The images we see from the capitals of Europe's crisis-ridden countries are confusing to say the least. In the Cypriot capital Nicosia, for example, thousands protested against the levy on bank deposits, carrying images of Hitler and anti-Merkel signs, one of which read: "Merkel, your Nazi money is bloodier than any laundered money."
German Chancellor Angela Merkel was greeted by a similar scene when she visited Athens in October 2012. An older man with a carefully trimmed moustache and pressed trousers stood in Syntagma Square. The words on the sign he was carrying sharply contrasted with his amiable appearance: "Get out of our country, bitch."
Despite these abuses, the protesters and all of Merkel's other critics in Rome, Madrid, Nicosia and Athens agree on one thing: Germany should pay for the euro bailout, as much as possible and certainly more than it has paid so far.
They argue that Germany is a rich country that has benefited more than all others from the introduction of the euro, and that it has flooded other European countries with its exports, becoming more prosperous at their expense.
Germans Own Less than Those Asking for Money
But there is also a second image of Germany, one that's based on numbers, not emotions. The figures were obtained by the European Central Bank (ECB) and released last week. This image depicts a country whose households own less on average than those that are asking for its money.
In this ranking of assets, Cyprus is in second place Europe-wide, while Germany ranks much lower, even lower than two other crisis-ridden countries, Spain and Italy.
And this Cyprus, with its affluent households, is now supposed to receive 10 billion ($13.1 billion) from the European Stability Mechanism (ESM), the Euro Group's permanent bailout fund, and the International Monetary Fund (IMF), at least according to the decisions reached after dramatic negotiations, which the German parliament, the Bundestag, is expected to approve this week. But a new question is arising: Why exactly are we doing this? Isn't Cyprus rich enough to help itself?
In light of the new ECB study, a new discussion of the Euro Group's bailout strategy is indeed necessary. So far taxpayers have born the risks of this strategy, by guaranteeing all loans the ESM has paid out to needy countries. Greece, Ireland, Portugal and Spain are already part of this group, and now Cyprus has been added to the mix.
Germany is already guaranteeing about 100 billion in loans. If even more countries request aid and can then no longer serve as donors, the amount of money guaranteed by the Germans could rise to 509 billion, according to an estimate by the German Taxpayers' Association. This figure doesn't even include the latent risks in the balance sheet of the European Central Bank (ECB).
In addition, interest rates are very low, because the ECB is flooding the euro zone with money to stabilize the system. People who save their money are currently getting the short end of the stick, as they are stealthily being dispossessed. On the other hand, those with enough money to invest in stocks and real estate are benefiting from the boom triggered by the flood of funds coming from the ECB. In other words, taxpayers and ordinary savers are paying for the euro rescue efforts, which are primarily benefiting the rich in Europe's most troubled economies. Their assets remain largely untouched, while the assets of their rescuers are melting away.
In the past, the affluent have only been expected to participate in the rescue twice. In the case of Greece, owners of government bonds had to relinquish a portion of their claims, and in the case of Cyprus, bank deposits of more than 100,000 were either partially or fully lost.
Both cases mark a turning point, indicating that government donors are no longer willing to bear all the risks without the private beneficiaries of the euro rescue paying part of the bill.
But this could be only the beginning. The current strategy is not only unfair, because it distributes the burden one-sidedly. It is also economically dangerous, because it could put too much of a burden on the donor countries. And if they began to falter, the monetary union would inevitably break apart.
Besides, the aid programs to date have only replaced old loans with new ones, so that the borrower countries will never shed their heavy debt burdens. On the contrary, the necessary austerity measures are stifling and shrinking the economy in Greece and other Southern European countries.
Crisis Countries Should Seize Assets
It would be more sensible -- and fairer -- for the crisis-ridden countries to exercise their own power to reduce their debts, namely by reaching for the assets of their citizens more than they have so far. As the most recent ECB study shows, there is certainly enough money available to do this.
The numbers are potentially explosive. For instance, the average German household has assets of 195,000, almost 100,000 less than the average Spanish household. The average net wealth of households in Cyprus is 671,000, more than three times the German value. Italian and French households are also significantly wealthier than their German counterparts.
The differences are even more pronounced when it comes to median net wealth, which is the level that the lower half of the population just reaches and the upper half exceeds. On this measure, Germany, at 51,400, is actually in last place in the euro zone. The corresponding value for Cyprus is five times as high. Median net wealth is even higher in crisis-rattled Portugal than in Germany.
The conclusions of the ECB study had hardly been published before various efforts to relativize and whitewash the figures began. The results were apparently embarrassing to the ECB itself, but also to the German government.
ECB Downplays Report's Significance
When politicians with the center-right Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), perused the confusing figures at a breakfast meeting last Wednesday and turned to the finance minister with a questioning look in their eyes, Wolfgang Schäuble responded by shrugging his shoulders.
Schäuble was unwilling to offer a clear interpretation. He eventually commented that the figures were not as clear as they appeared, and there were no further questions.
Schäuble had reached his objective, given his fears that the material would be welcome ammunition for critics of the current rescue policy. Even the ECB, apparently feeling uneasy about its own numbers, came up with all kinds of footnotes to downplay the statistics' significance.
The ECB noted, for instance, that the average Cypriot household consists of three individuals, while the average German household has only two members. This is true, and yet a difference of 50 percent in household size cannot explain a difference of 200 percent in average wealth.
More convincing was the note that the differences in wealth were mainly attributable to property ownership habits in the various countries. Whereas just over 80 percent of households own their own homes in Spain (83 percent) and Slovenia (81.6), and even 90 percent in Slovakia, this is true of only 44 percent of Germans.
The following comparison shows what a significant role property ownership plays in wealth statistics: While the median wealth of a German household that owns its own house or condominium is 216,000, it's only 10,300 for renters.
It is also clear that homeowners in Spain and Cyprus are not nearly as wealthy as the ECB study suggests. The data for most EU countries are from 2010, while some of the information for Spain is even from 2008. In both countries, the value of many houses and condominiums has declined sharply. Spain alone has seen a decline of 36 percent in the meantime.