Germans turn on the euro

The Euro Endangers German Economy

In a situation reminiscent of the autumn of 2008, after the bankruptcy of investment bank Lehman Brothers, ailing banks are infecting the rest of the economy. "Cross-border financing is declining in Europe," says Michael Keller, managing partner of the Frankfurt-based management-consulting firm Keller & Coll.

Investment bank Morgan Stanley says that Europe's banks are undergoing a "Balkanization" that will have "serious implications" for the availability of loans and for growth in some countries. The euro, which was intended to stimulate growth in Europe, is becoming a divisive force in the crisis.

Particularly along the edges of the EU, weakened banks are bringing companies down with them. "Companies are only doing business in the peripheral countries of the euro zone if they can obtain the necessary financing locally," says consultant Keller.