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Merkel's coalition holds, passes euro bailout

The Local · 29 Sep 2011, 12:26

Published: 29 Sep 2011 12:26 GMT+02:00

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As expected, the German parliament voted to increase the scope and scale of the European Financial Stability Facility (EFSF). 523 MPs voted in favour of the measure, 85 voted against, with three abstentions.

The vote before the Bundestag lower house on expanding the bailout fund to €440 billion ($599 billion) had been cast as a crucial test of Merkel's authority amid fears of a major backbench rebellion.

Merkel's Christian Democratic Union (CDU) governs Germany in coalition with the Free Democratic Party (FDP) in a fraught coalition that has come under increasing pressure over its handling of the eurozone crisis.

But Merkel got four more than the 311 votes she needed from her own side on Thursday, meaning she did not have to rely on the opposition to secure the victory.

Traders and European partners had been on tenterhooks ahead of the vote as

Germany, the eurozone paymaster, became the 11th country among the 17 using the euro to agree to boost the scope and size of the fund.

"We welcome this new approval," said EU economic affairs spokesman Amadeu Altafaj, moments after the German vote result.

"The process is moving forward," he said, citing ratification by another tight-ship economy in Finland on Wednesday. Both countries have seen anti-EU sentiment rise significantly as the strain of successive bailouts for Greece, Ireland and Portugal weighs on voters and taxpayers.

"We are confident we can achieve (full ratification) by mid-October," Alrafaj said.

European Union leaders will stage a crucial summit in Brussels on October 17 and 18, at which diverging views on a second bailout for Greece, or an early default, must be addressed.

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Opening the lively, at times fraught debate, Volker Kauder, who heads Merkel's parliamentary group of conservatives, said it was a pivotal moment in the spiralling eurozone debt crisis.

"Today in the Bundestag, we have an important decision for the future of our country and for the future of Europe," he said, as he called on rebels within the centre-right coalition to toe the line.

AFP/The Local/bk

The Local (news@thelocal.de)

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Your comments about this article

13:17 September 29, 2011 by raben
More debt to solve the debt problem. This can only end well.
13:18 September 29, 2011 by ECSNatale
Now I know what it's like to be on a run away train with no chance of getting off before it crashes. I just hope it doesn't hurt too much.
13:28 September 29, 2011 by ChrisRea
@ raben

Putting money aside for rainy days (like the ones Europe is facing now) does not mean creating debt.
13:35 September 29, 2011 by Jehanzeb

This rainy day is NOW... and it is pouring cats&dogs in Greece without any sign of stopping. This is not our problem.

An orderly bankruptcy is the best and cheapest way to deal with Greece and it will cost German a mere 32 billion euros (15% of the proposed 211billion euro rescue fund).
13:38 September 29, 2011 by venkyfra
now I think all these 2012 doomsday prediction is all about global economy!! every country is working very hard to create more debt....

as long as someone is giving there will be someone to take it!!

journey to bottomless pit has began....
14:31 September 29, 2011 by quadcore
READ TODAY'S NEWS ON BBC! "Greece Default is UNAVOIDABLE" Ernst & young.....The Greece default is going to be the beginning of the end for the Euro & when (Not if but when) Greece does default this will send a massive shock wave through the system, 2008 would seem like a walk in the park compared to whats about to happen, For instance in 2008 it was institutions going under like Lehman brothers & many other banks, NOW its countries going under and it does NOT get anymore serious & wide scale that that..do your maths & whilst your there America's paper over the cracks comes to mind, This new EU bailout rubbish is just another way to waste billions of Euros! The ONLY way the goverments can get the train back on the track is NOT by putting up taxes.? Where they hell is their heads??? its about reducing taxes! IF they put down lets say by two thirds people will have the extra money & so would businesses, Charging people who are already struggling MORE MONEY is just terrible politics, if you have any money dont keep it in the banks the old practice of "money under your mattress" is coming back, This is where Russia will come in, they have hundreds of billions at the ready they will utilise this & be a key player in bonds & struggling countries..their global profile is about to change, Well done too "Granwyth Hulatberi" for exposing the truth live on the BBC, the goverments are keeping the genuine facts & figures from the public so not to cause anymore panic then there already is! problem is now they cant hide behind the curtain & its all about to be exposed.....¦quot;

Mrs Merkel maybe smiling now! BUT we are & have NOT been told the true depth of this Crisis, The official facts & figures are miles away from the truth, The real details would basically frighten anyone so we are NOT told about them but then hasnt the politicians always lied to the public?? the VERY people that keep them in jobs? bite the hand that feeds them...in four words "THE EURO IS DOOMED"...
15:04 September 29, 2011 by jmclewis
Sad for the German Tax Payer!
15:17 September 29, 2011 by jkipr
well said quadcore!
15:44 September 29, 2011 by ChrisRea
@ Jehanzeb #4

If Euro is your problem, then Greece is your problem too. The idea of a controlled bankruptcy is just a speculation for the moment, as there was no previous similar case.
15:54 September 29, 2011 by quadcore
"JKIPR" cheers i appreciate your support my friend!

Just one other thing i would like to add, Pure fact is this, the money wasted on the EU Bailouts (& got them no further out of the poo) when amalgamated would be such a financial force that that money could of paid for a solid brick house for EVERY person in Africa? it would also of given them enough resources to have sufficient food for every person in the country & included a decent transportation system so that walking miles for the very basics would of been a thing of the past....How can politicians stand in front of the camera's and smile when you can see what the money could of done? it would of basically brought a third world country one of the poorest in the world out of hard times? FOREVER!!! & yet its been wasted on greedy goverments that have spent the money on unorthodox policies & other goverment wastage schemes.. forgive me for saying this but my grandma would of done a MUCH better job..
16:06 September 29, 2011 by ryhntyntyn
@ChrisRea You are completely right. Panic creates panic. And it's a European problem it has to be solved by Europe. And it can be.

@quadcore Your economic advice doesn't take into account that we are no longer in the 20th century. A tax break won't help the Germans because they won't consume enough. Domestic consumption is not the big driver in the German economy. Exports are. And if no one else can buy, then Germany will suffer. Reduce taxes in post industrial EU and the surplus will dissapear into austerity, savings and investment, a generous chunk of which will turn into exported capital. And exported Capital is bad news.

The money exists, it's a European problem and the markets are reacting favorably after the vote, that's a good sign. Inaction is what will cause the EU to fail. And dropping taxes so that any intitiative to save either Greece or the rest would be underfunded would be suicide.

Lastly, Greece might well be on it's way to bankruptcy, they might have even planned for it, EFSF is not just there for Greece, it could be used to keep the rest of the Eurozone stable even after a Greek exit.

The idea that Germany can just go it alone is ludicrous. If the rest of Europe fails then Germany suffers as well. It's already too late to go back.
16:18 September 29, 2011 by storymann
I have no doubt that Mrs Merkel knows they are kicking cans down the road.
16:18 September 29, 2011 by quadcore
ryhntyntyn "quadcore Your economic advice doesn't take into account that we are no longer in the 20th century" Strange cause these where some views of senior officials & other EU members as well as investment bankers...

I think the top and bottom of it all is simply "Its a way too complicated system" we have, You cant seem to budge without red tape and restrictions the whole system could do with such a meltdown get rid of the lot of them & some new level headed people take charge..but the last part of my sentence isnt going to ever happen..
16:49 September 29, 2011 by Navigator_B
The banks are by far the greatest cause of the global debt problem, including that of Greece. They should pay the maximum possible amount for their bad loans even if it means that most of them collapse, instead of passing the risk onto the German people.

I have agree with what Kathrin Vogler of the Linke said today: "The EFSF is a bailout fund for the banks, not for the people," It's a pity that they can't concentrate more on getting that message across, instead of concentrating on the Berlin Wall and thee DDR and fighting the cold war with each other.
17:14 September 29, 2011 by derExDeutsche
'The banks are by far the greatest cause of the global debt problem'

No, overreaching Govt. Social Policy and HUGE Govt. created Debt. is the cause of the problems.
17:43 September 29, 2011 by shahislam
If German were a municipal-like Government under new UN power, its hard working people could keep all the money thet earned for themselves. When it comes to credit, there is no difference between a guy and a country, because countries' states mean representations of a few human minds.
18:56 September 29, 2011 by toemag
I find myself asking one question, and that is.

Where are they going to get that €211bn on day "X" from???

Please don't tell me the answer is, to borrow it from the ECB :-(
20:41 September 29, 2011 by Navigator_B
derExDeutsche, It's true that governments have to take a lot of the blame for borrowing huge amounts of money, but don't forgot about the bondholders (banks and other financial institutions) that lent them that money. The banks have all kinds of financial experts and should have known that the money could not possibly be paid back.

Whenever the banks are about to face huge losses on their reckless lending, they manage to pass the risks on to taxpayers. Germany's EFSF guarantee on government loans today is just the latest example of this.
22:45 September 29, 2011 by puisoh
@ toemag

money is created out of thin-air and borrowing it from ECB is precisely the answer.

Watch 'Money as Debt' on Youtube or Google and you will feel like going on a shopping spree.

the 50minutes is worth investing.
23:18 September 29, 2011 by Fargo71
The Euro has been a boon to the German economy for the last decade, but the profligacy of the Southern countries is a direct cause of the Euro institution.

Allowing Greece to borrow at the same rate as Germany is a shocking oversight on the part of those who created the Euro. They developed a set of rules which Euro nations were to abide by, but these rules were ignored from the very outset.

Now the German tax payer will have to pick up the bill for maintaining financial stability in Europe and the the wider financial world. The sums involved so far are a small proportion of the eventual costs.

Will German tax payers continue to bare the burden of failed Southern governments with the stoicicsm they have so far shown?
02:16 September 30, 2011 by Eastard
I suggest a slightly different perspective on the whole thing...

Capitalism and Democracy are failures in the absence of ethics. Both are based (however not practiced) on value systems maintaining a balance of market performance. This is globally no longer believed by most anyone. Corporation run governments in their interest and the money makers (banks, corporations, ultra wealthy, politicians) have convinced the public to own the problems they have created. Identity theift is a good example of how credit companies have convinced the public that their mismanagement of your information is your problem... This is another form of profit ... when you can get countries to cover your risk/losses... to make them not losses... Don't I wish...

Germany is doing what is required by the world... as did the US with our addressing the housing Ponzi Scheme our goverment/major corporations were running... Greece is isolated from reality and even deeper in denial than most... I don't believe default would be any worse than the slow market death we are experiencing everyday with the blips... The money makers are concerned that they may be killing off the global market and do not know how to fix it... They do not know how to fix it because all the traditional tools of telling the big lie more often, making up news and information, etc... has become less convincing to us world dummies. It does not stick...

Watch the debate when avoidance is unavoidable and protection becomes a real need..
07:09 September 30, 2011 by Aasvogel
Tyrants & Banksters - 1 Freedom & Sovereignty - 0.

So the can is kicked a little further down the road.

07:53 September 30, 2011 by heyheyhey
I am mystified by the insanity of this decision. The entire Greek system is corrupt. there is nothing in place in Greece that holds people accountable to pay their taxes, actually go to work, or for the government to do anything except reward cronies.

How does the EU think that Greece will magically change, become responsible, and carry out it's responsibility in ridding itself of its cancerous corruption?

The officials who supported this decision need mental health therapy. They have lost touch with reality.

I feel very sad about the losses that the hard working, responsible people of Germany suffer.

Germans need to revolt against this action, and do so in a manner that their government cannot ignore.
11:15 September 30, 2011 by storymann
The Greek system along with others was never compatible with the ECB regulations. The ECB has no fiscal authority over member states, supervision remains the responsibility of each member state(sort of like the fox watching the chicken coop). To change this would require a treaty change , a long and most likely unsuccessful endever. Perhaps an EU supervisory authority for cross border banks which make up 75% of total EU bank assets would be an easier and more realistic task. There needs to be a move towards a single EU supervisory authority.

Greece has proven this, as the commenter above has wrote "how does the EU think Greece will magically change" exactly!
11:52 October 1, 2011 by Silent_Stranger
From the moment that E.U. accepted Greece as its member it has to deal with this decision.Greece is run by corrupt politicians and unions but on the other hand E.U. had to know better its members. If the Germans wont bail out Greece right now that they are in trouble they will look irresponsible and incompetent to hold on to the union that they helped created.

It is not about bailing out some corrupt Greeks but bailing out the future European prospects.If they cannot bail out one of the smallest countries on the E.U. then what will happen if a bigger country gets in to trouble? A bank run and everyone for himself? This doesn't sound as a union.

Apart from myopic and idiotic arguments about throwing good money after bad one has to accept responsibility. You took them inside? Mistakes are costly. As you benefited now from them now its time to pay.

Maybe we would better talk about fundamental changes in the E.U. structure and in terms of better regulations, integration not just talk in terms of billions. Without better regulation and a E.U. ministry of finance history and other ministries history is certain to repeat its self and in every crisis E.U. leaders running around like headless chickens.
12:18 October 1, 2011 by Kennneth Ingle
It would seem, that the only real reason most of the politicians in the Bundestag voted to support Frau Merkel, is because they are frightened of otherwise losing their positions and the privileges which accompany the joys of being in parliament.

The pressure put upon those members of the house, who wished to avoid this fatal economic farce, is just another substantiation of the inability of many German leaders to govern democratically.

A large majority of normal German people never wanted the Euro. They were not asked! Twice in the last hundred years German currency - and therewith the savings of ordinary citizens - became valueless. By trying to salvage the Greek economy, with money Germany itself does not have and so must borrow, the government quite irresponsibly risks once more the nation's bankruptcy. It is no wonder therefore, that more than 70% of the electorate are against such inanity.
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