Greek PM to FT.de: Default or Not Default?

I don’t understand the Greek government. Most likely the Greek government doesn’t understand itself. More than often one has to read contradictory statements and diametrically opposed views that cancel itself by several government ministers and officials that leave a bitter and confused senses on one’s lips. Worst of all it is when the Prime Minister himself makes contradictory  statements and thus within days. Sometimes even hours. While PM George Papandreou complained in his letter to Eurogroup Chief J-C Juncker about media cacophony when they speak of default. One day later his Finance Minister Evangelos Venizelos spoke openly about ‘selective default’ creating uproar. And now George Papandreou, he himself personally, spoke to Financial Times/Germany and talked about ‘selective default’. Furthermore he urged the EU and the IMF to take a quick decision on a second rescue bailout for Greece.

Financial Times/Deutschland – George Papandreou Interview excerpt:

“The current atmosphere does not help us get out of the crisis. This uncertainty scares investors. If we do not have soon the decision that the second programme to support  Greece and the country can make its far-reaching reforms, the program will undermine itself.”

  
Greek Prime Minister Papandreou’s statement of the socialist government has expressed increasing frustration.

To the plans of the Euro-partners that the Greek government purchases with funds from the euro rescue fund – European Financial Stability Facility (EFSF) – some of their debt to the market value of 50 percent of the nominal value, the Premier expressed himself positively. “We stand open towards all these ideas” said Papandreou. “This idea would alleviate Greece’s debt burden, but also the debt service costs.”

The Prime Minister stressed that one must look at the issue of partial-payment weakness/partial insolvency. “This could theoretically take two weeks or it could last much longer and then it would cause much more damage.”

Anyone who can read the original text in German understand very well that the Greek Prime Minister speaks about a ‘selective default’.

And yet! After some Greek media lashed out against it with titles like “Society freezes” , government spokesman Ilias Mosialos issued a statement last night claiming:

“While the country gives a battle to protect its interests, to ensure long term sustainability of public debt and get out of the crisis, some people like to play with words. Now trying to use the journalistic interpretation of the interview given by Prime Minister to Financial Times Deutschland-interview in which the prime minister commented the declared intention of the rating agencies to evaluate the Greek government debt as ‘selective default’ if there is involvement of the private sector.” (Proto Thema)

Oufff, I am so glad to have the issue cleared….  I just wonder why the IMF speaks of the possibility of a temporary ‘selective default’ in its report about Greece or whether Greece has another proposal excluding the participation of private sectors in its 2nd bailout.

“A temporary Greek default may be unavoidable if private bondholders voluntarily participate in a new financing program for the beleaguered country, the International Monetary Fund said Wednesday.” (WSJ)

You can read the IMF report and Poul Thomsen’s interview here.