Core-country banks bought peripheral sovereign debt and levered up more than US banks

Evidence

The Greeks may well have lied about their debts and deficits, as is alleged, but as we shall see in chapter 3, the Greeks are the exception, not the rule. What actually happened in Europe was that over the decade of the introduction of the euro, very large core-country European banks bought lots of peripheral sovereign debt (which is now worth much less) and levered up (reduced their equity and increased their debt to make more profits) far more than their American cousins. — Mark Blyth, Austerity, 37

Categorization

• XREF: Feeds Mattei’s argument that austerity was imposed on peripheral states to protect core banks. — connects to: European banks transformed the euro’s risk-free sovereign debt into a leveraged carry trade — Mark Blyth, Austerity: The History of a Dangerous…, 225; European bank exposure to periphery sovereign debt reached dangerous multiples of national GDP — Mark Blyth, Austerity: The History of a Dangerous…, 239; Banks deliberately bought mispriced periphery debt because size guaranteed bailout — Mark Blyth, Austerity: The History of a Dangerous…, 226 (+2 more)

Broader Connections

• European banks transformed the euro’s risk-free sovereign debt into a leveraged carry trade #expands (0.95) — Mark Blyth, Austerity, 225
• Core European banks financed periphery consumption, creating Eurozone imbalances that later turned toxic #expands (0.95) — Mark Blyth, Austerity, 245
• European bank exposure to periphery sovereign debt reached dangerous multiples of national GDP #expands (0.90) — Mark Blyth, Austerity, 239
• Twenty large European banks had cross-border exposures exceeding their entire core capital #expands (0.85) — Mark Blyth, Austerity, 796
• Banks deliberately bought mispriced periphery debt because size guaranteed bailout #expands (0.80) — Mark Blyth, Austerity, 226