Chronicles Of Depression 2.0: #311: P Word
This is the headline in the Financial Times, dammit, so don’t accuse me of being a Chicken Little.
Germany said on Sunday it would guarantee all private German bank accounts – currently worth €568bn – in a dramatic move to prevent panic withdrawals as fears over the worldwide financial crisis spread to Europe’s largest economy.
“We want to tell people that their savings are safe,” Angela Merkel, chancellor, said at an unscheduled press conference on Sunday. The scheme would cover existing accounts and others which savers might open.
Berlin’s decision – which followed controversial action by Ireland last week to guarantee the liabilities of six of its banks – will see the abolition of its current protection scheme, which guarantees 90 per cent of all bank deposits but only up to €20,000 per account.
The UK and France were trying on Sunday to learn details of the German plan, amid concerns other EU governments would have to follow Berlin’s lead and offer similar safeguards to savers, to avoid a cross-border flight of capital to more secure banks.
At the summit, leaders from France, Germany, Italy and the UK agreed not to let any large financial institution in their country fail, according to people familiar with the talks.
German officials said the move was agreed because of fear that the crisis at Hypo Real Estate – a listed mortgage and public sector lender, whose government-backed €35bn ($48bn, £27bn) rescue collapsed at the weekend – would lead to widespread panic on Monday.
Emphasis added by me.
Now tell me this picture I ran earlier doesn’t apply:
This crisis has now turned into a global high-stakes poker game with every country upping the ante on their bets!