Still Think Europe’s 7-year Banking Crisis is Over? Germany has a Warning for You, Think Again
There are many opinion makers radiating outwards from Brussels who insist that the Euro crisis and the related European banking chaos is over … well now Germany has a stark warning — think again.
Germany’s central bank governor Jens Weidmann has told Der Spiegel, that country’s most influential news magazine: ‘The Euro Crisis Is Not Yet Behind Us’.
In the European Union’s current economic wasteland if Germany — now the biggest exporter by value in the world and the real power behind the EU — is worried about catching a cold the rest of the nations involved should be worrying about double pneumonia.
The German Bundesbank reportedly regards France and Italy as the two weakest links in the euro chain: “The longer these two large countries refrain from creating the conditions for growth and stability, the longer the euro zone’s weakness will continue — and with it, the pressure on monetary policy”, Weidmann told Der Spiegel.
France under its worst loved and weakest president in more than 60 years, is showing few signs of heeding Weidmann’s warnings. Among these is this one: “…When it comes to extremely important monetary policy decisions, the ECB Governing Council does its utmost to find the correct path. And the decisions are so difficult because the crisis is not yet behind us, even if the current calm on the financial markets might suggest as much…”
Der Spiegel noted an extended period of calm on the bond markets has led many to conclude the euro crisis was over. But in his interview the German central bank governor said that the coast was still not clear and a great need for reforms remains.
Der Speigel pointed out that the Netherlands, Italy, Spain and France, “are all countries whose banks continue to have many questionable loans on their books”.
Weidmann replied: “If elected politicians don’t take action for fear of voter dissatisfaction then a small circle of central bankers, who are not elected and who don’t have a mandate for economic policy, should not allow themselves to be seduced into taking on the role of policymakers. Such a procedure is not a sound foundation for the collective European house.
“SPIEGEL: Just as you are largely isolated in the ECB, German Chancellor Angela Merkel is largely alone when it comes to European policy. Most countries are demanding that austerity be loosened. What is wrong with giving crisis countries more time to solve their problems?
“Weidmann: I don’t see Germany as being isolated. Precisely those countries that have implemented far-reaching reforms in recent years and consolidated their budgets against political opposition are now calling on larger member states to conform to the rules. Furthermore, we shouldn’t forget that the sovereign debt crisis was triggered by doubts about the stability of the public budgets of some euro-zone member states. If we want to address the causes, a credible course toward stable state finances must be charted. Reaching agreements when the pressure is on only to scrap them when pressure drops cannot be part of that course”.
The latest warning from one of Europe’s most powerful central bankers is not the first such call to fight complacency, many other voices have been urging caution and expressing their increasing concern at the European quagmire.
Seven years after the corporate gangsters in charge of global banks crashed the world economy and plunged governments into a sovereign debt crisis that has plundered their taxpayers, the crisis is still not resolved. Too many Euro-banks are still baulking at proper disclosure about the subprime junk sold them by New York and London-based banking shysters which analysts fear remains on their books in many cases.
Story: Ken Pottinger
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