Cargo Cult of Rescue Packages

Today a second--this time EUR 109 billion--west European financial package was announced. The aim: saving the ailing Euro or, in Sarkozy's words, "prevention of contagion." There are many angles to this new arrangement. Let's focus, for a moment, on its size. Together with the last package that arrived in May 2010--which amounted to 440 bn Euros--the Euro is now propped up by a fund of 549 bn Eur. According to an online currency converter, this is equivalent to approximately 804 bn USD at today's rates. Using Angus Maddison's estimates of economic performance, a dataset of which I have made copious use in the writing of The European Union and Global Social Change, this comes to over 1.5% of the Gross World Product, more than 11% of the summary GDP of the Euro-zone, and almost half of the total GDP of Africa. Keep this in mind, when you hear west Europeans talk about the significance of fiscal discipline for indebted nations.