Germany suffering from bailout fatigue
BOB MOON: This weekend, finance ministers from across the globe
are gathering in Washington D.C. And the Obama administration has wasted no time keeping pressure on Germany and France to act decisively on Europe’s debt crisis before the woes of Greece, Italy, Spain and others become America’s problem. Already, Germany’s Angela Merkel
has pledged $200 billion in loan guarantees to ailing eurozone partners.
But there are signs of bailout fatigue in Germany, the country that’s been doing much of the “bailing.” Marketplace’s Stephen Beard reports from Berlin.
STEPHEN BEARD: Florian Hessler sells food here on Alexanderplatz. Like all street vendors in Germany, he must be licensed. He pays his taxes. And he’s appalled by the growing disorder in the eurozone and that Germany has to pick up much of the tab for it.
FLORIAN HESSLER: Why should we always give our tax money to other countries? If they run up debts they should pay for them themselves.
Florian will be gritting his teeth next week, when there’s a special session of the German parliament. Angela Merkel’s government will try to pass another multi-billion euro loan package for Greece.
Matthias Warnecke campaigns on behalf of German taxpayers. He is not impressed.
MATTHIAS WARNECKE: It means using the old recipe, raising new debt to fight old debt and that might buy us some time, but that won’t solve the problems.
Some say Mrs. Merkel is part of the problem — for failing to take definitive action. Moritz Schularick is a professor of economic history.
MORTIZ SCHULARICK: It’s part of her personality to be cautious, to avoid grand schemes grand solutions, avoid being bold. She’s sort of a one-step-at-a-time person.
Another German economist says a grand, bold move is exactly what’s needed because this is a crisis of confidence. Ferdinand Fichtner is with the DIW think-tank. He says hedge funds have exploited Europe’s disarray to bet against European government bonds. The eurozone must fight back with overwhelming firepower.
FERDINAND FICHTNER: Increasing the bailout fund would be an important signal that it simply doesn’t make sense to speculate against euro-area countries. If the rescue fund is big enough, it’s quite clear that it’s just not worth it.
BEARD: How big does it have to be, though?
FICHTNER: Maybe five times as big as it is right now.
That would be the equivalent of $3 trillion, with Germany stumping up a third of it. Henrik Enderlein of the Hertie School of Governance says this won’t be easy. Germany just can’t trust some of its European partners.
HENRIK ENDERLEIN: Greece lied on its budgetary and fiscal position in order to get into the euro area. So there is concern in Germany of people saying: “They’ve cheated once, they will cheat again.”
The fear is that under the shelter of Germany’s economic might, the Greeks and other less prudent eurozone members will embark on another spending spree. And that will drag down Germany’s credit rating.
Hans Olaf-Henkel is a former head of Germany’s main business organization. He wants an immediate end to all the bailouts for the sake of German democracy.
HANS OLAF-HENKEL: Eighty percent of the German public are fed up with those policies of continuing to help Greece, Portugal and in the future probably Spain, Italy, and finally even France.
Man on megaphone
The message at this rally in Berlin could not have been clearer: “We are against the euro. The euro is a major threat to Europe.” But that was the man with the megaphone. The response from the audience was telling. There were only about dozen protesters there. The Germans are torn. They hate the bailouts, but they still cling to the euro for fear what might happen if it were to collapse.
In Berlin, I’m Stephen Beard for Marketplace.
MOON: Next week, Stephen looks at how Germany has thrived under the euro, and what would be lost if the currency implodes.
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