Bank bail out guarantee and public debt edit
The turmoil currently taking place in Ireland is the direct consequence of the troubles affecting its banking system, together with the bail out guarantee provided by the Irish Government. European Governments have committed a lot of money to the rescue of their banks. But even more importantly, Governments are providing an implicit guarantee to the banking sector, possibly going beyond the amounts explicitly committed to such purpose so far. The bail out expectation clearly emerges from CDS quotes: the default risk priced by the market shows a remarkable co-movement between the financial and the public sectors, confirming that Governments are expected to take up the losses possibly incurred by banks. (in French; Italian version on LaVoce, English version to be published on VoxEU)
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