Europe's governments and banks are inextricably linked. Banks are key purchasers of government debt and are negatively affected if those bonds lose value. Governments are responsible for the stability of the financial system and might have to spend more to prop up banks that run into trouble. Overspending by governments or mismanagement by banks can set off a cycle that is difficult to stop. Here's a look at the steps of the cycle. Read related article.


Source: Staff reports | The Washington Post June 5, 2012
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