Bildzeitung: Germany Will Not Find a Lender of Last Resort
June 27, 2012 • 8:12AM

The fact that Germany is paying, and is expected to pay, for every other country, but that there is no lender of last resort for the Germans, is the theme of an article in Bildzeitung on page two with the banner headline, "Who Will Actually Come To the Rescue of Germany, Mr. Schaeuble?"

Right now, as Germany is about to pay its EU190 billion share into the ESM, public debt in Germany has already crossed the EU2 trillion threshhold: EU1,286 billion federal debt; EU622.7 billion states' debt; EU133.1 billion municipal debt. This, Bild writes, includes EU600 billion public debt owed to banks, another EU300 billion to insurance companies and private bond-holders, and the rest is owed to foreign state funds — predominantly the Chinese ones. The debt service is the second-largest position in the federal budget, with EU35 billion, and another EU27 billion paid by the states and cities. "This is money lacking elsewhere, for example for swimming pool renovations, more policemen," Bild notes.

EU2 trillion in public debt as such does not threaten a collapse of Germany, but a couple of defaults in Greece and other states would, and Germany's exports are already affected by the crisis in the other European countries. A point may be reached at which Germany simply cannot pay any more. And who would actually rescue Germany, then? Bild asks. "Nobody. In this case, the euro is faced with the total crash — with devastating consequences. Said Professor [Stefan] Homburg: then, savings account holders, owners of life insurance policies and of Riester Pensions [a private pension provision named after former Labor Minister Walter Riester] would suffer property losses. The countries would return to national currencies."