Jürgen Donges, a member of Germany’s 5 strong Council of Economic experts, said clearly that when Germany is rescuing Greece or Spain, it is thinking of rescuing German banks with exposure to in these countries.
His words caused a stir in the twittersphere and in Spanish papers and add to the already tense relations between Berlin and Madrid, as the discussions about a Spanish bailout request heat up.
Donges, 72, was born in Seville, Spain, and is a long serving member of the Council, sometimes dubbed in Germany as the “Wise Men”. He released these crude statements to Jordi Évole, the director of a show called “Salvados” on the Spanish channel LaSexta. Donges added a few more masochistic statements on the program, quoted here. More Spanish coverage is here.
As in every country, bankers possess a lot of power and influence. When Germany demands about necessary austerity and economic reforms, does this come to mask the actual motivation for the bailouts?
Many, including this site, pointed out the circular nature of the bailouts. which was the clearest in Ireland’s case, which is extremely similar to Spain:
The government wasn’t suffocating from high debt, until it “adopted” the banks. So then, Ireland was “saved”.Funds from the EU, IMF and from Irish taxpayers went into Irish banks, that in turn went into German, French and British banks.
Iceland took a different path when banks were in trouble: it let them fall. Spain had a choice between walking in Ireland’s shoes or in Iceland’s shoes. It seems to have to chosen the Irish path, but the hour may not be too late.
After such an angering statement, Spain may just let its banks fall – this is a very strong card, a card that Greece doesn’t have, and a card that may change the balance of power.
Without a Spanish bailout, there’s no ECB money and more fear of “convertibility” – a euro breakup. Fear alone could weaken the euro.