European austerity serves to reserve sovereign balance-sheet space for too-big-to-bail bank rescues
Evidence
But the desire to apply austerity is not just ideological, although it is that. There are also good material reasons for the continuing application of austerity, especially in Europe—that is, clearing space on the balance sheet of sovereigns in case one of the region’s too big to bail banks goes bust. What began as a banking crisis in the United States continues as one in Europe. The euro has turbocharged this problem by effectively turning the twenty-first-century European economy into a classical gold standard. — Mark Blyth, Austerity, 617
Categorization
- XREF: Strongly parallels Mattei’s account of austerity as serving financial-sector and creditor interests rather than debt reduction. — connects to: European banks are collectively too big for any sovereign to bail, forcing austerity instead — Mark Blyth, Austerity: The History of a Dangerous…, 207; European banks were too large for any national sovereign to rescue — Mark Blyth, Austerity: The History of a Dangerous…, 231; Eurozone banking integration outpaced national resolution, producing too-big-to-bail systemic risk — Mark Blyth, Austerity: The History of a Dangerous…, 227 (+10 more)
- SEED: The materialist explanation for austerity — reserving fiscal space for bank bailouts, not cutting debt — is a sharp essay angle contrasting stated vs. actual function.
Broader Connections
- European banks are collectively too big for any sovereign to bail, forcing austerity instead
#corroborates(0.92) — Mark Blyth, Austerity, 207 - European banks are too big for any single government to bail out
#corroborates(0.90) — Mark Blyth, Austerity, 37 - European banks were too large for any national sovereign to rescue
#corroborates(0.85) — Mark Blyth, Austerity, 231 - The sovereign debt crisis is a transmuted and camouflaged banking crisis
#corroborates(0.85) — Mark Blyth, Austerity, 35 - Eurozone banking integration outpaced national resolution, producing too-big-to-bail systemic risk
#expands(0.80) — Mark Blyth, Austerity, 227 - The European debt crisis resulted from banking losses, not sovereign overspending
#corroborates(0.78) — Mark Blyth, Austerity, 40 - Austerity transmitted sovereign-risk to the banks that held the bonds.
#complicates(0.75) — Mark Blyth, Austerity, 31