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German media condemn ECB plans

Bild front page headline

You don't need a degree in German to understand the headline in Bild: "Blanko-Scheck für Schulden-Staaten" - a blank cheque for the debtor states.

It is neatly positioned over a picture of the President of the European Central Bank, Mario Draghi.

Germany's most popular newspaper, and a maker of the political weather, continues: "ECB chief Draghi begins a bond-buying programme. Will he break the euro?"

The newspaper then asks and answers a series of questions: "Who bears the financial risk? The German share of the burden is 27%".

"Will inflation occur? Not immediately, but later".

In papers across the political spectrum, the phrase "without limits" is hammered away to emphasise that the president of the ECB put no limit on the bond-buying: "Ohne Limit", says the Tageszeitiung on the Left; "Ohne Obergrenze" (without an upper boundary) says the Frankfurter Allgemeine; and for Bild, in capitals, "IN UNBEGRENZTER HÖHE!" (limitlessly high).

The uneasiness about the scheme is voiced by politicians of all persuasions. Sahra Wagenknecht, the deputy leader of the Left Party and the party's economics spokeswoman, said: "The chancellor (Merkel) knows that in parliament she will not get a majority for another enlargement of euro bail-out funds so she lets the ECB and Mario Draghi create a billion new risks for Germany."

"The ECB is mutating into a dump for toxic paper," she adds.

Something serious

Perhaps more ominously, Bundesbank President Jens Weidmann voiced his open dissent of the measures. He took the trouble to issue a statement saying that the bond program was: "tantamount to financing governments by printing banknotes".

When the president of the Bundesbank openly disagrees with the president of the European Central Bank, you might think that something serious was happening. It is not the way central banks are meant to behave.

Mario Draghi said the decision of the ECB's governing council was unanimous bar one, without naming the one dissenter. It is clear that it was Dr Weidmann.

He is widely perceived in the German press to be the loser in all this (apart from the German taxpayer if the worst fears are realised). Die Welt ran a headline saying "Market jubilant at death of the Bundesbank".

The right-of-centre paper added that: "Super Mario Draghi has broken with a principle of the Bundesbank. For the president of the Bundesbank, the decision of the ECB means a defeat".

Election due

Does any of this matter? After all, newspapers get agitated about all kinds of things without the world falling off its axes.

In this case, it does matter, because the views of the German people matter. They constrain Chancellor Merkel as she heads to an election next year.

Also, they constrain members of the Bundestag who, under the country's constitution, have to vote on measures that allow bodies outside Germany to spend German taxpayers' money, as any new or expanded rescue fund would (though not the ECB's bond-buying programme).

Next week, the Constitutional Court is due to pass judgement on German participation in the current bailout. A poll just out indicated that 54% of Germans hope the court blocks the new fund.

This is scepticism of a high order. Polls in Germany usually indicate mixed, sometimes conflicting, sentiment. The results tend to be pro-euro but show deep unease about bailouts of eurozone governments in difficulty.

But all the indications now are that scepticism is rising, and people in power in Germany know that.

The morning after the night before, Jorg Asmussen took to the German airwaves to try to reassure German taxpayers. He is an important figure: on the executive board of the ECB, but fresh from the German Ministry of Finance where he was deputy minister of finance. He is a man in a high place with friends in high places, particularly Berlin.

He said that the buying of bonds of countries in difficulty would: "only take place when the country undertakes tough reform measures. That is a necessary precondition for the ECB to act".

"This is an imperative, a necessary prerequisite for our function. We must avoid decreasing pressure on the states concerned to implement reforms on their budgets, bolster competitiveness or getting banks' balance sheets in order," he added.

In this battle of scepticism and attempted reassurance, what does Chancellor Merkel think? We do not quite know.

Bild reported that Bundesbank President Jens Weidmann threatened to resign in disgruntlement at ECB policy, but was persuaded not to by the German government.

So Chancellor Merkel clearly wanted him to stay, but she is also close to Jorg Asmussen, the other German on the ECB governing council. Asmussen is in favour of the bond-buying; Weidmann is against it - so whom does Chancellor Merkel agree with?

Bild asks: "What does the chancellor say?"

It answers its own question: "Merkel was still not clear yesterday on the new ECB program, saying only: 'The bond-buying can't replace political action'."

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