The German government was facing a furious backlash on Friday from
conservative newspapers and parliamentary rebels, after the decision of
the European Central Bank to buy eurozone government debt to reduce soaring borrowing costs in the bond markets.
Wolfgang Schäuble, finance minister, led a counter-attack against a welter of doom-laden editorials, accusing the German media of misunderstanding and exaggerating the ECB action.
In the face of headlines ranging from “Blank Cheque for Debtor States” in the mass-circulation Bild newspaper, to “Financial Markets Rejoice at the Death of the Bundesbank” in the conservative broadsheet Die Welt, Mr Schäuble rallied to the defence of Mario Draghi, ECB president.
“It is monetary policy, not the beginning of monetary financing of sovereign debt,” he told a news conference in Stockholm. Headlines proclaiming “unlimited help” for debtor states failed to understand that if the ECB spelt out a limit to its intervention, it would simply invite speculation in the markets, he said.
Even the respected Frankfurter Allgemeine Zeitung, and the centre-left Süddeutsche Zeitung, referred to unlimited spending. “In the eurozone, there is no longer a border between monetary and fiscal policy,” the FAZ declared in a front-page opinion.
The popular German reaction focused overwhelmingly on the decision to buy sovereign bonds in the secondary market, and paid much less attention to Mr Draghi’s insistence that any such action would only be taken if debtor nations first submitted to austerity programmes imposed by the eurozone rescue funds.
Angela Merkel, the chancellor, faced calls from her back benches in the German Bundestag to challenge the ECB decision in the European Court of Justice in Luxembourg, after Jens Weidmann, president of the hugely respected Bundesbank, voted against the ECB decision on Thursday.
Read more: http://www.ft.com/intl/cms/s/0/433e3d60-f909-11e1-945b-00144feabdc0.html#axzz25u9nSUkk
Wolfgang Schäuble, finance minister, led a counter-attack against a welter of doom-laden editorials, accusing the German media of misunderstanding and exaggerating the ECB action.
In the face of headlines ranging from “Blank Cheque for Debtor States” in the mass-circulation Bild newspaper, to “Financial Markets Rejoice at the Death of the Bundesbank” in the conservative broadsheet Die Welt, Mr Schäuble rallied to the defence of Mario Draghi, ECB president.
“It is monetary policy, not the beginning of monetary financing of sovereign debt,” he told a news conference in Stockholm. Headlines proclaiming “unlimited help” for debtor states failed to understand that if the ECB spelt out a limit to its intervention, it would simply invite speculation in the markets, he said.
Even the respected Frankfurter Allgemeine Zeitung, and the centre-left Süddeutsche Zeitung, referred to unlimited spending. “In the eurozone, there is no longer a border between monetary and fiscal policy,” the FAZ declared in a front-page opinion.
The popular German reaction focused overwhelmingly on the decision to buy sovereign bonds in the secondary market, and paid much less attention to Mr Draghi’s insistence that any such action would only be taken if debtor nations first submitted to austerity programmes imposed by the eurozone rescue funds.
Angela Merkel, the chancellor, faced calls from her back benches in the German Bundestag to challenge the ECB decision in the European Court of Justice in Luxembourg, after Jens Weidmann, president of the hugely respected Bundesbank, voted against the ECB decision on Thursday.
Read more: http://www.ft.com/intl/cms/s/0/433e3d60-f909-11e1-945b-00144feabdc0.html#axzz25u9nSUkk
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