The German government is considering forcing banks to accept state aid and partially nationalizing them in return because it's increasingly worried that Germany faces a credit crunch, the Süddeutsche Zeitung newspaper reported on Monday. The German government is worried that the current shortage of bank credit plaguing industry will worsen later this year and is considering tackling the problem by forcibly taking stakes in banks, similar to the policy adopted by authorities in the United States and Britain, a German newspaper reported on Monday. Not lending enough -- German banks in Frankfurt, the country's financial capital. The plan envisages the government forcing banks to take state aid and to part-nationalize them in return, Süddeutsche Zeitung reported, citing unnamed sources. So far, both Chancellor Angela Merkel and Finance Minister Peer Steinbrück have rejected such mandatory aid and have allowed banks to choose whether to tap the government's bank stabilization fund set up last year. But analysts at the Chancellery, Finance Ministry and Economy Ministry now concur that Germany is at risk of a credit crunch that could worsen the recession, already the deepest since the 1930s, Süddeutsche reported.
The German government is considering forcing banks to accept state aid and partially nationalizing them in return because it's increasingly worried that Germany faces a credit crunch, the Süddeutsche Zeitung newspaper reported on Monday.
The German government is worried that the current shortage of bank credit plaguing industry will worsen later this year and is considering tackling the problem by forcibly taking stakes in banks, similar to the policy adopted by authorities in the United States and Britain, a German newspaper reported on Monday.
Not lending enough -- German banks in Frankfurt, the country's financial capital. The plan envisages the government forcing banks to take state aid and to part-nationalize them in return, Süddeutsche Zeitung reported, citing unnamed sources.
So far, both Chancellor Angela Merkel and Finance Minister Peer Steinbrück have rejected such mandatory aid and have allowed banks to choose whether to tap the government's bank stabilization fund set up last year.
But analysts at the Chancellery, Finance Ministry and Economy Ministry now concur that Germany is at risk of a credit crunch that could worsen the recession, already the deepest since the 1930s, Süddeutsche reported.
Hans-Peter Keitel, 61, president of the Federation of German Industries (BDI), discusses the threat of a credit crunch in Germany and the tough work awaiting the next government, which will have to create a plan for dealing with the massive debt accrued through efforts to combat the economic crisis. SPIEGEL: Mr. Keitel, the government in Berlin says we are experiencing a credit crunch. The banks are saying there isn't one. Who's correct? FROM THE MAGAZINE Find out how you can reprint this DER SPIEGEL article in your publication. Keitel: Both are correct. A person running a healthy business has no problem getting a short-term loan for his day-to-day business. In that sense I must even defend the banks against the occasional populist criticism. But there is trouble with loans needed by companies to finance large, long-term projects or investments. Here we are observing bottlenecks that give cause for concern. The crunch hasn't happened yet, but we are close to it.
Hans-Peter Keitel, 61, president of the Federation of German Industries (BDI), discusses the threat of a credit crunch in Germany and the tough work awaiting the next government, which will have to create a plan for dealing with the massive debt accrued through efforts to combat the economic crisis.
SPIEGEL: Mr. Keitel, the government in Berlin says we are experiencing a credit crunch. The banks are saying there isn't one. Who's correct?
FROM THE MAGAZINE Find out how you can reprint this DER SPIEGEL article in your publication. Keitel: Both are correct. A person running a healthy business has no problem getting a short-term loan for his day-to-day business. In that sense I must even defend the banks against the occasional populist criticism. But there is trouble with loans needed by companies to finance large, long-term projects or investments. Here we are observing bottlenecks that give cause for concern. The crunch hasn't happened yet, but we are close to it.
Many economists are already talking about a light at the end of the recession tunnel. But a new crisis is looming in Germany as companies find it increasingly difficult to borrow money. The government is coming up with increasingly desperate ideas to get liquidity flowing again. There was little evidence of a crisis as German Chancellor Angela Merkel hurried through a production building at Opitz Holzbau GmbH, a manufacturer of prefabricated building elements based in the eastern German town of Neuruppin, on Wednesday of last week. Production was in high gear, and the chancellor chatted with assembly workers, handed out praise and shook hands. Idle cranes in Hamburg harbor: The economic crisis is hitting German exporters hard. Merkel was making the second stop on her summer tour of German small- and mid-sized businesses. She was trying out the central message of her election campaign, which will begin in the coming weeks: "Everything will be just fine." After the factory tour, Merkel and local business owners retired to a drab conference room -- and suddenly the crisis was back. The discussion revolved around banks, the slowdown in the flow of credit and the resulting cash crunch many companies are experiencing. This is the subject that is currently capturing the attention of economists, politicians, business owners and ordinary people alike.
Many economists are already talking about a light at the end of the recession tunnel. But a new crisis is looming in Germany as companies find it increasingly difficult to borrow money. The government is coming up with increasingly desperate ideas to get liquidity flowing again.
There was little evidence of a crisis as German Chancellor Angela Merkel hurried through a production building at Opitz Holzbau GmbH, a manufacturer of prefabricated building elements based in the eastern German town of Neuruppin, on Wednesday of last week. Production was in high gear, and the chancellor chatted with assembly workers, handed out praise and shook hands.
Idle cranes in Hamburg harbor: The economic crisis is hitting German exporters hard. Merkel was making the second stop on her summer tour of German small- and mid-sized businesses. She was trying out the central message of her election campaign, which will begin in the coming weeks: "Everything will be just fine."
After the factory tour, Merkel and local business owners retired to a drab conference room -- and suddenly the crisis was back. The discussion revolved around banks, the slowdown in the flow of credit and the resulting cash crunch many companies are experiencing. This is the subject that is currently capturing the attention of economists, politicians, business owners and ordinary people alike.
