IF YOU have been wondering why European economists and French leaders are urging closer cooperation at a continental level to address the financial storm heading east from American shores, the Financial Times has a nice graphic of firms which might well be too big to be saved. While the recently nationalised Bradford & Bingley had total assets equalling about 4% of British GDP, and Fannie Mae and AIG each had total assets equalling something like 6-7% of American GDP, other European firms have grown well beyond the financial means of their home countries.

Fears have been raised over Deutsche Bank, but with total assets at 86% of German GDP, it looks relatively innocuous. More worrisome is a Santander, at 132% of Spanish GDP, a UBS at 484% of Swiss GDP, or a Kaupthing, at 623% of Icelandic GDP.

As the rescues of Fortis and Dexia showed, a multinational bail-out is not impossible, but the job in those cases was made easier by a relatively clear picture of which states had which shares in the firm, and therefore in the bail-out. Should UBS fail, on the other hand, Switzerland would have no obvious partner. It's unclear what would be done to prevent uncontrolled collapse.

Again, savvy administrators come up with contingency plans. In a political environment like the European Union, where institution building can be contentious and time-consuming, preparations ought to begin immediately, if not earlier.

(Hat tips: Matthew Yglesias, Tyler Cowen

Post-script—from Mr Cowen's post linked above, the following passage is quite interesting:

As for this country [ed-he's an American], the Chinese now regard us as "battle tested."  We have been through some truly major bumps, yet no major U.S. politician has called for "not paying back the Chinese."  We've even guaranteed the $350 billion in agency securities held by the Chinese central bank and without a stir.  I think the Chinese are shocked by that and in many ways they now trust their investments more than before, not less.

Maybe so. I wonder if there was ever much doubt among the Chinese. It's difficult to see what might be gained by an American default on debt held by China.