To: Jim McMannis who wrote (567276 ) 5/20/2010 7:47:06 PM From: tejek Respond to of 1578280 Merkel Relies on Majority as Euro Bailout Goes to German Vote May 20, 2010, 6:30 PM EDT By Patrick Donahue May 21 (Bloomberg) -- German lawmakers are set to back their share of a $1 trillion euro-region bailout in a vote today, allaying market concern that they would balk at approving a second emergency loan package in as many weeks. The vote in Germany will probably come hours before European finance chiefs meet for the fifth time in five weeks as they struggle to forge a united front to the debt crisis triggered by Greece. Today in Brussels, the officials will discuss proposals to better coordinate national budgets and may address unilateral German limits on government bond trading. Merkel’s coalition, which has 332 of the 622 seats in the lower house of parliament, can rely on its majority to push through the bill allowing loans of as much as 148 billion euros ($184 billion) to backstop the euro. “I expect this will pass,” Volker Kauder, who heads Merkel’s Christian Democratic alliance in parliament, told reporters in Berlin yesterday after a trial vote among the three coalition parties. Seven lawmakers voted against and two abstained, leaving a majority for the bill, Kauder said. The legislative action comes two weeks after lawmakers backed loans for Greece, a decision Merkel cited for an election setback two days later in Germany’s most populous state. She has since stepped up her calls for regulation to stem Europe’s debt crisis and forbid some types of short-selling this week, unsettling markets and depressing the euro. The day the trading curbs took effect the euro sank to its lowest since 2006. The single currency has lost 13 percent against the dollar this year. ‘Greater Good’ The ban was “possibly a political decision aimed at allowing Merkel to win support ahead of Friday’s crucial German parliamentary vote,” Jim Reid, a strategist at Deutsche Bank AG in London, said in a note yesterday. “If such a move allows the approval of the package then this is one of those regulatory decisions that may be for the greater good without anyone actually realizing.” European Central Bank Governing Council member Axel Weber urged German lawmakers at a parliamentary hearing on May 19 to back the rescue plan, saying investors were counting on support from Europe’s biggest nation. Rejection would trigger “dramatic” market developments, Weber said. That opposition Social Democratic Party plan to abstain after failing to secure a government commitment to pursue a financial transaction tax in return for its backing, floor leader Frank-Walter Steinmeier said. The Social Democrats abstained on the Greece vote. Merkel’s coalition can still muster the 312 votes necessary without opposition help. Upper House While Merkel lost a majority in the upper house in the May 9 election in North Rhine-Westphalia, the changes don’t take effect until a new regional government is formed. Until then, she controls the upper house, where Germany’s 16 states are represented. The upper house, or Bundesrat, has called a special session to debate the bailout from 12:30 p.m. After that, European Union finance chiefs will consider proposals for tougher and speedier penalties for violators of budget rules and stricter monitoring of high-debt countries. Merkel said on May 19 that Germany will push for faster budget cuts and a process for orderly insolvency of euro-area states at the May 21 meeting. Her isolation on the trading limits this week prompted renewed commitments to seek consensus on economic policies and financial regulation. Merkel issued a statement late yesterday that she and French President Nicolas Sarkozy agreed in a phone conversation to work “closely together.” They said they would prepare jointly for a June 17 EU summit and for the subsequent Group of 20 gathering in Canada.businessweek.com