• Germany's news in English

Germany says eurobonds no 'cure' for debt crisis

The Local · 21 Nov 2011, 13:36

Published: 21 Nov 2011 13:36 GMT+01:00

Facebook Twitter Google+ reddit

"The chancellor and the federal government do not share the opinion of many

others that eurobonds are now a sort of universal cure for the crisis," Steffen Seibert told a regular government news conference in Berlin.

Furthermore, the idea of eurobonds could even hinder Europe from finding an effective solution to the debt crisis that threatens to push the continent and the wider world into a crippling recession.

Berlin "sees the danger that such eurobonds could prevent us from attacking the problem at its roots," Seibert said. "None of the measures that are being discussed at the moment in public, which includes eurobonds, would bring a solution if they were immediately introduced," he said, quoting comments made by Merkel last week.

Instead of focusing on eurobonds, European officials should be working on a two-pronged strategy, Seibert said.

Firstly, he called for "quick, consistent, open and transparent measures in the member states to put these countries back on the path of financial stability and ... make them competitive." Secondly there was what Merkel calls the "political solution."

"This is to create the structures in Europe that have been missing until now to make binding the agreements that already exist," he said, apparently referring to the EU's stability and growth pact which sets down basic economic targets and rules for its members - most of which have been flouted for years.

The EU will this week urge eurozone states caught up in the debt crisis turmoil to club together to guarantee each other's debts, vowing to police national budgets ruthlessly by way of a safeguard.

Among a range of options, the Commission envisages an evolving system of "Stability Bonds" that could bring down the borrowing costs of those under the most pressure "relatively quickly," documents showed Sunday.

Seibert refused to comment on proposals that have not yet been tabled but hinted that the matter would feature at a meeting on Thursday between Merkel, French President Nicolas Sarkozy and Italian Prime Minister Mario Monti.

Berlin has traditionally been opposed to eurobonds since, as Europe's top economy and its most creditworthy, it fears it would end up guaranteeing the debts of fiscally weaker countries, pushing up its own borrowing costs at the same time.

Additionally, Germany believes that a pan-eurozone bond would take the spotlight off heavily indebted countries and reduce the pressure on them to implement much-needed economic reforms and stabilise their public finances.

But the debt levels of eurozone powerhouse Germany will stay elevated for several years to come, its central bank warned on Monday, as Berlin insists its European neighbours cut their own debt piles.

Germany is expected to have "a debt level above 60 percent (of gross domestic product) for many years," even without taking into account the current crisis, the powerful Bundesbank cautioned in its monthly report.

Story continues below…

With a rapidly ageing and shrinking population, a "loss of confidence" in the solidity of Germany's public finances could not be ruled out if "further costs" arose, the bank added. This demographic factor "will soon get considerably worse", the report said, which will automatically push up the debt levels if decisive action is not taken.

As an ageing population retires, tax revenues decline and pension and healthcare costs rise, pushing up a country's deficit, which is then added to its debt pile.

Germany's debt is set this year to decline to 81.1 percent of GDP, compared to 83.2 percent last year, according to federal government figures. In addition, a relatively healthy first half of the year economically should cut the deficit to around one percent this year, compared to 4.3 percent in 2010, the Bundesbank said.

AFP/The Local/mry

The Local (news@thelocal.de)

Facebook Twitter Google+ reddit

Your comments about this article

17:58 November 21, 2011 by raandy
Of course not, how can you buy up your own debt with your own money,I think we are finally starting to run out of other peoples money.
13:23 November 22, 2011 by luckylongshot
At last something sensible is said by one of the members of the EU, Geremany. It is a shame that common sense has been so absent in the rest of Europe, but what can you expect from an EU that recently declared that water cannot prevent dehydration (In the Independent). The rest of this message is a website commentary on this decision....

Let it be known that if you ever had any doubts about the cognitively evacuated morons who run the EU, those doubts have now been laid to rest with this EU directive which officially declares that water cannot prevent dehydration.

They might as well just declare that breathing cannot provide oxygen to your body, or that eating food cannot provide calories and nutrition. The EU has reached a level of mouth-gaping, slobbering stupidity that no nation in human history has quite matched.

What hope is there for the Euro to be saved if this is the level of intelligence of the bureaucrats!!!!

Learn more: http://www.naturalnews.com/034204_water_dehydration.html#ixzz1eR5Gjldg
17:54 November 22, 2011 by coffejohn
The problem with the German solution is that it would take a German state of mind to implement it.

If the Club Med states had a German mentality they would not have got into the mess that they are in.

So the solution requires a change of mentality from Club Med.

What are the odds!
Today's headlines
Obama to visit Berlin in last presidential trip to Germany
President Barack Obama and Chancellor Angela Merkel during a Berlin trip in 2013. Photo: DPA.

The White House announced on Tuesday that US President Barack Obama will be paying one last unexpected visit to the German capital - his last before he leaves office.

Hostility towards minorities 'widespread in Bavaria'
A village in southern Bavaria. Photo: DPA.

Hate and hostility towards groups deemed to be different are not just sentiments felt by fringe extremists, a new report on Bavaria shows.

Hated RB Leipzig emerge as shock challengers to Bayern
RB Leipzig. Photo: DPA

RB Leipzig's remarkable unbeaten start to the Bundesliga season has seen them suddenly emerge at the head of the pack chasing reigning champions and league leaders Bayern Munich.

Munich taxi driver in hospital after attack by British tourists
Photo: DPA

A taxi driver had to be hospitalized in Munich on Monday evening after three British tourists refused to pay their fare and then attacked him.

German police carry out nationwide anti-terror raids
Police outside a building in Jena during raids on Tuesday. Photo: DPA

Police forces in five German states carried out raids on Tuesday morning with the aim of tackling the financing of terror groups, police in Thuringia have reported.

The Local List
10 ways German completely messes up your English
Photo: DPA

So you've mastered German, but now it's time to learn English all over again.

Iconic German church being eroded away by human urine
Ulm Minster towering over the rest Ulm surrounding the Danube. Photo: Pixabay

It will now cost you €100 to spend a penny. That’s if you get caught choosing to pee against the world-famous Ulm Minster.

German small arms ammo exports grow ten-fold
Photo: DPA

The government has come in for criticism after new figures revealed that Germany exported ten times the quantity of small arms ammunition in the first half of 2016 as in the same period last year.

14-year-old stabs 'creepy clown' in prank gone wrong
File photo: DPA.

A 16-year-old in Berlin decided he wanted to scare some friends, but his plot backfired in a violent way.

Four Ku Klux Klan groups active in Germany, says govt
An American member of the KKK at a gathering in Georgia. Photo: EPA.

The German government estimates that there are four Ku Klux Klan (KKK) groups currently active in the country, according to a report by the Süddeutsche Zeitung (SZ) on Tuesday.

Germany's 10 most weird and wonderful landmarks
Sponsored Article
Last chance to vote absentee in the US elections
10 things you never knew about socialist East Germany
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
Eleven famous Germans with surnames that'll make your sides split
The best ways to get a visa as an American in Germany
jobs available
Toytown Germany
Germany's English-speaking crowd