Germany's Steinbrueck delighted by reaction to rescue

BERLIN Mon Oct 13, 2008 5:33pm EDT

BERLIN (Reuters) - German Finance Minister Peer Steinbrueck said on Monday he was delighted with the financial markets' reaction after Britain, Germany, France and other European countries announced major bank rescue plans.

"The reaction is what we imagined it would be and it's what we hoped it would be," Steinbrueck said in an interview with ZDF television.

"The movements in the (market) indices have been just delightful -- and one should be allowed to say that out loud," he added. "We should acknowledge that here in Germany instead of getting caught up with the idea that 'everything is so awful.'"

"It shows that the measures taken are having an impact -- not only in Germany, but also in other countries. Now we've got to be rigid about implementing what's been agreed."

"We're in love with the success," a visibly pleased Steinbrueck added.

The world bet solidly on recapitalizing ailing banks as the fastest way out of the financial crisis, sending stock markets soaring after their worst week in history.

U.S. stocks rose more than 11 percent on Monday, reversing direction after the Dow Jones industrial average fell 18 percent last week in a climate of panic and uncertainty as credit markets froze and major economies headed toward recession.

European shares soared 10 percent -- their biggest one-day percentage advance on record -- as investors cheered action taken by governments and central banks to revive credit markets and bail out banks.

In a separate interview with ARD, Steinbrueck ruled out any tax increases to fund the rescue, saying they would only hurt the economy. He also said the governments' rescue measures were "good for savers, good for small businesses and good for communities."

Steinbrueck angrily admonished an ARD interviewer when she asked him if the rising share prices on Monday were not a belated reward for bankers who helped caused the turmoil.

"We've finally got some good news and you're trying to suggest in your question that it's actually 'bad news,'" Steinbrueck said. "Would you rather see share prices continue to collapse?

"What we've done important for stability, so that confidence returns. And now you're trying to suggest that I should apologize for the good development in the market today?"

Steinbrueck said he hoped markets "would continue learning how to fly."

He also said he realized German growth would be slower in 2009 than in 2008, but noted government investment spending and social spending would not be cut. He added that he was disappointed his goal of a balanced budget in 2011 would not be achieved.

"It definitely hurts," Steinbrueck said. "But our goal remains unchanged -- reducing borrowing to zero. Whether the timeframe has to be delayed for that we'll have to see."

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.