Made in Germany: The Business Magazine

We talk to Wolfgang Gerke, financial sector expert and president of the Bavarian Financial Center in Munich, about the crisis of the euro and the future of the common currency.DW-TV: Will Spain follow Greece and Ireland and end up needing a bailout from the Euro zone? Wolfgang Gerke joins me. He is President of the Bavarian Finance Center in Munich. Is Spain next on the bailout list? Wolfgang Gerke: Spain might be the next candidate, but Spain will be a very different candidate compared with Greece or Ireland or Portugal. Spain has more possibilities to come out of the crisis itself. But on the other hand Spain has a very high unemployment rate, with 20%, and in that situation, if the economy isn't growing maybe Spain needs some help. DW-TV: Maybe it does need some help. It has high unemployment and it also has a debt problem. We have a graphic comparing Spain and Germany's debt as a percentage of GDP. At the beginning of this century, Spain was actually in better shape than Germany. Everyone today looking at Germany as the role model for the Euro zone. Then the financial crisis came and everything turned upside down for Madrid. Did the Spaniards become like the Americans and simply start living beyond their means? Wolfgang Gerke: They got too much cheap money and therefore changed their consuming behavior. And there was a very booming economy, especially in the building sector. So it could happen that the bubble burst. That is a problem for the private sector, the public sectors is going quite well in Spain, if you look at recent years. DW-TV: That's a good point. If you take private debt and corporate debt OUT of calculation, Spain's debt as percentage of GDP is LOWER than Germany's! Yet, bond markets are eyeing Spain, not Germany. Unfair? Wolfgang Gerke: Spain is nearly within the limits of the Maastricht Treaty, but the Deltas, that means the actual situation, is bad. In Germany we have a growing economy, in Spain we haven't and even the Spanish government has to borrow too much money at the moment and the Spanish bonds are suffering. DW-TV: Spanish bonds are suffering. And one solution is a joint Euro bond. We've got Belgium, we've got Italy, we've got Luxembourg coming out and saying we want a joint Euro zone bond. What do you say to that? Wolfgang Gerke: That isn't a solution. It's a very bad solution. DW-TV: Why is it bad? Wolfgang Gerke: It's a transfer system. It's an indirect transfer system and Germany will pay for it. DW-TV: Isn't that what Germany is doing now? Wolfgang Gerke: Yes but we have to do it in an open transfer and not in that way, even in the ECB we have the wrong policy making the ECB into a bad bank for European sovereign governments. DW-TV: The ECB is buying European sovereign bonds right now. You think that's bad too? Wolfgang Gerke: Yes, that's the wrong way. DW-TV: Mr. Gerke, I'm sure we'll be talking with you next year to see how this story unfolds. Thank you very much for joining us today. ? (Interview: Brent Goff)? ? ? ?