The majority positive vote of the Bundestag’s 750-billion-euro rescue package should not obscure the fact that in the discussion, even extreme positions could be heard. In plain language, this is the requirement for task of monetary union. It is the underlying judgment but it is so well founded. After all, the union has worked ten years well. This is despite all the compromises in the accession decisions and the application of the Stability and Growth Pact in the last decade. Germany in particular has benefited in recent years from monetary stability within the euro zone.
That does not justify a rescue at any price. All attempts at a solution have to be weighed carefully. The 750-billion-euro bailout with its strict conditions, provide to every request for help to the International Monetary Fund and its requirement acts. Even if in this rescue, there are elements that contribute to wrong economic incentives. Their rejecting would have been fatal. The price of failure of the monetary union would be incalculable.
After the debt crisis
The national debt of federal, state, and social security funds in Germany is rising steadily. It is high time to be demonstrate firmly stepping on the debt ceiling. European governments are under intense pressure. It is not only their debt, but also the fear of ever-higher refinancing costs, which they push to massive austerity.
Some politicians are the cause of this crisis of ominous “speculation monsters” or “rivets in pinstripes”. It is true, however that the market puts a finger only into the gaping wound. Root of all evil is the debt of the states themselves. After the debt crisis of the state is a long-term, which has been exacerbated by the financial crisis in 2008 still further. For decades, there was a failure to stem the endless growing debt. In 2007, as and before the financial crisis, the debt of the public sector has grown at an incredible 1,578 billion (approximately EUR 19,000 per capita) in interest payments alone, devouring 67 billion euros, which are nearly three percent of GDP.
The consequences are enormous. Sure, with the introduction of the new German debt brake requires the Constitution to save the policy. Only one of the euro crisis and the ignoring of the Stability and Growth Pact clearly shows that a brake can take effect only when you step on it too!