As a Dutch citizen at times I enjoy being cast as co-villain of Germany by certain analysis and citizens of countries that want me to assume sovereign risk in order to save them. Especially in this case where banks holding many questionable accounts are being rescued, me having to underwrite those accounts is sour grapes.
Its good to look at Iceland. Iceland is a country of just 300,000 people, roughly equivalent to the city of St. Louis MO or Bielefeld in Germany, Wakefield in the UK. Can such a tiny population service a government that has to be world class especially when its banking sector was? For Iceland the answer was no. Cyprus (the southern part) only has 800,000 citizens and and one has to wonder the same. Can it ever have a government competent enough when it can only pick from 800,000 (albeit relatively well educated) citizens? I guess the answer is no.
In case of Iceland I wasn’t forced to assume debt. Here I am and see that it is in my best interest to do so. Not out of solidarity, there are billions of people who are dysmally poor who need and deserve my solidarity more. But to save my own coin. So we bail them out. Would one expect gratitude? Of course, 10 billion Euros spent to save a country of 800,000 is 12,500 euros per citizen. Wow.