Bailout Blues

Busted Bailout

Delaying bank restructuring is costly, in terms of both the eventual bailout costs and the damage to the overall economy in the interim.

The Bailout Bias

Why the Greek Bailout Failed

Regardless of the details of the ultimate deal, the risk is that the ghost of Russia s bailout of Cyprus in 2011 could provoke severe side effects across Southern Europe, both for governments borrowing costs and for small savers.

Eurobonds would cut borrowing costs for the European Union s two large troubled members. And it would spare German and other taxpayers from the EU s solvent northern countries from having to fund yet another bailout of a southern member state.

costs Recurrent costs 1. Military personnel costs

After a bank s shareholders are wiped out and its creditors take an 8 haircut, the European Fund transforms itself into a bailout fund, justifying some of Germany s fears. And there is no explicit prohibition of some form of national government bailout.

Will the bailout work? We have national debt, Detroit, currency valuations, healthcare, all these issues facing us.

Common staff costs (total costs)

Other travel costs (total costs)

Common staff costs (total costs)

Spain like Greece is spiraling into depression, and may need a full scale bailout by the troika (the ECB, the European Commission, and the International Monetary Fund). Meanwhile, austerity fatigue in the eurozone periphery is increasingly clashing with bailout fatigue in the core.

Recurrent costs 1. Military personnel costs

Public information production costs (total costs)

Total investment costs C. Audit costs

The fact is that only the US and the massively over represented countries of the European Union supported the Greek bailout. Indeed, the major emerging economies all strongly opposed it, with the Brazilian representative calling it a bailout of Greece s private debt holders, mainly European financial institutions.

If the ball costs 10, the bat costs...

Recurrent costs 1. Military and civilian personnel costs

(Estimated costs inclusive of 13 programme support costs)

Military personnel costs Civilian personnel costs Premises accommodation

Costs

Costs

costs

Total costs Lower actual costs (e) Government provided personnel

1997 staff costs Staff costs Israel Rent and water

This costs me money, ladies, it costs me money!

Common staff costs Other travel costs (c) International contractual personnel

1 January 31 December 1998 Total costs Non recurrent costs

Common staff costs Other travel costs (c) International contractual personnel

And it all costs money. Everything costs money, huh, Max?

The IMF learned this in 1997, when an inadequate bailout of South Korea forced a second round of negotiations. In Greece, the problem is even worse, as the 86 billion ( 94 billion) plan now under discussion follows a 110 billion bailout in 2010 and a 130 billion rescue in 2012.

Administrative costs

Investment costs

Administrative costs

Investment costs

Audit costs

Operational costs

Operational costs

Communication costs

Phone costs

Draw Costs

KOC costs

Ancillary costs