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Merkel talks euro rescue with France and Spain

The Local · 5 Aug 2011, 17:19

Published: 05 Aug 2011 17:19 GMT+02:00

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Merkel was prepared to interrupt her summer holiday in South Tirol to speak with French President Nicolas Sarkozy and Spanish Prime Minister José Luis Rodríguez, but she so far has ignored calls from opposition politicians for her to return to Berlin.

Vice Chancellor and Economy Minister Philipp Rösler, who leads cabinet meetings in her absence, on Friday took aim at European Commission President José Manuel Barroso, attacking his suggestion that the €440 billion European Financial Stability Facility (EFSF) or rescue fund, be increased.

Barroso wrote to European leaders on Thursday calling for more money to be earmarked for the fund to stop a spreading of the eurozone debt crisis. Yet his suggestion was widely cited as one of the factors exacerbating fears of a collapse of the world economy, which led to steep losses and even panic on the stock markets this week.

Commerzbank’s head of interest strategy Christoph Rieger, said Barroso had poured oil into the fire of the crisis and made things worse rather than better.

“Such a debate comes at the worst possible time,” said Rösler. “It was just two weeks ago that wide-reaching and good decisions were made,” he said, referring to the July 21 decisions on a Greek rescue package and making the EFSF more flexible.

Rösler said those measures needed to be taken first. “Therefore I see absolutely no need for a renewed discussion.”

A similar message was relayed from the Chancellery. A statement said it, “wasn’t clear how reopening the debate two weeks after the summit would calm the markets.”

Rainer Brüderle, former German economy minister and now parliamentary leader of Rösler’s Free Democratic Party, even attacked Barroso personally.

“In order to secure the euro we need an effective and strong stability and growth package two, and not an irresponsible letter from Brussels,” he told the German tabloid paper Bild on Friday. “It is rash and negligent to now question something upon which heads of state and government have only just agreed.”

Yet European Union Currency Commissioner Olli Rehn said he was prepared to conscience changes to the EFSF, telling the BBC’s Radio 4 the fund needed the respected of the finance markets in order to be effective. “We are ready to adapt our crisis management course in order to achieve more credibility and efficiency,” he said.

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The Chinese government said it was keen to buy up further European government bonds. The country’s foreign minister Yang Jiechi, on a visit to Poland said, “China always had trust in the eurozone and the euro. China will continue to support Europe and the euro in the future.”

Yet there was little optimism to be found on the world’s markets, where the global sell-off of the last few days continued on Friday. A crash on Wall Street, and terrible performance on the Asian markets led the German market to open with sales, with the Dax falling nearly 4 percent shortly after trading started.

DPA/DAPD/The Local/hc

The Local (news@thelocal.de)

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Your comments about this article

18:07 August 5, 2011 by Jack Kerouac
It is so easy to critisize Barroso and the entire bailout packages agreed upon during the talks in Brussles. But do the critics ever have a better way to deal with things? This is serious and needs the IMF and heads of government to pull together, not nit-pick and questions everything before it has begun. Does anyone know why the EU is breaking its own rules and bailing out Greece instead of just ejecting it from the EU proper?
19:06 August 5, 2011 by toemag
I only have one problem with the likes of Barroso, "not elected to the position he holds", but I guess your right, even an "elected official" would have a tough time of sorting this mess out.
21:21 August 5, 2011 by whpmgr
I think, as if anyone cares, that countries should be allowed to fail. If they go broke, and build their way out of the problem, it could stabilize the economies after a tiem of chaos. People will need food, and other services. If we were to have a world crisis, we could reset wages, reset the union hold on the world, recognize that labor costs and free programs got us here. If we reset, it may take a great deal of hell to go through, but at the end, we will be closer to the value of goods versus costs, and we can start all over again. Unions want to keep high wages, and free insurance, and work less, and have 30 days a year paid vacation. Companies want to give low wages, no benefits, and produce more for less.

If we can go back to the value of products from the 50's, for instance, and reset all pricing with that end, we would be able to maybe learn from the probelms of today and ge tthe economies of many countries back rolling. I know it wont work, and many of you will say this is crazy talk. My house is worth $1 mil and you want me to go back to it being worth $10,000? (For instance). Sure, if everything comes down, devalusing everything will work. '

NO one says I am a geneous but hey, I thought I would add in my two cents...
23:31 August 5, 2011 by jg.
"Does anyone know why the EU is breaking its own rules and bailing out Greece instead of just ejecting it from the EU proper?"

Yes - in a word, federalism. A federal EU would be a single large country and for this to happen, the EU needs to become a single economy. For this reason, EU member states (including the UK) are committed to adopting the single currency and to ever closer fiscal integration. If member states start leaving the single currency, fiscal integration is not possible and the federal dream would be dead. Those at the centre of the EU are apparently prepared ignore any rules and to spend any amount of our taxes to keep their dream alive.
18:03 August 6, 2011 by derExDeutsche
Germany is not indebted enough yet to be on the same economic standing else as the rest of Europe. A correction will be made.
19:24 August 6, 2011 by toemag
@ derExDeutsche

Once Germany has gone down the €U will sink faster than the Titanic, and all the funds will disappear into nothingness :-€
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