What’s at risk for Europe’s taxpayers?
TEXT OF STORY
Bill Radke: As we’ve said, the bank stock plan, inspired by the British, and major European countries doing more of the same. The question is, how are they going to pay for this? Here’s Marketplace’s Megan Williams.
Megan Williams: Europe’s rescue packages so far have been good news for investor confidence. But that’s not necessarily the case for taxpayers, who’ll be footing the bill — and assuming big risk. Germany’s bailout will cost almost $700 billion. The French price tag is set at about $400 billion, and Italy can’t even fathom a guess yet.
Euro expert Francis X. Rocca says governments are basically using taxpayer’s money to bet on the future of the banks. If the economy improves, it will net dividends.
Francis X. Rocca: But if things don’t work out, it’s going to mean much higher debt levels — not only as a direct effect of the losses, but as a snowballing effect of the credit ratings.
That could lead to government’s cost of borrowing going up, says Rocca, and private investment and the economy down.
I’m Megan Williams for Marketplace.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
