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Merkel: Greek crisis will inspire Spain, Portugal

AFP/The Local · 2 May 2010, 10:46

Published: 02 May 2010 10:46 GMT+02:00

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"All the experts say that Portugal, Spain and Ireland are in a much better situation than Greece," Merkel said in an interview with the mass-circulation Bild am Sonntag newspaper.

"These countries can also see that the path taken by Greece with the IMF is not an easy one. As a result they will do all they can to avoid this themselves, and they have already set out saving efforts," Merkel said.

Greek Prime Minister George Papandreou said Sunday that a bailout package of "unprecedented" size had been agreed with the European Union and the International Monetary Fund to avoid what he called "bankruptcy," but that the country would have to make "big sacrifices" in return.

Mr. Papandreou said that unless Greeks were willing to make major sacrifices the country would go bankrupt.

"These sacrifices will give us breathing space and the time we need to make great changes," he said.

His comments come after thousands of demonstrators joined May Day marches through Athens protesting planned budget cuts.

The rescue deal could be worth as much as €120 billion ($160 billion) over three years.

The Greek debt crisis has raised fears that other countries in the 16-nation eurozone with shaky finances would also be unable to finance their debt mountains and would be forced to seek help from outside.

Story continues below…

Portugal and Spain's credit ratings were downgraded last week.

AFP/The Local (news@thelocal.de)

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Your comments about this article

14:36 May 2, 2010 by Bushdiver
I doubt it. What will probably really happen is the money Greece gets from the EU and IMF they won't be able to repay and that will be that. Another forgiven debt that the EU will have to swallow. This bailout is just prolonging the inevitable.
18:12 May 2, 2010 by wmm208
Ha, "inspire". What a joke. "Inspire". "Inspire" them to come to ask Germany for more money because they know their is a free bar at the EU bankruptcy party. Ha ha ha
23:04 May 2, 2010 by cobalisk
The Chancellor's comments are directed toward the markets, an attempt to short circuit the building speculative wave against Spain and Portugal. It is important to view things in their context. The notion that Germany will have to bail out more countries is only accurate if everyone sits back and lets currency and bond speculators individually target sovereign debt with impunity. Since this is not happening, the fears are unfounded.
23:08 May 2, 2010 by wmm208
" Since this is not happening, the fears are unfounded. "

Oh Yes they are. There is so much "smart money" not even from the evil zionists anymore but rather coming from Asia who are placing huge bets against the Euro. You cant control the markets nor can you control speculators:

'The Financial Industry Doesn't Give a Damn about Politics'


The Cancerllor can speak all she wants. So can Lagarde. You cant control the markets nor do the markets care what politics says...
23:27 May 2, 2010 by Logic Guy
Well, I wonder How it feels to be the people that forced the Euro onto European citizens. History clearly indicates there that serious problems result when a government overlooks the concerns of the people. Yes, someone must lead and make decisions, but they must take into account the views of the people they represent nonetheless.

In a perfect EU, the various nations would trade freely with each other and yet retain their own currency. It's either this format, or create a highly structured system that absolutely prevents one nation from destroying the others.

Where is the logical thinkers?
23:51 May 2, 2010 by wmm208
Logic Cuy - You are talking about Socialism and social welfare states. As we are witnessing, social welfare states and socialism are dead. They are dying for numerous reasons however, the world or platform you wish for (It's either this format, or create a highly structured system that absolutely prevents one nation from destroying the others) cant and wont exist. Its too late. The denial and malaise of the "people" as you mention, who have been hypnotized by the govts efforts thru social welfare benefits and Bismarkian principals were drunk and now the kettle has run dry. There is only one final solution....
01:20 May 3, 2010 by Hibernicus
This crisis has nothing to do with socialism or "welfare states". The crisis is a direct result of the "de-regulated" neo-liberal economy which became dominant after Thatcher-Reagan politics came to power in the USA and Britain. Some posters are forgetting that you can't have borrowers without lenders.

The German Banks lent the money to Greece and other countries in the eurozone in the expectation that "Euro-solidarity" would eliminate the risk factor and cover their a$$es. They assumed that this would allow them to take a handy profit even if the borrowers were high-risk. Their gamble failed and we have a crisis which will re-emerge in a year or so as Greece will not be able to repay these loans without something approaching civil war. The only peaceful resolution is an orderly default process which eliminates the debt gradually and allows normal business to resume.

In the long-term, Capitlaism has outlived its social function and needs to be replaced. It can be done peacefully or by violent revolution. Welfare states are necessary for modern Capitalism in order to retain the illusions of liberal "democracy" and retain social and economic hegemony. Otherwise, Capitalism would be in the same position as the French Aristos in 1793, lose your power or lose your head!
02:01 May 3, 2010 by wmm208
German banks throwing this money after bad is just part of the malaise and denial. Germany doesnt have any future kids. The fertility rate does not allow it to issue more German bunds than is necessary because in 20 to 30 yrs those interest payments cant be met because the bodies to pay taxes are not there anymore. Social welfare programs like Hartz IV are history. The Bismarkian principle and the 3rd Way does not have anymore room in the new economy. People will either have to work or have to work. The East German project is over. It failed miserably. Now, Germany is loosing ground. The recovery has not returned and you can now see a double dip. Along with domestic problems, you will see that todays bailout of 120bn prove to not help Greece but also allow countries like Portugal, Spain and Italy to also default and ask for money from Germany. Germany;s export economy wont be able to catch the recovery because in the global rebalancing, consumer spending economies will recover faster. Germany will perhaps recover in 2011 or 2012. Also, German banks are withering. their capital base has eroded. They are not lending. The ECB cant lend for collateral anymore because of todays bailout, Its a no win for the EU, the Eurozone and germany. The Death of the Welfare State has begun. No more free lunches. Expect things to get worse...
10:53 May 3, 2010 by mrsams
Ok Ok....calm down....German won't bite you.From yesterday morning to dawn posting here really one of your records .

You need some sleep and things don't get worse .
17:23 May 3, 2010 by wmm208
The bigger problem for the social welfare ­ Bismarckian State in these times is that is going to have to ask its citizens to reduce their incomes (deflate) by at least 25%, at the same time that it must reduce the costs that its businesses labour costs. So cuts in corporation tax and compliance costs as well as abandoning tons of bureaucracy (and that means socialized welfare jobs & welfare benefits). In sequence, the poor must become much poorer, and the rich much richer, before a "normal" social contract can be reintroduced.
00:28 May 4, 2010 by wmm208
Just wait until the rest of the PIIGS stick their snouts in the trough. I hope the German taxpayers have some anal lube on hand. About 1 trillion is needed over the next few years. You will "Wish" that this was onlt a Greek problem...

20:33 May 4, 2010 by berlinski
Greek crisis will inspire Spain, Portugal.

Sure it will. Inspire them to party like it is 1999 and then put their hand out to Germany to pay for it while they nurse the hangover.
20:53 May 4, 2010 by wmm208
Why should the German plumber have to pay for Spain or Greece?
21:23 May 4, 2010 by berlinski
Didn't know there were any German plumbers. Any plumber I have ever met has been Polish or Spanish or some other EU national.
21:29 May 4, 2010 by wmm208
Yes, I forgot, Germans dont like getting their hands dirty. Then why should a German Auto worker pay for Greece or Spain then? Deflation is here. Make friends, it will be staying for a long time....Schade..
21:34 May 4, 2010 by berlinski
Reason is Germany needs someone to be able to buy the cars they produce.
22:01 May 4, 2010 by wmm208
What happens if nobody is buying anymore or if labor and auto costs go down -25%?
22:04 May 4, 2010 by berlinski
My guess is the German government doesn't want to wait around to find out and thus sets in motion the bailout.
00:28 May 5, 2010 by wmm208
But the bailout only adds gasoline to the flames and their are no devaluation mechanisms. What happens if the ECB cant accept asset collateral programs for liquidity anymore? Thats whats happening....
00:36 May 5, 2010 by Prufrock2010
Goldman Sachs' stock has declined 20% since it was served with a lawsuit by the SEC. Goldman Sachs will get it all back and then some by shorting the euro that it has helped to devalue.

The inevitable contagion from the Greek handout (not bailout) is going to doom the euro and maybe even the EU. The "euro skeptics" were right from the beginning, as there has never been a mechanism in place to deal with this kind of crisis. An unfortunate oversight....
00:53 May 5, 2010 by wmm208
Prufrock2010 - You have joined the dark side. We will rule the universe alas.

Something Euroland never saw coming because it beleived their leaders however, Nobel Laurete's have stated this since the Euro's inception....Not good...
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