Tags: fed | dollar | germany | bernanke

German Minister: US Fed Policy 'Clueless'

Friday, 05 Nov 2010 08:53 AM

Europe needs to strengthen economic governance and agree on a permanent crisis resolution mechanism, all the more so given current U.S. economic weakness, German Finance Minister Wolfgang Schaeuble said on Friday.

Speaking at a conference in Berlin, Schaeuble took issue with the European Central Bank's reluctance to support both a permanent structure to prevent future economic crises and strengthen the European Union's budget rules.

"I am of the opinion, and I know (ECB President Jean-Claude) Trichet doesn't agree with me, we in Europe cannot do without a crisis management mechanism on top of a strengthened stability and growth pact," Schaeuble said.

Replacement of the current mechanism, set up in the wake of the Greek debt crisis to prevent it from spreading and to help stabilise the euro currency, was on track and would likely not disturb financial markets, he argued.

"I believe we are on track to developing a reasonable mechanism in the EU ...
Market participants have long anticipated and are expecting it," Schaeuble said.

Germany has pushed for a replacement of the programme, which expires in 2013, and increased economic coordination in the EU — a goal advanced last month when plans it put forward with France to make limited changes to the bloc's treaty and tighten budgetary rules gained approval.

France and Germany should maintain their leadership role in Europe, Schaeuble said, especially in order to harmonise its economic policy and bolster stability given current economic uncertainties.

These are being worsened by reckless policy in part from the the United States, Schaeuble said, sharpening his criticism of the Federal Reserve's program to buy an additional $600 billion worth of U.S. government bonds.

Pumping more money into the economy will not solve the country's problems, he said, adding that the world needed U.S. leadership that was currently lacking.

"With all due respect, U.S. policy is clueless," Schaeuble said. "(The problem) is not a shortage of liquidity. It's not that the Americans haven't pumped enough liquidity into the market."

Late on Thursday, Schaeuble said Germany would take up this point critically with the United States both bilaterally and at next week's G20 summit of industrialised and emerging nations.

Aside from the G20, international economic coordination could prove nimbler in a smaller framework, Schaeuble said.

"The G11, a combination of the G7 (industrialized) and BRIC countries (Brazil, Russia, India and China) could become an instrument with which we gain capability to act."

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Europe needs to strengthen economic governance and agree on a permanent crisis resolution mechanism, all the more so given current U.S. economic weakness, German Finance Minister Wolfgang Schaeuble said on Friday. Speaking at a conference in Berlin, Schaeuble took issue...
fed,dollar,germany,bernanke
401
2010-53-05
Friday, 05 Nov 2010 08:53 AM
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