Germany Happy Paying Up to Keep Expansion on Track

by Alen Mattich

Wall Street Journal
June 23, 2011

The euro zone's periphery will continue to be rescued as long as Germany is willing to pay up. But Germany's readiness to keep beleaguered countries afloat is likely to wane as its economic growth slows. And Germany's economy is likely to slow sharply over the coming year.

Publicly, German politicians have made a big deal of not wanting to be stuck with the European rescue bill. But every time they've been confronted by the prospect of a euro-zone member's messy default and a consequent systemic crisis, they've always blinked. Most recently, Chancellor Angela Merkel backtracked on demands that private-sector lenders be made to join in any further Greek bailouts.

With the German economy growing by 1.5% in the first quarter from the previous three months, and 5.2% on the year, it's easy to see why Germany is so ready to pay up to prevent anything derailing its expansion.

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