Germany Pours Scorn on US’s “Silly Idea” For Europe

By: EW News Desk Team   Date: 28 September 2011

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EW News Desk Team

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28 September 2011

German Finance Minister Wolfgang Schaeuble has slammed recent comments made by the United States as “silly”, while telling the United States to stop blaming Europe for its economic woes and focus on its own problems at home instead.

Speaking at an address to the European School of Management and Technology in Berlin on Tuesday, Schaeuble effectively told Washington to mind its own business after President Barack Obama had rebuked EU leaders a day earlier for having “never fully dealt with all the challenges that their banking system faced” and allowing the debt crisis to escalate to the point where it was "scaring the world".

"It's always much easier to give advice to others than to decide for yourself. I am well prepared to give advice to the US government," said Schaeuble, as quoted by AFP.

"Even if Obama is thinking the opposite, I don't think the problems of Europe are the reason for the problems of the US," he said.

Schaeuble also lambasted reports that the European Union and the International Monetary Fund (IMF) were working on plans to boost the size of EFSF’s lending limit from 780 billion euros to around 2 trillion euros.

On Monday, Economic Affairs commissioner Olli Rehn’s spokesman Amadeu Altafaj told reporters that discussions following intense debt diplomacy in Washington were now centred on an 'increase of the means at the EFSF's disposal'. However, Schaeuble insisted that such plans were non-existent.

"I don't understand how anyone in the European Commission can have such a silly idea. The result would be to endanger the AAA sovereign debt ratings of other member states. It makes no sense," he said.[/quote

German Chancellor Angela Merkel poured further scorn on the idea later in the day when she let loose on calls on Europe, made mostly by the US, to reflate its economy to avoid recession.

"The idea that you need to boost growth by taking on ever greater debt is the wrong idea. I am deeply convinced of that," Merkel said.
 

Across the pond, Germany's central banker Jens Weidmann also added to the chorus of German derision. Speaking in Washington at the American Council on Germany, Jens Weidmann condemned Obama’s suggestion for the eurozone, arguing that leveraging the EFSF’s assets would only discourage politicians from taking the tough political decisions to cut budget deficits and ultimately weaken faith in the euro.

"A bazooka!” he said, as quoted by Reuters, describing the proposed idea. “I don't think it is a recipe that works in Europe.”

Weidmann added that markets were not concerned over the actual size of the rescue fund, but rather about the political capacity to deliver.

"This (the proposed idea) is a very dangerous thing,” he said. “It means you completely blur the responsibility between fiscal and monetary policy."


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