Calls in Germany to prime pump, Steinbrueck downbeat
German Finance Minister Peer Steinbrueck has warned that financial markets face a long crisis, and some German politicians stepped up calls Saturday for pump priming to avert an economic slump, dpa reported.
In remarks to appear Sunday in the newspaper Bild am Sonntag, Steinbrueck said, "The danger of a collapse is still not gone. Any all-clear signal would be wrong."
Speaking a week after Germany joined in uniform moves by euro-zone nations to recapitalize banks and guarantee interbank lending, he said, "We are still facing a dangerous situation.
"I'm not going to hoodwink citizens and declare, we've got it all under control."
The infusion of 480 billion euros (600 billion dollars) runs till the end of next year.
"We'll need that much time," said Steinbrueck, who appealed to Germany's eight landesbanks, which are majority owned by the 16 states, to merge into bigger units. He said cooperative banks should do the same.
Although Steinbrueck only spoke of the crisis in the financial sector, which has had little direct impact on most Germans, fears are growing of a recession that would hurt industry and commerce in Germany.
The bellwether DAX stock index closed Friday at 4,295.67, down 10 per cent in just a week, as investors reacted to fears in key Asian and European export markets.
Although many economists have warned that a splurge of counter-cyclical government spending would bring little benefit, the news magazine Der Spiegel said Berlin was considering a rush of handouts to boost consumption.
Franz Muentefering, leader of the Social Democratic Party which is in coalition with Chancellor Angela Merkel's Christian Democrats, called in a speech for more tax breaks for building renovations.
"We have to ensure as many jobs as possible are saved or created, and it has to happen in the next 14 days," he said, but opposed tax cuts. Muentefering is not in the cabinet.
Christian Wulff, a member of Merkel's party and premier of Lower Saxony, said business and consumers needed "positive signals" and called for an income-tax cut by way of a rebate on health-insurance premiums.
In Beijing, where she was attending the ASEM summit, Merkel said her government would "take action where we can help things along sectorally."
Der Spiegel said this was likely to mean more subsidies to insulate buildings and for infrastructure, with key government figures to decide on action on November 5.