Coverage in the German weekend press has reflected the stark division of opinion in Europe's largest economy to Europe's Central Bank engaging in wholesale buying of peripheral nations' debt.
Spain is not alone in its plight, FAZ noted. Rates for debt of France and Austria are at relative record highs, “and in the past week investors’ fear even touched the Netherlands and Finland”.
Germany’s chancellor Angela Merkel, Bundesbank president Jens Weidmann and his ECB counterpart Mario Draghi have all opposed wholesale intervention from Frankfurt to stem the tide and contagion.
But FAZ said: “In holding such a position, [they] have come to stand fairly alone internationally.”
They will not fire the ‘Big Bazooka’ Anglo Saxon leaders want, FAZ said.
“With their refusal to accept that, the Germans are only making the crisis worse. Fund managers are for the first time looking at the collapse of the eurozone.”
The Handelsblatt said: “If the ECB opens the ‘money tap’, it could come to a returns bonanza, and if it doesn’t larger losses threaten. In any case hectic market moves threaten, which investors have to deal with.
“Will the ECB save the eurozone or not? The fear of a contagion of the debt crisis to the stronger euro countries has risen massively – and with this the fear of financial collapse.”
FAZ accepted Merkel would have to gainsay most of her own economists if she allowed more direct ECB intervention, and it was unclear if buying bonds would work. “Gigantic sums would be required and that would entail enormous risks for Germany.”
One paper noted the ECB printing up to €650bn to buy the bonds would cause few problems regarding inflation, but printing more would be problematic.
But FAZ also carried an interview with leading economist professor Wolfgang Franz who said: “More ECB bond purchases would be a deadly sin”.
“All historical experience, not least Germany’s, shows the monetisation of debt is a deadly sin of a central bank,” he said. “In doing this the bank loses its independence and there is the danger of inflation.”
Against this backdrop, most German financial pages noted the EU’s own 2012 budget would grow by 2.02% to €129.1bn, which is €2bn less than the EU officials wanted. But the papers also noted, pointedly, 17% of the EU budget would come from the German purse.
Meanwhile, in Die Zeit Martin Schulz of Germany’s SPD opposition party put his weight behind the financial transaction tax, which he said would “improve the income side of the indebted countries markedly. In the coming weeks the European Commission will lay out guidelines for its implementation, and it will have the majority in the European parliament,” he said.
Some writers noted increased tensions between eurozone member states, as well as between Germany and the ‘half-in half-out’ EU member, Great Britain.
Handelsblatt’s Brussels correspondent noted increasing anger among non-German eurozone members that Germany was profiting from low Bund yields and a weak euro, while refusing to increase the EFSF’s latitude, or ECB’s mandate, to save more countries if this is needed.
In an article entitled ‘Deutsche Heuchelei’ the correspondent wrote: “Profits from the crisis are quietly being cashed in Berlin, while the risks are bemoaned loudly.”