Fair. Balanced. American.

Wednesday, April 14, 2010

Don't expect German support for future bailouts

The problem isn't right now. The Bundestag will surely approve the Greek "rescue package."

But approval comes with a debate, and that's a gift to the opposition:
Yields on Greek debt rose Wednesday in a sign of investor concern after a Finance Ministry spokesman, Michael Offer, said in Berlin that “the Bundestag would clearly participate in legal approval” of any aid.

The yield on the benchmark 10-year bond was at around 7.2 percent, or 405 basis points above comparable German bonds, the benchmark for safety.

At the very least, parliamentary debate would provide a forum for critics of the aid, which many Germans view as a subsidy for a country they see as corrupt and irresponsible.
Approval of some sort of the other must come from 16 nations, including fellow PIIG Ireland. Per Irish Central:
The Minister for Finance Brian Lenihan is seeking to introduce legislation that will allow the government to loan $700 million to Greece as part of a $61 billion rescue package to the debt ravaged country.

The government’s decision to loan money to Greece has shocked the Irish public, as Ireland has already borrowed billions of dollars to bailout the nations banks.

As a result of the banking bailout, Irish taxes have increased and public spending has been cut.
Now that's an electoral winner! Especially in tough economic times!

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