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Cyprus Points to Euro Folly

The Bundesbank also said, according to sources in those countries that used some differing methodology, the median net household wealth was 178,300 euro in Spain and 163,900 euro in Italy.

One reason for the difference, according to the Bundesbank, is that those countries have a higher rate of home ownership than in Germany. "The rate of home ownership in Germany equates to 44.2%," according to the Bundesbank, while "this rate is substantially higher in Spain (83%) and Italy (69%)."

"Unlike all these countries, the German median household is not an owner-occupied property," according to the Bundesbank report.

While everyone knows that games can be played with the reporting and methodology of economic statistics, the Bundesbank report is a political bombshell and the timing of the report's release speaks for itself.

The Credit Suisse team in its report on Thursday said, "the precedent set by the bail-in of a broad range of bank creditors and the suggestion that such a process may be applied to the resolution of other euro area banks and banking systems is likely to have negative effects for the euro area economy as a whole."

While saying forcing creditors rather than governments to bail for bank bailouts "isn't foolish," the Credit Suisse team said "by raising the prospect of a resolution and restructuring process -- with the cost borne by creditors -- and not rapidly implementing it, the euro area economy will start to experience some of the negative effects of such a process without experiencing any of the benefits."

One negative effect is rising funding costs, even in "core countries such as France and the Netherlands," according to Credit Suisse.

Over the past few years, there has been continual see-saw action in financial markets each time a complicated European bank bailout deal is negotiated between a wide array of players, including the Eurogroup of finance ministers, the European Central Bank, the International Monetary Fund, and, of course, euro member countries.

A Purer Bailout Approach

The political unity of the U.S. made it much easier to orchestrate a coordinated bailout of the nation's banking system, for good or ill. At the height of the credit crisis in the U.S., Congress and President George W. Bush enacted the $700 billion Troubled Assets Relief Program, or TARP, in order to take a very aggressive approach in propping up the banking system. TARP begin on Oct. 28, 2008, with the U.S. Treasury taking preferred equity stakes in nine of the largest U.S. banks, with some of the banks being forced to take the money.
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