Berlin's ballooning bailout bill
A billion here, a billion there, and soon you are talking real money. A true fiscal union may still be a distant prospect. But each round of the European sovereign-debt crisis has seen Germany make financial commitments that have raised the cost it would bear if the euro failed.
This week's Spanish bailout will raise its exposure to financially stressed countries by as much as €25bn or so. Is Germany now in too deep to risk the single currency collapsing?Germany's total commitment to crisis-fighting programs so far amounts to €113bn, or 4.4% of German GDP, Credit Suisse notes. This includes loans to Greece, European Financial Stability Facility guarantees and capital to be committed to the European Stability Mechanism.If the entire resources of the EFSF and ESM are eventually called upon, Germany's exposure to these facilities would be €401bn, the bank estimates. While EFSF guarantees are contingent liabilities, ESM capital must be funded via sovereign borrowing, increasing Germany's debt and deficit.But these direct exposures are only part of the story....MORE