Bundesbank dragged into the red buying up peripheral debt

This is rather tragic news. Merkel's constant doubling-down (or doubling up, they appear to mean the same thing) with regard to the PIIGS reminds me of the problems with the South Korean chaebol in the late nineties, where losses in a few subsidiaries were subsidised by the rest of the group, and were thus not properly addressed until they became so large that they brought down whole conglomerates. Wikipedia summarises it thus (note the parallels with the euro zone):

Many of the chaebol had become severely indebted to finance their expansion, not only to state industrial banks, but to independent banks and their own financial services subsidiaries. In the aftermath of the crisis when they could not service their debt, banks could neither foreclose nor write off bad loans without themselves collapsing. The most spectacular example came in mid-1999 with the collapse of the Daewoo Group, which had some US$80 billion in unpaid debt. At the time, it was the largest corporate bankruptcy in history.

Investigations also exposed widespread corruption in the chaebol, particularly fraudulent accounting and bribery.

The article makes it clear that this could theoretically end with the ruination of the Bundesbank, which does not benefit from Government guarantees. As a symbol of economic strength and financial probity, the Bundesbank has a special place in the German psyche, in the German identity. Though I don't doubt for a moment that the state would step in to rescue it, that might end up with a steep loss of independence — indeed, I wonder if that's actually the game plan somewhere in Brussels?