Former Bundesbank President Weber Warns Germany Will Be On The European Bail Out Hook For Up To 314% Of Its GDP
Anyone wondering why Axel Weber was passed over when picking the next ECB head in exchange for Goldman plant Mario Draghi, only needs to read a piece from Sueddeutsche Zeitung in which the former German central bank head, and future UBS head, confirms he actually does math. As has been said on Zero Hedge since back in July 21, when we actually did the math and realized the EFSF will not work as it will leave Germany footing the bill for all of Europe, Weber in essence said precisely that... but did not stop there. As quoted by Bloomberg, "Former Bundesbank President Axel Weber said the plan to leverage the European Financial Stability Facility increases the likelihood that tax payers have to step in, Sueddeutsche Zeitung reported. Germany’s public debt would rise to 135 percent of gross domestic product if Italy and Spain were to tap the EFSF financial backstop, the newspaper cited Weber as saying in a speech in Frankfurt. As the sole guarantor to the EFSF, Germany could end up with a debt of 314 percent of GDP in an extreme case, Weber said." This in turn brings us back to our own conclusion from 5 months ago: "What happens when an already mortally wounded in the polls Angela Merkel finds herself in the next general election and experiences an epic electoral loss? We will find out very, very shortly." We are happy that finally the Germans are realizing that the opportunity cost to propping up their export sector (the Euro, hence a "weak" DEM) can potentially be the bankruptcy of their country. We wonder how long until someone bypasses that despotic regime in Greece and actually proposes a referendum in Germany, asking the people if they are truly willing to subsidize their corporations in exchange for drowning in debt for millennia? America has already done this and, trust us, it is not pleasant.