The European debt crisis resulted from banking losses, not sovereign overspending

Evidence

This is a banking crisis first and a sovereign debt crisis second. That there is a crisis in sovereign debt markets, especially in Europe, is not in doubt. But that is an effect, not a cause. There was no orgy of government spending to get us there. There never was any general risk of the whole world turning into Greece. There is no risk of the United States ever going bust anytime soon. There is no crisis of sovereign debt caused by sovereigns’ spending unless you take account of actual spending and continuing liabilities caused by the rupture of national banking systems. What begins as a banking crisis ends with a banking crisis, even if it goes through the states’ accounts. But there is a politics of making it appear to be the states’ fault such that those who made the bust don’t have to pay for it. Austerity is not just the price of saving the banks. It’s the price that the banks want someone else to pay. — Mark Blyth, Austerity, 40

Categorization

• XREF: Connects directly to Mattei’s Austerity intellectual history and the broader claim that austerity misattributes the 2008 crisis’s cause. — connects to: European austerity serves to reserve sovereign balance-sheet space for too-big-to-bail bank rescues — Mark Blyth, Austerity: The History of a Dangerous…, 617; The sovereign debt crisis was actually a banking crisis in disguise. — Mark Blyth, Austerity: The History of a Dangerous…, 33; Austerity transmitted sovereign-risk to the banks that held the bonds. — Mark Blyth, Austerity: The History of a Dangerous…, 31 (+26 more)
• SEED: The claim that austerity is ‘the price the banks want someone else to pay’ is a sharp framing hook for an essay on crisis blame-shifting.

Broader Connections

• European fiscal crises were consequences of private banking crises, not their cause #corroborates (1.00) — Mark Blyth, Austerity, 205
• Europe’s rising debt ratios resulted from private financial crisis, not government profligacy #corroborates (1.00) — Mark Blyth, Austerity, 149
• European banking crisis was mostly private-sector exposure, not sovereign over-spending #corroborates (0.95) — Mark Blyth, Austerity, 240
• The Eurozone crisis was wrongly blamed on sovereign fiscal profligacy #corroborates (0.95) — Mark Blyth, Austerity, 152
• The Eurozone crisis was private, not public, debt #corroborates (0.92) — Mark Blyth, Austerity, 190
• States were complicit but did not cause the European debt crisis #qualifies (0.80) — Mark Blyth, Austerity, 199