European bank exposure to periphery sovereign debt reached dangerous multiples of national GDP

Evidence

By early 2010, Eurozone banks had a collective exposure to Spain of 727 billion, 402 billion to Ireland, and 206 billion to Greece. French and German bank exposures to the PIIGS were estimated in 2010 to be nearly 1 trillion. French banks alone had some $493 billion in exposures to the PIIGS, which was equivalent to 20 percent of French GDP. Standard & Poor’s estimated French exposures to be as high as 30 percent of GDP, all told. — Mark Blyth, Austerity, 239

Categorization

• XREF: The scale of French exposure (20-30 percent of GDP) matters for understanding why France pushed bailout politics — connects to the political-economy reading in Mattei. — connects to: Austerity cuts raised the debt-to-GDP ratios of Eurozone crisis states. — Mark Blyth, Austerity: The History of a Dangerous…, 30; Austerity transmitted sovereign-risk to the banks that held the bonds. — Mark Blyth, Austerity: The History of a Dangerous…, 31; The sovereign debt crisis is a transmuted and camouflaged banking crisis — Mark Blyth, Austerity: The History of a Dangerous…, 35 (+6 more)

Broader Connections

• Core European banks financed periphery consumption, creating Eurozone imbalances that later turned toxic #expands (0.75) — Mark Blyth, Austerity, 245
• Downgraded sovereign debt collateral trapped leveraged European banks in a funding spiral #expands (0.72) — Mark Blyth, Austerity, 238