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lauchenauermartin
Trustworthy Freedom Fighter
Joined: 09 Jan 2007
Posts: 522
Location: near St. Gall in Switzerland
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 Posted: Thu Oct 09, 2008 1:08 am Post subject: Will we still have a 15-member euro by Christmas? |
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http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3161588/Financial-Crisis-Who-is-going-to-bail-out-the-euro.html
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Financial Crisis: Who is going to bail out the euro?
Europe must pull together if it is to avoid further financial disaster,
argues Ambrose Evans- Pritchard.
By Ambrose Evans-Pritchard
Last Updated: 10:56PM BST 08 Oct 2008
... ... ...
Germany has vetoed French and Italian ideas for an EU lifeboat fund. The former knows exactly where that leads. It is a Trojan horse that will be used one day to co-opt German taxpayers into rescues for less Teutonic EMU kin. One can sympathise with Berlin. But sharing debts with Italy and Spain was implicit when they agreed to launch the euro. A shared currency entails obligations. We have reached the watershed moment when Germany has to decide whether to put its full sovereign weight behind the EMU project or reveal that it is not prepared to do so in a crisis.
This is a very dangerous set of circumstances for monetary union. Will we still have a 15-member euro by Christmas? |
The author is twisting the facts.
The German banking system is in enormous trouble because it invested heavily and recklessly in ill-fated American mortgage bonds.
This in turn affected Unicredit, Italy's largest bank, through its German subsidiary, HMB. The losses at HMB forced Unicredit to recapitalise which it successfully did without state help. Unicredit's shares are still under pressure because of its exposure to Germany.
Billions of euros have been lost by German and other northern European banks in their kamikaze American adventures, and it seems that parts of Southern Europe are having to pick up the bill.
Three points stem from this:
1. Financial integration in the eurozone is is at a very advanced transnational stage and it is irreversible, to the extent that crises only serve to consolidate that integration even further in the quest for a solution.
2. Contrary to the ill-informed
belief common to observers looking into the eurozone from outside, southern european shareholders are actually supporting toxic-mortgage ravaged German banks.
3. And finally, the Germans actually refused a eurozone bailout fund because the sheer scale of German bank involvement in American mortgage bonds would have meant that they would have had to put in the lion's share.
All this of course paints quite a different picture from the misleading scenario being portrayed by the author.
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