SPIEGELONLINE INTERNATIONAL: The US government is buying bad debt for $700 billion. Now Washington is asking other countries to jump in and help, too, but the Germans are bowing out. Believing that the rescue package sends the wrong signal, experts from the country's leading economics think tanks argue it's the right call.
It's not a call for assistance; it's a scream for help. US Treasury Secretary Henry Paulson is asking other countries to help buy up bad US debt. The US government is putting up $700 billion in taxpayer money in the hopes that the measure might restore stability in the financial system. Some countries are planning to help. But the German government has answered this call quickly and clearly: no.
Economics experts think that's the right response. As they see it, in the long run, those responsible for the crisis -- who have been cashed out with high salaries and bonuses for years -- will not be penalized for billions "but will be let off the hook like everyone else," says Carsten Meier of the Kiel Institute for the World Economy (IfW). According to Meier, by injecting capital into the market, the US government is putting everyone who speculated and lost back on their feet and thereby standing in the way of a market cleanup.
Paulson has stated that the US government will pay a fair price for the bad debt, which Meier sees as sending "precisely the wrong signal," adding that "people shouldn't be rewarded for taking such high risks." Meier also finds Germany's decision to sit out any bailout operation to be the right move. "The financial crisis is primarily a problem in America," Meier says. As he sees it, the fact that Germany and Europe are far less affected that the US justifies European reluctance. "The stability of the German banking system is not in danger," Meier points out as he explains why he believes Europe shouldn't provide any funds. "The world shouldn't have to bear the burden for America's lapses." 'The World Shouldn't Have to Bear the Burden for America's Lapses' >>> By Corinna Kreiler in Hamburg | September 23, 2008
BBC:
Paulson Eyes Rescue Plan Backing: US Treasury Secretary Henry Paulson has urged a key Congressional hearing not to delay a $700bn (£382bn) bail-out of the US banking system.
Mr Paulson told the Senate Banking Committee that the personal savings of US citizens are at risk if the rescue plan is not implemented.
The Treasury wants unlimited authority to buy back the bad debt that is clogging the financial markets.
Fed chairman Ben Bernanke has backed him by saying urgent action is needed. >>> | September 23, 2008
Watch BBC video: Henry Paulson on the plan to rescue the US economy >>>
BBC:
What Would Financial Armageddon Look Like? >>> By Anthony Reuben, Business reporter, BBC News | September 23, 2008
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