The shockwave produced by Hypo Real Estate’s problems have forced Germany to rethink its handling of the economic crisis. Despite advocating for days a case-by-case response, Berlin is now considering abandoning that strategy for a nationwide umbrella to protect its financial industry.
Hypo has now sucked in more than 50 billion euros in emergency funding; should it collapse, the reverberations would be felt far beyond its Munich headquarters. The firm’s management is already under attack, with Germany’s Finance Minister saying it was unthinkable that they remain in their posts.
The homegrown worries, and the wider global concerns dominated this morning’s German papers. All speculated on what to do next: one printed a picture of a ship’s lifebelt, and said it was time to man the rescue boats.
Europe is still no closer to a coordinated response to the economic worries. Banks have been putting pressure on governments to agree to a general package, but politicians, not least in Germany, have so far tried to remain masters of their own destiny.