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Family firms blast Merkel over debt crisis

The Local · 27 Jun 2011, 12:13

Published: 27 Jun 2011 12:13 GMT+02:00

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The Family Business Foundation, one of the main lobby groups for the Mittelstand – the all-important small and medium-sized businesses – has sent a fiery letter to the 620 members of the Bundestag protesting against the government’s debt crisis policies.

About 100 firms with a total of about 200,000 workers and sales of about €38 billion have signed the letter. They demand that the Bundestag “put an end to Germany’s irresponsible debt policy.”

“The government, with its euro safety net policy, has embarked on a fatal path,” they wrote.

They called for far-reaching changes to the common currency agreement, in particular provisions for struggling peripheral nations to exit or be thrown out.

“Withdrawal and expulsion must be possible,” they wrote.

The letter comes as Greece prepares to vote this week on tough new austerity measures that are the conditions of its receiving the next installment of bailout money needed to keep the nation’s pubic finances afloat. The timing of the letter is likely no coincidence and is meant to increase pressure on the German government at a sensitive time.

Merkel and other European leaders are desperate to avoid a messy Greek default on its debt and, further, to avoid any break-up of the eurozone.

The family firms’ chief complaint is that politicians have not stuck to the eurozone’s founding principles: that governments must not break a specific debt ceiling and that no country is responsible for the debt of others, as per the famous “no-bailout clause.”

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“They have in the past year broken that basic principle that no country has responsibility for the debt of other euro countries. And with this policy they have contributed to the European Central Bank’s losing its independence.”

The risks to Germany’s own budget were “incalculable,” they added, calling for the Bundestag to act.

The Local/djw

The Local (news@thelocal.de)

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Your comments about this article

13:54 June 27, 2011 by Major Dude
Comment removed by The Local for breach of our terms.
15:55 June 27, 2011 by catjones
In other words, you can only be a member of the EU if everything is ok. Once there's a common problem, start throwing members out. When this current crisis is over, then invite them back?

Solution de jour.
17:44 June 27, 2011 by neunElf
Greece never met criteria for qualification to Euro Zone in the first place, they cooked the books!

The political leadership of Europe at the time failed to do due diligence.

Now it is too late and the idea of having monetary union sans fiscal union, is being shown to be the Achilles heel of this project.
00:56 June 28, 2011 by Eastard
To catjones...

Yes... Similar to most financial deals.... especially where one side does not do their part. Greece has not only a long term but a short term problem with dealing with THEIR problems of debt... I agree that letting them go through a time when no one would enter their country for tourism or business reasons would help them become responsible... Has proping them up financially helped...? What would they be voting on if it had helped... I;m not Greek but I would expect that 80%+ of the Greeks think dumping the Euro and going back to their dead currency would be a good idea.... Until they get the message of excess words and loans are not helpful...
01:13 June 28, 2011 by mkvgtired
Good for these small businesses. Regardless of their message it is good to see small businesses banding together. They employ so many people, yet are often overlooked because they dont have a loud enough voice.
07:08 June 28, 2011 by Dizz
(lynch) mob mentality. when people start throwing words around like "incalculable damage" it means they're talking out of their ar*es. this was more than likely just a petty reaction to the recent newspaper ads by big businesses a few days ago in support of the Euro.

I love it when people spend about 4.5 seconds on pondering a complex problem and then confidently prescribe their genius formula to end all ills.
07:12 June 28, 2011 by axlathi
Germans would do well to remember the generosity with which the United States and its tax payers, through the Marshall Plan, bailed them and the rest of Europe out when Germany lay in ruins after WWII - ruins caused not by profligate spending and borrowing, but aggressive war. America had the money and a strong and democratic Germany and Europe were in its interests. Isn't a strong and democratic Europe in Germany's interests? Germany is missing out on a historic opportunity to save Europe and arguably the Western world from economic collapse, while at the same time forcing nations like Greece to carry out fundamental reform, which would be sure to pay dividends in Germany's long-term interests, both economic and political.
10:56 June 28, 2011 by LecteurX
So we have on the one hand articles from the centrist magazine Spiegel explaining to us, with facts and figures, that Germany was the "Biggest Debt Transgressor of the 20th Century" in their own words (see link here: http://www.spiegel.de/international/germany/0,1518,769703,00.html), and on the other hand, we have Major Dude and other uninformed fools crying "Greeks don't give a rat's fart about work, so let them go belly up".

There were so many mistakes in the sacrosanct "founding principles" of the Euro, now is the time to correct them.

Eastard, what do you suggest then: build a wall around Greece to prevent people from going there until they "become responsible"? Obviously you're not Greek and obviously you don't know what your're talking about. Your unsubstantiated claims about what you "would expect" are laughable. We're talking about a very difficult situation that will only be solved by making tough and well thought-out decisions, not by following your gut feeling and simplistic notions. Here, the Daily Telegraph (hardly a pro-Europe newspaper) tells us that "One in Four Greeks want to get out of the Euro" (that was last month so I don't think the proportion is now 80% as you "would expect"): http://www.telegraph.co.uk/news/worldnews/europe/greece/8513885/One-in-four-Greeks-now-want-to-get-out-of-the-euro-Greece-dispatch.html

Greece did not do her part at the time of entering the Euro as you correctly said, but even by cooking the books her finances did not look anywhere as good as what was required by the Stability Pact. The EU bent its own rules in order to allow as many countries as possible in. The stability pact said: no more debt than 60% of GDP. Guess what, Italy and Belgium had almost 100%, yet they were let in for political reasons. The false figures that the Greeks showed were also as bad, but if it had not been for political reasons, then that would not have been good enough to let the Greeks in. It was our political leaders who made the mistakes to create rules 15 years ago, only to bend them a couple of years later... No, it's not simple and it's not about teaching the Greeks to "become responsible".

Nice try, but next time please try to be informed beforehand.
11:52 June 28, 2011 by Eastard
Miss X...

Did not suggest building a wall around Greece... your words... Have you ever traveled to a country where their currency was worth nothing..? Would you do business with them expecting to be paid in your currency knowing they had none... ? If the answer to the last two questions was NO then you now understand why people with average intelligence would stay away from Greece amidst this and the following crisis.. The Greeks are good fun loving people with high expectations of life style. None of these features pays the bills. This does not make it Germany's taxpayers obligation to fund for the 12th year in a row... especially after they seem to not be willing to pass laws to repay.. My comments do not contain anti-Greek sentiment... They do contain observations of status.

Why is it that any country better off through their own hard work is somehow wrong if it does not support poor performance of others. Germany cannot teach Greece anything... The Greeks must learn themselves. Keep this thought in mind and review it after they default and complain about how bad things have become and how the default was someone else s fault...

In all democratic countries at all times it is the fault of elected leaders... This is not a free pass to poor performance. Let's see where the voting goes now on debt service.

I read the Local to become better informed and agree that I have allot to learn... So do you..
15:06 June 28, 2011 by LecteurX
The Germans (and many other European countries which shouldn't be overlooked...) are not bailing out Greece out of pure kindness of heart, but, among other things, because they are saving their banks (and the French ones) which own the Greek debt. In the end, we could "punish" the Greeks as much as we want for being "lazy", we still would have to foot the bill and bail out banks anyway. Yet again.

Greece is going through one austerity package after the next, and there is a limit to how much wage and welfare cuts, tax raises and retirement age increases you can impose to a democratic country. It's clear the country won't be able to keep the euro AND simultaneously become competitive enough to secure growth and revenue in order to pay back the debt, i.e. deflating its way out of the debt crisis (with the euro as a currency) is not an option; it never worked in other country which had its own currency so how should it work for Greece?

Even hardworking Germany had to massively "haircut" its debt in the 1950s, with the approval of the US. Surely that helped Germany experience its "Wirtschaftswunder". Times were different, it was the cold war and stuff, so that was possible. Now there's no denying that Germany did a lot of sacrifices all these decades (especially after 1990) in order to be in the better situation where she is now, but the Greeks are now playing their part, at last. Even if they raised retirement age to 75, lowered wages to 300€ a month and scrapped welfare altogether, the country would still be in dire straits (and would not be a democracy anymore, probably).

It's true there are lots of problems with Greece, and this tax-dodging attitude which (says the press) plagued the country for decades. But this can't be the cause of all ills. I don't think the Greeks are so much lazier or more allergic to taxes than their neighbours the Cypriots (who have the euro), or the Turks or the Bulgarians, so there has to be more to it.

One of the big mistakes was to let Greece join the Eurozone in the 1st place, by part because they cooked their own books (with some bank's help, of course, trust them to help you dig your own grave) and nobody spotted it, and also by part because the EU was willing to disregard its own rules for the political significance of the whole thing. I was a student in economics at the uni back then, and I felt a bit queasy about these rules that existed only to be flaunted at a whim. Like everybody else, I thought "well hopefully it will be just fine". Know we know it isn't.

Anyway, we can debate as much as we want, that won't change a thing to which policy will be adopted in the end. I'm glad I understand better what you meant about "letting them go through a time when no one would enter their country for tourism or business reasons", of course I had misunderstood it but I read so much nonsense about Greece in the last months that in that context, everything is possible.
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