It is amazing how quickly a large bank failure concentrates the minds of politicians. A few days ago, German Chancellor - Angela Merkel - criticised the Irish and Greek governments for giving a blanket guarantee on deposits.
A few days later, the second largest German commercial property lender bank hits the rocks and can not find any funding. Suddenly desperation takes hold of the German government. After a few hurried weekend meetings with officials, and Merkel is in full reverse. Forget those critical comments from a few days earlier; Germany needs what Ireland and Greece has; a blanket guarantee on private deposits.
Meanwhile, the backside covering and blame-storming got off to a brisk start. The German finance minister - Peer Steinbrueck - says he was "appalled" that the problems in Hypo had not been revealed earlier. Well, if he spend a little more time in the office and less time slagging off the US, he might have noticed something was going wrong. Poor old Steinbrueck - it is a clear case of Hubris followed by a fall.
With Germany, Ireland and Greece, the other EU countries are sure to follow. I reckon that there should be a complete guarantee on all EU deposits by next Friday. This financial crisis is starting to look extremely expensive.