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Whatever happened in the backrooms, events got a strange own dynamic. If the Spanish drive to publish the stress tests was a retaliation, it went further than intended with Barroso talking about the expansion of stress tests to smaller banks after the European Council meeting. He follows demands first voiced by the Bundesbank's boss, yet this expansion would cover the really problematic banks of both countries, that is the savings banks in Spain and the state banks in Germany (and the associations of the latter are still against the publication).

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sun Jun 20th, 2010 at 12:38:42 PM EST
[ Parent ]
Once the war of attrition is begun, escalation just hurts both contestants.

It's not even a zero-sum game any longer, it's a lose-lose situation.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Migeru (migeru at eurotrib dot com) on Sun Jun 20th, 2010 at 06:46:07 PM EST
[ Parent ]
Weber specifically said Landesbanken, so I don't buy the war of attrition narrative.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Jun 21st, 2010 at 01:29:22 AM EST
[ Parent ]
So, what has Germany been doing since February? Do you prefer the "Germany is insane" or the "Germany is stupid" narratives, or maybe the "it's all Anglo disinformation" narrative?

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
by Migeru (migeru at eurotrib dot com) on Mon Jun 21st, 2010 at 02:27:05 AM EST
[ Parent ]
I prefer the interpretation that the German government was insane, stupid, irresponsible, narrow-mindedly selfish, and incoherent (and in that no special in the EU), and I think I supplied lots of evidence especially for the last. (Add to that some out-of-context quotes reported in international media, see downthread.)

On the issue at hand, I do think that über-hawk Weber would very much like to go after the unloved Landesbanken, whatever the potential damage for the entire German economy, and thus seized the moment.

On the "cold war", what happened at the EU summit regarding austerity and stress tests seemed like the end of it.

On your broader theory, which if I got it right is that since February, Germany's elites collectively want to crash the Euro to have an excuse to bail out Deutsche Bank, it just doesn't make sense to me. First, it starts with speculation that DB is in trouble. Second, Germany is not the UK, there are industries other than the financial industry, and the loss of the Euro would hurt them a lot. Third, given that the austerity drive itself hurts German exports in both the medium and long term (medium: recession reduces EU consumption, long: Germany's depression of labour costs would be reproduced elsewhere), the whole push has all the hallmarks of short-term thinking.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Mon Jun 21st, 2010 at 01:58:44 PM EST
[ Parent ]

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