Both houses of German parliament have approved
Germany's crucial contribution to a European bailout package--desperately
needed, many think, as an antidote to the financial instability sparked
by ballooning Greek debt. This action comes only a few days after
serious worries in the E.U. and the U.S. over Germany's unilateral ban on short-selling of European governmental debt. So is the E.U., supposedly on the brink of total breakdown, saved?
Theoretically, everyone should be pretty happy that the Germans, whose money is critical to the European bailout plan, have approved the package. It was by no means certain: German public opinion has been strongly against forking over huge wads of cash to the E.U.'s southern big spenders. Yet commentators--who were skeptical about the bailout plan to begin with--seem something less than overjoyed, worrying this won't do the trick.
- Market Unimpressed "The enthusiasm over the lower house approval in Germany's Parliament of the euro bailout plan lasted exactly one minute," notes Peter Boockvar at The Big Picture.
- Germany Is Its Own Problem--and Europe's
Germans up until now have been fighting the notion that they should
ride in on a white horse to save their more profligate fellow
euro-members. In The Washington Post, Steven Pearlstein explains the flaws in their sanctimonious reasoning:
What Germans won't accept is that they wouldn't have been able to sell all those beautifully designed cars and well-engineered machine tools if Greeks and Spaniards and Americans hadn't been willing to buy those goods and German banks hadn't been so willing to lend them the money to do so. Nor will they accept that German industry was able to thrive over the past decade because of a common currency and a common monetary policy that, over time, rendered industry in some neighboring countries uncompetitive while generating huge real estate bubbles in others ... In the long run, the eurozone won't be fixed until Germany figures out how to generate growth and wealth without beggaring its neighbors and its trading partners.
- Which Is Why This Bailout Won't Work, writes The Atlantic's Derek Thompson
in response to Pearlstein's piece and the German bailout approval.
"We'll need more than an emergency plan. We'll need extraordinary
action on the part of the European Central Bank. We'll need the ECB to
stop worrying and learn to love expansionary monetary policy."
- Bail Like It's 2008 Reuters's James Pethokoukis reviews U.S.-inspired ideas from Don Rissmiller of Strategas Research Partners. He lists a TARP-like option and a monetization option, among others.