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Merkel: 'We have our own debts to pay'

The Local · 28 Nov 2011, 13:14

Published: 28 Nov 2011 13:14 GMT+01:00

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Speaking at a regular government news conference, Chancellor Angela Merkel's spokesman said, "Germany has solidarity with its European partners and has already deployed enormous resources. But we also have debt to deal with.

"We are on a good path to doing this... but we too do not have unlimited financial resources," added the spokesman, Steffen Seibert.

There have been appeals from around the world for Germany to either contribute more generously to the eurozone rescue fund or to backtrack on its opposition to pooling debt within the 17 countries with the common currency.

Berlin is also blocking what many see as potentially the most powerful solution to the eurozone crisis: allowing the European Central Bank to intervene more forcefully on the bond markets to bring down member states' borrowing costs.

Germany is "sceptical about the several calls for Europe to deploy the last big financial reserves, what in the Anglo-Saxon world is known as the bazooka," said Seibert.

"We in Europe can't pretend we have financial means that we don't really have... we are strong in Europe. Germany is strong, but we are not strong to an unlimited degree. That is true also for the federal republic," he added.

There was "no other solution than the one the federal government is arguing for," said the spokesman.

He insisted the countries of the eurozone must concentrate on reducing their debt piles, cutting spending in their budgets and boosting the competitiveness of their economies.

He also reiterated Berlin's denial of an earlier press report that Germany was open to pooling the sovereign debt of the six countries with a top AAA credit rating.

"Not the least of our problems in Europe, are the constant rumours" about possible solutions to the crisis, he said.

Merkel is planning to give a speech in parliament on Friday to set out Germany's position on the crisis ahead of a summit of European Union leaders in Brussels on December 8 and 9.

Story continues below…

Germany is making major efforts to bring down its budget deficit but is still grappling with a debt of more than 80 percent of its gross domestic product.


The Local (news@thelocal.de)

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Your comments about this article

20:18 November 28, 2011 by StevenLJones
The debt crisis started with the Americans selling toxic debt to Europe as triple A investments. Was this an act of greed or the act of a desperate country willing to take the rest of world down along with them? Probably an act of greed but otherwise an act of war. I bring this up because a lot on conspiracy theorists will be thinking this and the truth needs to be made very clear for everyone's sake. The result may be the end of the European Union.
23:15 November 28, 2011 by Eastard
It is counterproductive to speculate as to where the whole collapse begain. I would say that Capitalism without ethics is the failure... regardless of one being the greedy seller or the greedy buyer... At stake is the survival of a form of economics that requires rules but has learned to avoid them... in all countries... No one can make another buy a poor investment... The buyer must be motivated as was the case with the housing bubble SEEMING TO BE A GOOD TRICK... Millions swallowed the greed bait...from and in many countries other than the USA...There is no profit by the US in taking Europe down...Where would we get good cars and beer if we did...?
23:47 November 28, 2011 by Logic Guy
Well, the best way for any nation to dig out of a financial crisis, is for it to produce more desirable goods, which is GDP, and began operating more efficiently overall.

It doesn't matter how much money you loan someone, if then are not in a position to repay, then eventually they will burn through all of it, and ultimately slide back into the same hole.

What is difficult to understand about this?
01:41 November 29, 2011 by genedoc60
I know I do not live in Europe, However that said. Enough is enough, Its time for the rest of the Euro-zone to put the tinpot begging bowl away and put your own houses in order. Germany has its own debt to pay and a country to run and its own people to look after. Sorry if you were living high off the hog for so long and dont want to give it up. Germany has deep pockets yes, But the time for shuffling feet is over, Do something. The German people have no reason to keep loaning money out anymore, The bank is closed and your trust fund has just dried up.
01:54 November 29, 2011 by nemo999
Dr. Merkel has good reason to be worried about with the market turning their collective nose up at the latest offering of the Bund. The next round of Bund offer will tell the tale, and if the reception is as bad as the last offering, then things will get really bad, really fast.

If the market starts to seriously question the confidence of Germany ability to pay it debts, then things will get really bad. The data would indicate that external demand for German goods and services is start to shrink, which would reduce the GDP, which would increase the ratio of Debt to GDP, assuming that German does not expand it Federal Budget. The investors will start to demand high return given that the risk of German economy might suffer some type of slow down and therefore Germany tax revenue will be reduced, and the lack of confidence spiral starts.

It should be remembered that a significant portions of the export gain that German has experienced in the past few years was the expansion of Goods and Services to country that are collectively called the "PIGS" (I really hate that term). With these countries now being forced by various mechanisms down the path of austerity, the expectation that German Goods and Services will continue at current rate is faulty.

They may have gotten drunk, and now have the hang over, but Germany was the Bar Tender, and in the end many of the patrons have bar tabs that may never get paid.

Whether WE want to admit it WE are all tied together in ways that are hidden until some type of crisis appears.

Your neighbor house is on fire, do not help put the fire out (even if he started the fire) or do you just hope that it does not spread to your house.
12:00 November 30, 2011 by christopheuk25
Germany must ditch the Euro or it will cripple its economy and it's people.Having read many responses from the ordinary German,they are livid at the squandering of their taxes to prop up the parasitical countries,i include France in that.The political ideals of European politicians have brought about this disaster and they still refuse to acknowledge this failure and keep pouring more cash that belongs to the people into this circus of horrors.Wke up the German people you are being financially raped
12:02 November 30, 2011 by storymann
StevenLJones not selling ,Europe was buying. DB is now being sued by US;

The Justice Department sued Deutsche Bank AG, one of the world's 10 biggest banks by assets, on Tuesday for at least $1 billion for defrauding taxpayers by "repeatedly" lying to a federal agency when securing taxpayer-backed insurance for thousands of shoddy mortgages.

talk about greed..
03:02 December 3, 2011 by from canada
Observer only but hoping that Chancellor Merkel stands her country's ground as the voice of reason. Hoping that as part of this, even though it will be painful, that the European governments look at their use of bond sales and deficit financing as only sustaining the massively greedy banking world (whose huge overleveraging has caused the global too big to fail phenomenon and now require bailouts every time the economy slows). If they do not get this under control now and influence the governments of the rest of the world to do the same, the problem just gets bigger down the road and what will the future look like...very scary, in my humble opinion of course...
09:09 December 5, 2011 by rwk
@StevenLJones - reiterating what storymann said - German financial institutions, Deutche Bank in particular, have been some of the worst offenders this financial debacle, both in Europe and in the US.

Germany needs to take control of the EU, not drop it. But Germany itself needs reform. Taxes and government spending are too high. There is too much bureaucracy. There is not enough done to encourage the establishment of new businesses. Higher education is taking a sharp turn for the worse as it becomes more centered on high-tech R&D and other education spending. But perhaps the worst is yet to come, when the HORRIBLE decision to turn from nuclear power becomes too much for the economy to bear.
10:22 December 12, 2011 by oftesheimkerl
The European Union was a stupid idea to begin with.
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