Germany Won't Help U.S. with Bailout - Der Speigel

[Eurobabe]

Germany Won't Help U.S. with Bailout
German economists endorse the government's refusal to buy up bad U.S. debt, saying it would reward reckless investment behavior

It's not a call for assistance; it's a scream for help. US Treasury Secretary Henry Paulson is asking other countries to help buy up bad US debt. The US government is putting up $700 billion in taxpayer money in the hopes that the measure might restore stability in the financial system. Some countries are planning to help. But the German government has answered this call quickly and clearly: no.

Economics experts think that's the right response. As they see it, in the long run, those responsible for the crisis—who have been cashed out with high salaries and bonuses for years—will not be penalized for billions "but will be let off the hook like everyone else," says Carsten Meier of the Kiel Institute for the World Economy (IfW). According to Meier, by injecting capital into the market, the US government is putting everyone who speculated and lost back on their feet and thereby standing in the way of a market cleanup.

Paulson has stated that the US government will pay a fair price for the bad debt, which Meier sees as sending "precisely the wrong signal," adding that "people shouldn't be rewarded for taking such high risks." Meier also finds Germany's decision to sit out any bailout operation to be the right move. "The financial crisis is primarily a problem in America," Meier says. As he sees it, the fact that Germany and Europe are far less affected that the US justifies European reluctance. "The stability of the German banking system is not in danger," Meier points out as he explains why he believes Europe shouldn't provide any funds. "The world shouldn't have to bear the burden for America's lapses."

Still, the financial crisis has already reached German shores, and banks here have had to announce write-downs of nearly €40 billion ($58.5 billion). "German banks are already sufficiently involved in the calamity," says Stefan Kooths of the German Institute for Economic Research (DIW) in Berlin. Either way, experts estimate that half of America's bad loans were sold abroad—and a large part of that was assumed by Germans. And now the money is gone. "There's no reason why German should have to bear even more burdens," says Kooths. http://www.businessweek.com/globalbiz/content/sep2008/gb20080923_373846.htm?chan=globalbiz_europe+index+page_top+stories

[Doctor Cynic]

1. You know the reasons behind the LAST TIME foreign aid flowed between the USA and Germany?

//Godwinned

[melody]

2. Yeah, god knows the US has never helped out Europe

:sarcasm:

[BrewAz]

3. Why should they...?

Why should Germany...France, Spain (Latin America?)...or any Nato country assist? It is the failed Bush (read that conservative) economic and moneary policies that are at fault here.

Don't forget it is our Bush administration that has pretty much dumped all over our European allies over the last 5+ years. Diplomacy and listening to our allies is not a stong suit for the "w" white house. Now we are in need..and we are reaping the seeds that "w" has sown.

Sad but true.

[Eurobabe]

4. Thank you for a sane reply.

That's all.

[offog]

5. Right on!

I don't want to see European countries get caught up in the financial crisis because American government and big business fucked up. And it wasn't bad luck. It was about greed and lack of checks and balances.

[Eurobabe]

8. The Germans see this as a responsibility issue

and the US is a lumbering toddler that got caught with its hand in the proverbial cookie jar. Many German banks have already written off millions in bad loans. Germany wants its economy to remain strong. I see nothing selfish about that.

And those who post things like, well we helped Europe out in WW2, yeah that's right that is true, but the Euro-people seemed to have learned a few things that the US hasn't: like don't give people 100% home loans, DON'T offer credit cards with huge credit lines so people spend more than they earn. Encourage saving, etc.

At this point it is about trust and learning lessons.

[Ah Xoc Kin]

6. its not their problem

"The world shouldn't have to bear the burden for America's lapses."

absolutely right!

[bronxiteforever]

7. Countries generally follow their self-interest, always have, always will

To assume otherwise is foolish which is why we shouldn't count on others to bail us out.