Bailout Plan Is All About 'Rescuing Banks and Rich Greeks'

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Bailout Plan Is All About 'Rescuing Banks and Rich Greeks'

The 750 billion euro package the European Union passed last week to prop up the common currency has been heavily criticized in Germany. Former Bundesbank head Karl Otto Pöhl told SPIEGEL that Greece may ultimately have to opt out, and that the foundation of the euro has been fundamentally weakened.

SPIEGEL: Mr Pöhl, are you still investing in the euro -- or has the European common currency become too unstable of late?

Pöhl: I still have money in euros, but the question is justified. There is still danger that the euro will become a weak currency.

SPIEGEL: The exchange rate with the dollar is still close to $1.25. What's the problem?

Pöhl: The foundation of the euro has fundamentally changed as a result of the decision by euro-zone governments to transform themselves into a transfer union. That is a violation of every rule. In the treaties governing the functioning of the European Union, it explicitly states that no country is liable for the debts of any other. But what we are doing right now, is exactly that. Added to this is the fact that, against all its vows, and against an explicit ban within its own constitution, the European Central Bank (ECB) has become involved in financing states. Obviously, all of that will have an impact.

SPIEGEL: What do you think will happen?

Pöhl: The euro has already sunk in value against a whole list of other currencies. This trend could continue, because what we have basically done is guarantee a long line of weaker currencies that never should have been allowed to become part of the euro.


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http://www.spiegel.de/international/germany/0,1518,695245,00.html