Eurozone bailout may be within reach, but Germans still outraged

Marketplace Staff Sep 27, 2011

Eurozone bailout may be within reach, but Germans still outraged

Marketplace Staff Sep 27, 2011

Jeremy Hobson: Two of the key figures in the European debt crisis are meeting in today in Berlin. One is the lender — German Chancellor Angela Merkel; the other is the borrower — Greek Prime Minister George Papandreou. The subject is the crucial next round of bailout funding for Greece, and what the country will have to do
to get it.

For more, let’s bring in Marketplace’s European correspondent Stephen Beard. He’s with us live. Good morning, Stephen.

Stephen Beard: Hello, Jeremy.

Hobson: Well let’s start with Greece — what are the Greeks trying to get out of today’s meeting?

Beard: The timing of this is critical, because on Thursday there’s a big vote in the German parliament on the second bailout package for Greece. So Papandreou is in Berlin to tell the German people, “we’re cutting our deficit, we’re on target. You can trust us, you won’t be throwing your money into a black hole. And we’ll pay you back.”

Hobson: And how is that message going down with the Germans?

Beard: Not very well. The Germans are especially unhappy about giving more money to the Greeks.

Here’s Matthias Warnecke of the German Taxpayers Alliance.

Matthias Warnecke: We believe that German taxpayers shouldn’t be forced to pick up the bill for extravagant public spending in countries like Greece.

Hobson: So some opposition within Germany. What are the chances, Stephen, that Angela Merkel will be able to get this bailout package through?

Beard: Probably she will — yes — but it’s going to be very messy. She may only be able to do it with votes from the opposition. So she could be damaged politically.

Hobson: And — lest we get caught up in the day-to-day of what Greece needs — let’s talk about the big picture. I understand there’s another vote going on today?

Beard: Yes, a vote on a plan to overhaul the bailout fund, so that it could come to the rescue of other eurozone countries more quickly. This is not to be confused with what we were talking about yesterday — yet another plan to beef up this bailout fund, which involves pumping a lot more money into it.

News of that plan’s caused outrage in Germany, raising the possibility that the parliament may this afternoon vote down this more modest measure. All this is causing exasperation outside Germany.

Here’s David Blanchflower, professor of economics at Dartmouth College in the states.

David Blanchflower: People have been coming out with sayings like, “the euro must be saved.” Well if you’re going to have to save it, then you’re going to have to put the money out. And I’m afraid that’s the political and economic reality — now they’re actually going to have to write the big check.

Easy enough to say, of course, when it’s not your money.

Hobson: Marketplace’s Stephen Beard in London, thank you Stephen.

Beard: OK, Jeremy.

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