it is Austria.

By comparison the much talked about Spain is within very decent safety margins in this aspect, while Italy is not even listed, what means it has not thrown much of its public money down the toilet of banks' bailouts.

Thanks to Fajensen for revealing these facts, notably the difficult situation of Denmark, at the comments section of Naked Capitalism.

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