Fallout: The Financial Crisis

E.U. members divided on stimulus

Stephen Beard Dec 2, 2008
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Fallout: The Financial Crisis

E.U. members divided on stimulus

Stephen Beard Dec 2, 2008
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TEXT OF INTERVIEW

Scott Jagow: The European Union is working on a stimulus package. Let’s bring in our European correspondent Stephen Beard. Stephen, what’s in this thing?

Stephen Beard: It’s the first big Europe-wide recovery package. It aims to pump around $250 billion into the economies of the European Union. Not a done deal, however, Scott — there are some big differences over this package.

Jagow: Between the member states?

Beard: That’s right. On the one hand, you’ve got the Brits and the French who are in favor, but the Germans are very skeptical about the need for a big reflationary package. Even though Germany is already officially in recession.

Jagow: And the Germans are hesitant because they don’t want to go further into debt? Spend more money?

Beard: The Germans are getting very alarmed about the ever-widening budget deficits in Europe. At the weekend, the German finance minister was indulging in some pretty lurid rhetoric. He said countries embarking on big deficit spending programs were like lemmings rushing over a cliff.

Jagow: Well what does he think about the U.S. and the $8 trillion that have been pledged so far?

Beard: Well, they don’t like it. I mean this really has exposed a big cultural difference — not just between Germany and some of its E.U. partners, but also Germany and the U.S. I mean, the Germans don’t like debt. And the widespread reaction in Germany to last week’s raft of measures in the U.S. was pretty telling. I mean, many people were horrified. Including, it seems, the chancellor, Angela Merkel. I mean, they do not feel that taxpayers’ money should go into, as they see it, encouraging the kind of behavior that got us into this mess in the first place — excessive lending, borrowing and overconsumption.

Jagow: I think a few people here were horrified as well, Stephen. All right, Stephen Beard in London. Thank you.

Beard: OK, Scott.

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