When is Germany going to be held to account for helping to cause the euro crisis?
When is the true story about Germany’s role in causing the euro crisis going to be properly told? For instance: Its banks over-lent (often recklessly), feeding the euro bubble over many years and loading countries like Spain and Ireland with private debt. Rather than take a hit from property market meltdowns and the like, Germany has managed to persuade its partners to repay its banks back using tax payers money via sovereigns.
How does Merkel get away with it? The Chancellor points her wagging finger at sovereign finances, but her country’s banks need to be severely scolded too. Have they been reformed? Where will they lend their savings next, now that places like Spain and Ireland are on their knees? To pumped up new middle classes in Asia? How sustainable is that?
The euro bubble was inflated by savings from Germany, earned largely by selling goods to European partners and lent at cheap rates back to those partners to invest in property. It was a risk. Now that the bubble has burst private investors in Spain and Ireland should of course pay back or go bust. But tax payers should not be footing the bill. And Germany should share the costs of the damage it helped cause and not have its banks cushioned from consequences of their own risky lending.
That's what European solidarity should be all about: countries being transparent and honest with each other, and sharing the spoils and the costs of working together.
Let's hope Europe doesn't fall apart over a banking lie.
Before I sign off, here is a timely piece by Anatole Kaletsky: Can the rest of Europe stand up to Germany?
©RJDoyle, June 2012blog comments powered by Disqus