MacroScope

More German misery for the Greeks

April 20, 2010

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The rescue plan put together for Greece by its European Union partners was not working anyway — at least as far as financial market speculation was concerned. But then up pops Axel Weber, Bundesbank chief and European Central Bank governing council members.

Athens, Weber is said to have told German politicians, may need up to 80 billion euros in assistance in the coming years. That’s quite a bit more than the 30-billion euro aid mechanism agreed about a week ago.

Result:  The spread between Greek and German 10-year bonds flew out to a new euro lifetime high. It might also have been helped along by the International Monetary Fund Global Financial Stability Report saying:

Advanced country sovereign risks could undermine stability gains and take the credit crisis into a new phase.

Market analysts, in the meantime, are getting jittery about it all and are keen for the EU’s rescue plan to be used.

Given Germany’s  antipathy towards baling out Greece in the first place though, can this even begin until after the state election on May 9?

Comments
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It’s not looking so hot is it?

Posted by frambu | Report as abusive
 

Of course Greece should implement the necessary policy measures in order to tackle a problem that is almost entirely of its own responsibility. Nevertheless, Europe and Germany in particular couldn´t dismiss the tremendously important political issue of European Union maintenance and preservation. Any temptation of reversing this quite sucessful international institution, in particular when Germany reunification took a flight and market enlargement begins to augment his area of influence in Central Europe, is a clear misjudgement of the world equilibrium. Any attempt of discharging the mediterranean members would be a tragedy of astonishing dimensions and not only for them since they are not so weak and unprotected as the northern partners sometimes believe or desire (God forgive me to suspect of simple racism/nordic-germanic ethnicism in a lot of commentaries that I´ve read in several blogs and publications)

Posted by southmed | Report as abusive
 

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