Billions for Business
January 8, 2009
Germany is hoping to save its business sector by offering up to 100 billion euros ($137 billion) to the nation's business sector.
In an interview with the German daily General Anzeiger, the head of the Christian Democrats in the German parliament, Volker Kauder, said that the assistance in the form of guarantees is designed for companies struggling to secure funding from banks or are unable to raise capital on the financial markets.
"As long as banks are not increasing their appetite to award loans, the public powers must make investments possible for our economy by making loans available," he said according to the interview published Thursday.
Observers have criticized the rescue package. German newsmagazine Spiegel's Web site posted a warning from economists Roland Doehrn and Christoph M. Schmidt of the Economic Research Institute in Essen, who said there could be negative consequences. They said political pressure could hold up the decision on which companies deserve help.
They also warned that unless the 400-billion-euro rescue package for the nation's banking sector was properly applied, there was no hope of ever ending the credit crisis.
More Germans without jobs
The German government, which is currently led by an uneasy Grand Coalition of Christian and Social Democrats, is also dealing with the worst unemployment rates of the post-war era.
According to the German labor office, unemployment rose for the first time in 33 months this December. With an additional 114,000 people now out of work, the total number of jobless Germans has reached 3.1 million.
The new bailout package comes on the heels of an additional 50 billion euros in aid for the banks which the coalition also hopes to nail down by early next week.