German Vs. Greece Household Debt: Germany Has More

Be careful about your cultural stereotypes (source: Bloomberg).

For those who think we are out of the woods take note: The scale of bailouts is mushrooming. During the Asian financial crisis of 1997-1998, for instance, South Korea received $10 billion. But, after the rescues of Bear Sterns ($40 billion), Fannie Mae and Freddie Mace ($200 billion), AIG (up to $250 billion), the Troubled Asset Relief Program for banks ($700 billion), we now have the mother of all bailouts: the $1 trillion European Union-International Monetary Fund rescue of troubled eurozone members. A billion is a big number, too: a billion seconds ago it was 1959. A billion minutes ago Jesus was alive. A billion hours ago was the Stone Age. A billion days ago no-one walked on the earth on two feet. A billion pounds ago was only 13 hours and 12 minutes, or the rate the British government spending it (thank you adamsmith.org).

So where is all this heading I wonder? Governments that bailed out private firms now need .. bailouts. But what happens when the political willingness of Germany and other disciplined creditors - many now in emerging markets - to fund these bailouts fizzles? Who will then bail out governments that bailed out private banks? It starts looking increasingly like a Ponzi Scheme.