Industrial Europe is Happy with the Euro Crisis

The European Commission has “accused” Germany today of spreading false rumors about a possible bailout of Spain, after disturbing news published in two German papers that “EU prepares rescue for Spain”.

According with the Frankfurter Allgemeine Zeitung “The situation on the Spanish banking market is getting worse… the Spanish government asked EU Commission President Barroso and ECB President Trichet for assistance. A debt crisis in Spain would be more difficult to deal for the EU than in Greece.”

Why are the Germans interested in another crisis? I have a theory: Cheap Euro. Since the beginning of the Greece Crisis, now increased with the problems in Hungary, the Euro has dropped from $1.5 to $1.2. That makes products from the Euro zone 20% cheaper for US dollar purchases, and Germany is most industrial country of all.

European Central Bank

The Spanish banks are the most profitable in Europe and are considered to be the most efficient in the world. Last week Banco Santander purchased the remaining 25% share of its subsidiary in Mexico from Bank of America, and the BBVA has been purchasing medium regional banks in the US during the last three years. La Caixa is largest savings bank in Europe and its industrial arm has important holdings in the main European utilities markets.

The Spanish government may need the money, not the banks… but some people are just looking to keep the Euro low… for many reasons.

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