EQUIPO NIZKOR
Información

DERECHOS

21may10


German lawmakers back euro aid


German lawmakers approved on Friday a $1 trillion safety net to stabilize the euro as world stocks slid further on fears Europe's debt crisis and tougher financial regulation will choke economic recovery.

The Bundestag (lower house) approved Berlin's contribution of up to 148 billion euros ($183.8 billion) in loan guarantees, deeply unpopular with voters, on top of an equally divisive 22.4 billion euro contribution to a package for debt-ridden Greece.

The bill passed by 319 votes to 73 with 195 abstentions after the opposition Social Democrats opted to abstain. The upper house (Bundesrat) was due to approve it later on Friday.

The vote brought no relief for European shares, which extended losses to 2 percent on the day after Asian stock markets slid again. Japan's Nikkei average closed 2.5 percent down for a loss of 6.5 percent on the week, mostly driven by worries about the euro zone.

Chancellor Angela Merkel's center-right government failed to rally broad cross-party backing to ease public opposition to bailing out weaker euro zone states despite stunning markets this week by unilaterally banning speculative trades in some financial instruments.

Wednesday's ban sent stocks and the euro plunging and drew sharp criticism from EU partners, including close ally France, which were not consulted.

The leaders of Germany and France pledged on Thursday to work together to solve the European debt crisis, support the euro and press jointly for global financial regulation.

Later on Friday, European finance ministers and policymakers were to discuss tightening the bloc's tattered budget discipline rules and improving economic policy coordination in the 16-nation euro zone at a task force meeting in Brussels.

Berlin wants harsher sanctions on deficit sinners and an unprecedented insolvency procedure for states crippled by debt. No immediate decisions were expected.

The talks are sensitive because some euro zone countries oppose a European Commission proposal to scrutinize member's budget plans before they are submitted to their own parliaments, seen as a threat to national sovereignty.

"Today's meeting is to co-ordinate economic policies. Obviously the decision taken in Germany .... was not an example of co-ordination," Spanish Economy Minister Elena Salgado said pointedly in a radio interview.

Wall Street Overhaul

The United States also took a big step closer to the most comprehensive overhaul of Wall Street rules since the 1930s after a financial reform bill cleared a final Senate vote.

The tougher rules are aimed at preventing a recurrence of the 2007-2009 crisis which plunged the global economy into a recession that it is still struggling to shake off.

The bill has to be merged with one from the U.S. House of Representatives but analysts said they expected President Barack Obama to sign the law as soon as next month.

France and Germany, co-founders of the euro, clashed over Berlin's ban on naked short-selling of sovereign euro zone bonds and some financial shares. The Dutch parliament voted on Thursday to follow Berlin's lead but the government called the move ineffective and may refuse to implement a ban.

The Franco-German patching up, along with short-covering, helped push the euro up as high as $1.26 on Friday from a four-year low of $1.2143 on Wednesday. The European currency was trading around $1.25 at 1100 GMT (7 a.m. EDT).

French Budget Minister Francois Baroin said the euro was not in danger because Paris and Berlin were determined to save the single currency at all costs.

Luxembourg Prime Minister Jean-Claude Juncker, chairman of the Eurogroup of euro area finance ministers, and Ewald Nowotny, a member of the European Central Bank's governing council, both dismissed worries about the euro's level despite a 12 percent slide against the dollar this year.

A German spokesman said Merkel and French President Nicolas Sarkozy had agreed to cooperate on euro zone growth strategies and coordinate their positions on world financial rules at a G20 summit next month.

Sarkozy, who will visit Berlin on June 7, denied any policy differences with Merkel when pressed by reporters after talks with new British Prime Minister David Cameron.

Several euro zone governments have followed Greece in announcing or planning austerity measures to shore up their credit ratings and avoid having to seek a bailout.

But real doubts remain about their ability to push through savage spending cuts in the teeth of public opposition.

The head of Spain's largest trade union was quoted on Friday as saying he would probably call a general strike in response to government moves to cut public sector pay.

With the United States increasingly involved in trying to contain the euro zone crisis, U.S. Treasury Secretary Timothy Geithner will visit Europe next week, on his way back from a trip to China, and will meet the head of the European Central Bank and Germany's finance minister.

China has also said the crisis is adding to uncertainty.

"The euro for now is a secondary story. The danger is that people are doubting the sustainability of the global recovery," said Boris Schlossberg, director of research at GFT Forex in New York.

[Source: By Madeline Chambers and Jan Strupczewski, Reuters. Berlin and Brussels, 21May10]

Donaciones Donaciones Radio Nizkor

Informes sobre DESC
small logoThis document has been published on 08Jun10 by the Equipo Nizkor and Derechos Human Rights. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.