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05/18/2010

Pöhl: No. They should be investing their investors' money as securely as possible. Should the credit rating of a debtor worsen because that debtor has been living beyond his means for years, then it is completely rational for these institutions to get rid of these bonds -- because they have become insecure. Then other investors buy them at a lower price. They receive a higher return, but also have greater risk. That is totally normal market behavior.

SPIEGEL: With the exception that speculators are now carrying no risk at all because euro-zone members have agreed to guarantee Greek debt.

Pöhl: Yes, and that is harmful. It means that the basic balancing mechanism in the market economy is out of sync.

SPIEGEL: Is it possible that politicians invented the specter of rampant speculation to legitimize a break with the Lisbon Treaty and with the ECB's rules?

Pöhl: Of course that's possible. In fact, it's even plausible.

SPIEGEL: What will be the political consequences of this crisis?

Pöhl: The whole mechanism of the European community will change. The EU is a federation of nations, not a federal republic. But now the European Commission will have a lot more power and more authority as well as the potential to interfere in national budget law. That, however, is constitutionally problematic in Germany.

SPIEGEL: But this could also be construed as a positive development. For a long time, critics have been saying that before we can have a genuine currency union we need common fiscal and economic policy. Surely this crisis has brought the EU closer to that goal.

Pöhl: Yes, that is the logical next step of our union, but we must bear the burden. You only have to look at what it is going to cost us Germans. I would have preferred that things hadn't gone quite this far.

SPIEGEL: In the past, the bankers at the Bundesbank, Germany's central bank, were vehemently opposed to any political interference -- for example, when the government wanted to take control of gold stocks. At the moment even larger taboos are being broken -- yet there has been little outcry. Why is that?

Pöhl: The president of the Bundesbank, Axel Weber, is in a bind. He has been issuing warnings about these kinds of developments for some time and he continues to do so. But of course it is difficult to keep this up in the face of a political majority.

SPIEGEL: Especially when he aspires to the presidency of the ECB and is therefore dependent on political goodwill.

Pöhl: That may also play a role.

SPIEGEL: In the run up to the currency union that was formed when Germany was reunified in 1990, it was said that, if something is economically ill-advised, it is also a political mistake. Does the rescue package for teetering euro-zone countries make sense?

Pöhl: It depends on what one wants to achieve. If the point was merely to calm the markets temporarily, then yes. But that can't be the only reason.

SPIEGEL: Because the side effects will be too large, you mean?

Pöhl: Absolutely. Just imagine if claims were made. Germany would have to pay countless billions, which is dreadful. And, it could lead to the euro becoming a weak currency.

SPIEGEL: If you were president of the Bundesbank today, would you be ordering the printing of German marks just in case they became necessary?

Pöhl: No, no, we have not gone that far quite yet. In my opinion, the euro is in no danger. Perhaps one of the smaller countries will have to leave the currency union.

SPIEGEL: How should that work?

Pöhl: It would involve Greece, if we stick with the case we were discussing, reintroducing the drachma.

SPIEGEL: But Greece doesn't seem to have any interest in doing that -- and it would be against European agreements to force Athens to leave the currency union.

Pöhl: That is correct. As long as a country receives such massive support, it would, of course, have no interest in turning its back on the euro.

SPIEGEL: You think that could change?

Pöhl: On the mid and long term, I wouldn't rule it out.

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• Part 1: Bailout Plan Is All About 'Rescuing Banks and Rich Greeks'
• Part 2: 'Totally Normal Market Behavior'