27/10/2013: Ireland v Iceland: Full Deck

Here's the deck for comparatives between Iceland and Ireland. You can click on every slide to enlarge. Enjoy!

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4/10/2013: IMF 11th review of Ireland: Banks & Exchequer

IMF released its 11th review of Irish economy under the Extended Arrangement for funding. I covered growth-related issues arising from the IMF release here: http://www.fergco.co/2013/10/4102013-imf-11th-review-of-ireland.html

Now, some other topics, namely banks and the Exchequer.

Per IMF: "Ireland is expected to return to reliance on market financing in 2014, yet further European support could make Ireland’s recovery and debt sustainability more robust. Irish banks face weak profitability that hinders their capacity to revive lending. European support to lower banks’ market funding costs could help sustain domestic demand recovery in the medium term, protecting debt sustainability and financial market confidence."

What's that about? Here are two charts:

IMF: "The recent retracement of Irish sovereign bond yields has been broadly consistent with the experience of other countries in the euro area periphery." [But wait, what about Ireland's unparalleled success in fiscal adjustments and 'best-in-class' status? Are the IMF saying that Enda did not singlehandedly deliver huge improvements in Irish bonds yields? How can this be the case, unless the Irish Government uses 'we' as denoting 'Peripheral Countries' collective in claims that the Govenment has delivered stabilisation of Government funding costs.]

"After touching record lows in early May, the 10 year yield has risen 56 basis points, to 3.98 percent as of September 11. Market tensions dissipated in July after the settlement of the political crisis in Portugal and recent turbulence in emerging markets has had limited effect on Irish bond yields. No new bond has been issued by the Irish sovereign since the €5 billion ten-year issue in mid March." The latter, of course simply means that lower supply of new bonds (lack of it since mid-March) and now the new announcement by NTMA that it will not be tapping the markets any time before official exit from Troika supports, are keeping things steady in yields terms. Otherwise… well… logic suggests, at least speculatively, they can be higher.

And on banks: "From a trough in mid-May, yields on Bank of Ireland (BoI) and Allied Irish Banks (AIB) 3 year covered bonds have edged up some 40 basis points as of September 11. Since its May 30 issuance, the yield on BoI’s 3 year senior unsecured bond has been more volatile, but overall has risen by 62 basis points, to 3.37 percent."

Bah! Two things to say about the above:

1. Banks bonds still tracing sovereign risks and that holds even for covered bonds! Not a good sign for the banking sector. The explicit guarantee is gone, so now it is don to the implicit guarantee and the state simply cannot shake off the baggage of the original 2008 Guarantee. Irish banks are still too-big-to-fail and Irish state is still a too-small-to-bail-in banks lenders.
2. For an army of bonds sales-desks analysts out there pontification on Irish economy, I am yet to see their honest analysis on what is happening with banks funding costs and sovereign funding costs. They are a bit too keen talking about the economy and too little about debt markets. Which is sort of 'your dentist is football analyst' analogy...

"Deposit rates continued to inch downward, however, and ECB borrowing by domestic banks fell from €39.6 billion at end March to €33.4 billion at end August, reflecting a paucity of new lending, further noncore asset deleveraging, modest amounts of new market funding, and a broadly stable deposit base."

So cheap funding dissipating, deposits (stable funding) still anaemic or declining… Happy times, folks. Stabilisation bites. Come back and argue that when businesses and households are croaking under the weight of interest on their debts with the above 'improvements'.

Why wait, however, let's take a look at IMF-reported 2009-2013 data:
Banks non-performing loans (vs provisions) as % of total loans: 2009=9% (4%) or 44.4% cover, 2012 = 11.3% (5.4%) or 47.8% cover, 2013 = 11.5% (4.5%) or 39.1% cover. So cover is shrinking! Meanwhile, personal lending rates have gone up (as ECB repo rate went down) from 11.1% in 2009 to 11.6% in 2013, and SVR mortgages rates have gone up from 3.3% in 2009 to 4.4% in 2013. Government bond yields are down from 4.9% in 2009 to 4.2% in 2013. What's happening folks" The state credit costs are being dumped onto mortgagees. The 'rescue' of the banks and subsequently the rescue of the state has been loaded up onto the borrowers from the banks.


On the positive side, Exchequer performance was good. Not spectacular, but fine - in line with (and slightly better than) budgetary targets:

Do note the caveats listed below the charts - it would be nice were the Irish authorities actually provided a clear, consistent and well-defined map of all one-off payments and receipts… but then the picture of the fiscal adjustment would not have been as pretty as our politicians like to claim. Still, the picture is broadly fine.

Crucially, the above is not sufficient for us to rest on our laurels. For a number of reasons, but chiefly for the reason not even mentioned in the IMF note: has anyone looked at how sustainable, over the medium (2015-2020) term the fiscal savings delivered by the Government are? I mean: we know that pay moderation agreements with public sector unions are not sustainable and even subject to automatic reversals in 2015-on, right? We also know that much of health system 'savings' are not sustainable, since these come on foot of extracting more and more cash out of ever-dwindling supply of private insurance holders. Right? What else is not sustainable? How much? What is the risk down the line? Is corporate tax revenue uplift we have seen over the last 24 months or so sustainable? Much of it seems to have come from MNCs booking more transfer pricing profits into Ireland. Is that 'sustainable'?

IMF does some 'sustainability' tests in its analysis and here is a scary chart:

Basically, note the path of the gross financing needs for Ireland through 2018. This returns us, under baseline (no new shocks) scenario back to the situation in 2018 where financing needs of the Exchequer are slightly above the needs in 2013. This is assuming GDP is growing 2.5% annually in real terms 2015-2018. And this is incorporating the 'savings' achieved from the Promissory Notes. And this is after we impose agreed target cuts of 2014-2015. We are swimming faster and faster to be thrown back, not even to stay put.

Now, tweak few assumptions:

So in Constant PB Scenario, the change is with no 2014-2015 'austerity' factored in, which is boring stuff. But the exciting stuff is the 'Historical Scenario' where things slide back to 'normal' on growth and government deficits:

 The outcome of the above in two charts:
1) Public debt explodes

2) Financing needs of the Government explode too

Care to argue now we can afford a 'stimulus'? As Harry Callahan put it: "Go on, punk, make my day!"

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27/9/2013: Consolidating Irish Banking Sector is a Bit of a Efficiency Dodo?

A new paper by Anolli, Mario, Beccalli, Elena and Borello, Giuliana, titled "Are European Banks Too Big? Evidence on Economies of Scale" (August 6, 2013: http://ssrn.com/abstract=2306771) "…investigates the level of economies of scale, as well as their determinants, for 103 European listed banks over the period 2000-2011…"

H/T to @brianmlucey for spotting the paper. Brian blogged on this today here: http://www.irishbusinessblog.com/2013/09/26/are-irish-banks-too-big-seems-so/


According to the abstract [emphasis is mine]: "The results reveal that economies of scale are widespread and move together for all size classes, although small and medium-sized banks experience the lowest economies of scale and even diseconomies of scale in some of the years under analysis."

The economies of scale concept as applied here is whether banks become more cost efficient when their size increases. In other words, the issue is are TBTF banks more efficient and are smaller banks, perhaps created by a regulatory breaking up of larger institutions in the wake of the crisis less efficient?

According to the authors, in the wake of the crisis: "An intense debate on the “make-them-smaller” is ongoing, and we aim to contribute from a quantitative perspective."

To do so, and "to fill the gap of evidence on European banks over the most recent years, this paper aims to investigate whether, among EU listed banks, there is evidence of economies of scale also for the largest banks in terms of total asset. Moreover it aims to isolate the effects of risk-taking, diversification in the business model and profitability on economies of scale."

"We find that economies of scale are widespread across different size classes of banks, and that they are especially wide for the largest banks. Moreover, there is a scale effect of the financial system, the smallest financial systems (Iceland, Belgium and Finland) and the countries most affected by the financial crisis (Ireland, Iceland, Belgium, Portugal and Spain) experience the lowest economies of scale (if not even diseconomies of scale) probably due to the small/reduced use of their production capacity."

Put differently, in countries like Ireland, the study finds that there is small or negative effect of larger size on greater efficiency of the banking system. Now, wait, but what about Government/Central Bank plans for consolidating the banking system into 3-pillar banks? Ooops...

"As for the effects of risk-taking, diversification in the business model and profitability on economies of scale, higher economies of scale are documented for banks more oriented towards investment banking (in all periods), banks with a higher liquidity but only up to a liquidity ratio of about 5.3 percent (convex curve during the crisis only), banks with a smaller amount of Tier 1 capital (concave, although almost flat, curve during the crisis only), and banks contributing less to systemic risk. The Granger causality tests suggest the existence of unidirectional causality for liquidity, Tier 1 and systemic risk."

So in plain English, this means that authors found that larger banks are more efficient when they are more liquid, take on more risky assets (investment banking), hold less capital (i.e. run greater risk of potential need for larger bailouts) and for banks that are less wired into the economy (contribute lower systemic risks). Oh, and the casualty for the economies of scale efficiencies goes from riskier behaviour and less connection to the economy to greater efficiency related to scale. Which part of these conclusions supports the irish Government/CB plans for 3-pillar banking system? Err… none!

Now onto country-level results: "Table 4 reports the average economies of scale for each country and for the different size classes of banks during the entire period 2000-2011."

"…Three countries (Belgium, Finland and Iceland) show overall diseconomies of scale. Meanwhile in the other European countries…, large significant economies of scale are reported (in particular for banks in the Netherlands and Switzerland). When we combine country and bank size, we observe that diseconomies of scale are experienced by the smallest banks in Finland, Germany, Ireland and Spain, the small banks in Finland, Germany, UK, Iceland and Portugal, and the medium banks in Belgium and the UK. Large banks exhibit diseconomies of scale in Ireland only, whereas largest banks show diseconomies of scale in Belgium only."

Oh, wait, so the 3 Pillars are getting worse (at being efficient) as they get bigger? You betcha… And the solution is… per Irish Government plans... to grow them even more mighty by consolidating the entire banking space in their hands. But more to come on these giants of greatness in the next table.

"Table 5 shows the average values of economies of scale for each country and in each year under analysis."

"Diseconomies of scale are more pronounced during the global financial crisis. In 2007 the number of countries that experience constant economies and diseconomies of scale (Finland, Ireland, Iceland and Spain) increases, but it is especially in 2008 that the number of countries that encountered diseconomies of scale (Belgium, Finland, Greece, Ireland, Portugal and Spain) increases. This evidence confirms, as expected, that the scale of European banks, when volumes declines due to the crisis, resulted to be excessive and inefficient due to excess capacity."

Wait a second, folks… between 2010 and 2011 Irish 'banks have: (a) shed much of their bad assets into Nama; (b) got recapitalised, and (c.) spent the last few years trimming down their operations to deliver on efficiencies demanded from them by the Central Bank… And yet - the economies of scale declined for them between 2010 and 2011.

Crazy stuff, until you realise that none of the 'reforms' we put forward to our banks have anything to do with increasing their efficiency or their capacity to function like proper banks. All our 'reforms' have been designed to suppress the explosion of bad risks on their balanceshets. Extend-and-pretend across the banking system doesn't add up to gains in efficiencies in the banking system? Who could have thought that up to be the case?

Now, how about a novel approach to repairing Irish banking system? How about getting real competition going by encouraging new entrants and freeing up (regulatory) credit unions and post offices to move into banking and consolidate within their sub-sector to form medium-sized banks? That might reduce market concentration and increase the numbers of banks with economies of scale?..

Any source

26/9/2013: Even with Hopium injections, we are not that far from Greece...

Irish Fiscal Council paper "The Government’s Balance Sheet after the Crisis: A Comprehensive Perspective" authored by Sebastian Barnes and Diarmaid Smyth is an interesting read.

The paper sets out a strong promise: "While discussion often focuses around the debt-to-GDP ratio as referenced by the EU Stability and Growth Pact, the reality is far more complex. This paper takes a comprehensive look at the Government’s balance sheet following the financial crisis. This involves assessing assets and liabilities of the General Government sector, off-balance sheet contingent and implicit liabilities as well as the wider public sector."

Alas, the side of the assets equation is a bit wanting...

While it is good to see the broader approach taken by the authors to the problem of fiscal sustainability of public finances in Ireland, too often, broadening of the coverage of the crisis-impacted sovereign balance sheet slips into the stream of extolling the riches of state-owned assets, whitewashing the liabilities using imaginary assets. The paper does not do this. Which is good. However, the paper is still creating loads of confusion because it provides no clear tabulation of the assets and the way they are accounted for in the analysis.

Instead of a concise tabulation, assets analysis is presented in two parts, both overlapping. This makes it nearly impossible to disentangle what the authors include where and to what specific value.

Let's start from the top:

Per authors: "General Government financial liabilities have increased four-fold since 2007, reaching €208 billion (127 per cent of GDP) in 2012. Over this period, Ireland experienced the largest increase in the debt-to-GDP ratio of any Euro Area country." Yep. Nothing controversial here.

"The Government has substantial holdings of financial assets. These increased modestly over the same period to reach €73 billion (45 per cent of GDP) in 2012. The main assets are cash balances, holdings of semi-state entities and investments in the banking sector."

Now, that's a bit of a statement, in my opinion, open to questions.

Firstly, it creates an impression that most of the assets Government has are liquid. Not so, in my view.

Secondly, it creates an impression that the Government has a functional power to seize these assets. Also a bit of stretch in my view.

Thirdly, is suggests that even if individually liquid and recoverable, these assets can be sold in the market or used as collateral in the case of distress. Again, not something I would agree with.

The authors conclude that "The Government’s net financial assets (NFA), subtracting financial liabilities from financial  assets, gives a broader measure of the financial position of government. NFA have  declined from a position of balance in 2007 to a net liability of €135 billion (82 per cent of GDP) in 2012. Using this broader measure, the Irish government was the third most indebted country in the Euro Area in 2012 (as a share of GDP)."

I am not so sure that EUR73 billion is the real number we should be using in computing Government net financial position. My gut feeling is that we are lucky if we can count EUR50 billion in somewhat liquid and accessible funds. And even then we are at a stretch. With that, our Government's net financial assets position rises to a  deficit of 95-96% of GDP and this means that we are now challenging Greece to the Euro area's title of the second most-indebted country. And that is before Greece Bailout 3.0 which will probably result in some sort of a debt write down for the Greeks (see here:http://english.capital.gr/News.asp?id=1877516) even if small.


Here are some details on my sceptical assessment. The paper lists the following Government 'assets' (comments outside quotation marks are obviously mine):

(A.) Shares and Other Equity. "This broad asset category was valued at €24 billion. It includes: (1) the value of semi-state assets, including the equity of General Government in the Central Bank; (2) a portion of the NPRF; and (3) other equity
holdings." (1) is at least in part imaginary. The valuations of semi state companies are 'hoped for' and are not tested in the market. They also do not account fully for the shortfalls in pension funds and the knock on effects to any purchaser of equity in these companies from the role these pension funds play in running the companies' strategies. They also ignore the fact that with transfer of ownership, the semi-states are unlikely to continue enjoy state protection of their dominant market positions. All in, (1) covers EUR12 billion of semi-states equity, plus EUR2 billion of balances in the Central Bank - of which, my guesstimate is, no more than EUR5-6 billion is recoverable. The authors state clearly that "Considerable uncertainty, however,surrounds the value of these assets." per CB reserves, these are euro system money and I wonder how much of this even technically belongs to the Irish state. (2) covers NPRF-held equities and banks shares. Equities component is small, with total EUR9 billion in NPRF 'assets' accounted for mostly by banks shares (excluding preference shares). National Accounts assign EUR11 billion to the total Government holdings of banks assets. These valuations are off the mark, in my view, as the only value of the banks (ex-Bank of Ireland) today is the value of capital injected into them, net the losses they will sustain on mortgages. The rest is awash on revenue side v cost side. At any rate, these assets are not exactly liquid and if released into the market in any appreciable quantity will cause severe dilution of their value. All-in, say EUR9-10 billion of this 'stuff' is a hoped-for value in any scenario of sovereign distress.

Bit (3) above: 'Other equity holdings' "valued at approximately €3 billion. This includes the value of direct holdings of bank equity by the Exchequer, investments in the insurance sector and capital contributions to the European Stability Mechanism." Seriously? We'd get a rebate on ESM contributions? Insurance sector 'investments'? Shave off some EUR1 billion here for a dose of realism.

(B.) Currency and deposits. "The Government holds a substantial amount of relatively liquid  assets, which are managed by the NTMA. These were valued at €24 billion at end-2012. This figure includes cash balances held by the Exchequer (€18 billion), local government (€1.4 billion) and cash balances held by other Government bodies(such as the NPRF)." Can the Government expropriate the funds belonging to local authorities? Legally and actually? Can the Government capture all balances held by the Government bodies? May be. May be not. Surely it depends on contractual obligations of these bodies and the nature of assets? So suppose that EUR2.4 billion of the above is not subject to capture/recovery.

(C.) Amongst gloriously liquid Irish Government 'assets' the paper (and it is accepted methodology, I must say, which of course doesn't mean it makes any sense beyond purely theoretical exercise) list: "Loans and Other Assets(such as Accounts Receivable). This category was valued at €15 billion and includes a broad range of assets, namely loans from the Housing Finance Authority (HFA)(€4 billion), other Government loans,tax accrual adjustments (mainly VAT and PAYE (€3 billion) and a range of smaller assets such as collaterals, EU transfers and mobile spectrum receipts." Good luck, as one might say, selling these or pledging them as a collateral. The entire notion that all of these assets have the stated face value in the market is questionable. That they might have a stated value in an environment of distress sufficient enough to warrant their seizure is plain bonkers.

And so on… The point is that a claim that EUR73 billion represents assets that can be used to fund any shortfall in Irish Government funding or that they provide any yield that is NOT accounted for on the balance sheet already (remember, current debt is driven by deficits and these are driven by operating costs and revenues of the Government, which in turn are accounting for all asset yields that currently accrue from all of the above assets) is a bit of a stretch and double-counting.

In light of this 'net liabilities' discussion, we need to see some serious, detailed, models-based liquidity and legal title risks analysis of the assets that (a) in total amount to EUR73 billion and (b) amount to EUR45 billion that remains unaccountable in the paper in any appreciable details.


But never mind - on the net, the paper is very useful and worth a read. Here are two little gems (I will blog on rest later):

Ouch! You don't need to be a nuclear scientist to spot the problem above…

The true value of the above is that it shows clearly that even on the 'net liabilities' basis, with all the hopium injected into valuations of assets, Ireland is not that much different from Greece... Have a nice day, ya all...

Any source

26/9/2013: Fiscal Council Estimates of the Promissory Note Deal

So the Irish Fiscal Council published tonight "The Government’s Balance Sheet after the Crisis: A Comprehensive Perspective" paper authored by Sebastian Barnes and Diarmaid Smyth. 

The paper is good, interesting, but as always (not a criticism) is open to interpretations, questions and debate. One criticism - it is hard to wade through double-counting and incomplete reporting of the Government assets and charts nomenclature does not appear to correspond to the one used in the text. One simple table listing all assets with the estimated value attached and a column outlining core risks to valuations involved would have saved the authors pages and pages of poorly constructed material.

Overall, however, it is good to see the broader approach taken by the authors to the problem of fiscal sustainability of public finances in Ireland. We rarely observe such. And I will be blogging on this later.

But the very interesting bit relates to the final official estimates of the Promissory Notes deal. Keep in mind, here's my on-the-record estimate of the net benefit from the deal in the range of 4.5-6.3 billion euros over 40 years horizon with most of this accruing earlier on in the life span of the deal. Here's the record (see box-out at the end of the article: http://www.fergco.co/2013/03/2332013-sunday-times-10032013.html).

So here are the Fiscal Council estimates:

Mid-range minimum sales of bonds scenario: net savings of EUR 5-7 billion. Accelerated sales scenario: mid-range estimate of EUR 2-3 billion. Base Case for Euribor+150 and Euribor +250 at minimum levels of sales of bonds: EUR4 billion and EUR7 billion. The difference to my estimate is immaterial since I am looking at a longer time horizon for my estimates than the model used by the Fiscal Council does.

Reminder - some other estimates of the net present value of the savings from the deal run into 19 billion euros… ahem!..

I am looking forward to studying the spreadsheet with the model included which the FC is promising to make available on their website.

Any source

6/9/2013: Euromoney Country Risk Survey: Upgrading Irish Banking Sector Risks Outlook

Some good news for Ireland out of a number of surveys today. First, BlackRock Investment Institute survey of country experts shows Ireland improving economic outlook 6 months forward - details here: http://www.fergco.co/2013/09/692013-blackrock-institute-survey-north.html

Now, Euromoney Country Risk survey shows significant improvements in market experts assessment of Irish banking sector stability:

While both reflect opinions of experts, including experts within the specific sectors, the two are good indicators of the general direction toward gradual improvement in country economic outlook. Let's hope the Budget 2014 and mortgages arrears workouts do not derail this trend.

Any source

19/7/2013: Detroit officially files for Chapter 9

So after much of prevarication and discussions with the unions (there always discussions with the unions involved), the City of Detroit has filed for Chapter 9 federal bankruptcy protection. Detroit recently missed USD40 million payment to its own pension system and has amassed estimated USD18.5-20 billion in long-term liabilities.

Washington Post has an excellent timeline on the crisis: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/18/detroit-just-filed-for-bankruptcy-heres-how-it-got-there/

The city has shrunk over the decades from over 1.8 million in 1950 Census to around 700,000 currently (2010 Census put Detroit population at 713,777). In 2000-2010 the city population fell by 25% with the city rankings in the US by population falling from 10th largest to 18th largest. Meanwhile the six-counties Metropolitan Detroit area population is healthy at 4.296 million and ranks 13th largest in the US.

Quote from the Washington Post: "The official unemployment is now 18.6 percent, and fewer than half of the city’s residents over the age of 16 are working. Per capita income is an extremely low $15,261 a year…"

And another quote: "“The city’s operations have become dysfunctional and wasteful after years of budgetary restrictions, mismanagement, crippling operational practices and, in some cases, indifference or corruption,” Orr wrote in May. “Outdated policies, work practices, procedures and systems must be improved consistent with best practices of 21st-century government.” (Detroit has been a one-party city run by Democrats since 1962.)"

A good compendium of information on Chapter 9 bankruptcy for the cities from the Business Inside here: http://www.businessinsider.com/municipal-bankruptcies-explained-2013-7

Apocalyptic imagery of the city: http://www.marchandmeffre.com/detroit/

And my earlier post on the lessons Detroit bankruptcy process offers in comparatives to Ireland's errors in relation to the banks crisis:
http://www.fergco.co/2013/06/662013-detroit-is-about-to-go-bankrupt.html
As usual, this blog was ahead of the Irish news curve by a month...

Lastly, a ray of hope: http://www.businessinsider.com/after-filing-bankruptcy-detroit-is-on-the-verge-of-an-epic-comeback-2013-7

Which echoes some of my tweets on the subject (read from the bottom tweet up):

Any source

6/6/2013: Detroit is about to go bankrupt... differently from the Irish banks

So who is to say sovereign (or rather quasi-sovereign) defaults are a rarity in fiscal + currency unions? Here's a story about forthcoming, well-flagged in advanced Chapter 9 bankruptcy for Detroit: http://www.theepochtimes.com/n3/93438-detroit-facing-chapter-9-bankruptcy/

And, guess what - the story is telling in more than just one context. The terms and conditions of the restructuring will be ugly, but manageable... And the sequencing of events is revealing:

• Step 1: Detroit had $15.7 billion debt load it cannot repay - diagnosis was set as insolvency. 
• Step 2: The city was taken over by the state of Michigan and emergency manager was appointed.
• Step 3: The state of Michigan needed a calm evaluation of the problem confirming the diagnosis of insolvency and it was deemed to be structural (economy suffering from unsustainable levels of unemployment, declining population, loss of revenues, etc, but also cost overruns).
• Step 4: Rating agencies dropped ratings on Detroit debt and debt limits kicked in before then.
• Step 5: Chapter 9 bankruptcy, forced deal with the unions and Financial Advisory Board was set up with very clear termination objectives.

The sequencing of events above is distinct from what has happened in the case of Ireland's banking crisis resolution, where the above steps were re-ordered as follows:

1. Steps 4 and 5 (resolution steps) took place ahead of any assessment and diagnosis postulation and confirmation (banks guarantee issuance)
2. Step 3 took place next in the form of PCARs assessments
3. Step 2 (takeover) took place only after the PCARs
4. Diagnosis was never fully correctly established - all banks, save for Anglo and INBS are still considered officially solvent
5. Step 5 never took place with exception of Anglo and INBS

In other words, we never created a security cordon around the banks that would have resulted in banks takeover prior to guarantees and recapitalisations and this has meant that the banks were always able to use the threat of disclosure of insolvency as the means for bargaining out improved position vis a vis the taxpayers. 

Best proof of this: at no point in time did the state of Michigan tell the markets or the nation or its own taxpayers that Detroit will never be allowed to go bust. In contrast, during 2008-2010 period, Irish Government repeatedly asserted that the banks will be provided all and any funding necessary to stay in business. 

Any source

23/4/2013: Updating the cost of banking crisis data

Nice update from the ECB on the cumulated cost of the banking crisis in Europe, now available through 2012. The net effect, summing up all assumed sovereign liabilities relating to the crisis, including contingent liabilities, and subtracting asset values associated with these liabilities are shown (by country) in the chart below:

Note the special place of Ireland in the above.

For the euro area as a whole, net liabilities relating to the crisis back in 2007 stood at EUR 0.00 (EUR36.72 billion for EU27). By the end of 2012 these have risen to EUR 740.15 billion (EUR 734.23 billion for EU27).

Net revenue losses for Government arising from the banking sector rescues, per ECB are:

Any source