There was a big European bailout at the weekend. Approximately $960 billion has been organised.

The tally stacks up as $640 billion (E500 billion) from the European Union, 90% of that sum coming in the form of loan guarantees, and the remaining 10% in emergency European Commission funding. In addition there is another $320 billion (E250 billion) from the International Monetary Fund.

So, it is mostly government commitments or guarantees that would have to be paid back if the money is drawn down. The hope is that by providing the commitment then the confidence of creditors is restored and there will be no need to actually use the money. To date, unlike over at the Fed, there has been no money printing in the European Union.

Has all the money that has been borrowed and wasted now been miraculously risk managed then? Is everything plain sailing from here?

"My view is different. There is still too much debt in the Western world, and in Japan, and we are simply witnessing an effort to shuffle it from one holder to another, or provide guarantees for it, without the underlying ability to repay," says Hong Kong macro hedge fund manager Geoffrey Barker of Ballingal Investment Advisors.

"Every so often this inability to repay is crystallised, whether it be US mortgages or banks, Dubai or the Greek government," he says. "There is a tightening of credit conditions and another flurry of policy initiatives to 'provide liquidity' and implicitly bail out the bondholders."

But does all this bequest of debt and contingent liabilities succeed in sweeping the toxic pile of obligations under the carpet?

Geoffrey Barker says: "What is now occurring is that governments that have taken on board a portion of private sector debt are being forced to tighten fiscal policy. This will result is a slowdown in global growth in the second half of 2010, most likely starting in Europe, and we will see more trouble."

So it is probably not over yet, the time bomb has just been passed on. $960 billion for Europe is a lot, but just meditate on what the US has committed through its programmes.

TARP                                                  $700 billion

Asset Guarantee Programme, Auto, Term Asset-Backed Securities Loan Facility (TALF), Making Home Affordable programme (MHA), Public Private Investment Programme (PPIP) AIG

Federal Reserve Rescue Efforts      $6.4 trillion

Fund liquidity facility (ABCP), Bank of America and Citi backstop, Bear Stearns bailout, Commercial Paper Funding Facility (CPFF), Government Sponsored Enterprises (GSE), TALF, Term Asset Backed Securities facility.

Federal Stimulus Programmes          $1.2 trillion

Economic Stimulus Act, Student Loan guarantees, American Recovery and Reinvestment Act, Cash for Clunkers.

AIG                                                     $182 billion

Asset purchases, bridge loans, government stake in subsidiaries, TARP investment.

FDIC Bank Takeovers                      $45.4 billion

2008 and 2009 bank takeovers.

Other Financial Initiatives                 $1.7 trillion

Credit Union deposit insurance programme, money market guarantee programme, Credit Union bailout, Temporary Liquidity Committee Programme.

Other Financial Initiatives.                $745 billion

Fannie and Freddie Mac bailout, FHA.

 

That is a total of $11 trillion in commitments, making Europe's hole look modest in comparison.