I received a number of e-mails in regard to...

...Michael Lewis's piece on the Irish banking crisis. Many people -- including me -- read the following two sentences and immediately reached for their calculators:

A single bank, Anglo Irish, which, two years before, the Irish government had claimed was merely suffering from a “liquidity problem,” faced losses of up to 34 billion euros. To get some sense of how “34 billion euros” sounds to Irish ears, an American thinking in dollars needs to multiply it by roughly one hundred: $3.4 trillion.

Wait a minute, I thought. 34 billion euros, using the current exchange rate of about 1.36, would equate to about $46 billion, not $3.4 trillion. What on earth is Michael Lewis talking about? But then I went back and reread the sentence (my emphasis):

It had been two years since a handful of Irish politicians and bankers decided to guarantee all the debts of the country’s biggest banks, but the people were only now getting their minds around what that meant for them. 

And:

 An Irish economist named Morgan Kelly, whose estimates of Irish bank losses have been the most prescient, made a back-of-the-envelope calculation that puts the losses of all Irish banks at roughly 106 billion euros. (Think $10 trillion.)

Now if the Irish economy only generates about $200 billion a year (about the size of Nevada's), then the government would be on the hook for a sum of about 72% of annual GDP. If the U. S. GDP is about $14 trillion a year, then that would equate to about $10 trillion.