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ECB bond-buying under fire in Germany

The Local · 8 Sep 2012, 08:46

Published: 08 Sep 2012 08:46 GMT+02:00

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Despite several European Union leaders welcoming ECB chief Mario Draghi's

crisis strategy for driving down borrowing costs for struggling eurozone

members, it failed to convince many in Germany, Europe's effective paymaster.

"A Black Day for the Euro", "Over the Red Line" and "Pandora's Box Opened

Forever" read some press headlines about the bond-buying programme, in a

country historically fearful that such intervention could fuel inflation.

Half of Germans oppose the ECB buying sovereign bonds of crisis-wracked

eurozone states, compared to 13 percent in favour, according to a poll

published on Friday, but conducted by Infratest dimap before Draghi's announcement.

Finance Minister Wolfgang Schäuble insisted in Stockholm Friday that the programme was not monetary financing of sovereign debt, and bashed the German media as "very nervous" in its criticism of Thursday's ECB decision.

Chancellor Angela Merkel implicitly backed the action, but would only say just minutes after it was unveiled on Thursday that the Frankfurt-based central bank was acting "within its independence and within its mandate", a message her spokesman later repeated to reporters.

On Friday however, Merkel welcomed conditions attached to the new bond-buying programme, saying governments also had work to do.

"The ECB made clear yesterday ... that the future of the euro will, to a large extent, be determined by political action, and that the conditionality is a very important aspect," Merkel said after talks with her Austrian counterpart Werner Faymann.

"Responsibility and checks, or help and checks and conditions, always go hand in hand," she told reporters in Vienna.

"That is the way we have always chosen and so I believe we have the political duty to solve politically the difficulties that we have together. And the ECB is playing its role with its particular responsibilities."

But hard on the heels of a weeks-long assault against the plan by the head of the German central bank, or Bundesbank, newspapers of different political stripes accused the ECB of making a move from which no good could come.

"Saving the euro at all costs can economically be a disaster. That is one red line which may not be crossed. The other limit is the law...," wrote Friday's centre-left Süddeutsche Zeitung newspaper.

"A euro commmunity based on one treaty breach after another is on shaky ground," it added.

The Handelsblatt business daily pondered why Merkel, who is now in the countdown to new elections which must be held by October 2013, had failed to

clearly come out for or against the ECB plan.

"One way to read it is the chancellor does also have misgivings about the buying of sovereign bonds of crisis countries, but no longer feels in a position to stop the phalanx of supporters of the Draghi model," the paper said online.

Story continues below…

Or, Merkel did support the ECB action but could not openly enthuse about it because of domestic political pressure from euro-sceptic members of her centre-right coalition, the paper added.

Werner Weidenfeld, of the Centre for Applied Political Research at Munich's Ludwig Maximilian University, said Merkel had to be mindful of voter sensitivity to money-related issues.

But he said that if she did oppose the ECB plan, Merkel would also not want to be a lone critical voice.

"In politics, people hate to be alone, and if she openly opposed the announcement, she would be completely isolated in the eurozone. And no politician wants that," he said.

But she may also support the action, which has certain provisions attached meaning targeted countries also have to submit to budgetary discipline conditions under one of the eurozone bailout funds, which Merkel actually wants, he commented.

Opponents of more intervention in stemming the near three-year eurozone crisis may be pinning their hopes now on a September 12 decision by Germany's constitutional court on two key crisis-fighting tools.


The Local (news@thelocal.de)

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Your comments about this article

10:55 September 8, 2012 by radical.islamist
Comment removed by The Local for breach of our terms.
11:32 September 8, 2012 by smart2012
This is due to poor communication in Germany led by populistic and nationalistic BILD, and all mistakes made by Merkel and its coalition in the past 1.5 years, which did not give clear direction to masses on how important Europe is for Germany, and how important are European partners demand for the german export.

And article say that verkel did not want to be alone... 26 eu countries like this ECB move plus the rest of the world.. How can Germany be so different??? It is scary.

@ radical Islamist, I hate extremist, I hope you nick name is for fun, however in thus case u right to laugh about Germans. At the moment they r acting in a non civilized way, but inflexible and uber alles way.. Lets hope they stop, otherwise ww3
12:13 September 8, 2012 by joysonabraham
Have a surplus? Try a tax cut.¦quot;

¦quot;Deficit too high? Try another.¦quot;

¦quot;Feel a cold coming on? Take two tax cuts, roll back some regulations, and call us in the morning.¦quot; - obama on republicans

suits austerity advocates everywhere in the whole world
12:37 September 8, 2012 by TheCrownPrince
German wealth now is used to neutralize the wrong policies in other european countries. The ECB never was designed to buy bonds, quite the opposite. If the ECB goes on like this, the Euro will become as weak as the Lira has been, and in the end the economic power of Germany will falter as well. Germans are not there to subsidize their financially inept neighbors. The problem is that the German government backs this nasty game on the backs of the German taxpayers. I'm hoping for an anti-Euro-party at the next German elections in 2013. They should win the election and tell all those Greeks and Spaniards and Italians to jump in the lake.
13:00 September 8, 2012 by likosmokeses
So, europeans taking austerity measures want eurozone stay alive just to buy german goods?

Europeans want to help Germany outclass China?
13:23 September 8, 2012 by smart2012
Euro's concept is to be a compromise between DM (strong but not good for export) and lira (too inflated but very competitive for export). This is the power of euro. But as this was not explained to German masses, now this is the reaction based on no facts (draghis measure is not meant to increase inflation), but just based on superficial populistic and conservative press.

The prince, yes, vote for anti euro nazi parties, then be ready for a ww3
14:26 September 8, 2012 by likosmokeses

...DM (strong but not good for export)...

How german economy was running until 1999?
15:55 September 8, 2012 by smart2012
I just remember ww2 and reconstruction of Germany with american money. Then I remember a decline with struggling companies when Chinese competition started. Then I remember German unification managed by kohl who led euro creation (with mitterand) to support Germany to survive. Euro was designed by Germans to support German export and compete china and survive east Germany unification.

Go back to DM and u ll fall apart
17:14 September 8, 2012 by likosmokeses
''Germany resisted the euro, arguing that full political union should come first. Since there was no chance that the other countries would accept political union, Germany¦#39;s position seemed like a technical maneuver to prevent the establishment of the single currency. Germany was reluctant to give up the Deutsche Mark, a symbol of its economic power and commitment to price stability. Germany eventually agreed to the creation of the euro only when French President François Mitterrand made it a condition of France¦#39;s support for German reunification.

CommentsMoreover, under pressure from France, the Maastricht Treaty¦#39;s requirement that countries could introduce the euro only if their national debt was less than 60% of GDP was relaxed in order to admit countries that were seen to be ¦quot;evolving¦quot; toward that goal. That modification allowed Greece, Spain, and Italy to be admitted.''

17:39 September 8, 2012 by TheCrownPrince
If Germany leaves the Euro it's not Germany that will fall apart... Europe needs Germany, not the other way around! Unfortunately, Germans are tired of watching their hard-earned money being risked by others over and over again. If the Euro falls apart: good! Very good! Of course, exporting will be much more difficult, but Germany has exported like hell before the Euro, and thus it will do again after it. Abandoning the Euro has the big advantage of finally breaking the chains tied around Germany by all others. All those (in an economic sense) living corpses like Spain and Italy and Greece, which will drag Germany down with them... And France is on her way to ruin and collapse as well, thanks to Hollande and his ruinous politics. Let all those countries make up their own Loser-currency, maybe the Lira 2.0, I don't care. Then they can make inflation as like like and as they are used to. Germany on the other hand should join with Finland, the Netherlands and Austria to create a North-Euro, a REAL Euro, not that zombie Draghi is creating right now. All over the years "European solidarity" only meant - and is still meaning - to gain access to Germany's money, nothing else (especially when France is concerned). This must end, and it will end, and hopefully quite soon.
18:00 September 8, 2012 by Livioxxx
@radical.islamist Europe will never go under. Why is Ancient Rome still present today? Not because it was conquered but because everyone wanted to copy it. And the same is with Europe. The USA emerged from Europe and every nation in the world which wants to become anything imitates the westetn System of economy and so on. Also Europe isn't just an industrial location it stands for the idea of democracy and human rights. In Europe the people have won more than anywehre else. We have problems, we have always had problems, but will master them and we will grow with them.
18:22 September 8, 2012 by smart2012
U r tired of paying for whom? Greece? Deutsche bank, Commerzbank, siemens, deutche Telekom, thyssenkrup have invested in Greece, so most of the money which are going to Greece will come back to Germany. Also, without Germany Europe would be better off, more flexible and competitive with the key world players ie China and Russia. U do not have a clue guys sorry. And as I said, push that Germany gets out, it will be better for Europe. But please stop being in the middle with no clear understanding of what u want, otherwise we will have a ww3.

In germany u hate grey areas, but at the moment Germany is the one creating them.
18:53 September 8, 2012 by IchBinKönig
War in Europe has traditionally come from 1 country attempting to wrest away the sovereignty of another. NOT because 1 country left the other alone as Shhmaat2012 believes.

allowing sovereign nation states to practice democracy and self determination, for better or for worse, is the only way to avert a WWIII.
19:24 September 8, 2012 by smart2012
King, let's tell all the story: Germany (verkel) has tried to impose crazy austerity measures to countries like Greece which everyone knows cannot be implemented in 6 months without losing power in the parliament. And this because verkel (and buba) tried to push struggling countries in the corner to economically colonialize them. Luckily this failed, and now the one on the corner is Germany. And as Germany is known for high nationalism, this is where the risk of a ww3 is coming if this crisis is not resolved soon. Be careful in Germany as if next year u will not have a good moderate person with strong leadership (not verkel) then u will have a crazy guy winning (like Roesler) which can lead to very scary situations. Aa said, the indecisiveness of verkel and her coalition is leading to dangerous situations. Either in or out, and if in play a partner, u cannot play the boss.
19:39 September 8, 2012 by TheCrownPrince
Smart2012.... very slowly now, just for you: Greece is a little, dysfunctional, corrupt and completely useless near-3rd-world-country that I would not have as a a gift on a silver plate. The EU was so nice to let them join the club, but losers always will be losers. Greece is unreformable. Period. Concerning Germany: we want to colonize nobody, in fact, we would like you all to leave us alone with your sh..t! You want money? Earn it, as we have earned ours!! Do we force people to buy our stuff? No! If you don't like it, buy Chinese or Japanese goods, but don't complain if we are successful and others in Europe are not! Is it our fault that other countries are notorious unsuccessful and love the "southern life"? No, it is not!! But unfortunately we share the same currency now, and the f..cking Euro would have crashed long ago if it was not for Germany's reputation alone on the markets!! So the others better do what we suggest or Germany will leave that project, which we never should have joined in the first place! The markets give a damn about Italy, Spain and Greece, these countries are virtually dead! So they better shut up!
20:05 September 8, 2012 by sonriete
When one says Germany stands alone in the Eurozone, it is reasonable to also ask who in the Eurozone possesses the all important AAA from the ratings agencies? Yes there are a few others, but they seem to wish to stand back and let Germany be the bad guy.

When you listen to the rhetoric coming from Helsinki and the Haag, it is clear they agree with Berlin and not Rome regardless of how they voted on Thursday.
20:11 September 8, 2012 by likosmokeses
It's quiet amusing how southern people think about german politicians.

Greek oriented smart2012 says that Roesler WILL LEAD TO SCARY SITUATIONS!!! hahahahahaha

Roesler will be soon enough unemployed.

German army sized at 73,823. What type of world war will begin?

I think it's better reading Bild rather than hearing crazy old leftists in Greece (which is testified sign of 3rd world country).
21:32 September 8, 2012 by siba
... I wanted to keep silent but I see just populism here on both sides. Germany is the bad guy or Greece is the bad guy... Of course it is neither nor!

But Smart20102: You seem to know little about Europe and Germany. Why should there be a WW3? Once you even mentioned that you think it could be between Germany with Turks/Turkey??? What kind of sick fantasys do you have in your mind? Turkey and Germany have very good relations. Turks and Muslims are - relative to most other Western countries where nationalist anti-islam partys gained power - quite well accepted in Germany. And Germany is a quite pacifist country, joining less wars than most other western countries during the last 60 years.

Germany only stands alone in terms of having responsibility, the other rich nations support Germany, but hide behind its back. I am Austrian, you should see what politicians there say regarding Greece, THIS is really anti-Greece and anti-EU-populism. There is now - next to already 2 anti-EU partys - a third anti-EU-party... Interestingly, nobody looks at vienna, the hague, helsinki...

There was ONCE a war which was caused by german nazis... this is the reason why Germany changed more than many other nations and still is free from any mainstream anti-eu or anti-muslim group .. and ONCE does not mean that there will be another war coming FROM Germany... on the contrary.

The next chancellor will be Merkel OR someone from the Social-Democrats... The second option will change the German position in favor of the french one...

So much I am for investing in the EU as a whole I must also say that there might be also some governments which are only interested in Germany's and other rich nations' money... going the easy way instead of ending corruption and doing real reforms (France is a positive example and Italy seems to be on a good way too).
22:32 September 8, 2012 by Berlin fuer alles
Reduce the monkeys rations and they will start blaming and fighting each other rather than look for the real cause. Not saying all BILD readers are monkeys but you get my drift.
22:33 September 8, 2012 by smart2012
Yes, this is a very populistic conversation, but it is well deserved looking at what is going on in Germany.

Europe followed merkozy strategy for 1 year, and this brought to a worse situation, which is resulting in Germany loosing AAA. That is why now all eu countries and ECB decided to go against Germany. very simple.

And re ww3, what is going on in Germany is scary and very populistic. A lot of people are now anti euro and speak badly about Greeks. But verkel isn't saying that until 1.5 years ago germany was pushing Greece to sign contracts with siemens, thyssenkrup (2submaribes that even are not working), Telekom, deutche bank etc etc, and they did not care about corruption in Greece. Why?

And no one wants to bother Germany, is Germany which is bothering eu at the moment (just read German press this weekend), after all world has appreciated the move of draghi.

finally, Turkish is a big problem in Germany. Until now Turkish were quite, however with a crisis in Germany and Turkey booming, you'll see they will start to change.. Just wait.

Guys, listen to a Canadian noone, and make your kids learning Chinese. This is my reco.
01:24 September 9, 2012 by siba
smart2012: why do you still comment here. when I read a headline of the local I know already if you posted sth. and what you posted. it is 100 % predictable. you are more predictable than the BILD. you post the same again and again and again 100s of times. you seem to have an agenda. do you also do anything else in your life than posting here?!

don't project your populism to others. BILD is populist for sure, but you beat BILD with your populism. Congrats.

I still recommend you not to think in a "fascist" way - I mean just to see it one way and to blame one country - it is not so easy. I know you have a problem with germany but that should not make you only read and write what fits in your picture. think and read outside the box... my last recommendation and from now on I will end commenting again.
10:35 September 9, 2012 by raandy
siba I like reading smart2012s comments they are often entertaining, I do not always agree but that is what puts the interest in the comment section.
11:10 September 9, 2012 by smart2012
Siba, I'll keep commenting and being tho one always attacked, as verkel, Bild and buba are endangering lovely Europe and the future of my kids
13:32 September 9, 2012 by Berlin fuer alles
I like Smart2012's comments also. Whilst not agreeing with them all I can see a lot of merit and truth in the comments. Merkyl has used the EU as a political football for National politics. This Euro crisis has been dealt with in a small minded way by Merkyl and as Helmut Kohl also said, her performance has left a lot to be desired and she showed no leadership. This would be fine with the rest of the EU apart from the fact we are all in this together and are unfortunately shackled by her allegence and reliance to BILD populist politics.
13:43 September 9, 2012 by siba
smart2012: of course you can post as much as you want. I just see that discussing has no purpose.

I wanted to make clear that you are like Bild, just on the other side of the coin.quoting you: "Merkel, Bild... are endangering lovely europe and the future of my kids" .... you talk like a US-repuplican about Obama.

as stated often enough I am not a supporter of merkel (and not german) - I am a social-democrat/socialist - aiming at welfare and prosperty for the whole of europe. I just don't like your consolidation into a lump sum (pauschalierungen). the only thing you do is blaming merkel, bild and germany. your perspective is too narrow, black white, but I know you do not like colors.

Do you think you do anything for the future of Europe by only attacking and blaming? this is pure populism, nothing more.

cheers :)
19:11 September 9, 2012 by schneebeck
In Europe there have been some fiscally juvenile, irresponsible countries. This has led to a dangerous crisis. Europe is endangered now.

There were other countries in Europe that behaved in a more fiscally adept way and have money now.

It is the latter countries that are endangering Europe.
19:08 September 10, 2012 by sonriete
Europe will always be here, whether ther is a Euro, an EU or other various structures.

If tthey want a united Europe they should organize honest referendums, with choices including ever closer union, but also the choice of pulling back to a strictly limited common market in goods and services.

Those who favor ever closer union have for decades restricted referendum options to those that promote ever closer union, never allowing referendums on pulling powers back from Brussels.

If they won such referendums it would greatly enhance the democratic legitimacy of the EU, but they don't dare, because they know what the outcome would be.

Is this democracy?
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