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Rösler plans for default ahead of Greece visit

The Local · 4 Oct 2011, 14:16

Published: 04 Oct 2011 14:16 GMT+02:00

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Rösler suggested that when a country within the eurozone can no longer service its debts it would have to surrender some of its sovereignty in a process which would be led by an independent committee to balance, organise and monitor negotiations between creditors and the debtor state. The country concerned would have to establish a sensible restructuring programme, he said.

A European Currency Fund could take on this role as a successor to the European Stability Mechanism (ESM), which is due to be introduced at the latest in 2013, Rösler said, while creditors would also have to accept some of the losses. The framework had been sent by Rösler to the Finance ministry with the demand it be included in the ESM contract, the Frankfurter Allgemeine Zeitung reported.

Rösler has been heavily criticised by other senior members of the government for openly airing the possibility of a Greek default – just as the German political body voted for an increase in the country’s contribution to the Greek bail-out.

Yet deputy head of the Christian Democratic Union’s parliamentary party, Michael Fuchs said on Tuesday he thought it made sense to plan the kind of intervention outlined in Rösler’s framework. He told SWR radio, he could not really understand why Luxembourg’s prime minister Jean-Claude Juncker, who heads the group which has political control over the euro, still believed that Greece’s bankruptcy could be avoided.

Rösler is due in Athens on Thursday, taking a group of German industry managers with him, to talk about possible investments. Yet Rösler’s finance ministry is said to be warning against expectations of any kind of quick fix, drawing parallels to the long-term changes effected in East Germany and other former socialist countries.

While Europe’s future seems to depend on what happens to Greece, the pressure is showing on its prime minister Giorgos Papandreou, who has recently been close to resigning, according to a report in the Financial Times Deutschland.

The paper reported on Tuesday that he had twice spoken about stepping down in the last three weeks. He offered his resignation both times, but then continued, the paper said, quoting sources from people close to him.

He is finding it difficult to deal with the demonstrations by tens of thousands of his fellow Greeks against the savings plans he is being forced to implement – and the pressure from European Union and the International Monetary Fund to increase the cuts. A sense of powerlessness is also making him feel terrible, an insider told the paper. “Greece is deciding nothing any more,” the insider said.

The FTD said the insider described as catastrophic, the effect of his potential resignation in the middle of the negotiations for new financial aid and the implementation of the widespread cuts.

Story continues below…

“But when a weariness of holding office has planted itself in his head, he will take that step sooner or later,” he said.

The Greek government denied the report completely, with a spokesman saying, “The information that you have received is nonsense.”

The Local/hc

The Local (news@thelocal.de)

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Your comments about this article

16:20 October 4, 2011 by sigfus45
Keep in mind what is being bailed out with no possibility of repayment. A whole country full of people that either don't pay taxes or avoid taxes through corruption. A bloated and corrupt bureaucracy that won't collect taxes, prefering to accept bribery. A leadership that is so enamoured of their position and involvement in corruption that they have not the ability to lead, believing that the world owes them. Banks that have lost the simple ability of bankers to make a proper judgement on the ability of Greece to repay loans and rather than stop loaning and calling the loans, prefer to get even more of the world involved in this ponzi scheme in order to prop up their own little empire and excessive entitlements. Governments of many countries with such close ties to their banking and investment friends that they fear letting go, prefering the attempt of presenting false appearances.
17:12 October 4, 2011 by William Thirteen
now that Q3 is over we can get on with processing the Greek default, giving the banks enough time to hedge / recapitalize before they need to report again at year's end. Hopefully, an orderly consolidation can relieve some of the pain felt by the Greek populace, who have suffered enough in this ridiculous effort to stave off the inevitable.

Also,Philipp Rösler needs a shave.
17:43 October 4, 2011 by r2d2c3po
Well said. Too bad the feces brained politicians refuse too see the obvious. Germany and France will pay a very heavy price for their monumental stupidity. The average citizen will once again pay the price of a gutless government that does not put the welfare of their own citizens before common sense.
20:05 October 4, 2011 by Englishted
Is he brave or just stupid?
01:45 October 5, 2011 by Logic Guy
Well, for a while now, here on The Local, I have spoke of creating a

"Subtle Exit Programme", for nations that are not able to pay their debts. And so, the finance minister does have a point. Surely it's better to avoid a problem,

than to actually deal with one.

Why not go ahead and take the pain now, and allow Greece to re-establish their own currency? Isn't this going to eventually happen?
18:35 October 5, 2011 by William Thirteen
just to clarify my comment. i don't believe Greece needs to leave the Eurozone. The default needs to be processed and the banks recapitalized within the Eurozone. This would avoid the problems with Maastricht and get the banks into a better position. The Eurozone taxpayers (and i am one of them) are going to be coughing up the cash for this débâcle either way - but i would prefer the funds be used to shore up the banks after the default rather than just be thrown down the rathole of wishful financial projections. Destroying the Greek economy through fantastical austerity programs doesn't make the default less likely but just hurts ordinary Greek citizens while the bankers get extra time to shuffle off their debts.
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