It's very possible that Berlin will have to absorb the costs of its bank bailouts. At the height of the financial crisis, the German government supported ailing financial institutions such as Hypo Real Estate, Commerzbank and WestLB with capital injections and guarantees amounting to nearly €180 billion. Large quantities of toxic assets were transferred to so-called "bad banks."
But it's questionable whether these banks will ever be able to completely pay back this money. If that is the case, the federal government will have to waive its claims and permanently absorb the debt.
Schäuble's team foresees the possibility of a similar development with the euro rescue. Indeed, "irrevocable ESM payment defaults" is one of the reasons they list for their contingency plans. Behind the bureaucratic jargon lies the concern that Germany -- despite the government's solemn statements to the contrary -- will have to pay for the euro rescue.
Germany is currently supporting the European Stability Mechanism (ESM) to the tune of at least €190 billion. A portion of these guarantees and loans could actually be lost if Greece's government creditors forgive some of the country's debt. The losses to German public coffers could then easily amount to tens of billions of euros.
Consequently, Finance Ministry officials contend that the government will have to make cutbacks elsewhere in the future. Now, in a scenario that euroskeptics have long been warning about, German Chancellor Angela Merkel's government has finally admitted, for the first time, that to balance out the impact of the monetary crisis it will have to reduce expenditure for pensioners and people taking early retirement.
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TOP NEWS
Romanian government presents program: Average economic growth of 3% in 2013-2016, budget deficit below 3%
de V.O. HotNews.ro
Joi, 20 Dec 2012 English | Business
The newly designated government of Romania, formed of the Social Liberal Union (USL) alliance and led by Victor Ponta, eyes an average annual economic growth of 3% for 2013-2016 and maintaining an ESA-system budget deficit of under 3% until 2016, according to the USL governing program, published by the government on Thursday. On fiscal policies, the government says it plans to provide transparency for public funds, to simplify the tax system, to return to a 19% VAT and introduce progressive taxation.
Romanian Prime minister presents extensive team of new government
de V.O. HotNews.ro
Miercuri, 19 Dec 2012 English | Top News
Romania's designated prime minister Victor Ponta presented on Wednesday the structure and members of the future Government. It will include many more ministerial seats than before, many of which split from existing governing bodies. Ponta's team was announced after days of negotiations between the governing Social Liberal Union (USL), formed of Ponta's Social Democrats and the National Liberal Party, who won the December 9 parliamentary elections by a large majority.
In case you're been distracted by Christmas, here's how events have unfolded in Italy in the last few days:
• The election battle really got underway last Friday, when Mario Monti formally stepped down: Mario Monti resigns as prime minister of Italy.
• On Sunday, Monti declared that he would be prepared to lead a group of parties who backed his reform agenda: Mario Monti considers return as Italian prime minister
• That agenda - including economic reforms and fiscal responsibility - was launched online on Christmas Eve: Mario Monti announces reform agenda for Italy
Monti also appears to have joined Twitter, tweeting late on Christmas Day that:
Together we have saved Italy from disaster. Now politics is due for renewal. Complaining does not help, you must work. "Let's go" in politics!
The other big news this morning is that negotiations over the US fiscal cliff have still not reached a conclusion.
With the deadline to reach a deal looming, US Treasury secretary Tim Geithner warned yesterday that "extraordinary measures" might be needed to prevent the US hitting its $16.4tn (£10.16tn) debt ceiling.
Geithner warned Congress that the uncertainty over America's tax and spending policies for 2013 meant the country risked breaching its borrowing limits.
He said the Treasury could raise $200bn through "extraordinary measures" - but warned that it wasn't clear how much time that would buy.
US president Barack Obama has now cut short his holiday in Hawaii, heading back to Washington late last night....
"Geithner warns US could breach debt ceiling"
so, why are you STILL calling this "The Eurozone crisis blog" instead of the "global financial crisis blog"? I understand the Guardian wants to keep the spotlight on the EU to cause mischief within the government, but all this anti-EU propaganda will come and bite you on the backside.
be honest it would have been better if Greece would have gone bankrupt and we would have saved directly the banks (and then sent medicine and food to the poor in greece).
I understand that many normal people in greece are unhappy but where are the protests against the rich greeks that pay no taxes? Against those that bring the money outside and buy flats and houses in Frankfurt or London instead investing it in greece? Where are the protests against the administration that seems only to be build up to buy voters and that do nothing and is preventing any investments? I saw reports about non-working administration in hospitals (making it easy to get treatment without any payment resulting big losses), isles full of "blinds" driving taxis, priviliged groups like taxi drivers, owners of ship fleets that pay "legal" no taxes. Greece has the structure and administration of third world, pays taxes like third world but wants to live in first world. And in this mess without any solidarity in the greek society you expect the taxpayer of other countries to pay the price?
December 2012 10:29 AMLink to this comment
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While throwing his hat back into the ring, Monti refused to name parties he would ally with, merely stating that he would consider politicians who sign up to a programme of reforms he wanted carried out in Italy.
"I would be ready to offer my appreciation, encouragement, and if asked, leadership" to parties that backed the programme, he said, adding that it would soon be posted online.
Monti said he would not join a party ticket before the election, but added: "If one or more political forces who adhere to the programme propose me as a candidate for prime minster, I would consider it."
Italian democracy must be different from the UK form of democracy (not that either are democratic)
Looking at this statement by Monti he will not be directly running for PM, but if enough centralist (neo liberal scum) parties win then he would be happy to be reinstalled as a tenocratic (read undemocratic) PM.
What a shambles.
f you are outside italy, most people don't realise that for italians, the Euro has been just one long party ticket and italy has been having quite a party over the last ten years. The economy as created by Berlusconi is completely unsustainable. He, and the rest of the country hope that they never have to payback the cost of a ten year bunga bunga party....
Worse....most italians in the middle and ruling classes are so used to be draped in the latest fashion or fast cars....that they fully expect the Berlusconi Bunga Bunga ten year party to continue. They need him as much as he needs them...
There is not a single honest politician in italy that can help it from the mess it is in.
The only question about the Cameroon andf the UK is that should it jump first before Berlusconi brings down the EU and the markets or does he jump after?
One of the basic problems resides in the Italian electorate and in the electoral system cooked up by Berlusconi and his men in 2005 — the least democratic system in all Europe. The Italians fancy themselves as ever so clever. On that basis, they chose Berlusconi in 1994, 2001 and 2008. And what did they get out of it? Unmitigated disaster by selecting a figure who is half-crook and half-clown, whose European counterparts regard with contempt (except, apparently, for a certain A. L. Blair — remember? — and Berlusconi's bosom pal, Vladimir Putin!). Those who fail to learn from history are condemned to repeat it (George Santayana) — a precept amply confirmed by Italian political history of the past twenty years...or fifty years...or...(fill in the figure of your choice).
Berlusconi changes like the weather. He has no idealogy to believe in. He is a corporate prime minister who has found himself outside the circle of the G8 because of his perverted antics.
Parmina12...you talk as though its impossible for Berlusconi to consider taking italy out of the EU. He will if it gets him the votes. He will bring down Europe to escape jail and criminal charges that he is a pervert.
The simple fact is that with a huge chunk of center ground votes agreeing to leave the EU, he will also pick up AN and Lega votes as well. Monti knows he does not stand a chance because he raised taxes to pay back german bankers.
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