S&P downgrades Commerzbank’s credit rating

Deutsche Bank and Commerzbank

The rating agency warns of a significant deterioration in results.

(Photo: dpa)

Frankfurt The rating agency Standard & Poor’s (S&P) has given it a thumbs-up because of the economic impact of the corona crisis at Commerzbank, Deutsche Bank and other German financial institutions. At Commerzbank, S&P downgraded the credit rating by one grade to “BBB +”, the outlook remains “negative”, as the credit rating officers announced on Thursday.

At Deutsche Bank, S&P confirmed the rating of the creditworthiness with “BBB +”, but lowered the outlook to “negative” from “stable”. While the creditworthiness guards doubt that Commerzbank can implement its new strategy “Commerzbank 5.0”, including the planned sale of the Polish subsidiary mBank as planned, they see the restructuring of Deutsche Bank basically on track. Commerzbank and Deutsche Bank declined to comment.

With “BBB +” the credit ratings of the two largest German private banks are still three levels above the junk level. A negative outlook means that the credit rating is in danger of being lowered.

S&P warns that even if the economy begins to recover in the third quarter, all banks will see a significant deterioration in results, credit quality and, in some cases, capital resources. The risks that the economy will recover later and the situation will worsen are considerable.

At the Sparkassen-Finanzgruppe Hessen-Thüringen, which includes Landesbank Hessen-Thüringen (Helaba), S&P confirmed the credit rating with “A”, but lowered the outlook to “negative” from “stable” due to the corona crisis.

At the leasing provider Grenke The rating with “BBB +” also remained stable, here too the outlook was reduced to “negative” from “stable”. At Deutsche Pfandbriefbank (pbb), S&P left both the credit rating “A-” and the outlook “negative”.

More: False incentives, fraud, debts – the side effects of the corona crisis.


ECB acceptance of junk bonds gives troubled companies room

ECB headquarters

The central bank has recently been able to accept speculative corporate bonds as collateral.

(Photo: dpa)

The European Central Bank also includes bonds with a poorer risk assessment in its aid package, thereby giving air to many companies in Europe. The cost of credit insurance for companies with advice in the scrap sector fell on Thursday. A corresponding iTraxx index dropped to 478 basis points after 508 basis points on Wednesday.

The ECB announced on Wednesday that it would also accept junk bonds as collateral in the future. With this step, she wants to ensure that there is no credit crunch in the wake of the crisis. Experts believe that due to the economic downturn, countries such as Italy and many companies are at risk of losing their rating as an investment grade with rating agencies.

Corresponding debt securities would normally no longer meet the ECB’s minimum collateral requirements. “The ECB decision makes a possible downgrade less painful for Italy or Spain,” said Marija Vertimane, strategist at the financial services provider State Street Global markets.


South African rand in the downward pull

Frankfurt The South African central bank surprised the markets this week with a sharp rate cut. It cut the key interest rate from 5.25 to 4.25 percent and thus by a whole percentage point. In doing so, it compelled experts to show respect. “Praise to the South African central bank,” wrote Robin Brooks, chief economist at the Institute of International Finance (IIF), on Twitter. “In view of the high level of uncertainty, it takes courage to cut interest rates and overcome the fear of a price drop.”

What Brooks alludes to: The South African rand is one of the biggest losers in the corona crisis on the foreign exchange market. It has lost over 30 percent of its value against the US dollar since the beginning of the year. The Rand is particularly affected by the fact that international investors are currently avoiding risks and are therefore withdrawing capital from emerging countries. And many experts fear further losses. In this environment, an interest rate cut is definitely a risk, as this tends to put the currency under even greater pressure.

It remains to be seen whether the bill will work. “The coming weeks will be extremely difficult for South Africa and will therefore be associated with many ups and downs for the margins,” writes DZ Bank’s currency analyst Tobias Gruber in an analysis. Commerzbank’s head of foreign exchange, Ulrich Leuchtmann, makes a similar statement. “The rand is particularly vulnerable among emerging market currencies,” he says. “Traditionally, he suffers particularly in phases in which investors avoid risks.”

In addition, South Africa had significant structural weaknesses even before the corona crisis. In 2019, the country’s fiscal deficit was over six percent of economic output, and the current account deficit was around three percent, i.e. in the trade in goods and services with foreign countries. In crises, both are an expression of weakness.

Economic slump expected at six percent

In the past few weeks, the agencies Moody’s and Fitch had also downgraded South Africa’s rating, highlighting the poor prospects for the economy and the weak fiscal position. The poorer rating increases the financing costs for the country.

The South African central bank is now assuming that the country’s economy will shrink by six percent this year. In its latest report, the rating agency Fitch predicts that government debt will increase from currently over 60 percent of economic output to over 70 percent by 2022.

Some analysts are already asking whether South Africa can survive the crisis without outside financial help. It is “difficult to imagine that the country can manage the crisis on its own,” writes Gruber. Commerzbank expert Leuchtmann points out that South Africa initially does not want to receive any help from the International Monetary Fund (IMF) because it fears the associated stigmatization. However, he sees a possibility for help if there is a general solution for the emerging countries, for example through a debt moratorium.

South Africa is also vulnerable because international investors hold a particularly large amount of debt there. According to calculations by the IIF, a lobby organization of international banks, the share of foreign investors in the South African equity and bond market rose from around 35 percent in 2010 to over 60 percent in 2019. The problem: You quickly withdraw from the market when the risk appetite decreases as is currently the case.

In addition, South Africa’s debt in foreign currencies is comparatively high, as is the share of short-term debt. “Companies in particular have heavily indebtedness in foreign currencies,” says Commerzbank expert Ulrich Leuchtmann.

This is particularly risky in the current environment. Because if the edge devalues, the burden of this debt increases. This in turn limits the central bank’s scope to further lower interest rates. An interest rate cut tends to weaken the rand’s price because it makes it relatively more attractive for international investors to invest their capital in other currency areas.

The South African central bank is thus in a difficult situation. From an economic perspective, lower interest rates are appropriate given the extremely weak outlook for the economy. The risk of rising inflation is also low – not least because of the drop in the oil price. These arguments for lower interest rates are offset by the risks of a stronger devaluation of the rand.

The South African central bank initially decided to cut interest rates further. It will be seen in the coming weeks and months whether this calculation will work.

Much will depend on how long the corona crisis lasts. Should there be severe economic restrictions beyond the summer, Commerzbank expert Leuchtmann assumes that the pressure on the fringes should increase more. “It is crucial for a trend reversal that the risk appetite in the markets returns.”

More: The fear of an emerging market crisis is growing.


Moody’s warns – bondholders face high defaults

Dusseldorf The risk for international bond creditors caused by Corona is given a house number for the first time: corporate bonds totaling more than $ 174 billion, the rating agency Moody’s announced on Wednesday, are currently among the financial stocks threatened by the epidemic.

This figure corresponds to the outstanding bonds of those 25 percent of the large companies rated speculatively (“non-investment grade”) by Moody’s that have lost a large part of their current income due to official orders: above all the non-food retail trade, followed by the Car industry to the leisure and catering trade.

The energy sector is also indirectly affected, which represents a further 2.4 percent of the group bonds issued worldwide. The oil price shock is throwing business on them these days.

“We will also see a contagion effect in other industries,” warns Moody’s manager Jeanine Arnold. Business service providers, chemical companies and raw material suppliers are exposed to high risks as suppliers.

Even the telecommunications sector, which is hardly affected by the corona crisis at the moment, could be affected at different times. There is usually a correlation between sales development and gross national product, observes Moody’s. With the “unprecedented shock” for the economy of the G20 countries, it is expected there, telecommunications revenues will shrink – but with a delay of one year.

Investors have suspected that the biggest failures from the non-food retail sector are to be feared, not only since the protective shield procedures for the Esprit fashion retailer and the Essen-based department store group Karstadt Kaufhof. A look at the latest reports from the rating agency Standard & Poor’s confirm the concern.

In the past two weeks alone, she has classified industry giants such as Fossil, Levi Strauss, the US department store Neiman Marcus and the British fashion retailer in this sector Matalan down – all now with a non-investment grade. S&P even certified the last two with an “CCC” rating, an acute risk of late payment. Even the hotel chains Hilton and Wyndham, which also got a speculative “BB” thanks to Corona at Easter, are still stable in comparison.

Rapid descent

For bond artists, the situation has escalated at an immense pace. Among the speculative European bonds – that is, from a rating of “Ba1” downwards – there will be a default of 7.8 percent by the end of the year, Moody’s expects. By March 2021, it could even be eight percent. In the twelve months to March 2020, however, the default rate was just 1.7 percent.

Between early March 2020 and April 9, 22 percent of all companies rated by Moody’s as “speculative” received a devaluation. Companies from retail and the automotive industry in particular were often down several levels.

“In addition, the corona crisis will significantly widen the gap between relatively financially strong and financially weak companies,” warns Moody’s manager Arnold. For example, issuers classified as moderately speculative (“Ba”) only had three devaluations between the beginning of March and April 9 that made up more than one meter, while the poorer credit ratings (“B” and below) gave 33.

Speculative issuers tend to have weaker market positions, are more geographically defined and focus on fewer customers and suppliers, Moody’s explains. In some cases, they would have a higher fixed cost share, which limits operational flexibility. This makes it difficult for them to react to the suddenly and unforeseen restrictions.

Investment grade companies, on the other hand, would typically have better access to sources of finance, often to equity. In addition, there would often be levers to limit the outflow of funds – for example through dividend cuts or the provision of investments.

Such conditions currently count not least for government aid programs. In Britain, for example, the government has made the CCFF program explicitly available to investment grade companies. In other countries, including Germany, the banks have to guarantee part of the government loans. Moody’s believe that this limits the prospects for companies that were considered “speculative” even before the corona crisis. The tour operator Tuiwho received a EUR 1.8 billion KfW loan is an exception here.

More: With Daimler, BMW and ford It hit the first: The corona crisis is causing rating agencies to downgrade car companies. It can go further down.


Because of the corona crisis, federal states are planning to pay up to € 65 billion in debt

Berlin Politicians only think big in the corona crisis. And so Federal Finance Minister Olaf Scholz (SPD) was full of praise for CSU Markus Söder. The Bavarian rescue package is “massive”, said Scholz recently at a joint appearance with Söder. This is not the case in every federal state.

Scholz hit a point. Behind the huge federal rescue packages, which have now reached at least 1.2 trillion euros, a number of countries have built large protective shields for their own economy, unnoticed by the general public.

According to a survey by the Handelsblatt newspaper among the 16 state finance ministries, they are currently planning with around 65 billion euros in new debt to fight the crisis.

However, the Prime Ministers handle the crisis in very different ways. While large federal states such as Bavaria or NRW are building up huge mountains of debt to save the economy, a number of smaller ones are still planning with a balanced budget.

Thuringia, for example, assumes that it will not have to take on new debts this year, despite the corona crisis. Bremen and Berlin are also currently planning a black zero, with the capital planning to adopt a second supplementary budget in June.

Generous debt appropriations

Other countries, on the other hand, have long since exhausted all possibilities to use debt to fight the crisis. The first thing they had to do was pull the emergency option in the debt brake – because that would have actually prevented the countries from taking on even a cent of new debt this year.

After that, the state governments have allowed their state parliaments to give them generous debts. The black and yellow coalition in NRW, for example, can take on up to 25 billion euros in new liabilities this year thanks to the supplementary budget – this corresponds to around 3.5 percent of the country’s economic output.

This makes NRW the front runner of Bavaria, which is planning new debts of 20 billion euros this year, which corresponds to 3.2 percent of the gross domestic product. In third place is Saxony, which can raise up to six billion euros in new debt by 2022.

The reason why countries borrow so differently is because they react differently to the crisis. The densest aid network for companies to date has created Bavaria by far. The Free State provides all companies with up to 250 employees with emergency aid up to a maximum of EUR 50,000. There is no other country like this.

Bavaria has also made 20 billion euros available so that companies can be nationalized if necessary. The Bavarian rescue package comprises a total of 60 billion euros, making it around the entire state budget.

Many countries come from a good financial position

North Rhine-Westphalia is not quite as generous. The state government also goes beyond the aid that the federal government offers. In the most populous federal state, emergency aid of up to 25,000 euros is available for all companies with up to 50 employees. In addition, artists receive one-time payments of up to 2000 euros.

The country also plans to use the new debt to finance guarantees and deferrals. “With our rescue package, we want to avoid the collapse of many companies and save many jobs and entire employment histories of families,” says NRW Finance Minister Lutz Lienenkämper.

Many countries come from its very good financial position. In the past few years, all federal states have generated large surpluses and accumulated reserves worth billions. As of this year, they will also receive almost ten billion euros more annually from the federal government as the reform of the federal-state financial relations comes into force. However, many countries owe the consolidation to the lower interest costs.

The Corona debt will thus be a heavy mortgage in the state budgets for many years to come. Take North Rhine-Westphalia, for example: If the state has to exhaust all the scope for new debts, the state government expects that it will take 50 years for the debt to be repaid in full.

More: The emergency aid should be distributed as unbureaucratically as possible. However, some states pay out the aid regardless of actual needs.


Merkel warns of patience in the corona crisis – and expresses cautious hope

Angela Merkel in Berlin

Despite cautious hope, the Chancellor warns of taking too much of the easing.

(Photo: AFP)

Berlin According to Chancellor Angela Merkel (CDU), the corona virus will continue to determine life in Germany for a long time. There is reason to be confident, said Merkel on Thursday in Berlin with regard to the spread of the virus. At the same time, she emphasized: “We must not weigh ourselves in safety.”

The Chancellor warned against taking a big step in easing the very tough regulations, “which will then throw us back completely”. The worst would be if the current tough or even tougher security measures had to be taken. “And that’s why it will take patience.”

The Chancellor also pledged to support the planned European bailout package of around EUR 500 billion for vulnerable states, companies and jobs in the crisis. She hoped that this would be decided in the Eurogroup, said the politician.

However, Merkel still rejects common European debts via corona bonds. She said there were so many other ways to show the much needed solidarity in Europe. Germany is ready and obliged to do so.

It relies on the instruments that are being discussed in the Eurogroup: precautionary credit lines from the ESM euro rescue fund for troubled countries, extended programs of the European Investment Bank (EIB) for companies and the “Sure” short-time worker program proposed by the EU Commission.

More: NRW Prime Minister Laschet campaigns for “flexible entry” with effective corona rules.


The first European emergency aid for the economy is ready

EU flag

The EU could launch a recovery program for the economy after the corona crisis.

(Photo: dpa)

Brussels The EU announces implementation: After weeks of heavy disputes, the finance ministers of the 27 member states have agreed on a loan package to cushion the costs of the corona crisis. The ministers had negotiated all night on Tuesday and wrestled all evening again on Thursday. “We did it,” announced the visibly relieved chairman of the Eurogroup Mario Centeno Thursday shortly before midnight.

The loan package amounts to up to 540 billion euros and comprises three parts. The Euro Rescue Fund ESM provides a precautionary credit line for euro countries that are overwhelmed by the financial consequences of the pandemic.

In theory, every euro country can receive a loan of two percent of its gross domestic product from the ESM. In the unlikely event that all euro countries exercise this option, the ESM would have a loan volume of 240 billion.

The usual conditions for ESM loans are largely suspended in the corona crisis: recipient countries are not obliged to undertake economic reform. Italy, in particular, had insisted that an ESM loan would probably be applied for.

The Netherlands initially did not agree to the loosening of the ESM loan conditions and therefore blocked the Corona loan package on Wednesday morning. However, the Netherlands was completely isolated with its no in the EU and met with great misunderstanding among its European partners. The government in The Hague came under massive pressure and finally gave in.

Reconstruction program for the economy possible

In the end, the Netherlands still enforced that the use of ESM loans would be strictly limited to expenses caused by the corona crisis in the healthcare sector.

The EU Commission and the European Investment Bank (EIB) are also involved in the Corona loan package. The Commission is providing loans of up to € 100 billion to help Member States finance short-time work benefits. The EIB secures corporate loans up to a total volume of EUR 200 billion.

Eurogroup leader Centeno and EU Economic Commissioner Paolo Gentiloni made it clear that the first emergency aid from Corona will not be enough to deal with the financial consequences of the pandemic. After the crisis, there must be a European reconstruction program for the economy. The EU heads of government would have to decide on the scope and funding of this program, said Centeno.

Financing is particularly controversial in the EU. A group of states led by France wants to borrow European government bonds. A group led by Germany rejects euro bonds and instead wants to finance the fund from the EU budget.

The EU heads of government are expected to meet for their second video conference since the outbreak of the corona crisis in April and then discuss the reconstruction fund.

More: Billions against the corona crisis: the EU is considering these aid programs


IMF expects worst economic crisis since 1929

Berlin The corona pandemic plunged 170 of the 189 member states of the International Monetary Fund (IMF) into recession. 160 months ago, 160 of them had good prospects for economic growth.

IMF chief Kristalina Georgieva announced in Washington on Thursday that the fund would describe the worst economic decline since the Great Depression in its World Economic Outlook report next Tuesday.

The IMF sees its task as helping liquidity through the crisis to countries in need. “We are providing over a trillion dollars in loans to our member states,” said Georgieva. Emergency loans have been increased to $ 100 billion.

And – very unusual for the IMF, which otherwise always ensures that its loans are paid on time – Georgieva announced that it would “overhaul our toolbox”. The goal is that states with unsustainable debt can also receive IMF funds for the targeted fight against Corona.

The disaster relief fund for debt relief is therefore also topping up: the rich industrialized countries are working to increase this “CCRT” fund to $ 1.4 billion in order to be able to grant states debt relief. The high number of countries in financial crises shows that emergency loans are necessary: ​​90 countries have already asked the IMF for financial aid.

According to Georgieva, emerging and developing countries in particular mostly do not have the means to adequately equip their health systems for the pandemic. It therefore campaigned again for richer countries to cancel bilateral debts for the poorest developing countries.

“Every fifth company in Germany could go bankrupt”

“2020 will be catastrophic,” said the IMF chief. So far, the fund expects global economic recovery to begin in 2021. However, this is by no means certain. The IMF therefore called for finance ministers and central bank heads to agree on a joint approach to the pandemic at their virtual spring meeting next week.

The IMF sets four priorities for this:

  • First, all states would have to Curb the spread of the virus and the Health systems strengthen.
  • Second, they should go with generous help Companies and employees help through the crisis. So far, the states have provided $ 8 trillion worldwide for this.
  • Third, everyone should make sure that the Banks are not in great stress through defaulting loans devices and this creates a financial crisis.
  • And fourth, all states would have to plan for the recovery.

The central banks should continue to provide cheap money for countries without inflationary pressure. And governments should stimulate consumption. When exiting from a standstill, all states should proceed step by step according to careful plans.

More: The developments in the corona crisis in the live blog.


Europe is facing its historical test!

The corona crisis means dramatic losses for Europe: we lose thousands of lives from an ever-deadly viral disease, we lose prosperity and jobs as a result.

Who should still believe in the much-cited “Union of Values” of Europe, if this Europe in the greatest crisis since its existence literally turns out to be worthless? How hollow the Sunday speeches about “European solidarity” may sound in the ears of the affected regions of Europe, if at the beginning of the infection crisis, when the first signs of mass death were already evident in Italy, European member states – including Germany – first banned the export of medical products Impose aid in Italy instead of providing emergency aid?

And what is left of the European idea if, in the everyday life of the crisis, only the individual nation states seem to be able to act through closed borders and national aid programs – or are left helpless when they are defeated by national means alone in the fight against the pandemic?

The European Union threatens to fail dramatically in this greatest test since its inception. Instead, we see that powers like Russia and China are providing effective public aid to emphasize precisely this deficit in Europe. It is obvious that humanitarian and political goals are being pursued at least at the same time.

Sigmar Gabriel

The author was environment, economy and foreign minister and vice chancellor.

(Photo: dpa)

Joschka Fischer

From 1998 to 2005 the author was German Foreign Minister and Vice Chancellor.

(Photo: dpa [M])

It is true: the export ban for aids has now been lifted again. Germany is one of the countries that offer seriously ill patients from Italy, France and Spain, for example, hospital beds and intensive care because our capacities are still sufficient. But this aid, which is as important as it is good, is little more than the famous “drop in the bucket” given the impact of the crisis, the thousands of deaths, mass unemployment and severe social upheaval.

Countries like Italy and Spain will not forget Europe and especially we Germans for 100 years if we let them down in the face of this threatening and already beginning development in their countries. And that’s exactly what we’re doing.

Europe threatens to become a zero-sum game in which nation states believe that if someone gets something, someone always has to lose. Donald Trump has made this the credo of his international politics. Now this “my-nation-first virus” has apparently also infected Europe.

The assertion that has repeatedly been made in Germany for decades that Germany is a “net contributor” has repeatedly proven this anti-European resentment anew. Of course, Germany pays more taxpayers’ money to Brussels than it receives back from subsidies – only that’s not even half of the bill.

One really only has to know the basic arithmetic to know that a country like Germany that exports (or: exports) far more goods and services to Europe than it imports (or: imports) from there obviously also has more money in the country gets than it spends in other countries. There is no other way to become an export European and world champion.

Germany is the biggest winner in Europe

The truth is: our country is the biggest economic and financial winner in Europe. We even made money from the financial crisis in Greece. Our neighboring and member states in the European Union know all of this. That is why you are now rightly looking at what Germany is doing to use part of the wealth it has acquired through Europe for this Europe.

Europe is not just a peace project, but also an economic, social and ecological project, not a “zero-sum game”, but the opposite: it literally creates “added value” for everyone. Especially for Germany and definitely also in the financial and economic sense. The founders of the European Union knew that and what Europe needs now is the courage of this generation of founders.

Because, of course, it is not popular everywhere to share the hard-earned economic performance in your own country with others. Especially not when you are in the middle of a crisis, the outcome of which neither politicians nor the population can safely judge today. The fearful question, “Don’t we need our medical and economic resources for ourselves?” Is not immoral or reprehensible.

The answer to this, however, is that no country – not even Germany – will come out of this crisis alone and on its own. Because our economic and social collapse of our neighbors will also reach apparently safe Germany. In Europe there is prosperity and security only for everyone or for nobody. That was the reason why the founding generation dared to take on this daring project of European unification, although it was certainly not popular to ask us Germans at the table of a united Europe shortly after the devastation of the Second World War.

No country has benefited from this solidarity as much as Germany – because with the establishment of European integration, the countries reached out to us as friends and partners, the streets of which the boots of the German occupiers had marched a few years earlier. The success story of the Federal Republic could not be told without Europe’s solidarity.

Nobody therefore has as much Europe within them and nobody has as much responsibility for Europe as our country. That is why it must now show willingness to lead in Europe – preferably together with France. Europe now needs two things: joint aid in the crisis and a joint reconstruction program after the crisis.

Just as there were two projects in 1948 that, due to their historical size, have remained in our country’s collective memory to this day: the Berlin Airlift to supply the needy citizens of West Berlin and the Marshall Plan for the Reconstruction of Europe, which is today after all, it would have a value of just under 150 billion euros and from which the German state bank KfW (formerly: Kreditanstalt für Wiederaufbau) comes. KfW still manages twelve billion euros as a special fund from what was then the “Marshall Plan”. Even today – 70 years later – KfW is financing the aid measures that have just been decided for German companies in the corona crisis from these assets.

Three-step program for Italy and Spain

The hardest hit by the corona pandemic, such as Italy and Spain, need an overlapping three-tier program: emergency medical and humanitarian aid; medium-term, long-term European loan support, which is not counted towards the Maastricht criteria, to stabilize the domestic real economy; long-term innovation promotion program to secure economic and social future.

Germany would be well advised to take part in such an aid program at European level instead of continuing the ideological dispute between Northern and Southern Europe over euro bonds or corona bonds. Because one thing is clear: Neither Italy nor Spain are able to raise the necessary funds to rebuild their countries as new government debt alone. Europe has to relieve them of the burden of interest and presumably also repayment.

The signal that all European member states are ready to do so must come quickly. Otherwise right-wing extremists in both countries will try again to warm up their nationalist soup against the EU. It is in both European and German interests that these governments in Italy and Spain, which are undoubtedly democratic, are economically, socially and thus politically stable and stay European-minded!

Of course, in the medium term and regardless of the current crisis, Europe will also have to jointly guarantee the single currency. Only then will the euro become a real international reserve currency and an alternative to the dollar. If we do not do this, Europe will not achieve its economic sovereignty, but in doubt will always depend on the policies of the dollar area, as we have had to experience bitterly in the dispute over the nuclear deal with Iran.

However, since this further development will not take place today and probably not tomorrow, there should be no debilitating principle conflict in the middle of the crisis. The clearest and clearest way would be to add an emergency aid fund to the budget of the European Union, which is fed by all member states and must have sufficient financial means to deal with major crises in Europe.

Incidentally, this also includes urgently finding answers to what Europe wants to do if the corona infection spreads in large numbers in the refugee camps in Greece or in Turkey or Syria. All international aid organizations warn of the human tragedy that will arise there and for which we are responsible, whether we like it or not.

The corona crisis needs a strong European response

Wherever the whole of Europe is threatened, the entire European Union must respond and must not delegate this response to sub-groups such as the Eurogroup. Or as George Marshall said in his famous Boston speech to justify the Marshall Plan: “(…) Europe’s economic realignment is a matter for the Europeans themselves. I think the initiative must come from Europe. The program should be a collaborative one, agreed by some if not all European nations. ”

The dispute in any case, whether the European Union should do this within the common currency group of the euro with common bonds (bonds), whether existing financing options such as the 410 billion euros of the European Stability Mechanism (ESM) can be used for this or a new instrument has to be created because the ESM was created for completely different goals and is therefore unsuitable for today’s situation, should be ended and decided quickly.

Handelsblatt Morning Briefing - Corona Spezial

The corona crisis needs a strong and audibly European response of cross-border and practical solidarity: It means a challenge that ignores national borders and in some cases drastically overwhelms the ability of individual states to act. If we want to survive the major strategic challenges of the new decade – from digitization to migration and security policy – we Europeans can only do it together.

Crises can be opportunities for Europe – like the Balkan wars of the 1990s that led to the start of a European foreign policy. The corona virus has the potential to accelerate two opposite processes: Either it deepens the cracks already existing in Europe so that the Union could break apart. Or the European Union and its member states succeed in agreeing its consequences in the fight against the virus. It is very important to us Germans which way Europe will take. We don’t have much time left for that!

More: The pandemic is a stress test: can Corona destroy the EU?


Rating agency S&P confirms top rating for Germany

The rating agency expects GDP in Germany to drop by almost two percent. Source: dpa
Rating agency S&P

The rating agency expects GDP in Germany to drop by almost two percent.

(Photo: dpa)

Berlin The rating agency S&P has confirmed Germany’s top rating. The country holds the grade “AAA / A-1 +”. The assessment reflects the strong financial buffer that Germany has. Government finances are in good shape and have enabled a strong response to the economic impact of the coronavirus pandemic.

The rating agency assumes that gross domestic product in Germany will shrink by 1.9 percent this year.

More: Read all current developments regarding the corona pandemic here.

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