Add this to the list of reasons German taxpayers are unhappy about having to lend Greece money to ease its debt crisis: In effect, they already have, The New York Times reported.
Germany’s financial institutions hold some 28 billion euros, or $37 billion, in Greek bonds, according to estimates by Barclays Capital, extrapolating from International Monetary Fund data.
Germany’s regulators and many of its banks do not disclose precise figures, but an informal survey on Wednesday of the largest banks indicates that about half of that debt — rated as junk by Standard & Poor’s since Tuesday — appears on the balance sheets of institutions that are owned or controlled by the German government.
And so Germany’s exposure to Greek debt already exceeds, by far, the $11 billion the country would lend to Greece as part of an initial European Union plan to help the country avoid default on its debt — though not the $32 billion that may eventually be needed from Germany.
One institution, Hypo Real Estate Holding, carries $10.5 billion worth of Greek debt on its books. After a bailout last year, German taxpayers own Hypo Real Estate.
Germany’s direct exposure to Greek debt underscores how the country’s problems are very much Europe’s problems. “It’s not just a question of paying for Greece’s luxury pensions. There are intrinsically strong German interests as well,” said Alessandro Leipold, a former acting director of the I.M.F.’s European department.
Greece’s fiscal crisis, beyond threatening the credibility of the euro and the stability of the European economy, also could hit government budgets in a very direct way, potentially requiring them to pump even more money into banks they have already rescued. Read more.
