Germany draws line on funding euro bailout

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The 211 billion euros pledged to the euro zone stabilization fund this week is all the fund will get from Germany, its finance minister said in a magazine interview.

Agence France-Presse reports on France 24 that German Finance Minister Wolfgang Schaubele told the German magazine Super-Illu that Germany would put no further funds into the European Financial Stability Facility beyond the €211 million approved by the German parliament on Thursday and Friday.

The EFSF was created to prevent euro zone member states that are overburdened with debt from defaulting on their obligations.

In the interview, which was published today, Schaeuble said, "The European Financial Stability Facility has a ceiling of €440 billion ($590 billion), 211 billion of which is down to Germany. And that is it. Finished."

Public sentiment in Germany has increasingly turned against the idea of Germany backstopping the weaker members of the European currency union. A poll scheduled to appear tomorrow in the German newspaper Bild am Sonntag found that 58% of Germans disapprove of the government's move to bolster the stabilization fund. Chancellor Andrea Merkel was reported to have faced the possibility of open revolt among some members of her governing party over the bill to boost the fund balance, but in the end she was able to keep her troops in line. The bill to add the €211 billion cleared the lower house, the Bundestag, by a large margin on Thursday, and the upper house, the Bundesrat, okayed it the next day.

Germany's foreign minister, Guido Westerwelle, had similarly stern words for the euro zone's problem children in an interview in today's Suddeutsche Zeitung. In it, he said that the debt-plagued countries needed not just advice but even outright intervention in their affairs in order to right their finances. "A right to scrutiny and make recommendations isn't enough. The states which in the future will benefit from the solidarity of the rescue fund should give the European authorities the right to intervene in their budgetary decisions," he said.

Germany's approval of the additional funding removes a major hurdle to its ultimate implementation, but some roadblocks remain, for all 17 of the European Union member countries in the euro zone must approve the funding increase for it to take effect. The bill also faces significant opposition in Slovakia, one of the poorest members of the euro zone. However, outside pressure may force the government there to cave in and pass the bill as well.

The European Financial Stability Facility has been funded mainly by Germany since its inception. The German public has been generally cool to the idea of frugal Germany cleaning up the messes left by more profligate euro zone members. Schaeuble noted that a stabilization fund set to replace the EFSF next year will be smaller in size - and so will Germany's commitment to it, he said in the interview.

Comments

Submitted by Euro Guy (not verified) on
It's good that Germany is bailing out Europe. That hopefully preserves Euro. If Europe did not follow the single currency path, who knows, that may be in 20 years the would would have seen another world war in Europe. The problem was that they had to figure out Euro ins and outs before going toward single currency. Or, better, the architects of Euro should have written clear rules about debt and national governments' spending.

Submitted by Stock trader (not verified) on
Why should Germany bailout Europe? National government's spent recklessly without worrying about paying the debt. Now why should the German taxpayers bail out the Euro?

Submitted by Euro Guy (not verified) on
May be Euro bailout is Germany's atonement for the pains the regimes in this country have caused on the rest of the Europe?

Submitted by Euro Guy (not verified) on
By the way gambling sites put a comic spin on a bitter reality by inviting bettors to place wagers on the economic fate of the eurozone countries.

Submitted by Euro Guy (not verified) on
Here is more update on Sunday morning regarding to Euro bailout. First, is that Greece just unveiled a plan to fire state workers as part of its austerity plan. On the other hand, the boost in Euro bailout fails to dispel concerns in the markets around the world.

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