Germany expands bailout fund to $287B

BERLIN -- Germany's hotly debated decision to get behind a $287 billion package to prevent debt-laden European nations from going bankrupt came as Greek workers vowed to fill the streets to protest the tax hikes and benefits cuts that come with the money.

"The euro is our common future," Chancellor Angela Merkel said before the vote in the German parliament. "Approving this European fund is of the very, very greatest significance."

But critics who say the German public is angry over bailing out countries they say are squandering the funds of the European Union on social spending say the bailout would not stop Greece from doing more of the same. A recent poll showed 66% of Germans oppose bailouts for Greece.

"A rescue package will only help in the short run, and in three to four years, Greece will be in the same spot again," German lawmaker Frank Schäffler said.

Many in Greece on Thursday reacted bitterly to the bailout because of the strings attached.

In Athens, taxi owners said they would stay out on strike to protest a forced liberalization of their monopoly on taxi permits, or medallions, that they sometimes sell for high prices on the black market. Hospital workers walked off their state jobs to protest wage cuts demanded by the EU bailout administrators.

The two most powerful trade unions, which represent 730,000 workers, said members would march on Parliament over the demand that their ranks be slashed by a fifth and salaries cut 20%, as well as lower overall pensions. Craftsmen, printers and tax officials also staged stoppages.

Drivers of trains, subways and buses were on strike as well, preventing children from going to school and making it hard for businesses to make deliveries.

International debt inspectors returned to Athens on Thursday to complete a review on its attempts to install tax hikes, wage cuts and spending decreases. Protesters blocked government offices to complain that the banks that lent Greece money should forgive a large portion of the debt rather than squeeze ordinary Greeks to help pay back the loans.

Greece must extend a new property tax until 2014, two years longer than originally planned, after the EU inspectors determined Greece's estimates on what the tax would bring in were too rosy. Protestors have been burning copies of the bill.

The latest German guarantee comes on top of a $600 billion fund approved earlier this year by the 17 European nations that replaced their currencies with the euro. That fund did not prevent Greece from nearing a point where it would default on its loan payments and declare bankruptcy.

Germany, which has the largest European economy and has provided more money to the bailouts than any other nation, is worried that it is reaching its breaking point.

"I am convinced we are going to get high inflation because the politics of cheap money, these rescue funds: that means the savings of millions of Germans who made investments will be devalued," Schäffler said.

Others said there was no alternative to approving the measure no matter how distasteful.

"We don't feel good at all about this (bailout) thing," said Bert Van Roosebeke, an economist with the European Center for Policy in Freiburg, Germany. "But you have to ask yourself at the moment, 'Is there a viable alternative?' At least in the short term, I don't think there is. So with a big stomachache, I would say, it was probably a good decision to make."

Other financially stable nations must still approve the new bailout if Greece is to be saved. Austria's parliament takes up the measure Friday, the same day Germany's upper house of parliament is to finalize Thursday's vote. The Netherlands votes in October as does Slovakia, where a sizable bloc of legislators have threatened to sink the approval.

The vote was a measure of confidence for Merkel who has struggled against the anti-bailout/anti-Greece sentiment of voters, who have voted against her coalition in several state and local elections this year. Economists say the vote in parliament is not enough to end the crisis but shows Europe that Germany wants the EU to survive.

The approval "takes away the fear that Germany might stop the European project," said Carsten Brzeski, chief economist at the Dutch financial group ING in Brussels.

Jan Timken, leader of Bürger in Wut (Citizens Enraged), suggested it was time for Germany to consider whether the EU should live on as is.

"We are very against it," he said. "Better would be the exclusion of Greece and other indebted states from the eurozone."