| BERLIN, July 24
BERLIN, July 24 The prospect of Europe's biggest
economy losing its cherished AAA credit status has unsettled
Germans, already angry about footing the bill for bailouts, and
triggered calls for an even tougher stance on Greece and other
euro zone laggards.
While politicians and economists were at pains to argue that
Moody's downward revision to Germany's credit rating outlook
would have little immediate impact on borrowing
costs, ordinary Germans said they were worried.
"If things pan out the way Moody's have predicted then we
will have problems here with unemployment, if we lose confidence
that things will get better, it'll mean big problems for the
economy," said Memet Dogan, a 45-year-old transport worker near
Berlin's Brandenburg Gate.
Germany has been a bedrock of stability in the euro zone
crisis with its bonds seen as a safe-haven from the region's
troubles and investors paying to lend money to Berlin at recent
But Germany's strength means it has the role of regional
paymaster and taxpayers are fed up that their hard-earned cash
is going to support neighbours whom they view as profligate.
They oppose further bailouts and a poll for German TV
released last month showed a hefty 83 percent said Greece should
quit the euro zone if it failed to abide to the conditions of
its aid package.
Hans Michelbach, a senior member of Bavaria's Christian
Social Union (CSU), sister party to Chancellor Angela Merkel's
conservative Christian Democrats (CDU), described Moody's move
as "a signal that even Germany's resilience is not unlimited."
"Germany has made a huge solidarity contribution to
stabilise highly indebted euro states. Taking on a further
burden will be difficult and hard to explain to citizens."
Polls show most voters back Merkel's tough approach towards
bailouts, which has included imposing tough conditions in return
for aid and resisting the mutualisation of debt.
With fears that an agreed up to 100 billion euro bailout to
prop up Spanish banks may not be enough, the Moody's warning -
which came too late on Monday night for newspapers to publish
the news - shows her room for manoeuvre at home is diminishing.
"Opposition to additional commitments for rescue measures is
likely to strengthen," said Berenberg Bank economist Christian
Schulz, adding: "The so-far very small group of rebels in
(Merkel's) coalition (for bailouts) may grow".
He added, however, that Germany's cost of borrowing is
unlikely to rise because of the change in the ratings outloook
as it is still viewed as a safe haven.
Rainer Bruederle, a senior member of the Free Democrats
(FDP), who share power in Merkel's centre-right coalition,
agreed investors would continue to have confidence in Germany.
"Moody's view is a bit short-termist, maybe even a bit short
sighted," said Bruederle, arguing that with solid growth and a
robust labour market, German fundamentals were still strong.
Many Germans placed the blame for a potential downgrade by
Moody's firmly at Athens' door and saw it as a further reason
for Greece to leave the currency union.
"I hope Greece exits the euro zone. We can't keep supporting
them. Spain, Italy and Greece should never have entered the euro
zone," said a 73-year-old retired construction engineer waiting
for a bus in Berlin who declined to give his name.
"Markets might suffer in the short term if Greece does leave
but in the long term things would be fine in Germany. Right now
only the tax payers are suffering," he said.