'It Doesn't Exist!'.(International Edition; WORLD AFFAIRS)(Peer Steinbruck)(Interview)

Germany's outspoken finance minister on the hopeless search for 'the Great Rescue Plan.'

Since markets took a turn for the worse in September, there has been a chorus of calls for a Pan-European response. Most of those proposals have been vetoed by a group of countries led by Germany, the European Union's biggest economy and leading paymaster, on whose back many of these costs would fall. Leading the German defense has been Peer Steinbruck, the Social Democratic finance minister in Chancellor Angela Merkel's cabinet. Speaking with NEWSWEEK's Stefan Theil at the Finance Ministry in Berlin, Steinbruck explains why he doesn't like any of the proposals he's seen.

Theil: You're facing a lot of criticism inside and outside Germany, particularly from France and the EU Commission, that you should do more to fight the crisis.

Steinbruck: We have a bidding war where everyone in politics believes they have to top up every spending program that's been put to discussion. I say we should be honest to our citizens. Policies can take some of the sharpness out of it, but no matter how much any government does, the recession we are in now is unavoidable. When I look at the chaotic and volatile debate right now, both in Germany and around the world, my impression and concern is that the daily barrage of proposals and political statements is making markets and consumers even more nervous. Still, Brussels is pressing for a joint European approach. For a while the position in Brussels and a few other places has been "We're now very much for setting up large-scale spending programs, but we're not really going to ask what the exact effects of those might be. And since the amounts are so high, well, let's get the Germans to pay because they can." Ms. Merkel and I are trying to calm them down a bit just now, and understandably that's getting us criticized.

What is wrong with the stimulus proposals?

The speed at which proposals are put together under pressure that don't even pass an economic test is breathtaking and depressing. Our British friends are now cutting their value-added tax. We have no idea how much of that stores will pass on to customers. Are you really going to buy a DVD player because it now costs [pounds sterling]39.10 instead of [pounds sterling]39.90? All this will do is raise Britain's debt to a level that will take a whole generation to work off. The same people who would never touch deficit spending are now tossing around billions. The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking. When I ask about the origins of the crisis, economists I respect tell me it is the credit-financed growth of recent years and decades. Isn't this the same mistake everyone is suddenly making again, under all the public pressure?

Doesn't an unprecedented crisis call for unprecedented measures?