* Eurosceptic says crisis "burying deeper, like a worm"
* Opposition lawmakers say Merkel should be open on risks
* Conservatives blame low yields, flight from sovereigns
By Andreas Rinke and Noah Barkin
BERLIN, Nov 23 A botched sale of German
bonds rang alarm bells in Berlin on Wednesday, with opposition
lawmakers calling it a sign the euro zone's debt woes were
coming home to roost and slamming Angela Merkel's government for
failing to spell out the true risks of the crisis to Germans.
Senior members of the chancellor's Christian Democrats (CDU)
mostly played down the significance of the 10-year bond auction,
in which commercial banks ended up buying just 3.64 billion
euros of the 6 billion euros in bonds Germany had on offer.
But other politicians were less kind.
Frank Schaeffler, a eurosceptic parliamentarian from the
Free Democrats (FDP), who rule together with Merkel's
conservatives, said it showed the debt crisis was "burying ever
deeper, like a worm" and had now reached Germany.
Carsten Schneider, budget spokesman for the centre-left
Social Democrats (SPD) in parliament, described it as the first
concrete sign that the crisis which started in Greece two years
ago and has since spread across the 17-nation euro zone like a
virus would not pass Germany by.
"The time has come for the chancellor and finance minister
to tell people the truth about the costs and risks that our
country now faces," Schneider told Reuters. "Germany won't be
able to finance itself forever with rock-bottom interest rates."
After initially painting the crisis as a problem for certain
euro countries that irresponsibly ran up their debts, Merkel has
changed her rhetoric in recent months, warning increasingly
about the costs to Germany if the bloc is allowed to fall apart,
as some experts now predict.
At a party congress last week she said Europe faced perhaps
its "toughest hour" since World War Two. But for many Germans
the crisis has not hit home. The economy remains buoyant,
unemployment is at its lowest levels since reunification in 1990
and German firms say they have strong order backlogs.
Germany has been seen as a safe haven by investors since the
crisis erupted. While the borrowing costs of vulnerable single
currency members on Europe's southern periphery have shot up to
euro-era highs, those of Germany have sunk ever lower.
But as the crisis has deepened, toppling governments in Rome
and Athens, and hitting bigger economies like Italy, Spain and
even Germany's neighbour France, worries about the costs to
Europe's paymaster have risen.
KNOCK KNOCK KNOCKIN ON GERMANY'S DOOR
One analyst called the bond sale, which pushed the euro and
stocks lower, a "complete and utter disaster" that did not bode
well for Germany and the wider bloc.
"The crisis of confidence is knocking on Germany's door for
the first time," Gerhard Schick, a finance expert for the
opposition Greens, told Reuters.
The head of the German Debt Agency Carl Heinz Daube blamed
"extremely nervous markets" for the poor result. He said the
retained amount, roughly 39 percent of the planned volume of 6
billion euros, would be sold on the secondary market and
rejected the notion that Wednesday's weak sale would affect
planned debt sales in the coming weeks.
Lawmakers from Merkel's party also scrambled to play down
the auction, blaming the result on the low returns offered -
just 2 percent annually over 10 years.
"The situation is not dramatic at all," Norbert Barthle, a
CDU budget expert told Reuters.
"The fact that the interest rate offered is around the
inflation rate means no profit for investors. It should be no
surprise, because the debt crisis has meant an investor flight
away from sovereign debt," he said.
His conservative colleague in the Bundestag, Michael
Meister, warned against reading too much into the sale but
conceded it gave reason for vigilance.
"It's really not that dramatic. This kind of thing happens
every now and then with bond placements," Meister told Reuters.
"We need to remain substantive and responsible. This
placement really doesn't justify the war cries that we're
hearing from the opposition and euro opponents."