Paul Krugman has it right when he says this:
I hold no brief for weak financial regulation in America. But it’s a bad sign that Germans still think of this as a made-in-America crisis. The truth is that the European housing bubble was as big or bigger than the US bubble; not in Germany, true, but it was German capital exports that fed the bubbles in Spain and Ireland. This was a North Atlantic crisis, roughly equally severe on both sides of the ocean.
If you go to the bottom of this credit crisis timeline, you will see where German banks like IKB, Hypo Real Estate, HSH Nordbank and Dresdner Bank, chasing yield, lent recklessly all across Europe and North America. Apparently, European fund managers are now piling into a well advanced bubble in Australia too.
Of course the US banks were reckless. Of course they were. But the people in glass houses in Germany will soon find out that what comes around goes around.
Sources:
- They Hate Me, Sie Wirklich … – Paul Krugman, NY Times
- Wie wäre es mit Fakten, Herr Krugman? – Handelsblatt
PS: you might want to take a look at this too and you’ll see what I’m talking about.