The euro is under attack like never before, as the promises on which it was based turn out to be lies. Hedge funds are speculating against Greek debt, while euro-zone politicians work behind the scenes to cobble together rescue packages. But fundamental flaws in the monetary union need to be fixed if Europe’s common currency is to survive.

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Germany’s Protestant and Catholic churches may be facing the biggest credibility crisis in decades after an unprecedented bout of scandal-fueled negative media coverage.

Bishop Margot Kassmann, the first woman to lead the Evangelical Church in Germany (EKD), resigned as leader of German Protestants on Feb. 24 after she was arrested for drunk driving, just four months into office.

In the same week, Catholic bishops met in Freiburg to address allegations of widespread sexual abuse of children by clergy that had surfaced late in January, prompting a possible criminal probe by state officials.

Germany is the birthplace of both the Protestant Reformation and Pope Benedict XVI, and religion plays a key role in German life; indeed, both churches are among the nation’s largest employers.

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…Germany’s Chancellor, Angela Merkel, is not ready to sign off on a rescue, officials said, before Greece has pushed through further cuts.

One European official, speaking on condition of anonymity because of the sensitivity of the subject, said that Greek officials appeared to be briefing journalists on the prospect for an big rescue package in the hope of pushing the European Union into a quick solution, or of convincing the markets that help is at hand.

“The Germans will not put a euro on the table until there is a credible austerity package,” the official said.

Simon Tilford, chief economist at the Center for European Reform, said that France and Germany recognize that some form of bailout is inevitable, but that, to enable a bailout to be sold to a skeptical German public, the Greeks first “have to be seen to be suffering.”

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Last year it was banks; this year it is countries. The economic crisis, which seemed to have eased off in the latter part of 2009, is once again in full swing as the threat of sovereign default looms.

Europe’s leaders are struggling to avert the biggest financial disaster in the euro’s 11-year history…. This week all eyes have been on Greece. If it defaults, it will be the first EU member to do so. As The Economist went to press EU leaders were meeting to discuss what to do, and there was talk of a German-led rescue scheme. If it happens, other European candidates may be queueing up. Bond markets are worried about the capacity of Spain (see article), Ireland and Portugal to repay their debts, forcing these countries to increase taxes and cut spending, even as they remain mired in recession.

Europe’s troubles have given investors good reason to worry; but they are not the only cause for concern.

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As the eurozone’s dominant economy, Germany would be expected to take the lead in marshalling financial support for a Greek bail-out. There are fears the crisis could spread to other eurozone states with big deficits such as Spain and Portugal.

“We’ve had to face up to the fact that what is now a Greek problem could turn into a European one,” the official said.

”We’re thinking about what we should do if the crisis spills from Greece into other euro countries. So it’s more about finding firewalls, containing the problem, than principally about helping the Greeks.” He added there were ”no concrete plans” as yet.

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A U.S. immigration judge has granted political asylum to a Christian family from Germany that wants to home-school its children.

The Home School Legal Defense Association, which defended the family, announced the Tuesday (Jan. 26) decision by Judge Lawrence Burman in Memphis, Tenn.

“This decision finally recognizes that German home-schoolers are a specific social group that is being persecuted by a Western democracy,” said Mike Donnelly, an attorney and director of international relations for the Purcellville, Va.-based association.

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This week the European Commission begins studying Greece’s latest plan for extracting itself from its financial crisis. But although the deployment of the Brussels machinery has taken the edge off the drama, any sense that the problem is now contained would be an illusion. The possibility that a country within the eurozone will get to the brink of defaulting on its sovereign debt remains real.

The new Greek Government’s plan remains incredible, based on a cut in the budget deficit from nearly 13 per cent to under 3 per cent in three years. That implies that Greece would, in one coherent sweep, push through profound reforms of the public and private sectors that it has not yet been able to tackle.

It remains likely, then, that Greece is headed for a crisis that tests the stability of the eurozone. The burden of Europe’s most difficult decision this year would fall on Angela Merkel, the German Chancellor, who would have to decide whether to rescue Greece to forestall a crisis throughout the currency club.

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The fall of the Berlin Wall is arguably the most significant event of the 20th century, says the director of an educational foundation that seeks to create a new intellectual culture in post-communist countries.

Father Marcel Guarnizo is founder and chairman of the Vienna-based organization Educational Initiative for Central and Eastern Europe (EICEE), which hosted a conference earlier this month to mark the 20th anniversary of the fall of the Berlin Wall, and to reflect on lessons learned from the rise and fall of communism.

Part one is here and part two is there.

Germany’s new development minister said Saturday he opposed taxing financial transactions, putting him at odds with support for such a levy expressed earlier this year by Chancellor Angela Merkel.

“I am speaking out clearly against a tax on financial transactions which would be used to finance development aid,” said Dirk Niebel, a member of the pro-business Free Democrats who took up his post in October.

“It is already a stated position of the liberal party.”

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One day near the middle of the last century a minister in a prison camp in Germany conducted a service for the other prisoners. One of those prisoners, an English officer who survived, wrote these words:

“Dietrich Bonhoeffer always seemed to me to spread an atmosphere of happiness and joy over the least incident, and profound gratitude for the mere fact that he was alive”¦ He was one of the very few persons I have ever met for whom God was real and always near”¦ On Sunday, April 8, 1945, Pastor Bonhoeffer conducted a little service of worship and spoke to us in a way that went to the heart of all of us. He found just the right words to express the spirit of our imprisonment, and the thoughts and resolutions it had brought us. He had hardly ended his last prayer when the door opened and two civilians entered. They said, “Prisoner Bonhoeffer, come with us.” That had only one meaning for all prisoners”“the gallows. We said good-bye to him. He took me aside: “This is the end; but for me it is the beginning of life.” The next day he was hanged in Flossenburg.”

Germany’s new finance minister has echoed Chinese warnings about the growing threat of fresh global asset price bubbles, fuelled by low US interest rates and a weak dollar.

Wolfgang Schäuble’s comments highlight official concern in Europe that the risk of further financial market turbulence has been exacerbated by the exceptional steps taken by central banks and governments to combat the crisis.

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Although later perceived as a “church in socialism”, it was a Church in opposition which understood itself as a fellowship of the Crucified, thus echoing Bonhoeffer’s words in The Cost of Discipleship: “Every call of Christ leads to death.” A key text for them was Bonhoeffer’s influential book Life Together, first published in 1939 and greatly influenced by his time at the Anglican Community of the Resurrection at Mirfield in West Yorkshire.

What the Church achieved in East Germany before 1989 cannot be underestimated. Great sacrifices had to be made. There was no room for cheap grace; it was sacrifice lived as well as believed in. It was their network of contacts, which enabled them as a minority church to survive against a background of discrimination that was not always subtle. The University Church in Leipzig, for instance, had been pulled down by the communists and a bust of Karl Marx placed where the altar was.

However, during the 40 years of the German Democratic Republic the churches provided the forum where people could speak freely and democracy be exercised. Their strong pacifist emphasis was particularly inspired by the vision of Isaiah of turning swords into ploughshares and spears into pruning hooks.

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[Oliver] Karsitz, who works as a cameraman for German TV, is unsentimental about that night. “I always try to look to the future and live for today,” he says.

His daughter, who is about to turn 20, is training to be a Web designer. His relationship with her mother didn’t last. Karsitz’s father still lives in what was East Germany.

Karsitz says that his generation lived with the East-West tensions every day, but they are “meaningless” today to his daughter and her friends.

“My daughter has no inkling of what it was really like then. Our generation is still working through it all, to some extent. East and West come together everywhere in this city now. At your job, for example, you work with people from both sides of the wall, and you notice the divisions a little bit, the different outlooks. But for her it plays no role whatsoever,” he says.

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St. Nikolai Evangelical Lutheran Church hasn’t changed much since the 16th century. Bach once played the organ here and the music remains alluring, but it is the church’s more recent history in the last days of the Cold War and its role in the fall of the Berlin Wall that draw tourists today.

The Rev. Christian Fuhrer became the pastor at St. Nikolai in 1980, when the world was divided by the Cold War between the Soviet Union and the United States. Germany itself was split in two, most visibly by the wall the East German government ”” the German Democratic Republic”” built in Berlin in 1961 in an attempt to keep its people from fleeing to the West.

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It is said that the key to the door in the Iron Curtain was cut in Leipzig. It was to become the key that opened Berlin’s infamous Wall and ultimately brought about its collapse, not to mention that of the Soviet empire. But 20 years ago to the day, in the second city of what was communist East Germany, no one had any notion of what was to come. Instead, the shabby, heavily polluted town of nearly half a million people was gripped by an all-pervasive fear.

Newspapers controlled by the Communist Party had done their best to whip up panic, full of dire warnings about the state’s readiness to crush “the counter revolution” by force. The order had been given by none other than Erich Mielke, the regime’s despised and feared Stasi chief. There were rumours about hundreds of Kalashnikov rifles and machine guns being broken out of store rooms at secret police headquarters in preparation for a bloody showdown with the growing numbers of demonstrators who were taking to Leipzig’s streets to protest against the Communist regime.

“We were terrified that the state would enforce a Chinese solution,” recalled Christian Führer, a pastor who was one of the demonstration leaders. “You have to remember that our protests against the regime were happening only weeks after the massacre at Tiananmen Square.”

Führer is one of the big heroes of East Germany’s peaceful revolution. He looks more like a lorry driver than a pastor and is rarely seen without his sleveless jean jacket. At age 66, he could easily be mistaken for someone 10 years younger. In 1989, the East German regime were using 28 Stasi officers to watch him night and day; his spiky grey hair earned him the secret police codename “hedgehog”.

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German religious freedom laws require a school to let a devout Muslim student set aside some time during the school day for prayers, a Berlin court ruled Tuesday (Sept. 29).

The ruling reaffirmed a temporary order from 2008 that requires the school to allow the student time to engage in prayer at least once a day””but not during class time.

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German Chancellor Angela Merkel said she’ll press ahead with tax cuts and labor-market deregulation after winning re-election with enough support to govern with the pro-business Free Democrats.

With Germany struggling to recover from the deepest economic slump since World War II, voters spurned plans by Merkel’s Social Democratic challenger to raise taxes on top earners. Frank-Walter Steinmeier’s SPD had its worst postwar result in what he called a “bitter day” after sharing power with Merkel for four years and governing for the previous seven.

“There’s a clear sentiment in favor of economic changes, especially on income taxes,” Tilman Mayer, head of the Bonn- based Institute for Political Science, said in an interview. “Voters have turned their back on grand coalition-style compromise politics.”

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Vauban, Germany–Residents of this upscale community are suburban pioneers, going where few soccer moms or commuting executives have ever gone before: they have given up their cars.

Street parking, driveways and home garages are generally forbidden in this experimental new district on the outskirts of Freiburg, near the French and Swiss borders. Vauban’s streets are completely “car-free” ”” except the main thoroughfare, where the tram to downtown Freiburg runs, and a few streets on one edge of the community. Car ownership is allowed, but there are only two places to park ”” large garages at the edge of the development, where a car-owner buys a space, for $40,000, along with a home.

As a result, 70 percent of Vauban’s families do not own cars, and 57 percent sold a car to move here. “When I had a car I was always tense. I’m much happier this way,” said Heidrun Walter, a media trainer and mother of two, as she walked verdant streets where the swish of bicycles and the chatter of wandering children drown out the occasional distant motor.

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The Vatican on Tuesday sought to defend Pope Benedict XVI against criticism that his speech at the Yad Vashem Holocaust memorial on Monday was a disappointment coming from a German who experienced the Nazi terror firsthand.

But in seeking to clarify the pope’s wartime past, the Vatican further muddied the waters, appearing to revise ”” then retract ”” Benedict’s wartime history in the middle of his first visit to Israel as pontiff.

At a news conference on Tuesday, the Vatican spokesman, the Rev. Federico Lombardi, seemed to contradict the pope’s own previous statements when he said that Benedict, growing up in Bavaria during World War II, “never, never, never” belonged to the Hitler Youth.

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Once divided by communism, Berliners are now split over faith as they head to the polls Sunday (April 26) to consider whether to offer public school students the choice of taking religion or ethics classes.

Until now, ethics courses have been mandatory for students in the German capital, thanks to a 2006 measure introduced out of concern about Muslim radicalism after an honor killing of a Turkish girl the year before. By contrast religion classes have been optional, making Berlin an exception in Germany, where most states include them in the public school curriculum.

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But despite calls for unity from Mr. Obama and the British prime minister, Gordon Brown ”” the host of the Group of 20 meeting that formally begins Thursday ”” the French and German leaders held a joint, and combative, news conference to underscore their differences with the Anglo-American approach to the crisis.

While President Nichoals Sarkozy of France did not repeat an earlier threat to walk out of the conference ”” “I just got here,” he joked ”” he made it clear he would reject an agreement that puts off stringent new regulations on banks, tax havens, and hedge funds.

“The decisions need to be taken now, today and tomorrow,” Mr. Sarkozy said. “This has nothing to do with ego. This has nothing to do with temper tantrums. When it comes to historic moments, you can’t circumvent them.”

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Chancellor Angela Merkel of Germany, an avowed friend of the United States and the leader of the European Union’s biggest economy, is diplomatic about the coming visit by President Obama. But she is clear that she is not about to give ground on new stimulus spending, stressing the need to maintain fiscal discipline even as she professes to want to work closely with the new American president.

Speaking in her modern concrete-and-glass Chancellery building last week, she underscored the points of drama that may well delineate the three summit meetings during Mr. Obama’s first trans-Atlantic trip since he was elected.

“International policy is, for all the friendship and commonality, always also about representing the interests of one’s own country,” Mrs. Merkel said in an interview with The New York Times and The International Herald Tribune.

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Gordon Brown’s carefully laid plans for a G20 deal on worldwide tax cuts have been scuppered by an eve-of-summit ambush by European leaders.

Angela Merkel, the German chancellor, last night led the assault on the prime minister’s “global new deal” for a $2 trillion-plus fiscal stimulus to end the recession.

“I will not let anyone tell me that we must spend more money,” she said.

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A portrait of a troubled, depressed teenager with easy access to an unsecured pistol has begun to emerge in the days after the youth went on a rampage, killing 15 people before taking his own life.

The police have established that the teenager, Tim Kretschmer, 17, last year broke off a round of psychological counseling for depression.

Searching his bedroom, the police found violent computer games ”” in which, experts say, players digitally clothe and arm themselves for combat ”” plus brutal videos and play weapons that fire small yellow pellets, said Siegfried Mahler of the Stuttgart prosecutors’ office.

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Germany may be at the heart of any European response to a weakening world economy, but Germany’s heart is not in it.

As world leaders gear up for a London summit meeting on April 2 where they are supposed to settle upon a coordinated response to the global economic crisis, conflict is brewing between Europeans who see tighter regulation of a skewed financial system as the main task ahead and Americans who are focused on the more immediate challenge of countering the acute dropoff in economic activity across the globe.

The differences between Europe and the United States are most evident in Germany, where years of growth fueled by a mighty manufacturing base and a deep-seated suspicion of financial capitalism has spurred a powerful resistance to the Keynesian-style deficit-spending favored in Washington.

As the United States pushes to ensure that governments around the world are spending enough to replace the demand that has evaporated as U.S. consumers lead a global retrenchment, Germany is sticking to the relatively modest stimulus it has already approved.

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The superior of the Society of St Pius X (SSPX), Bishop Bernard Fellay, has apparently ruled out the possibility of his fraternity complying with conditions laid down by the Vatican for them to exercise ministry in the Church.

Last week, following an outcry over the lifting of the excommunications of four SSPX bishops by Pope Benedict XVI, the Vatican Secretariat of State issued a statement saying that “full recognition of the Second Vatican Council” was an “indispensable condition for any future recognition of the SSPX” by the Church.

However, in an interview with the German weekly Der Spiegel published on Tuesday, Bishop Fellay said the Second Vatican Council was responsible for the “deplorable state of affairs in the Catholic Church today”. The SSPX particularly rejected three points in the council declarations, he said, “namely the ecumenical initiatives, the declaration on religious liberty and the introduction of the vernacular in the liturgy”. “Since these changes in the Church, we have experienced a unique collapse of church life unlike anything in the entire history of the Church,” he added.

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A leading member of Germany’s Jewish community said Monday that Benedict XVI, the German-born pope and leader of more than a billion Roman Catholics worldwide, was sowing divisions and abetting far-right groups by rehabilitating four ultra-conservative bishops, one of whom has denied the Holocaust.

Stephan Kramer, secretary general of the Central Council of Jews in Germany, said in an interview that because of the pope’s nationality, Benedict had a special responsibility to avoid creating rifts between religious groups over the comments of the controversial bishop, Richard Williamson of Britain.

“The pope’s decision is particularly disturbing in that he is also a German pope,” Kramer said. “Yes, he made a statement pledging solidarity with the Jews. But, frankly, the statement was made nearly 13 days after Williamson’s interview. Why? The question is how the pope wants to proceed from here in relations with the Jewish community.”

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Several government rescue packages later, the troubled German banking sector is still showing no sign of recovering from the financial crisis.

The discussion over what to do with the hundreds of billions of euros worth of toxic securities the banks still have on their balance sheets has received fresh impetus in Germany after it became clear that the Special Fund for Financial Market Stabilization — known as Soffin after its German acronym — is not succeeding in its intended aim of helping out troubled banks and jump-starting financial markets. Günther Merl, the head of the agency that manages Soffin, announced Wednesday that he was resigning — the second person to quit the agency’s steering committee within the last three months. Insiders say that Merl was frustrated at having his authority usurped by government and Finance Ministry officials.

Now the talk is of setting up a so-called “bad bank” to take over banks’ toxic securities — an approach backed by a number of leading German bankers. Sweden was able to successfully use this model in the early 1990s to combat its own credit crunch. The state even made money when distressed assets were later sold.

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SPIEGEL: Our former Chancellor Helmut Schmidt says it’s all a matter of so-called predatory capitalism. Do you agree?

Wolfensohn: Well, it’s not the system, the system did not drive it. It was driven by individuals, and the individuals created a capitalist system that was full of excesses and not regulated. So it wasn’t because there was a system; it was because individuals took advantage in the absence of appropriate regulation.

SPIEGEL: Has it to do with the American way of doing business, the American way of life, the American dream?

Wolfensohn: Well, your banks — also in their international activities — engaged heavily in this practice and had substantial losses as a consequence of this crisis.

SPIEGEL: But they didn’t invent this business.

Wolfensohn: Avarice is not contained only in the United States. So if something is making money here, it’s very apparent from the reports of your financial institutions and your investors, as well as other foreign banks, that sophisticated investors were investing very heavily in this system. So I give you that it was invented here, but I must say that there were some willing buyers and participants in other parts of the world.

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