Doomsday scenarios are up again, as the Greek government is preparing the list of reforms to be submitted to the Institutions of IMF, EU and ECB, the creditors’ Trio formerly known as the Troika.
The warnings by the head of the German Bundesbank have been garnished by media articles claiming that “Greece will default in two weeks” and some tabloid even claiming that Greek Finance Minister Yanis Varoufakis was about to resign.
Suedduetsche Zeitung: Two weeks until Greece defaults. Always bad news. Greeks are afraid the worst for the country – the bankruptcy. And they empty their bank deposits just to be on the safe side.
Weidmann: Greece Risking Default If Loan Payments Missed
European Central Bank Governing Council member and head of German Bundesbank Jens Weidmann said in an interview to to be published on Saturday that Greece is risking default if it does not meet its obligations.
As expected, Weidmann blames the new Greek government for the renewed crisis between Greece and its creditors, claiming that the Greek economy was improving until autumn last year.
“If a member state of the currency union decides not to meet its obligations and stops paying bond holders, then an unordered insolvency is inevitable.”
Although EMU governments were putting on a good face, it was getting increasingly hard to avoid a default, Weidmann suggested.
“It seems as if the governments of the other states are of the impression that a solution can still be achieved,” Weidmann said. “But we don’t have much time anymore. It’s getting close.”
“I am against increasing the emergency loans,” he said in the interview.
Weidmann argued that Greece could continue to service its debts on its own in spite of its high public debt ration given that interest rates are low and maturities long.
“The Greek interest burden in relation to its economic output in the current year is lower than, say, in Italy, Portugal or Ireland,” he said. (full article MNI-Marketnews)
Weidmann said further that “The new government has squandered much trust,” and added that “some members of the Greek government” had exacerbated the situation by making contradictory remarks in public appearances.
It is highly possible that Weidmann points out with his finger to Finance Minister Varoufakis, with German tabloid Bild “hearing” rumors and claiming that Varoufakis’ resignation was imminent, even today Friday.
Taking into consideration Germany’s hysteria and Schaeuble’s fury against Varoufakis, I suppose, if he was to be resigned, the crisis would be solved… furthermore, I assume, that Germany wants him out mostly our of fear, that he would materialize what he always supported: default within the eurozone.
PS and that’s very bad for the eurozone and its reputation…