How Big Are These PIIGS?

The bailout package provided for the EU yesterday is not quite a trillion dollars. Lot of money, right? Yes, even in this day and age a trillion is a large number, although our friends in Washington may not appreciate that.

Will the bailout be enough to buy time for the economies of the PIIGS to recover and stop the spread of contagion across the EU and then the world at large? In order to address that question, we need to assess just how big and fat these PIIGS are in terms of their outstanding debt and their fiscal deficits, as well. To this end, I thank a loyal Sense on Cents reader for sharing a chart drawn up by Bank of America which highlights the size of these PIIGS:

Will the PIIGS economies be able to generate sufficient economic growth to finance their debts and deficits at reasonable rates? Great question. We will not learn the answer to it anytime soon, but do not think that the bailout provided to the EU yesterday is an “all clear” signal. The mountain of debt and fiscal deficits within these PIIGS will provide a real drag on these countries and the EU as a whole for the foreseeable future.

The violation of moral hazard involved in this bailout will also serve as an economic drag as well. That concept is quite familiar to those of us in America who appreciate fiscal discipline.

About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

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