The dollar is surging today, and its because of a critical decision in Europe.
(Dow Jones)--The bailout of Germany's banking sector may swell the country's public debt rate to 90% of gross domestic product, Die Zeit weekly newspaper reports Wednesday.
The weekly based this estimate on a recent decision by Eurostat requiring Germany to include the balance sheets of public-owned bad banks--set up to help financial institutions offload toxic and non-strategic assets--into its overall debt ratio.
State-owned WestLB AG bank has already offloaded EUR77 billion into such a rescue bank. Going by the Eurostat decision, EUR54 billion of WestLB's toxic assets transferred to the bad bank must be included in Germany's overall debt level.
That's an interesting concept - forcing the government to include the debt of publicly-owned companies that it has nationalized.
One might wonder if America adopted that idea and included the $6 Trillion in Fannie Mae and Freddie Mac debt that the public now owns? What would the sudden increase of the debt/GDP ratio to 140% do to the dollar?