Germanys Schaeuble warns Greece #scary #orwhat #itsmyball #greece #germany #eurocrisis #ecb


Coat of arms of Greece since 7 June 1975.

Coat of arms of Greece since 7 June 1975. (Photo credit: Wikipedia)

Germanys Schaeuble warns Greece | Herald Sun.

The ever sensitive German finance minister is out waving his stick around again as was predicted by Simplesimon8 a few months ago.

The issue is that Greece may not be complying with the terms of it’s Euro bailout.

If Greece must cut it’s budget, then in turn it’s people will have to take a lower salary and in turn their cost of living must reduce, with lower rents, energy costs, food etc etc..

Can’t see that happening anytime soon, so where now? Just a long long summer.

July 23 (Bloomberg) — Greece retakes its position at the heart of the European debt crisis this week as its creditors assess how far off course the country is from bailout targets, raising again the specter of its exit from the euro.

Greece’s troika of international creditors — the European Commission, the European Central Bank and the International Monetary Fund — will arrive in Athens tomorrow amid doubts the country will meet its commitments and reluctance among euro-area states to put up more funds should it fail.

“If Greece doesn’t fulfill those conditions, then there can be no more payments,” German Vice Chancellor Philipp Roesler told broadcaster ARD yesterday, adding that he is “very skeptical” Greece can be rescued and that the prospect of its exit from the monetary union “has long ago lost its terror.”

After euro finance ministers failed to staunch a fresh low for the single currency last week with the approval of a 100 billion-euro ($122 billion) aid package for Spain, the troika will be tasked with determining the fiscal position of the nation where the crisis began almost three years ago. Greece is clamoring for more help as efforts to cut its debt to 120 percent of gross domestic product by 2020 fall short.

The euro last week fell to a 12-year low against the yen and the lowest point against the U.S. dollar in more than two years. Ten-year Spanish bond yields climbed back above 7 percent as concern mounted that policy makers are failing in their efforts to resolve the euro quandary.

IMF

The slump was compounded as Spanish Prime Minister Mariano Rajoy forecast a second year of recession and Spain’s regions lined up to seek bailout funds from the central government. Italian Prime Minister Mario Monti, his country also burdened under surging borrowing costs, blamed unrest in Spain.

In Greece, officials have been struggling to hold to obligations tied to 240 billion euros of rescue funding over the past two years.

The IMF, which indicated in March it won’t commit more money to Greece, will make a decision on its next disbursement in late August at the earliest based on the troika’s findings, two fund officials familiar with the situation in recent days.

The Washington-based IMF has signaled to European officials that it will stop paying further rescue aid to Greece, bringing the country closer to insolvency in September, Der Spiegel yesterday cited unidentified European Union officials as saying. It’s “already clear” to the troika that Greece won’t reach the 120 percent target, Spiegel said.

Additional Aid?

Missing the targets means Greece would need between 10 billion euros and 50 billion euros in additional aid, a potential outcome that the IMF and several unidentified euro- area states are not prepared to accept, Spiegel said.

Greek Prime Minister Antonis Samaras’s three-way coalition, formed last month after a June 17 election ended a six-week political deadlock in the country, has scrambled to assemble budget cuts to convince troika officials.

Finance Minister Yannis Stournaras has identified about 8 billion euros of spending cuts and savings for the next two years out of 11.5 billion in additional cuts required. Stournaras is fending off pressure to impose more reductions this year as the economy shrinks faster than originally forecast. He is scheduled to present his proposals to the troika on July 26.

The Greek government is also behind on state asset sales, having so far brought in 1.8 billion euros, a fraction of the 50 billion euros it aims to raise by 2020, half from sales in company stakes and half from real estate. The state is unlikely to generate more than 300 million euros this year, short of the about 3 billion euros targeted for 2012, according to the outgoing chief of the state’s asset-sales fund, Costas Mitropoulos.

Bond Payment

Mitropoulos announced his resignation from the Hellenic Republic Asset Development Fund last week, citing a lack of support from Samaras’s government.

Greece is due to make a 3.1 billion-euro bond payment, mostly to the ECB, in August, a challenge that euro-area officials have said won’t be an issue, while so far declining to specify how they’ll ensure the bond redemption gets paid.

German officials over the weekend torpedoed the possibility of renegotiating the terms of Greece’s agreement.

Foreign Minister Guido Westerwelle told the Hamburger Abendblatt that his Free Democratic Party, the junior partner in Chancellor Angela Merkel’s coalition government, won’t agree to any attempts by Greece to overhaul its bailout terms.

“That won’t work — that’s a Rubicon we can’t cross,” Westerwelle told the newspaper. “It’s in Greece’s own hands to ensure it stays” in the euro, he said. Last month, Westerwelle said negotiators might consider giving Greece more time.

No Extension

That option also was rejected by Volker Kauder, the parliamentary caucus leader for Merkel’s Christian Democratic Union. He told party colleagues that “there will be no adjustment, also no more time,” according to WirtschaftsWoche.

Once taboo, the possibility that Greece could exit 17- member monetary union has been voiced by European officials this year who consider the fallout from such a scenario would be the lesser evil against a seemingly perpetual crisis.

Roesler, who is Germany’s economy minister as well as the Free Democratic chairman, told ARD that a curtailment of aid to Greece would lead to a sovereign default, which would in turn lead to “Greeks coming to the conclusion that it is probably wiser to leave the euro area.”

Spiegel reported that German officials were holding off on such a decision until the permanent bailout fund, the European Stability Mechanism, comes into operation in September. The 500 billion-euro ESM is on hold pending a decision by Germany’s Federal Constitutional Court, set for Sept. 12.

To contact the reporter on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

Advertisements
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: