Germany s opposition to debt forgiveness is thus bad economics, bad politics (except at home), and bad history.

This will be bad news for consumption and the size of bank losses.

The key is to accept bad news losses must be recognized before efficient realignment can occur.

Welcome to the BAD (Big Annual Deficits) decade of public debt.

A bad bank can be an effective instrument in the recovery of losses and the revival of banks.

Critics point out that plain old bad lending by the commercial banks accounted for 90 of banks losses.

These raw figures on job losses, bad as they are, actually understate the weakness in world labor markets.

The financial fallout from the debt crisis could also result in huge losses for China.

Even if some of these losses are offset for the government as a whole (as the central bank loses on its holdings of government debt, the treasury gains in equal measure, because the debt it owes is worth less), the losses on long term private debt holdings are real.

But even debt financing would be better than no investment at all, given the deadweight losses.

Corporations have learned how to take bad news in stride, write down losses, and move on, but our governments have not.

And a stronger economy would help domestic banks by reducing potential bad debt and mortgage defaults.

Sub Saharan Africa graphically demonstrates how losses from trade can outweigh the benefits associated with aid and debt relief.

The Obama administration is promising to pick up losses to persuade hedge funds and other private investors to buy out banks bad assets.

Investors are worried that the Court could oppose the ESM such that they would have to bear the losses from their bad investments.

European banks, traditionally a major source of trade finance, have pulled back dramatically, owing to capital adequacy problems caused by sovereign debt capital losses and, in some cases, losses from real estate lending.

And when times are bad, for example in a crisis episode, losses are transferred to creditors. If those creditor losses are large and spread so as to undermine the broader financial system, pressure for a government bailout will mount.

Moreover, the size of the bad debt threatening banks remains unknown, and could amount to several hundred billion dollars.

One reason to be concerned about the bad deal that American taxpayers are getting is the looming national debt.

Indeed, history suggests that severe recession and socialization of private losses often lead to an unsustainable build up of public debt.

The public losses are massive in comparison roughly 6 trillion, if we limit ourselves just to the increase in federal government debt.

How the resulting losses imposed on debt holders will be divided between the various eurozone institutions and the IMF is anyone s guess.

European banks have been operating on a great deal of debt and very little shareholder capital the essential buffer against potential losses.

Thus, a debt equity swap of less than 7.5 of the creditors investment would be enough to compensate for the banks losses.

So we're sort of all imperfect. And the question is well, if we're around here, you know, these little losses or gains might not be too bad.

The crisis started with too much private debt and leverage, which became public debt and deficits as crisis and recession triggered fiscal deterioration and private losses were mostly socialized via bailouts of financial systems.

And when the downside risks materialized, the losses were largely socialized the primary reason why US public debt has soared in recent years.

But how can debt relief be achieved for the sovereign without imposing massive losses on Greek banks and foreign banks holding Greek bonds?

This solution limits the risk of contagion and the potential losses that financial institutions would bear if the value of debt principal were reduced.

This holds down interest rates on that debt in the short run, but creates even bigger potential losses in the case of potential default.

Only after that date would any new mechanism open the door for losses for private investors, and only for debt issued after that date.

Thus, the eurozone faces three choices even more austerity for the heavily indebted countries, socialization of the debt across Europe, or a creative re profiling of debt, with investors forced to accept losses sooner or later.

If the losses are big enough that existing equity and debt holders are wiped out, government insurers should make up the difference to protect depositors.

As it stands, every country that has implemented an austerity program without imposing losses on private creditors has more debt now than when it started.

Europe as a whole is not in bad fiscal shape its debt to GDP ratio compares favorably with that of the United States.

Managing modern debt crises always involves the extraordinary logic of throwing good money after bad in the hope of masking the underlying unsustainability.

But in bad times, when it is important to keep banks lending, bank capital would automatically be increased by the debt to equity conversion.

Honoring all three of those legal obligations simultaneously is impossible if Congress refuses to raise the debt ceiling, but raising the debt ceiling without Congressional approval, though illegal and an impeachable offense, was the least bad choice.

The most direct way to address the debt problem is a write down, coupled with recapitalization of those banks that will suffer large losses as a result.

They could buy bad loans from lenders and forgive part of the principal payable by borrowers, simultaneously reducing lenders collateral requirements and borrowers debt overhang.

Losses

Protectionism is bad for wealth, bad for democracy, and bad for peace.

In Ireland and Spain, transferring the banking system s huge losses to the government s balance sheet on top of already escalating public debt will eventually lead to sovereign insolvency.

Worse still, massive losses resulting from the materialization of credit risk might jeopardize core eurozone economies debt sustainability, placing the survival of the European Union itself in question.

The socialization of private losses and fiscal laxity aimed at stimulating economies in a slump have led to a dangerous build up of public budget deficits and debt.