Skip to comments.Germany's Ongoing Refusal to Forgive Greek Debt
Posted on 11/26/2012 4:51:40 AM PST by DeaconBenjamin
The International Monetary Fund (IMF) believes that the only way to reduce Greek debt to a sustainable level is by a debt haircut involving the country's government creditors. But Germany refuses to consider the proposal. Reality is on the IMF's side.
An elegant appearance is important to Christine Lagarde. The head of the IMF wears her short hair carefully coiffed, and diamonds glitter on her manicured fingers. When she talks about global financial issues, she hardly ever raises her voice. Her colleagues call her "Ms. Perfect."
But last Tuesday Lagarde had trouble keeping her composure. She hurried back to Europe from Asia to attend the latest Euro Group crisis meeting on Greece. And even though she had a fever and felt weak from the flu, she began to raise her voice as she spoke. For Greece to recover, she insisted, creditor countries would have to forgive the government in Athens a large share of its debt. "Nothing else will work," Lagarde said.
But the group, most notably Germany's impassive Foreign Minister Wolfgang Schäuble, refused to budge. The meeting ended unsuccessfully at around 5 a.m. and was adjourned until Monday.
It is something of a paradox. Originally, Germany was the primary backer of IMF involvement in efforts to save the euro, primarily because of the group's experience, as Merkel repeatedly emphasized. Schäuble, for his part, said at the time: "There is no institution worldwide that has a comparable level of expertise."
Now, however, Berlin has shown the greatest resistance to Lagarde's approach. The reason is simple: If the Greek government were forgiven a portion of its debt, Germany would have to write off billions in aid loans. Greece's crisis would cost German taxpayers money, a novelty that Merkel and Schäuble would like to avoid on the eve of an election year.
(Excerpt) Read more at spiegel.de ...
The “have” and “have not” problem is not unique to the US. Germany doesn’t want to pay for the irresponsibility of the Greek government....what a surprise. Working Americans don’t want to pay for those who refuse to work, but they will be made to. Soon it will make you a target to be rich. A two-tier system will develop between the proles, who will have little, and the “party” who will control the resources. (See ‘The Hunger Games”)
A “haircut” is when you lose a very minor amount of dead cells to make yourself temporarily look better.
But, the term “haircut” is being used to describe up to 75 % of the Greek debt. That loss rate when applied to a human’s haircut would result in amputating everything above the waist. That king of operation is “survivable”?
Why do I call it the European Monetary crises instead of the Greek Monetary Crises? If it happens for Greece what will prevent it from happening for the other nations of the “PIIGS” - Portugal, Ireland, Italy, and Spain?
I would like to write off 75% of my mortgage. If the lender agrees, I promise to immediately spend more money in order to boost the economy. Sounds like a plan to me.
Why should Germany forive the debt?
Germany needs to get their money back.
The only way out of this for Greece is to default on all of their debt,leave the Euro Zone and go back to printing their own money. Of course this will result in significant economic disruption in the short term but this farce has been going on for 4 years now and there is absolutely no way that Greece can be saved regardless of all of the machinations of the IMF and ECB.
Get it over with and move on.
Which is exactly why Germany will end up forgiving the better part of Greek debt. This was all a scam in the first place. It is simply worth too much to German economic leaders to keep Greece in the Eurozone. Germany and the Eurozone countries were always going to forgive whatever amount of Greek debt it took to keep them in - they just had to bring the people along slowly (particularly Germans). So they take the Greek debt from private creditors as a bailout, kick the can down the road, and eventually will avert the crisis' increasingly by forgiving chunks of debt. The German people wouldn't go along with this right out of the gate, so they had to do it slowly.
where is Bono? He pushed for debt forgivness to third world nations.
Germany will either take a loss voluntarily or involuntarily. Either way their marque brands will start to suffer.
Greece, like many of these euro nations, are ruled by a cliquie of crony capitalists. They have no interest in anything other than something that keeps their power.
Germany should insist on ownership of Greek islands in exchange for debt relief, and rename them German islands.