Germany

German bankers railed Thursday against European Union proposals that would force the Continent's banks to raise capital and further write down the value of Greek debt on their books, arguing that the moves themselves could force the sort of financial crisis that Europe's leaders are working to avoid, The Wall Street Journal reported. Deutsche Bank AG's chief executive, Josef Ackermann, cautioned Thursday that a credit crunch could result if Europe's leaders enact higher capital levels for banks and big haircuts on sovereign debt.

The German parliament has voted by an overwhelming majority in favour of measures bolster the €440bn eurozone rescue fund, and give it new powers to buy bonds and recapitalise weak banks, in a move that lifted financial markets and boosted the euro, the Financial Times reported. The decision was greeted in Brussels as removing a big potential road block to further action to deal with the debt crisis, although several more eurozone parliaments still need to sign off on the package.

Germany will be subsidising its weaker eurozone partners for a lifetime and Greece, Italy and Portugal face big changes if the European currency is to survive, Foreign Secretary William Hague said in an interview published on Wednesday, Reuters reported. Britain had been vindicated for its decision not to join the 17-nation currency club but was very concerned about the euro breaking up, Hague told the weekly Spectator magazine.

German Chancellor Angela Merkel may fall short of a majority in her own coalition for a crucial reform of the euro zone rescue fund meant to stop a sovereign debt crisis spreading, in what would be a severe blow to her authority, a test vote showed, Reuters reported. Talk of proposals to leverage up the 440 billion euro bailout fund to multiply Europe's financial firepower lifted global stocks on Tuesday but made it harder for Merkel to unite her fractious centre-right coalition.

As the crisis engulfing the 17-nation bloc escalates, Germany continues to press hard for Greece, the region’s worst fiscal miscreant, to pay a high price for breaking the rules, the Financial Times reported. From the federal president down, conservative thinkers have denounced the extraordinary steps taken by the European Central Bank to prevent financial meltdown. Jürgen Stark, one of their leading representatives, this month quit the ECB’s executive board in protest.

Germany’s bad banks, backed by the state to prevent the collapse of Hypo Real Estate Holding AG and WestLB AG during the credit crisis, would be the hardest hit in the event of a Greek default, leaving taxpayers to shoulder the bill a second time, Bloomberg reported. Hypo’s FMS Wertmanagement, with 8.76 billion euros ($12 billion) in Greek sovereign investments and loans, and WestLB’s Erste Abwicklungsanstalt, with 1.21 billion euros, bear more than half of German banks’ Greek debt, according to data compiled from company reports and statements.

Athens’s inability to get a grip on the debt problem is rattling markets and giving rise to talk of a notion that until recently has been considered taboo: a eurozone without Greece, The Christian Science Monitor reported. Greece's introduction last weekend of a new real estate tax and reduction in elected officials' pay are being called too little, too late to address its deep debt.

Germany’s ability to come to the rescue of troubled European partners won crucial backing from the country’s constitutional court on Wednesday, a victory for Chancellor Angela Merkel that also provided at least a temporary reprieve for markets that had begun to worry that Europe’s common currency could collapse, the International Herald Tribune reported. The ruling, which defied some expectations that the court would hamstring Mrs.

Back in May, Chancellor Angela Merkel, little-known for strident pronunciations on foreign policy, lashed out against the indebted countries of Southern Europe, the International Herald Tribune reported. As Greece sought its second rescue package, Mrs. Merkel used an appearance in Meschede, a small town in western Germany, to lambaste the Southern Europeans for not working hard enough, taking long vacations and retiring early. “It’s not just about getting further into debt in countries such as Greece, Spain and Portugal,” Mrs.

The head of Germany's powerful central bank called Thursday for greater co-ordination of fiscal policies in the eurozone as a response to the debt crisis, which he termed its "most severe ever test." Speaking in Hanover in northern Germany, Jens Weidmann said that any solution to the crisis that has crippled debt-laden states on the periphery of the 17-country zone must tackle the problem at its roots, Agence France-Presse reported.