Contagion could fracture the eurozone

The Guardian: "Somehow you always sensed that it was tempting fate when the German finance minister, Peer Steinbrück, said last month that the credit crunch was an American matter. How long would it be before the contagion that knocked the stuffing out of Wall Street and the City would claim a eurozone bank or two?

Well, the hubristic words were barely out of Steinbrück's mouth before we had our answer. The Belgians and the Dutch bailed out Fortis bank; the Irish made a blanket guarantee on deposits amid fears that at least one, and probably two, of their big banks were about to go belly up.

Steinbrück's musings on whether the US was losing its status as the world's economic hegemon were interrupted by the need to seek approval from Brussels for the ill-fated €35bn (£27bn) rescue of Germany's Hypo Real Estate banking group. And by the weekend the leaders of Europe's big four - Germany, France, Italy and Britain - were calling for an emergency global summit next month. A lesson for finance ministers: try not to anger the gods."

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