Another day, another bailout

It never seems to stop. Every day carries a story of another bank bailout. This time, it is a Belgian bank receiving the cash. From today's FT:

KBC Group, one of Belgium’s largest remaining banks, is to receive a €2bn cash boost from state coffers after it incurred a full-year loss of €2.5bn.

Meanwhile, over in America, Citibank has its hand out again. It wants the US government to take over its bad debts. From the BBC:

Citigroup's new chairman says that if the US government took bad assets off bank balance sheets, banks might be able lend more money.

With a mixture of threats and promises, banks around the world have extracted enormous amounts of money from taxpayers. They have pulled out so much money that long term fiscal sustainability in many countries has been undermined. In reality, governments have substituted one problem for another. Instead of banks going bankrupt, it is the public sector that is likely to default.