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Much research has treated the Eurozone crisis as a sui generis event. Yet we can only examine exactly how the Eurozone crisis is distinct from other crises if we compare it to other, similar crises. This chapter therefore develops a comparative framework that allows for us to study the distributional trade-offs inherent in crisis management of a large set of crises, including the Eurozone crisis. It argues the relative costs of external vs. internal adjustment will shape crisis politics, including the willingness of these countries to accept harsh conditionality in return for external financial support. The chapter develops measures to compare national vulnerabilities to internal and external adjustment and analyzes the crisis responses for a sample of 142 crisis episodes that occurred in a sample of 122 countries between 1990 and 2014. Our analysis shows that the vulnerability profile is a useful tool for analyzing crisis responses across a wide variety of balance-of-payments (BOP) crises. It also demonstrates that the Eurozone crisis is unusual because all crisis countries were located in the “misery corner”: Deficit country vulnerabilities to both internal and external adjustments were exceptionally high, and vulnerabilities frequently increased over the course of the crisis. In such a setting, quick and decisive crisis solutions are hard to find.

Surplus countries usually do not attract attention in balance-of-payment crises. However, even though the immediate crisis repercussions mostly center on countries with large current account deficits, surplus countries form an integral part of current account imbalances. They contribute to the underlying problem and could be part of the solution. While in the Eurozone crisis this became especially apparent in negotiations about bailout packages and mutual adjustment measures, such conflicts between surplus countries and deficit states occupy hardly a unique situation. This chapter, therefore, examines the position of surplus countries during the Eurozone crisis in a broader, comparative perspective. Building on the concepts laid out in Chapter 2, it develops a quantitative measure of surplus country vulnerability profiles, which express the relative costs of external and internal adjustment. Specifically, vulnerability profiles of surplus countries in the Eurozone crisis are developed against the backdrop of 272 historical surplus episodes in 61 countries and are specifically compared with those outside the monetary union and with those in the EMS crisis. Similarly to their deficit counterparts, the surplus countries in the Eurozone were in the “misery corner,” where they faced high costs to both external and internal adjustment. The vulnerability profiles indicate why they acquiesced to bailout packages for deficit countries, but only after a difficult and lengthy political struggle.

This article examines Cornelia Woll’s book on the “power of collective inaction” in which she argues that banks could extract favorable bailouts in the recent global financial crisis by remaining collectively inactive. Collective inaction forces governments to bear the brunt of the crisis resolutions. While this book provides an illuminating account of banking bailouts in several countries, its argument neglects the power of governments and of individual banks. Governments did not have to wait for banks’ (in)action but could impose punitive conditions on banks. And the resistance by banks did not originate from an incapacity to act collectively but from deliberate actions by individual banks to obstruct government intrusion. Rather than inaction on the part of banks, these interactions between governments and banks involved deliberate action and their outcome depended on more conventional notions of state-business power relations.

First published online : September 24, 2014 The 2008 bailout is often taken as evidence of the domination of the American political system by large financial institutions. In fact, the bailout demonstrated the vulnerability of American banks to government pressure. Large banks in the United States could not defy regulators, because their future income depended on the American market. In Britain, by contrast, one bank succeeded in scuttling the preferred governmental solution of an industry-­-wide recapitalization, because most of its revenue came from outside the United Kingdom. This was an exercise of structural power, but one that most contemporary scholarship on business power ignores or misclassifies, since it limits structural power to the automatic adjustment of policy to the possibility of disinvestment. We show that structural power can be exercised strategically, that it is distinct from instrumental power based on lobbying, and that it explains consequential variations in bailout design in the UK, US, France, and Germany.