Germany's Lafontaine Talks, Business Trembles

The Finance Minister is throwing his weight around

When German Chancellor Gerhard Schroder made his first policy speech on Nov. 10, it sounded more like damage control than the agenda of a brand-new government. Schroder tried to reassure Parliament and a worried business community that he and his fellow Social Democrats would continue on the path of fiscal discipline. But his words did little to soothe his listeners' fears. The very same day, the chief aide to Finance Minister Oskar Lafontaine had issued a stern warning: If Europe's central banks don't cut interest rates to spur economic growth, he warned, governments might open the spending spigots--even if that means relaxing the rules for monetary union.

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