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Schäuble says Greece will need a decade to recover, criticises Italy

The Local · 24 Sep 2011, 12:31

Published: 24 Sep 2011 12:31 GMT+02:00

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“Greek will certainly need a decade rather than a year to return to full competitiveness,” he told weekly business magazine Wirtschaftswoche.

Much depended on the Greeks’ acceptance of harsh economic measures, he said.

“We cannot spare the Greek people the necessary adjustment measures. At the end, the people decide whether they can, and will, take the burden,” he added.

The Greek government was at least clearly in favour of doing all that was necessary to remain within the euro, although this made significant demands of the people, said Schäuble.

“We should have respect for the enormous adjustment burdens which are being demanded from the Greek people. Although it does not always seem to be fair, if one can believe the media reports of yachts in Piraeus or Mykonos and other places.”

He said if Greece was not rescued during the current euro crisis, the European Union itself could collapse.

“There is a real danger that the currency union could fall apart. The EU would lose enormously in terms of political credibility and ability to act in the future,” he told the magazine.

Schäuble also criticised the Italian government for its lack of consistency in the financial crisis and called for it to make more effort to win over the trust of the financial markets.

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“Those responsible in Italy – and in all other countries – have to know that it is problematic to announce measures or promises and then not to keep to them. That is no way to win the trust of the financial markets.”

The Local/hc

The Local (news@thelocal.de)

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Your comments about this article

13:32 September 24, 2011 by Englishted

Try slamming those who are responsible,not just the bottom every time.

He worries " That is no way to win the trust of the financial markets.¦quot;

Sorry, how about the financial markets trying to win the trust of the rest of society as they caused the crisis and are I believe encouraging it to continue for their own selfish ends.
23:36 September 24, 2011 by Logic Guy
Well, I usually respect the words that comes from Schauble. I view him as being intelligent. However, I admit that I find it weird, that he thinks that the entire EU would fall apart, if Greece were to falter. According to the facts, this is not true.

Sure, if some nations in the EU were to default, then yes, the EU and the Euro would take a huge hit. But....over time, the EU would recover and actually become stronger, due to the FACT that weak nations would no longer harm the union.

What can't people understand this?
11:26 September 25, 2011 by lwexcel
@Logic Guy

I am sure that people understand the concept just fine, but after a bit of closer analysis you would see that it is, in fact incorrect. The Euro was created to allow a free movement of people, goods, and other commerce, but it was also created to stop the competition between a bunch of countries that were right next door to one another. To kick the weaker countries out does not end with just that move. After kicking them out what is next they will devalue their currency and then trade tariffs will need to be put into place. That would hurt some of the remaining members while helping some others of the remaining euro zone states (but wait......that means that the ones that are hurt by these actions have become weak as well so then you have to kick them out right.)

To make a long story short kicking a country out of the euro zone is not so logical, and it would just create a situation where the euro zone countries are in a tougher competition with one another than they were before the union was started.
12:12 September 25, 2011 by storymann
Greece's debt load is approaching 200% of it's output. Schäuble assessment seems reasonable under the current situation in Greece. I think a major problem with in the zone was pointed out by Gao Xiqing, the head of the China's sovereign wealth fund, he suggested that resolving the current crisis will require a major cultural and social shift across Europe. He sees the problem as a conflict between the relaxed work ethic of southern European countries, such as Greece, and the fiscal discipline of Northern countries like Germany. I doubt this problem will go away with more bailouts. The default of Greece will send major shock waves through the European Banking system, all those banks holding Greek bonds including the ECB will be in peril. Pooling the debt as Merkel said will create a debtor union as the disciplined nations will have to carry the load for the relaxed work ethic nation. This is not where the EU wants to go. I think at this point ,nations like Germany are considering other alternatives to bailouts. It was made clear that China was not eager to step in and buy Euro Bonds which would only be a temporary stop measure. I believe a rebuilding of the zone's monetary policies is what is needed and this appears to be the direction and thinking of many in the financial world. This will take time and a great deal of planning and sacrifice by those nations mired in debt by penalty interest rates.
23:41 September 25, 2011 by kr77
This isn't about "rescuing Greece", it is about giving taxpayer money to German banks that made insanely stupid investments in Greece, lured by the prospect of high profits.

By securing or paying of these debts instead of letting them default, German banks are just going to continue making bad loans. Why not? They don't have to pay for the consequences, the tax payer does.
02:41 September 27, 2011 by Logic Guy
Well, in reality, there are two options:

*) Continue to put money into a sinking ship.

*)Take a huge, financial hit, but have the peace of mind of knowing that you are on the road that leads to recovery.

And so, why is the decision so difficult to make?
12:23 September 28, 2011 by storymann
The problem is not that simple Logic Guy, it is not only Greece it is others as well. The EU's ECB ,needs to have legal power over all it's members to insure that the guidelines for financial stability are being adhered to, and tax powers.

The real problem started in the formation of the zone when a Due Diligence should have been throughly done by the ECB prior to admittance into the Euro Zone. That is water under the damm now. The problems will continue until a new constitution is agreed upon giving up sovereignty to the ECB and the EU by all members. Many see this as a German takeover.This is not the case ,Germany is the strongest and most financially secure nation, this puts Germany in a leadership role.The problem will be convincing other nations of this.
19:23 October 2, 2011 by euan.dykes
I don't think I've ever seen the words 'A product of Greece' written on anything I've bought before. Maybe Greece just needs to pull some finger?
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