Merkel refuses to bail out Greece as Germany's recovery stalls

 

 

By Mail Foreign Service

Last updated at 12:59 PM on 12th February 2010

 

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Angela Merkel has put the brakes on any quick multi-billion euro bailout of Greece, it has been claimed.

The German Chancellor is apparently insisting that Athens work out its own problems.

The report of her stance contradicts a European Union statement that the bloc was sending a 'clear message of solidarity' and the show of Franco-German unity on the crisis.

 

Enlarge Franco-German split: Despite a show of unity in Brussels yesterday, above, Angela Merkel appears to have split with Nicolas Sarkozy over how to handle the crisis gripping Greece and the euro

 

 

'Germany is stepping totally on the brakes on financial assistance,' the Guardian quoted a senior EU official as saying. 'On legal grounds and on principle.'

An unnamed top diplomat also quoted by the Guardian said of the German position: 'They're not waving their chequebooks.'

Mrs Merkel's hesitance came as it emerged that Germans have become so disillusioned with the euro, many will not accept notes produced outside their homeland.

 

 

More...

 

 

• The euro? It's a great success, says Mandy as Greece turmoil sends single currency into worst ever crisis
  

 

There is bitterness among some of the larger economies that they share the same currency as countries like Greece and may have to bail them out.

 

Every note has a serial number with a one-letter prefix to identify the country of origin.

The split also came as Germany's economic recovery lost steam in the fourth quarter of last year.

The preliminary data for the October-December period show gross domestic product was unchanged compared with the previous three months, after quarterly rises in both the second and third quarters brought Europe's biggest economy out of a deep recession.

'The euro's a success': Peter Mandelson at Downing Street yesterday

 

 

The Federal Statistical Office identified exports, the traditional driver of the German economy, as the 'only positive contribution'.

Germany went into recession in 2008 as demand for its exports dried up amid the global economic crisis.

After shrinking for four straight quarters, including an 3.5 perc ent slump in the first quarter of 2009, the country technically emerged from recession with growth in the second quarter of 2009.

 

Meanwhile, Britain's Business Secretary Peter Mandelson triggered incredulity last night by insisting Britain should join the euro.

The Business Secretary played down turmoil in the eurozone by claiming the single currency had been a 'remarkable success' and said it was in Britain's long term interests to sign up in the future.

He was derided by critics as living in 'cloud cuckoo land'.

 

Meanwhile, Gordon Brown has repeatedly refused to rule out the possibility that British taxpayers would have to contribute to any possible bailout.

 

Yesterday, European leaders sought to prop up Greece with moral support - but offered no specific aid, sending Greek debt yields higher and the euro down against the dollar.

EU President Herman Van Rompuy and Merkel said they could not offer specifics on how Greece might be helped as it had not specifically asked for help from the EU.

As the crisis threatened to spiral even further out of control, an EU source claimed the bloc is hoping to draw on expertise from the International Monetary Authority.

The EU wants advice on designing a financial rescue - but not the Fund's money, the source told Reuters.

 

Yesterday the IMF pledged support for Greece. 'We stand willing and able to support Greece in ways that the Greek authorities think is appropriate,' IMF First Deputy Managing Director John Lipsky said.

 

Austerity: Greek PM George Papandreou in Brussels yesterday

 

 

European Central Bank President Jean-Claude Trichet also weighed in, offering help in monitoring Greece's efforts and drawing up 'necessary additional measures'.

 

inancial markets had hoped EU leaders would lay out specific plans to provide Greece with a credit life-line or a scheme in which state-owned European banks would buy Greek bonds in order to help the government finance its borrowing.

But that optimism gave way to disappointment, with market focus now on next week's meeting of EU finance ministers.

 

Analysts aren't holding their breath.

'There will still be a lot of questions hanging around,' said Gareth Berry, a currency analyst at UBS in Singapore.

 

'The EU have no experience of this type of thing. They are not the IMF and they will be very careful not to plunge into this with both feet and not think things through.'

European leaders are keen to prevent Greece's problems from spreading to other highly indebted or high-deficit euro zone members - such as Spain and Portugal - plunging the currency area into a deeper crisis.

But they also want to keep up the pressure on Athens to implement an austerity plan designed to cut hundreds of billions of euros in debt and a deficit that reached 12.7 per cent of gross domestic product last year - more than four times EU limits.

Greece needs to raise about 53 billion euros this year to finance its budget and refinance its debts, which are expected to grow to 290 billion euros this year, nearly 120 per cent of gross domestic product.

Commentators, however, warn that Greece's debt rout may have put the EU in a lose-lose situation.

Leaving the Greeks alone to deal with the legacy of years of excessive borrowing and lax budget discipline could expose its and its southern peers' debt to a punishing sell-off that could rock the entire 16-nation euro area.

A bailout would expose the area's biggest flaw - its inability to enforce fiscal discipline among its members.

That would further dent market confidence in the EU's Stability and Growth Pact that sets limits on public debt and fiscal deficits.

Greek Prime Minister George Papandreou yesterday again promised deficit cuts, starting with a four percentage point reduction this year, and the EU said it will monitor progress.

Even with EU support Greece faces a daunting challenge to consolidate its budget and restore confidence in an economy whose imbalances were exacerbated by the financial crisis and where social unrest remains a threat.

Read more: http://www.dailymail.co.uk/news/worldnews/article-1250433/Greece-debt-bailout-EU-leaders-split-euro-crisis.html#ixzz0fKLKnLma

Neither of them have a chance against Spain in the semi-finals.

When will the PIIGS(Portugal, Ireland, Italy, Greece, Spain) get slaughtered?

Germany and the rest of the nations will have to bailout PIIGS even though they played by the rules. Germany has every right to be pissed but if they don't want up to 30% of Eurozone GDP to collapse and the Euro to get massacred they have to step in and bailout Greece.

How many times does it have to be proven massive government spending never leads to anything good?

How many times does it have to be proven massive government spending never leads to anything good?

 

 

 

Ehh....4?

Ehh....4?

 

You're off by a couple of zeros...

^ D'awwww I did baaaaad :goofy: