(Reuters) - A botched sale of German bonds rang alarm bells in Berlin on Wednesday, with opposition lawmakers calling it a sign the euro zone's debt woes were coming home to roost and slamming Angela Merkel's government for failing to spell out the true risks of the crisis to Germans.
Senior members of the chancellor's Christian Democrats (CDU) mostly played down the significance of the 10-year bond auction, in which commercial banks ended up buying just 3.64 billion euros of the 6 billion euros in bonds Germany had on offer.
But other politicians were less kind.
Frank Schaeffler, a eurosceptic parliamentarian from the Free Democrats (FDP), who rule together with Merkel's conservatives, said it showed the debt crisis was burying ever deeper, like a worm and had now reached Germany.
Carsten Schneider, budget spokesman for the centre-left Social Democrats (SPD) in parliament, described it as the first concrete sign that the crisis which started in Greece two years ago and has since spread across the 17-nation euro zone like a virus would not pass Germany by.
The time has come for the chancellor and finance minister to tell people the truth about the costs and risks that our country now faces, Schneider told Reuters. Germany won't be able to finance itself forever with rock-bottom interest rates.
After initially painting the crisis as a problem for certain euro countries that irresponsibly ran up their debts, Merkel has changed her rhetoric in recent months, warning increasingly about the costs to Germany if the bloc is allowed to fall apart, as some experts now predict.
At a party congress last week she said Europe faced perhaps its toughest hour since World War Two. But for many Germans the crisis has not hit home. The economy remains buoyant, unemployment is at its lowest levels since reunification in 1990 and German firms say they have strong order backlogs.
Germany has been seen as a safe haven by investors since the crisis erupted. While the borrowing costs of vulnerable single currency members on Europe's southern periphery have shot up to euro-era highs, those of Germany have sunk ever lower.
But as the crisis has deepened, toppling governments in Rome and Athens, and hitting bigger economies like Italy, Spain and even Germany's neighbour France, worries about the costs to Europe's paymaster have risen.
KNOCK KNOCK KNOCKIN ON GERMANY'S DOOR
One analyst called the bond sale, which pushed the euro and stocks lower, a complete and utter disaster that did not bode well for Germany and the wider bloc.
The crisis of confidence is knocking on Germany's door for the first time, Gerhard Schick, a finance expert for the opposition Greens, told Reuters.
The head of the German Debt Agency Carl Heinz Daube blamed extremely nervous markets for the poor result. He said the retained amount, roughly 39 percent of the planned volume of 6 billion euros, would be sold on the secondary market and rejected the notion that Wednesday's weak sale would affect planned debt sales in the coming weeks.
Lawmakers from Merkel's party also scrambled to play down the auction, blaming the result on the low returns offered - just 2 percent annually over 10 years.
The situation is not dramatic at all, Norbert Barthle, a CDU budget expert told Reuters.
The fact that the interest rate offered is around the inflation rate means no profit for investors. It should be no surprise, because the debt crisis has meant an investor flight away from sovereign debt, he said.
His conservative colleague in the Bundestag, Michael Meister, warned against reading too much into the sale but conceded it gave reason for vigilance.
It's really not that dramatic. This kind of thing happens every now and then with bond placements, Meister told Reuters.
We need to remain substantive and responsible. This placement really doesn't justify the war cries that we're hearing from the opposition and euro opponents.