• Germany edition
 
Bond market jitters misplaced, Germany says
Photo: DPA

Bond market jitters misplaced, Germany says

Published: 12 Nov 2010 08:09 GMT+01:00
Updated: 12 Nov 2010 08:09 GMT+01:00

"Any new (bailout) mechanism would only come into effect after mid-2013 with no impact whatsoever on the current arrangements," finance ministers from Britain, France, Germany, Italy and Spain said in the declaration, issued at a G20 summit in Seoul.

Germany is backing a plan to force private investors to bear a share of bailout costs for countries facing fiscal ruin.

But German Finance Minister Wolfgang Schäuble stressed Friday this would only take effect in three years, and was not to blame for the rise in interest yields on Irish government bonds to record levels.

He said investors were guilty of a "total misunderstanding."

"It has to do with decisions from the European Council (EU leaders), and it's a total misassessment of the issues at hand.... It has absolutely nothing to do with any current discussion, and you can't get them mixed up," he added.

Ireland's cost of borrowing hit record highs on Thursday. Ten-year government bond yields jumped to 8.929 percent, the highest level since the euro was created in 1999, placing Europe's bond markets under serious strain.

The leap fuelled fears that the eurozone debt and deficit crisis could be entering a dangerous second phase just six months after a massive bailout of Greece, to which Germany was the biggest contributor.

Portuguese bond yields also hit historic peaks on Thursday.

German Chancellor Angela Merkel said Thursday that European taxpayers should not pay the whole cost of rescuing debt-laden countries.

“Let me put it simply - there may be a contradiction between the interests of the financial world and those of the political world," she said at a G20 business summit in Seoul.

"We cannot explain to our voters and citizens why taxpayers must finance certain risks, and not those who made a great deal of money taking those risks."

Under Merkel's proposals, future rescue packages would only be launched if government bondholders agree to bear some losses.

EU leaders agreed last month to design a permanent plan of aid and penalties for eurozone countries facing fiscal ruin, to take over after the lifespan of a current crisis response fund ends in 2013.

But the European ministers stressed Friday that "the EFSF (European Financial Stability Fund) is already established and its activation does not require private-sector involvement," adding that the new system from 2013 "could include a range of possibilities."

"Whatever the debate within the euro area about the future permanent crisis resolution mechanism, and the potential for private sector involvement in that mechanism, we are clear that this does not apply to any outstanding debt and any programme under current instruments," they said.

European Commission president Jose Manuel Barroso said Thursday that the European Union was prepared to stand by Ireland.

"What is important to know is that we have all the necessary instruments in place now to support Ireland if necessary," said Barroso.

Irish bond yields - the rate of return paid to investors holding the government debt instruments - have soared in the face of mounting investor unease at the stretched public finances. Later this month, Finance Minister Brian Lenihan will unveil a four-year programme of austerity measures that will involve a €15-billion correction to rein in the huge public deficit, ahead of the annual budget in December.

AFP/ka

The Local (news@thelocal.de)

Your comments about this article

Today's headlines
Oettinger blames celebs for nude photo hack
Oettinger (l) appeared to misunderstand how the internet works in his comments about the photo hack which has reportedly affected celebrities including Amber Heard (r). Photo: DPA/EPA

Oettinger blames celebs for nude photo hack

German newspapers on Tuesday ridiculed incoming EU Digital Commissioner Günther Oettinger after he blamed "stupid" celebrities for having their private nude pictures hacked and spread online. READ  

Shots fired as ‘seniors’ rob Berlin security van
Police outside the Apple Store in Berlin where a security van was robbed. Photo: DPA

Shots fired as ‘seniors’ rob Berlin security van

A gang disguised as pensioners opened fire on a Berlin security van on Monday night, escaping with cash before setting their getaway car on fire. It is the second such attack in ten days. READ  

Pickpocket fools minister at anti-crime event
Ralf Jäger in front of a sign reading "eyes open and pockets closed" at the pickpocketing awareness event. Photo: DPA

Pickpocket fools minister at anti-crime event

North Rhine-Westphalia's interior minister Ralf Jäger was pickpocketed by a magician at a press conference he called on Monday to launch a campaign against pickpocketing. READ  

Berlin heart centre fiddled transplant list
Photo: DPA

Berlin heart centre fiddled transplant list

A probe into German transplant centres sparked by an organ donor scandal has revealed 14 cases of a doctor fiddling medical records at one of Germany’s leading heart centres. READ  

Lufthansa strike hits 20,000 passengers
A stranded group of travellers from Vancouver, Canada, sit and wait at Frankfurt Airport on Tuesday. Photo: DPA

Lufthansa strike hits 20,000 passengers

UPDATE: The fourth pilots’ strike in recent weeks hit Germany’s biggest airport on Tuesday morning, with long-haul Lufthansa flights grounded at Frankfurt. Around 20,000 passengers have been affected. READ  

View from Germany
'Criminals are at work in refugee homes'
Photo: DPA/Police

'Criminals are at work in refugee homes'

A photo appearing to show a refugee being abused at a home for asylum seekers has caused outrage in Germany. The photo has been compared to those from Guantanamo Bay and Abu Ghraib. Police are now investigating six cases of abuse at three different centres. READ  

Police suspect neo-Nazis of Reichstag attack
An investigator gives a sniffer dog the scent of an object found at the scene. Photo: DPA

Police suspect neo-Nazis of Reichstag attack

Investigators believe a Molotov cocktail thrown at the Reichstag building in Berlin early on Monday morning was the work of a far-right group, a police spokeswoman said on Tuesday. READ  

Unemployment rate stagnates in September
Photo: DPA

Unemployment rate stagnates in September

Unemployment in Germany stagnated in September, as clouds continue to build over Europe's biggest economy, official data showed on Tuesday. READ  

Germany struggles with Turkey Nato mission
A Bundeswehr Patriot missile in southern Turkey. Photo: DPA

Germany struggles with Turkey Nato mission

A shortage of trained troops caused more embarrassment for Germany's military on Tuesday when it emerged that more than one in four soldiers taking part in a Nato mission in Turkey are not getting their allotted time off between deployments. READ  

Spielberg to shoot spy thriller in Berlin
Spielberg (l), Amy Ryan (c) and Tom Hanks (r). Photo: DPA

Spielberg to shoot spy thriller in Berlin

Director Steven Spielberg is to shoot his next film in Germany, the Berlin-Brandenburg Film Board announced on Monday. The Jurassic Park and Saving Private Ryan director is turning his attention to a Cold War spy thriller. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Photo: DPA
Business & Money
Immigrants have created how many German jobs?
Photo: DPA
Munich
Brit raped at Oktoberfest while going to toilet
Photo: DPA
National
Revealed: Germany's military feet of clay
Marks & Spencer
Sponsored Article
Marks and Spencer: Win €300 toward your new autumn wardrobe
Photo: Shutterstock
Society
Quiz: How good is your German?
Photo: DPA
Gallery
Thousands take to Berlin's streets for marathon
Photo: DPA
Society
'Incest should be legal,' says ethics board
Photo: DPA
Gallery
Ten noises that sound very different in German
Photo: DPA
Society
QUIZ: Can you pass the German citizenship test?
Photo: Shutterstock
Gallery
Ten German words you'll never want to hear again
Sponsored Article
Bilingual education from nursery to graduation at Phorms
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
National
Share news tips with The Local Germany
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

3,154
jobs available
Toytown Germany
Germany's English-speaking crowd