December 6, 2007 (LPAC)--There are, after months of rumors and delusions, no buyers for the European banks ruined by speculating in the U.S. mortgage bubble meltdown, so they are likely to be bailed out by governments on a huge scale. A spokesman for EU Commissioner Neelie Kroes, a radical deregulator and privatizer, stated in Brussels yesterday: "We come to the conclusion that the measures [to save Northern Rock bank] are in conformity with the guidelines for state help".

A comment by German Finance minister Peer Steinbrueck in the Financial Times Deutschland explains why the EU allows state bailout in this case, while it has adamantly forbidden state aids for industry in all recent years. It is not a question of single institutions, Steinbrueck said, but of preventing systemic risks and the spreading of a crisis. Steinbruck spoke shortly after a meeting in Berlin, also yesterday, with European Central Bank Governor Jean-Claude Trichet.

The EU decision, which okays a bail-out of up to 50-60 billion euros for Northern Rock alone, opens the way also for a possible state bailout of IKB, the once-Mittelstand (productive small and medium business) bank turned into a conduit, where the single-biggest shareholder, with 38%, is the government's Kreditanstalt fuer Wiederaufbau. The bail-out for IKB will come up soon: German newswires report today that numerous private banks that have had interest in buying a stake in, or all of, IKB, have lost interest, because of the apparently high exposure of the bank in other banks' unrecoverable "SIV" investments. An unnamed banker is quoted in the German edition of Financial Times as saying that he was surprised to find out that IKB no longer is the Mittelstand bank he was looking for, but has turned into a mere vehicle for speculation.