When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Already a subscriber? Log in .

You've reached your limit of one free article.

Get unlimited access to Worldcrunch

You can cancel anytime .


Exclusive International news coverage

Ad-free experience NEW

Weekly digital Magazine NEW

9 daily & weekly Newsletters

Access to Worldcrunch archives

Free trial

30-days free access, then $2.90
per month.

Annual Access BEST VALUE

$19.90 per year, save $14.90 compared to monthly billing.save $14.90.

Subscribe to Worldcrunch

Bundestag Band-Aid: The Latest Act In Europe's Debt Crisis Bluff-A-Thon

Op-Ed: Three cheers! The relevant EU states approved the new euro bailout package. There’s just one problem: everybody knows the money is not enough, which is why they are already planning their next steps. Why are politicians ignoring the truth and playi

French President Sarkozy and German Chancellor Merkel
French President Sarkozy and German Chancellor Merkel
Hans-Jürgen Jakobs<

MUNICH - The Greek bailout package is a case of coming to the rescue after the rescue. Now that all the relevant EU states have approved the rescue fund, vehement debate has started about how to leverage a few more billion euros with the new framework.

Starting this week, the Eurozone's finance ministers are going to be working on money creation concepts -- or how to finance debt with more debt, and buy enough time until the moment finally comes when emergency measures have to be undertaken to help those euro countries that have been living way beyond their means.

A first step is the European Financial Stability Facility (EFSF), as the rescue umbrella is known in the technocratic language of the finance eggheads. Again, measured against the size of Greece's money woes, it is a tiny umbrella indeed.

In any case, last week, Germany's lower house of parliament -- the Bundestag -- approved increasing effective financial help to 440 billion euros since the initially proposed 250 billion would not be enough. And while most of the experts dealing with the Greek mess know that too will not be enough, ways are being sought to leverage that money – with obligations, of course.

Pumping capitalism, kicking cans

This is a new variation of the ‘pump capitalism" that in the wake of the 2008 financial crisis led leading market economies to the abyss. One current model entertains the use of collateralized debt obligations (CDOs) – the very mechanisms that a few years ago were responsible for exporting the U.S. real estate market disaster to other countries.

Are financial products of this type really the solution? The EFSF fund would, at least in the imaginations of apologists of the dangerous products, guarantee some yet-to-be-created entities that would buy and sell bonds, with varying degrees of risk and interest, of troubled countries like Greece.

Another idea has also recently come under discussion: granting the EFSF a banking license. That way, for example, it could buy Greek bonds, deposit them at the European Central Bank (ECB) and get more money to acquire more such bonds.

This is the dangerous "leverage" that could create 3.5 billion euros from the 440 billion, and which German Central Bank president Jens Weidmann is condemning.

It is to be feared that whatever creations the EFSF comes up with, risks to stability in the Euro zone will rise. Europe‘s debt fighters are manifestly trying to survive this year and 2012, before rolling out the big gun in 2013: the European Stability Mechanism (ESM). Only that, the governments believe, will make it possible for them to deal with what is already being talked about now: Greece's bankruptcy.

Meanwhile, Greece's creditors may be facing a haircut of up to 50%. First, however, we need to wait a few weeks and see what the representatives of the ECB, the EU Commission and the IMF – the so-called "troika" – come up with after their inspection tour in Athens. Drama feeds on drama.

The problem is being kicked down the proverbial road like the proverbial can. The time to pay will come later. In the business world, what is happening here would be considered delaying bankruptcy.

Read the original article in German

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

FOCUS: Israel-Palestine War

Why Netanyahu Has Little Choice But To Extend The Ceasefire

The Israeli government has declared it is opposed to any ceasefire with Hamas. But one of its key objectives — and the top priority for Israelis — is to recover hostages. And only the ceasefire can achieve that...

photo of people marching with the sign Bring Them Home Now

A march in London in support of bringing home to Israel the hostages held in Gaza.

Vuk Valcic/ZUMA
Pierre Haski


PARIS — Monday marks the fourth and final day of the ceasefire agreed upon between Israel and Hamas. Does that mean the war resumes Tuesday in Gaza? Probably not, and here is why...

During the first three days of the ceasefire, 40 Israeli hostages, mostly women and children, were returned to the Jewish state. According to the terms of the agreement, three times as many Palestinian prisoners were released. Additionally, 35 Thai nationals and one Filipino, also kidnapped on Oct. 7, were released separately, as part of a negotiation that went through Iran. And one Russian citizen, according to Hamas, "in response to the efforts of Russian President (Vladimir) Putin and in appreciation of the Russian position in support of the Palestinian cause."

For the latest news & views from every corner of the world, Worldcrunch Today is the only truly international newsletter. Sign up here.

A fourth exchange is scheduled for Monday. Meanwhile, over these same past three days, hundreds of aid trucks have been able to enter Gaza, where humanitarian conditions are catastrophic.

What will happen Tuesday, considering that Hamas still holds more than 180 hostages? All communication channels have been hard at work for the past 24 hours, to extend this ceasefire and facilitate the release of more hostages and prisoners.

Qatar has been leading the negotiation efforts. An envoy from Doha arrived in Israel on a special flight on Saturday — something worth noting, given that the two countries have no diplomatic relations. The United States is also very active, with President Joe Biden personally intervening on Saturday, when the agreement showed signs of impending collapse.

Keep reading...Show less

The latest