German tempers boil over back-door euro rescues…”It is a horror scenario,”

Friday, April 20, 2012
By Paul Martin

Controversy is raging in Germany over soaring “payments” by the Bundesbank to shore up Europe’s monetary system and cope with a tidal wave of capital flight from southern Europe.

By Ambrose Evans-Pritchard
TelegraphUK
19 Apr 2012

Professor Hans-Werner Sinn, head of Germany’s IFO Institute, said German taxpayers are facing a dangerous rise in credit risk from a plethora of bail-out schemes. “The euro-system is near explosion,” he told Austria’s Economics Academy on Thursday.

Dr Sinn said Germany is on the hook for much of the €2.1 trillion (£1.72 trillion) in rescue measures for EMU debtors – often by the back-door – that will saddle Germans with ruinous losses one day.

“It is a horror scenario,” he said, warning that the euro system is splitting friendly countries into blocs of mutually hostile creditors and debtors, exactly the opposite of what was hoped.
Earlier this week, the Foundation for Family Business in Munich filed a criminal lawsuit against the Bundesbank, accusing the board of disguising the true scale of risk born by German citizens.
The furore follows a sharp jump in the Bundesbank’s “Target2″ claims within the European Central Bank’s internal payment network from €547bn in February to €616bn in March. Bundesbank claims have risen sixfold since 2008, a rise mirrored in Holland and Luxembourg.

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