While Germany might not step up now, the ECB will not let DB fail, it would send a shock wave through the euro block that can cause it to implode.
This is especially important now when countries like Poland have the Euro hanging over their heads.
This is especially important now when countries like Poland have the Euro hanging over their heads.
The Greek bailout, was an indirect bailout of Franco-German banks[1]. Ms Merkel was not able to ask for a second bailout, so she masked the bailout as a solidarity towards Greeks.
Of course Greece's public debt sky-rocketed (from 120% of the GDP to 180% in 6 years) but the worst part was the total disintegration of the Greek economy. Since, throwing money in failed banks never works, we're back in square one. Oh, in the process she also destroyed the Eurozone, but that's just a side effect.
[1] http://www.keeptalkinggreece.com/2016/05/04/german-esmt-stud...
It's no wonder that Schauble was pressing so hard 2 years ago for a big part of Greek Assets to be held abroad as guarantee the debt payments would be made... where? In DB non the less.
It truely was. German banks (and DB) was main creditors and could not afford Greece to default.
They borrowed low interest money at ECB (0.5-2%), spend it on high paying greek bonds with interest between 10-15% - but could not deal with the risk...
They're likely to keep it floating, take control of it, and demand that it is split into smaller pieces. Anything else would be completely irresponsible, especially if it's because of pride.
They didn't have that problem when it happened in other countries
Not sure what outlets you are using for getting your information, but there is no way Poland will implement Euro within next decade unless something catastrophic will happen to their own currency. The referendum won't go through and if the government will try to pass it without public approval you will see hundreds of thousands of people taking this to the streets. The western media do not understand the situation in central Europe. While Poland still being one of the biggest EU supporters, is actually supporting a conservative model of it, without any deeper integration when possible. Status Quo from 2010-2012 is what Poland wants to maintain its relationships with EU and only change they are looking for is a bigger influence in central Europe and EU offices.
I think that the main reason this can't be, is because of the Maastricht rules effectively blocked the creation of a proper banking union. Mario Monti, when he was Italian PM along with and Mario Draghi, tried to create a proper banking union, but Scheuble under the instructions of the Bundesbank blocked the procedure. Ironic isn't it?
Of course since Germany at this point could have the cake and eat it by bending the rules, but that wasn't the case for Italy 2 years ago.
We'll see. However, I believe that given the current state of disintegration in the EU it's politically toxic to issue another bailout to a major European bank while unemployment is in record-highs all over the European north and the south.
We now see the effect of this new knowledge about a previously opaque sector. Politicians and buraucrats are not as afraid any more. So banks cannot get away by having the tax-payer carry their risk.
[1] http://www.eba.europa.eu/risk-analysis-and-data/eu-wide-stre...
DB is also not lehman brothers, so the 2008 analogy isn't exactly on the money.
2008 would have been better than 2016.
Today would be better than tomorrow...