Last week The Slog pointed out (to enormous yawns all round) that the European banks were so scared of lending to each other, they were ploughing an Everest of cash into the Central Bank (ECB) in Frankfurt. Fears of toxic subprime debt were everywhere….why?
The latest data from the Bank for International Settlements shows precisely why: the largely French and German banks are up to their necks in bad-collateral lending to Greece, Spain, Portugal and Ireland.
The BIS report shows that French and German banks had more than £800 billion in exposure to the Failing Four last year. And believe me, that hasn’t changed one jot in 2010. Taken together, the eurozone banks had £1.26 trillion of exposure to the four, roughly £200 billion of which was direct government risk.
No wonder Nicolas and Angela decided to pucker up yesterday and sort it out. No wonder the panic has set in, and Britain is being cast as the villain. We’re not bailing out the PIGS here, we’re bailing out the financial system…..again.
Speaking for myself, I’ve done all the bank bailing I’m going to do. I think that, if this EU project is going to carry on and get somewhere other than Hell in a handcart along with zero real democracy, we need a fresh start.
And the first task in that new dawn will be to inject some honesty into the relationships involved. Because I fancy that most Brits are getting that funny “Do you think I was born yesterday?” feeling with which they became so familiar after 1997.
Still more does this strengthen the hand of the Cameron/Osborne/Hague axis. One can only hope they have the will to make it count.