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Global Biz

German minister lashes out at US economic policy

(Xinhua)
Updated: 2010-11-06 10:04
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BERLIN - German Finance Minister Wolfgang Schaeuble lashed out Friday at the United States' move of printing huge money to stimulate its slow recovery, saying that these policies would not help but create more troubles.

"With all due respect, my feeling is that the United States is at a loss," Schaeuble told reporters in Berlin, two days after the US Federal Reserve (the Fed) announced it would ?purchase 600 billion dollars of long-term government bonds by mid-2011, in a new round of "quantitative easing".

"Saying now that we once again make an additional $600 billion available will not solve any problem." Schaeuble said. The difficulties faced by Americans had nothing to do with " liquidity drain."

On Friday, figures showed that the United States surprisingly added 151,000 jobs in October, but the unemployment rate remained unchanged at 9.6 percent for the third straight month. In contrast, Germany's unemployment fell for the 15th consecutive month in the same month, dropping to 7.5 percent, its lowest level in 18 years.

"I really wish the Americans could deal with their great problems as well and quickly as possible. But if they look at Germany's success, they will understand that increasing the deficit is not the right way," Schaeuble said.

The minister noted that huge economic problems of the United States "should not be tackled with more debt," which was at odds with consensus made at June's Group of 20 summit that cutting deficits, rather than adding more, was one of the priorities among all developed countries.

Schaeuble told German public television ARD on Thursday night that the Fed's capital-injection push would "create extra problems for the world" and lead to "long-term damage".

One outcome of the Fed's new plan would be the fast appreciation of the euro against dollar, some analysts said.

On Thursday, the euro stood at a nine-month high of 1.4264 against the dollar at Frankfurt. Since early June, the euro has risen 19 percent against dollar. Fears are spreading among European exporters that the too-strong currency could ruin their price competitiveness.

Germany, the Europe's largest economy, outpaced other euro zone countries and registered a solid growth since spring. Surging exports were widely seen as a main engine of its recovery. However, figures showed that German exports began to slow down since July, after a stunning 8.2-percent increase in the second quarter.

"We are going to discuss the issue (the Fed's plan) in a serious manner with the United States both in bilateral talks and at the G20 summit in South Korea next week," Schaeuble said.

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