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German report German report
by Euro Reporter
2011-10-27 07:44:42
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Germany approves boosting of EU’s bailout fund

Another EU leaders’ summit has kicked off in Brussels aimed at taking concrete steps to deal with the Eurozone debt crisis. Ahead of that, German legislators agreed to support a massive expansion of the European bailout fund. In one of the first decisions to emerge from the summit, big European banks will be required to raise their capital cushions to 9 percent of their risky investments. The recommendation to banks exposed to the unhealthy finances of Greece, Ireland, Portugal, Italy and Spain is to be put in effect by June 2012, the Associated Press reported, citing Polish Finance Minister Jan Vincent-Rostowski. Moreover, a draft statement obtained by Reuters suggests the EU’s bailout fund will be increased "several fold." The EU finance ministers are to agree the details of the scale up no earlier than in November. The enlargement of the European Financial Stability Facility (EFSF) might be achieved via cooperation with the International Monetary Fund.

Wednesday’s summit, which was called after an earlier gathering on Monday failed to produce any concrete results, is still to focus on resolving Greece's debt crisis, scaling up the EU's bailout fund – and Italy's staggering finances. "We need a deal tonight, and we need political agreement to the key aspects that are on the table," European Commission spokesman Olivier Bailly said in Brussels. Still, the summit may not provide the final figure on writing down the Greek debt, he added.  But before the meeting, German Chancellor Angela Merkel indicated that private investors should take a cut of at least 50 percent on Greek bonds. Such a "haircut" would imply for creditors a loss of 103 billion Euros.

The chancellor also said the summit should deliver a solution, which will allow Greece to reduce its debt burden to 120 percent of GDP by 2020. At the moment, there are fears that Greek debt will continue mounting and may hit 190 percent of GDP in 2013. Italy's Prime Minister Silvio Berlusconi is set to deliver a letter offering details on the package of 54 billion Euros ($75 billion) in austerity measures adopted by Italy in September to balance the country’s budget. Less than 24 hours prior to the summit, PM Berlusconi managed to push through retirement reform to knock the retirement age for all Italian workers from 65 up to 67 by 2025.  In Germany, the vote to enlarge the bailout fund of the European Financial Stability Facility (EFSF) passed by a broad margin of 503 against 89 with four abstentions in the German Parliament. Germany is the only country where the Constitutional Court ruled that bail-out operations involving taxpayers’ Euros must first gain legislators’ approval.


Inflation in Germany’s North Rhine-Westphalia slowed in October

Inflation in the German state of North Rhine-Westphalia slowed in October due to a one-off drop in education costs. The inflation rate decreased to 2.3 percent from 2.8 percent in September, the state’s statistics office in Dusseldorf said today. In the month, prices fell 0.3 percent. Economists forecast that German inflation, calculated using a harmonized European Union method, will slow to 2.8 percent from 2.9 percent, the median of 22 estimates in a Bloomberg News survey shows. The Federal Statistics Office in Wiesbaden will release that report, based on data from six states, tomorrow.

The European debt crisis and slowing global growth are demand for oil, the main driver of inflation this year. While euro-region inflation accelerated to 3 percent in September, European Central Bank Governing Council member Ewald Nowotny said yesterday the central bank doesn’t see any inflation risks. “Inflation has probably peaked in Germany and the euro region,” said Alexander Koch, an economist at UniCredit Group in Munich. “It’s likely to drop below 2 percent in the first half of next year, hence the ECB doesn’t need to be overly concerned about future price pressures.”

Without the 52.2 percent drop in education fees from a year earlier, North Rhine-Westphalia’s inflation rate would have remained unchanged at 2.8 percent, the statistics office said. The price for heating oil rose 24.4 percent in the year and flights were 18.7 percent more expensive. Europe’s leaders, struggling to heed the world’s calls to once and for all eradicate what U.S. Treasury Secretary Timothy F. Geithner called the “catastrophic risk” of the debt crisis, are back in Brussels today for an emergency summit. A potential Greek default threatens to spark shockwaves that could engulf Italy and France, jolt the banking system and spell havoc for the global economy.


Germany's autobahn churches

Germans are famous for their love of fast cars. But for those needing a little respite from the country's high-speed highways, autobahn churches offer a unique brand of peace and sanctuary for the modern traveller.  "We seek to care for our guests fully -- not just for their cars but also for their body, soul and spirit," said Anna Isabell Strohofer, whose parents opened the ecumenical Light on Our Path Church ten years ago at the family-run Strohofer service station close to Nuremberg in southern Germany. "It was the aim of our family to create a place where drivers can recover mentally."

A family tragedy also played a role in the decision. "My mother's brother died aged 18 in a car accident," said Strohofer in an interview. "My family had always been very religious but this accident made our faith much stronger, and was also a reason to build the church: to remember him."

The church now draws all kinds of travellers from bus charters to long-distance truck drivers, and even hosts ceremonies where bikers come to have their motorcycles blessed. The tradition of roadside crosses and chapels where pilgrims and other travellers pray for divine protection on the road dates back to the Middle Ages, and seems very much alive at today's autobahn churches.  "Thank you for your protection over 5,000 accident-free kilometres home to my family," wrote one visitor in the message book at the Protestant community and autobahn church at the village of Werbellin. "Thanks for this oasis on our path of life," reads another.

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