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Bundesbank boss warns Greece to reform

The Local · 12 Jun 2011, 09:13

Published: 12 Jun 2011 09:13 GMT+02:00

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"Greece's capacity for (debt) payment depends foremost on the attitude of the government and the people," the hawkish Bundesbank chief told Welt am Sonntag newspaper in an interview published on Sunday.

"A lot of aid has been given, but under strict conditions such as massive and swift privatizations. If these commitments are not upheld, there will no longer be a basis for additional aid," he said.

"Greece would have made its own choice and should assume the undeniably dramatic consequence of a default on its payments."

Although a potential Greek default would likely make life hard for eurozone member nations the single currency will survive "and remain stable even in that case."

Despite a landmark €110 billion ($160 billion) bailout agreed last year, Greece's €350 billion debt load has only got heavier as a deeper-than-expected recession in 2010 weighed on government income.

The European Central Bank has until the end of the month to decide a second bailout for Greece but remains divided over the role of the private sector.

Germany wants a second rescue package to include contributions by private creditors, banks and investment funds as the price of Berlin's involvement.

Diplomats say the need is estimated at more than €90 billion – one-third to come from eurozone nations and the IMF, one-third from sell-offs of Greek state assets and the final €30 billion or so from the bank rollovers.

The latter two components are uncertain, and it is also uncertain whether the headline €90 billion figure includes remaining tranches of the existing €110 billion package mustered last year.

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While expressing sympathy for public resentment in Greece towards the reforms, the current process is "inevitable" for the country to become more competitive and put its financial house back in order, said Weidmann.

AFP/The Local

The Local (news@thelocal.de)

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Your comments about this article

10:08 June 12, 2011 by 9900lawre
If the Greeks pictured are just angry at their government for making an almighty balls up then thats fine. If it's a protest against public spending cuts and demanding more to be spent (requesting a bigger unaffordable overdraft)then thats not!

It likens to a spoilt child (The public) in the supermarket who crys for more sweets even when his mother (the government) who is on state benefits hasn't got enough money coming in to pay for them. This mother seems to be a sponger waiting for mr right to rescue her.
11:28 June 12, 2011 by marimay
EU was a bad idea.
11:43 June 12, 2011 by delvek
EU in theory is an excellent idea but in reality the differences in the various country's are so great it just isn't realistic.

The Dane and French border closing, heavy debts being saddled on Germany, these are all signs that it will not last the test of time.
11:47 June 12, 2011 by harcourt
It WILL be sorted out somehow, because so many countries, U.S., France, Germany etc. are heavily exposed financially in Greece
13:41 June 12, 2011 by pjdipalo
Get rid of the EU bosses, allow each country to dictate its own economic future using free enterprise ( very strong anti monoply laws), and alow the cream to float to the top. Socializing the economic power of any country never works. It only works for the power mungers and the thieves.
18:47 June 12, 2011 by MJMH
Why is it forgotten that in literally every period of true greatness which sprang from Europe it was from a nation state that stood alone. The Netherlands didn¦#39;t have a Golden Age because the country depended on help from Sweden. France didn¦#39;t become a great power because the country dragged Hungary along for the ride. Italy didn¦#39;t ask Luxembourg for permission to create the Renaissance. Europe would do well to remember that while the continent was just beginning to exit the Middle Ages, there were much more potent centers on the map like the Ottoman Empire and China, and still somehow these small countries managed to become, well great. Exploration, art, music, and literature all had their basis and their very formation because of fostering from the nation state, even many of the great cities-especially the capitals of Europe-are byproducts of the nation state. Most wars in Europe on the other hand were caused by competition, which was exactly why the EEC was turned into the EU-it promised to compete with the USA and other emerging countries. Wanting to be the biggest, the richest, the best, or the most liberal, is not good for any nation in Europe. The past only proves the point. Both the Soviet Union and the Roman Empire were multicultural. Where are they now?
19:43 June 12, 2011 by maxbrando
Greece, and the EU will collapse - and for the same reason. The governments are undisciplined, and have no willpower to rein in spending. All they know how to do is raise taxes. For much of the EU there are plenty of industries and people to tax even more. For Greece, they don't make anything that I know of, and don't have anything to tax to raise cash. I hope you all fail.
22:34 June 12, 2011 by wood artist

What will ultimately happen is anyone's guess. It is obvious the Greek situation is stressful, both for the Greeks and for the EU, but to hope for failure only ensures that situations such as those that led to wars and conflicts arise yet again. While much of the world hasn't risen above that point, Europe has at least tried, and despite the differences between them, I think Europeans have finally decided that regardless of the question, war is not the answer.

For many reasons, often because of resources, not every country can or will be an industrial giant. However, as we learned at the end of WWII, the whole continent can only thrive when trade is allowed and encouraged. Greece may or may not be able to discipline themselves, but to hope for failure is to suggest you'd like to return to those old days...and I doubt many of us look back and think that's a better way.
07:26 June 13, 2011 by HANNIBAL-BARCA
The Greek people should revolt overthrow their farcical government and leave the Euro! Let the bankers sort out the mess created by the bankers.
09:23 June 13, 2011 by harcourt
I totally agree with Wood Artist. To hope for failure is hardly constructive. Maxbrando you don't appear to sketch out the system you want to replace it with after your desired failure. I'd be interested in some ideas instead of only destructive critisism
09:45 June 13, 2011 by Keleth
Can't see the Germans pulling their aid even if Greece fails to make cuts etc.

Them pulling out would drag down and could mean the end of the € and that is 1 thing the German government does not want.
22:33 June 13, 2011 by Eric D
Greece is a **** hole don't try to put sugar on it it's still a **** hole

get Greece out of there it wont affect the Euro for crying out loud

greece as no economy beside Tourism and agriculture with Immigrants make up nearly one-fifth of the work force in that department.. borderline 3 world
18:47 June 14, 2011 by Jack Kerouac
"Greece would have made its own choice and should assume the undeniably dramatic consequence of a default on its payments."

Exactly! And the fact that Greece is blaming "the recession" for their financial woes is laughable. Greece's corrupt government and lack of finanacial reforms (just to name a few causes) are what's affecting their economy. They won't accept responsibility for their short-comings, but they sure will accept our cash. How many of you believe they will pay the loans back?

Wake up - They will not reform, we cannot save them - only they can save themselves. You cannot help somebody who doesn't want help. It's a bad situation, and I hope somebody at IMF, Bundesbank, and/or Greece finds a solution.
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