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How do you figure? German banks very much fueled the housing and lending bubbles in the rest of Europe. This is one of the reasons Germany is so against debt
by knowtheory 14y ago
How do you figure? German banks very much fueled the housing and lending bubbles in the rest of Europe. This is one of the reasons Germany is so against debt holders taking haircuts on their loans.
Germany is very much a part of the neighborhood going south (so to speak) in that they were at the very least enabling all the loose lending, if not actively complicit in fostering such an environment (e.g. why weren't they vetting their loans better).
- skylan_q 14y agoOne could argue that they were in a way complicit, but not responsible. Is it Germany's fault that the representatives of a country made it seem that they were able to make good on their debts?
- icebraining 14y agoRepresentatives of a country aren't exactly magicians that can hide the anemic growth and money pissing (particularly in Public-Private "partnerships") that countries like mine - Portugal - had. They were either fully aware or extremely incompetent, and the latter isn't plausible.
- JumpCrisscross 14y agoException: Greece. It defrauded investors by producing false accounts.
- o1iver 14y agoI agree with you that the German banks facilitated the spending, but the fault still lies with the countries that abused that money. You cannot blame the bank for your debt after requesting your 12th credit card! Aside: I believe that the German banks have to live with their mistakes regarding due diligence, although even that isn't so clear as it seems that the greek authorities weren't entirely honest when it came to their financials.
- icebraining 14y agoYou cannot blame the bank for your debt after requesting your 12th credit card! Why not? I can and do blame banks for lending money to people who they know are submerged in debt. That does NOT mean those people aren't to blame too. Blame can be attributed to more than one party.
- danmaz74 14y agoSo, US banks have no responsibility for the sub-prime crisis?
- danmaz74 14y agoArguing about faults here doesn't help. It appears that Greece has the bigger faults (but they're already paying a lot for them). But I would gladly save them to save us all.
- lispm 14y agoGerman banks? They did? Do you have a source for that?
- arethuza 14y agoAccording to Michael Lewis (in both The Big Short and Boomerang) Germans banks were famous worldwide as being an excellent source of "stupid money". http://www.pbs.org/newshour/bb/business/july-dec11/makingsense_10-21.html http://www.pbs.org/newshour/bb/business/july-dec11/makingsen... "The Germans made just about every bad investment you could have made in the last 10 years. They invested in Icelandic banks. They invested in Greek government bonds. They were heavy into Irish banks, big into Irish banks, and they bought U.S. subprime mortgage bonds."
- lispm 14y agoWho gave Spain how much money? I want numbers, not stories.
- arethuza 14y agoHere you go - exposures of banks of the relevant countries to Spanish banks: http://www.haver.com/comment/comment.html?c=120604b.html http://www.haver.com/comment/comment.html?c=120604b.html [NB Germany doesn't have the largest exposure to Spanish banks - US banks do]
- lispm 14y agoRight. In Portugal its the US banks, too. In Ireland its the UK banks. In Greece its the French and US banks. That the German banks were largely responsible now is falsified with the numbers you linked to.
- arethuza 14y agoI didn't interpret knowtheory's comment as implying that German bank's were solely responsible, but I can see how you could make that interpretation. However, I can't provide direct quantitative information on the quality of the loans summarised by those numbers. Lewis (who seems credible to me) gives accounts of how German banks appear basically to have been taken advantage of (hence the "stupid money" comment) as customers for particularly ill-advised investments.