Germany

German Chancellor Angela Merkel's cabinet approved new powers for the euro zone's bailout fund on Wednesday, but she faces an uphill battle to convince party skeptics to back efforts to contain the crisis. Concerned that Germany's parliament has little control over the European Financial Stability Facility (EFSF), some members of Merkel's center-right coalition are threatening to oppose boosting its powers when the Bundestag (lower house) votes on September 29.

German Chancellor Angela Merkel is weighing whether to yield to a demand by some lawmakers for a bigger voice in future debt bailouts as a condition to win her party's approval for a stronger euro-zone rescue fund, as a parliamentary vote on the issue was delayed a week, The Wall Street Journal reported. Granting the German parliament the right to approve or reject future bailouts could trigger similar demands from parliaments across the euro zone, whose lawmakers are closely observing Berlin's actions. That could lead to further delays in the EU's approval for the Greek rescue.

German landesbanks WestLB and LBBW said their first-half earnings were weighed down by Greece exposure and restructuring, factors that made it difficult for either public sector lender to give a clear forecast for 2011, Reuters reported. WestLB said ongoing restructuring expenses weighed down first-half earnings as the troubled German bank prepares to break itself up. The lender posted a net profit of 36 million euros ($52 million) in the January to June period, down by half from 67 million in the year-earlier period as it transferred portfolios to the German government's bad bank.

After being held up as a model of strength in a region saddled with debt and low growth, Germany suddenly finds itself in a perfect economic storm that could force it to rethink its approach to the crisis plaguing the wider euro zone, Reuters reported in an analysis. New business sentiment figures from the Munich-based Ifo institute confirmed on Wednesday what tepid second-quarter growth data suggested last week: Europe's largest economy is slowing, and slowing sharply. The reasons are many.

The euro zone's rescue plan to end its sovereign-debt crisis will weaken the foundations of the currency union and could increase states' tendency to build up debts, Germany's Bundesbank warned Monday, taking a hard stance against an agreement that German Chancellor Angela Merkel still has to persuade her government to support, The Wall Street Journal reported.

France and Germany on Wednesday increased the pressure on their euro-zone peers to improve fiscal discipline in the bloc with a proposal to cut off the region's wayward spenders from key European Union transfer funds, The Wall Street Journal reported. The proposal marks an effort to boost fiscal discipline across the euro zone by giving countries incentives to rein in spending and cut their budget gaps. But the idea is controversial and could be difficult to enforce, as well as to sell to the rest of the bloc.

The economy of Germany, Europe’s headline performer, slowed to a virtual standstill over the past three months, according to new figures released Tuesday, a further blow to international efforts to contain the financial crisis on the continent, The Washington Post reported. The discouraging news came just hours before German Chancellor Angela Merkel and French President Nicolas Sarkozy called for closer European coordination in setting economic policy and new steps to impose discipline on governments whose lax budget practices prompted the debt crisis.

New steps to save the euro are raising anxiety levels among Germany's influential economic policy establishment, which sees them as an existential threat to the principles that helped raise the country from the ashes of World War Two, Reuters reported. Many saw Chancellor Angela Merkel's decision last month to let the euro zone rescue fund buy the bonds of vulnerable member states on the open market as a step toward a "transfer union," in which Germans are forced to pay for the sins of others.

One of the most common catchphrases in the consulting business is that there are opportunities to be found in every crisis, Spiegel Online reported. The global financial crisis of 2008 indeed provided the German economy with the chance to shine. German businesses enjoyed stronger growth than most rivals once the worst of the crisis was over. Germany emerged as a world champion of the economic rebound. But is the worst truly over? With its downgrading of the United States' top credit rating on Friday, Standard & Poor's triggered fears that we may be facing a double-dip recession.

Germany has long sat at the center of the European economy, but Europe is no longer as central to Germany as it used to be, the International Herald Tribune reported. With large parts of Europe still in an economic rut and struggling to cope with a debt crisis, Germany is increasingly deploying its money and energy outside the euro zone to fuel its robust growth.