Merkel: Europe faces historic test in euro crisis

BERLIN (AP) -- Europe faces an "existential" test in its effort to shore up the euro, German Chancellor Angela Merkel said Wednesday, as she pushed for tougher regulation of markets and tighter public finances across the region.


Merkel told lawmakers that closer oversight of the financial world was needed to assert the "primacy of politics" amid the debt crisis.

"It is about no more and no less than the preservation of the European idea," she told the lower house of parliament. "That is our historic task; if the euro fails, then Europe fails."

Parliament was meeting to consider the euro750 billion ($1 trillion) rescue package to help eurozone nations avoid default -- with Germany to contribute at least euro123 billion in loan guarantees. It is expected to vote on Friday.

Merkel made clear that the root cause of the debt crisis was insufficiently competitive countries living above their means.

"Europe needs a new culture of stability," she said, with faster and more effective punishment for countries that habitually run excessive budget deficits.

Those could include withholding European Union structural funds and temporarily withdrawing voting rights from repeat offenders, she added.

Merkel said that markets, while not the original cause of the crisis, poured oil on the fire -- raising "the question of how we can assert the primacy of politics."

It is up to governments and parliaments to intervene "to keep the risks controllable," she added.

Merkel renewed a pledge to push for taxation of financial markets -- either a financial transaction tax or another form of levy -- in Europe and beyond.

She pointed to her government's decision on Tuesday to ban so-called naked short-selling of eurozone government debt and shares of major financial companies, and said that would remain in place until wider European rules are drawn up. Naked short-selling involves a trader selling shares or investments he doesn't own.

Parliament is considering the eurozone rescue package two weeks after a smaller, separate package for Greece, which was unpopular in Germany.
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Createwealth8888:

Don't end up like Asian finacial crisis where STI dropped -68% from its last peak. So scary hor.