The euro created bank incentives that produced a private crisis

Evidence

Just as we saw in the US case, the crisis in Europe has almost nothing to do with states and everything to do with markets. It is a private-sector crisis that has once again become a state responsibility. It has almost nothing to do with too much state spending and almost everything to do with the incentives facing banks when the euro, a financial doomsday machine the Europeans built for themselves, was introduced. — Mark Blyth, Austerity, 153

Categorization

• XREF: Mirrors the US chapter’s same private-crisis-become-state-responsibility framing, which this chapter builds upon. — connects to: Europe’s rising debt ratios resulted from private financial crisis, not government profligacy — Mark Blyth, Austerity: The History of a Dangerous…, 149; The Eurozone crisis was private, not public, debt — Mark Blyth, Austerity: The History of a Dangerous…, 190; European fiscal crises were consequences of private banking crises, not their cause — Mark Blyth, Austerity: The History of a Dangerous…, 205 (+8 more)

Broader Connections

• European fiscal crises were consequences of private banking crises, not their cause #corroborates (0.88) — Mark Blyth, Austerity, 205
• European banking crisis was mostly private-sector exposure, not sovereign over-spending #corroborates (0.86) — Mark Blyth, Austerity, 240
• The Eurozone crisis was private, not public, debt #corroborates (0.85) — Mark Blyth, Austerity, 190
• The European debt crisis resulted from banking losses, not sovereign overspending #corroborates (0.85) — Mark Blyth, Austerity, 40
• Euro-induced cheap credit caused periphery current account deficits and vulnerability #expands (0.82) — Mark Blyth, Austerity, 221
• Core European banks financed periphery consumption, creating Eurozone imbalances that later turned toxic #expands (0.80) — Mark Blyth, Austerity, 245
• A banking guarantee transformed private debt into sovereign debt overnight #expands (0.75) — Mark Blyth, Austerity, 184
• Bank profits shifted from loan interest toward securities-packaging fees before the crisis #expands (0.70) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 888