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German Fin Min shocks: Greece’s return to markets within 2012 unrealistic-programme not sufficient

Germany’s Finance Minister Wolfgang Schaeuble sent a letter to the European Central Bank, the International Monetary Fund and his euro zone colleagues. In the letter, dated June 6 and published by Reuters,  Schaueble explains the German position on the support programme for Greece. He starts right away with a shocking finding:

“The situation is difficult. A return by Greece to the capital markets within 2012, as assumed by the current programme, seems more than unrealistic. This means that the volume of the current programme is insufficient to cover Greece’s financial needs over the programme period.”

Pointing out that Greece is in danger to default in due time, Schaeuble writes about the nedd of the 5th loan-tranche:

“At the same time, without another disbursement of funds before mid-July, we face the real risk for the first unorderly default within the euro zone.”

German Finance Minister stresses the urgency to avoid a default within the eurozone and underlines the necessity that the financial support is being shared by taxpayers and private investors:

“Against this background, I see the need to agree on a new programme for Greece in order to close the financing gap and prevent default. However, any additional financial support for Greece has to involve a fair burden sharing between taxpayers and private investors and has to help foster the Greek debt sustainability.”

Wolfgang Schaueble sees the solution in

 “a bond swap leading to a prolongation of the outstanding Greek sovereign bonds by seven years, at the same time giving Greece the necessary time to fully implement the necessary reforms and regain market confidence.”

Read the Full Letter Reuters

I am sure Schauble’s letter will raise many questions among the 11 millions of Greeks. If there is not rescue, why bother with additional austerity measures, why bother with additional loan? The game is over  and lost…. unfortunately. After all, Greek taxpayers’ money will land to Schaueble’s banks. Only recently the finance ministry of Austria openly declared, that Athens had paid Wien “19 million euros on interest rates”. The whole issue is just to save the banks and impoverish the citizens. A house of cards in a virtual money world. However the life we do live here is not virtual at all, it’s real.

 

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One comment

  1. “If there is not rescue, why bother with additional austerity measures, why bother with additional loan?”

    I agree completely. Greece will at some stage have to default, I see no other outcome. Better to default now whilst the state-owned industries are still in Greek hands rather than default later when they’re foreign owned (even in part).

    In the UK we have a saying; “when you’re in a hole, stop digging!”.