25 Jul 2012 18:46:
It is entirely unlikely that the German people will accept the debts of Southern Europe, in full measure. \If you talk to almost any German they will say that they have supported the idea of Europe ever since the war. But they have had the huge cost burden of rescuing East Germany. They have seen their money go to support Greece, but believe that the Greeks have brought the problems upon themselves and have not done what they agreed to do to escape from their sad situition.
As for Spain, the problem lies with the huge over-lending of Spanish banks to the local property developers. Most of the potential buyers for these properties are as always Germans or British. But right now, they are not buying much. Valencia and Murcia where most of the overbuilding occurred have poured huge amounts of infrastructure support into these new developments. Now both regional governments are bust as are many of the banks that lent on property, that cannot be sold. It will take a decade or more to clear this situation and loaning money to banks will not in itself the resolve the real issue.
That is that there is a huge overhang of property and associated infrastructure in Spain which may never be cleared. The German people reasonably enough do not wish to take responsibility for this mess.Nor. I believe. would the British if the UK was a Euro country.
My predictioon is that the Germans will not bail out Spain sufficiently to resolve the problem permanently and that Spain, as with Greece will be forced to quit the Euro, with similar consequencences for the value of Euro deposits in Spanish banks.
Thread: Not looking good