Just when you thought the Euro crisis couldn’t get nastier, it gets much nastier: Germans unleash their tongues (but not officially).
A firestorm has broken out in Germany, though you wouldn’t know it from reading the major papers. Neither Bild, nor Die Zeit, nor the FAZ mentioned it. Among the largest dailies, only Die Welt ran a short article that a few local papers picked up as well. And not a word from any government official.
But the people are mad as hell.
Romano Prodi, Ex-Prime Minister of Italy (twice) and Ex-President of the European Commission—no featherweight in European politics—is the cause. In an editorial that appeared last Saturday in the Italian daily, Il Messaggero, he said, “We have to react to the German egoism.”
This “German egoism” showed when Deutsche Bank dumped its stash of €8 billion (over $11 billion) in Italian government bonds. It spread an “impressive signal of no confidence” among investors, he lamented, and it goosed yields (by around 100 basis points). As a result, borrowing costs rose significantly for the Italian government, eating up any savings from the recently passed austerity package. He then exhorted his government to complain to Berlin about Deutsche Bank’s recklessness.
While German politicians are mouse-quiet on the subject, even otherwise polite and mild-mannered Germans are not. Here are their top eleven angry counterattacks—cleaned up and translated into printable English:
1. Someone should explain to Prodi that Deutsche Bank isn’t a government agency but a publicly traded bank with a fiduciary responsibility to its stakeholders— and when it finds junk on its books, it should get rid of it.
2. The Italian judiciary should investigate more rigorously the various monopolies and entanglements and commence an effective prosecution of organized crime to clean up the mess so that businesses can thrive.
3. Italy will soon need German money, and so Prodi wants to put all Germans on a guilt trip in advance. That has always worked before.
4. Egoism? Good grief. Deutsche Bank shouldn’t have bought this junk in the first place.
5. Prodi is confusing “Deutsche Bank” with “Deutschland”—a particularly embarrassing faux pas for an ex-president of the European Commission.
6. His exhortation to his own government to go to Berlin and whine about the legitimate actions of a financial institution shows that he is confusing the way things work in Italy with how they work in other countries.
7. Germans pay out of their noses for the PIIGS and are reviled for it.
8. Prodi wants Germany to pay for all the over-indebted peripheral states. But how can Germany defend itself against hedge funds when it has to guarantee the debt of the entire Euro zone? Then Germany’s debt becomes worthless as well.
9. The ratings agencies will look at German Bunds and say, hey, they’re not AAA anymore because you’re guaranteeing all the junk around you. You have to privatize and tighten your belt. And so the crisis will end with Italy and Greece living above their means on borrowed money that Germany provides, and with Germany tightening its belt.
10. You should trust Italian politicians only up to 20%, same as it has been for hundreds of years.
11. He wants Germans to be responsible for Italy’s debt and finance its fiesta.
Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.
Many experts agree that metal roofs are a great defense against wildfires. Click here or call 1-800-543-8938 for details from our sponsor, the Classic Metal Roofing folks.
Classic Metal Roofing Systems, the leader in fire safe roofing for residential applications, manufactures products that are 1/20 the weight of most tile products and eligible for Class A, B, or C fire ratings as determined by roof preparation.