Countries within the European Union are reacting individually rather than collectively, in propping up their banks amid worries that a run on the banks by depositors will lead to another 1929-like rush on the banks. Fresh in their memories is what happens after severe economic troubles. Someone nasty comes to political power. In their case, it was Hitler.
Sunday’s deal came hours after Merkel and Finance Minister Peer Steinbrueck announced an unlimited guarantee for all personal savings and checking accounts. The move was aimed to shore up confidence amid a spreading global financial crisis, in a country in which failing banks bring up particularly bitter memories of the 1930s Great Depression, which helped the Nazis rise to power.
In a bid to head off a run on banks, Finance Minister Peer Steinbrueck assured that German account holders need not worry about losing a “single euro” in the crisis. “This is to give a signal so citizens do not run to their banks and savings and loans tomorrow to withdraw their money,” he said of the guarantee.
Italian Prime Minister Silvio Berlusconi was quoted as saying Italy would revive the idea of a common bailout fund for European banks at a meeting of finance ministers in Luxembourg on Monday. Germany shot back that it remained opposed to any such pooled funding for European bank rescues like the $700 billion bailout approved last week by the United States.