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Merkel: No eurobonds 'as long as I live'

The Local · 27 Jun 2012, 15:31

Published: 27 Jun 2012 09:08 GMT+02:00
Updated: 27 Jun 2012 15:31 GMT+02:00

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With pressure increasing for eurobonds to share the debt of EU member countries, Merkel laid down the law, turning her repeated “no” to the idea into a “never”.

She was speaking to a meeting of the parliamentary group of her business-friendly coalition partner the Free Democratic Party on Tuesday when she made the uncharacteristically strong statement.

And on Wednesday she addressed the full parliament and told MPs there were "no quick, no easy" solutions, nor a "magic formula", and called for the problem to be tackled at its roots.

"Everything else is doomed to failure from the start. At best it is window dressing," she told the Bundestag lower house of parliament in a speech lasting around 25 minutes punctuated by applause.

Under pressure from financial markets and international partners to come up with convincing responses to the more than two-year long eurozone crisis in Brussels, Merkel said she was under "no illusion".

"There will be controversial discussions in Brussels. And yet again, all eyes, or at least several eyes, will be on Germany."

"But I repeat that Germany's strength is not unlimited. Germany's power is not endless," she warned.

The EU is pushing for a collective financing of members' debt, a bank union and eventually a Treasury office to oversee the currency, the Die Welt newspaper said on Wednesday.

Commission President Jose Manuel Barroso stressed that the plan was not only about European economic integration but also to generate more confidence in the euro and get nations to commit to the European project.

Merkel is said to be looking increasingly isolated in her opposition to the idea.

The latest – fifth – European Union bailout candidate is Cyprus, where sources expect the nation will need as much as €10 billion, or more than twice the country's annual output.

Europe's politicians have engaged in a flurry of shuttle diplomacy to thrash out a solution, culminating in Merkel's dinner with French President Francois Hollande on Wednesday.

The short-term problems could feed into long-term ones, which are being pushed to the back burner as EU officials deal with new immediate emergencies. Big euro countries like Spain and Italy are facing increasing financial difficulties as they have to pay ever higher interest rates to borrow money.

Story continues below…

The head of Merkel's Christian Democratic Union party's economic council, Kurt Lauk, insisted that Cyprus not be allowed to take over the EU council presidency, which it is set to do July 1, because of its economic problems.

A country that for years did not do its own economic homework cannot exert such a function, Lauk said. The German foreign ministry immediately rejected that idea.

The Local/AFP/mw

The Local (news@thelocal.de)

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Your comments about this article

11:18 June 27, 2012 by JDee
time to declare them bankrupt and take the fallout, we can't go on like this, good on Mrs. M for sticking to common sense
12:50 June 27, 2012 by freechoice
yeah! I support Mrs. M too! she is awesome! the IRON cross of Germany. Nein fur Europa debts!
14:42 June 27, 2012 by mos101392
No eurobonds 'as long as I live'

Hurray for democracy!

If more than one country uses the euro, then shouldn't those countries vote and decide? Although Germany is the strongest economy in Europe, it is not a dictatorship.

In addition, Germany shouldn't be expected to bail everyone out. There should be clear rules set by the EU and if those countries can not live by those rules, they should not be allowed to be a part of the EURO GANG.

Increasing the cost to borrow money, Greece, Spain, Portugal ect, will not help the matter. This is like hanging an anchor on their feet while they struggle to stay afloat with only their nose above water.

This will only help to insure the inevitable, bankruptcy!!!
15:07 June 27, 2012 by areyoulucio
Probably the people in Germany dont know what happen in the rest of Europe. As I work for an International company and I have daily contact with many countries I can tell you. Many Company are closing everyday (also in italy).

My company (bIG) start to have problem to provide salary.

If you go to the bank the dont help you or if they help you they ask for an unaceptable percentage . so NO.

people is scared to buy anything.

i supposed to buy a bmw, but sorry probably i have to buy a fiat now. (I hope ) .

after the euro union is not possilbe to talk only of singular countries.

if south europe have problem, be sure , problems will come also in north europe.

and then why we made thie european union? do you think is just a name? or it's an Idea.

I think Germany is Great Country (i have many german friends) and it's important that country like Greece, portugal etcc and also ITALY ofcourse have to fix the internal problems.

But ONLY COST SAVING and MORE TAX cant be the solution.

Dankeeeeeeee and sorry for my bad english.

15:38 June 27, 2012 by smart2012

Merkel pstrategy is also killing Germany (see Q2 German manufacturing data and Zew index), and germany in Q1 has reached the ever biggest debt value (above 2000 bilion Euros)... she will go soon, and if not, then all Europe will be in a disaster
16:45 June 27, 2012 by Michael Rivero
"See? See? This is all Germany's fault. Germany is to blame. Germany is always to blame. Go hurt them and leave me alone!" -- Official White Horse Souse

"See? See? This is all Germany's fault. Germany is to blame. Germany is always to blame. Go hurt them and leave me alone!" -- Federal Reserve

"See? See? This is all Germany's fault. Germany is to blame. Germany is always to blame. Go hurt them and leave me alone!" -- Wall Street

"See? See? This is all Germany's fault. Germany is to blame. Germany is always to blame. Go hurt them and leave me alone!" -- European Central Bank

"See? See? This is all Germany's fault. Germany is to blame. Germany is always to blame. Go hurt them and leave me alone!" -- International Menotary Fund

"See? See? This is all Germany's fault. Germany is to blame. Germany is always to blame. Go hurt them and leave me alone!" -- World Bank
19:07 June 27, 2012 by PNWDev

You have become so blinded by your liberal party loyalty that you have no sense of the economic reality that has, and is, being played out. The econometrics of this issue has nothing to do with Merkel, as the seeds for this harvest were planted long ago in other unproductive nations. And now it is as simple as these unproductive nations, who are being labeled the victim, wanting a handout from the German taxpayer, who is being labeled as the perpetrator. And you are cheering for them all the way to default.

Beschämend mein bruder.

You should be thankful Germany has Merkel and not the Obamaunist, because that fool would have started depositing checks in this bottomless pit a long time ago and called it an Executive Order. And go ahead and keep posting the same exact, selectively-chosen statistics in an effort to try and prop up your weak, and narrow-sighted argument.

The rest of us wake up every day thanking God you are not the German Chancellor.
19:22 June 27, 2012 by AlexR
@Michael Rivero

Here are some more quotes for your collection. But this time they are *real* and made by important *Germans* in the field of economy:

"Germany is responsible for the whole disaster. German leaders genuinely believed that financial markets would reward fiscal rectitude with lower interest rates. That was naïve. It didn't happen. The problem is, it isn't easy politically to make a 180-degree turn. It will take a lot of courage and leadership from Merkel." --Peter Bofinger, German economist and member of the German Council of Economic Experts.


"Germany was responsible for what were the biggest national bankruptcies in recent history. It is only thanks to the United States (and Britain, France, Greece among others -mc), which sacrificed vast amounts of money after both World War I and World War II, that Germany is financially stable today and holds the status of Europe's headmaster. That fact, unfortunately, often seems to be forgotten. The anti-Greek sentiment that is widespread in many German media outlets is highly dangerous." --Albrecht Ritschl, professor of economic history and a member of the advisory board to the German ministry of economics.

19:27 June 27, 2012 by jennyT
@ PNWDev

Thank you!!

@ areyoulucio & smart2012

What if your neighbors tell you, "Hey, guess what! I overspent this week and now please give me 50% of your take home pay. And oh, by the way, you also need to pay for the expensive leather sofa I just purchased."

Don't get me wrong, I'm all for helping people in needs. But there is a limit for everything. Merkel is right about German's power is limited. She takes care of the German people first and only when there is spare capacity she should help the others (which by the way, already did.) In another word, would you starve your own children while you give out the food to others?

Bottom line, we all have to live within our means otherwise we will bear the consequences. This applies to the governments too! Raise the retirement age, cut the inefficiency and redundant jobs in government and plug the tax loop holes! Do everything to fix the problem within before asking for handout!!
20:08 June 27, 2012 by landwerkanal2
1 Part

To Save the Euro, Leave It


Published: June 26, 2012

AS the European economic crisis continues to intensify, policy makers are faced with the need to take ever more extreme measures to prevent a financial cataclysm. Tomorrow,European Union leaders will meet in Brussels to discuss the latest proposals: centralizing banking regulation and putting limits on national spending and borrowing.

A better, bolder and, until now, almost inconceivable solution is for Germany to reintroduce the mark, which would cause the euro to immediately decline in value. Such a devaluation would give troubled economies, especially those of Greece, Italy and Spain, the financial flexibility they need to stabilize themselves.

Although repeated currency devaluations are not the path to prosperity, a weaker euro would give a boost in competitiveness to all members of the monetary union, including France and the Netherlands, which is why they might very well choose to remain in it even if Germany were to gradually leave. A resurgence of manufacturing would also allow the vast unemployment rolls of Spain, Portugal, Greece and other countries to begin to decline. The tremendous loss of human capital and human dignity we are witnessing would ease.

Reintroducing the mark would not solve the debt burdens of southern European countries, but it would give them needed breathing room to restructure their economies, reform labor markets, collect more taxes and reassure investors. The ability of the southern European countries to service their sovereign debt would immediately improve, helping to end the slow-burning debt and banking crises that have engulfed the Continent since 2008.

A weaker euro would also encourage greater foreign investment. For example, Spain¦#39;s distressed real estate market would become far more attractive. Rising capital flows would also assuage investors worried about the unrealized losses on property loans held by Spanish banks.

Unlike Greece — whose exit from the euro would require either a redenomination or outright repudiation of its euro-denominated debts (with potentially catastrophic financial consequences) — Germany would be able to reintroduce the mark without altering the form of any current asset, liability or contract. For example, euros deposited in German banks would remain euro-denominated. So would outstanding German sovereign and corporate debt now denominated in euros.

A German phaseout of the euro could occur gradually, by first issuing government bonds denominated in marks, followed by corporate securities. Germany could establish a transition period before the mark would be used on a daily basis.

continues read 2 Part
21:02 June 27, 2012 by landwerkanal
Part 2

Germany¦#39;s industrial base would unquestionably endure hardship in the transition to a stronger currency. In the early years, Germany could use a variety of measures to manage the rate of appreciation of the mark, much as China or Switzerland do today. Over time, the industrial base of Germany would adapt and move forward.

Critics will say our plan invites financial chaos. To the contrary: capital would flow from ¦quot;safe haven¦quot; assets toward more productive investments, boosting global growth prospects. Resources now dedicated to the alphabet soup of bailout programs and financial guarantees could be redirected. Besides, the current situation is hardly a model of stability.

While most observers, including German policy makers, believe Germany will do what is necessary to save the euro, it is more important to save the European Union, which is older, larger and more significant than the euro zone. Continuing on the current trajectory will most likely entail more bailouts, more guarantees and ultimately dramatic sovereign defaults or enormous fiscal transfers. That would mean a continued loss of human capital and dignity for southern Europe and a nightmare of an open-ended commitment of trillions of euros on the part of Germany.

Germany¦#39;s historic responsibility is at odds with present-day reality. The only way for the euro to survive is for Germany to put every bit of its financial strength at the service of the euro — an outcome that would be deeply unfair to ordinary Germans — and even then it¦#39;s not clear the euro zone could be salvaged in its current form. Given what has played out in Greece, for German leaders to provide further financial assurances to the periphery would be unconscionable.

Like Britain, Germany can be part of the European Union without being part of the euro. What is essential is the preservation of the European Union¦#39;s greatest accomplishment: the free movement of labor, goods and services. Germany alone has the ability to end a dysfunctional monetary union and to bring prosperity back to Europe.

Kenneth C. Griffin is the founder and chief executive of Citadel, an investment company.Anil K. Kashyap is a professor of economics and finance at the University of Chicago Booth School of Business.
21:27 June 27, 2012 by smart2012
To all of the guys who say "why Germany has to pay for ..." u guys do not know all the background. Europe had to pay for unifying Germany, Europe supported Germany to recover (first country who missed european target was Germany, noone said anything..) No one want German money, countries want a robust system. But guys, no worry, keep voting merkel, and we will all end up in a disaster (already started, in Germany too)....keep reading Bild
23:44 June 27, 2012 by raandy
Mrs Merkel, I am impressed that you have made such a definite statement on the subject.

I can understand your point of view, why should the German taxpayers be put on the hook for the mismanagement,and living way beyond your means government policys of those with a lesser work ethic then yourselves.

This may result in the break up of the Euro Zone, but i doubt the end of the Euro.True turbulent times lay ahead but I doubt Germany will fold up.


I suppose you could pool the debt that is much more serious than the public realizes and try to save those slackers with your balance sheet. I would not be as optimistic, for your success, however.
00:15 June 28, 2012 by schneebeck
"But guys, no worry, keep voting merkel, and we will all end up in a disaster "

So you see, this disaster is all Merkel's fault.

One thing I seem to observe from observing deficit democracy in the West, is that it is absolutely impossible for a political system and its politicians to perform within the parameters of fiscal logic. Borrow, borrow, borrow, and borrow!! Any attempts to check this and balance things are met with a tidal wave of opposition and in every case, in the end, are put down.

I borrowed way too much money. Do you know what my solution is?

I am going to borrow a whole bunch more money!!

But people want to charge me too much money to borrow that money!! Should I stop borrowing money? Of course not, you need to let me borrow that money in your name, with your guarantee that I will pay it back.

Just loan me the money!! I really, really promise everything will be OK and it will all be paid back.

Why are you being such a tyrant about this!!?? Just give me the money!!
10:21 June 28, 2012 by mobaisch
as long as you live?

what? are you planning to be elected your whole life??

Germans have to realize one day that they are under dictatorship :)
12:36 June 28, 2012 by Peepopaapo
smart2012, the only ones who had to pay for the German reunification were the German taxpayers for instance via the "Solidaritaetszuschlag". The PIGS have simply lived way beyond their means and instead of paying the bill by themselves they want Germany and the other Northern European countries to pay for them. The Italian fortune per capita is even higher than the German fortune per capita, because many Italians did not pay their taxes properly and the Italian state kept in having a deeply dysfunctional administration. Although having a smaller population than Germany the Italians have much more represantatives sitting in their parlament than the Germans whose wages are even higher than the ones of the German represantatives - and now the Germans should pay for the Italians whose fortune per capita is even higher because they simply did not pay their taxes while the German fortune becomes smaller and smaller? No, thanks!
15:35 June 29, 2012 by AlexR

You are incorrect when you say that "the only ones who had to pay for the German reunification were the German taxpayers". The 'Solidaritätszuschlag' or 'Solidarity surcharge' was/is only a fraction of money that East Germany received after the reunification. The biggest fraction was/is coming from EU funding through its 'Convergence programme'.


Also, even if it's relatively correct that "many Italians did not pay their taxes properly", this has nothing to do with the big majority of the Italians. If you have just looked at the countries tax revenue as percentage of GDP that is published by Eurostat, OECD and other international organizations, you could have seen that, for example, the tax revenue of Italy in 2009 was at 43.5% (the highest of all Eurozone countries) while of Germany was 37%.


So even if Italy has 6.5% *higher* tax revenue than Germany, still you and the majority of the German public still believe that "Italians don't pay taxes". This is another characteristic example on how people could be manipulated by the media and politicians to make them believe in stereotypes and generalizations while hiding the real main culprit of the current crisis, which is no one else than the banks with their irresponsible lending/gambling.

And on a final note, many here and in the German public believe that only the Germans and northern Europeans are paying for the bailout of the PIIGS which is absolutely incorrect. With the current crazy bailout system of the EU, when for example Italy receives bailout money, those money are not coming only from the north European countries but from ALL the Eurozone countries, including the PIIGS. So when recently Spain got 100 billion euro from the EU, not only Germany but also Italy Greece Ireland and Portugal had to pay their share. And not only that, but per capita Germany has to pay 19€ while the near-bankrupted Ireland has to pay 88€ per capita. This is madness and certainly not sustainable.
00:01 June 30, 2012 by Why EU?
Why do Germans so stu-pid to earn for the S H I T?
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