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Juncker: Greek exit manageable, but it'll hurt

The Local · 8 Aug 2012, 08:22

Published: 08 Aug 2012 08:22 GMT+02:00

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"The way things look now, it would be a manageable process," he told Germany's WDR public broadcaster, according to a transcript on the government website of Luxembourg, where Juncker is prime minister.

"That's not to say it would be a desirable occurrence because it would be linked to considerable risks, above all for the average person in Greece."

Germany, as the biggest EU funder of Greece's rescue packages, would stand to lose the most from a messy Greek euro exit and default on its bailout loans.

Asked whether Greece could, in theory, drop out of the 17-nation single currency bloc in two days' time, Juncker denied that would happen, adding: "In any case not before the end of autumn, and not even then."

Struggling with a fifth year of continuous recession, Greece has fallen behind in the implementation of structural reforms that are part of the EU-IMF bailout packages which are keeping its economy afloat.

Back-to-back elections in May and June resulted in a two-month political deadlock that got the country's reform programme off track, amid mounting international pressure.

German Economy Minister Philipp Rösler in late July voiced serious doubts about whether debt-mired Greece would be able to stay in the eurozone, saying the "horror" of a potential exit had worn off.

Rösler said that Athens' partners would wait for the progress report from the troika of Greek creditors – the European Union, International Monetary Fund and the European Central Bank.

"Nevertheless I have to say I am more than sceptical," said Rösler, who is also head of the pro-business Free Democrats (FDP), junior partners in Chancellor Angela Merkel's centre-right coalition government.

Juncker, who is due to visit Greece on August 22, also said that many in Germany, including some of the press, "talk about Greece in a way as if the people were not worthy of respect. That's not the case."

Some Greek newspapers, meanwhile, treat German Chancellor Angela Merkel "as if she were the successor of the Nazis," he said calling for members of the eurozone to be careful in their dealings with each other.

Story continues below…

The Greek government has to cut €11.5 billion off expenditure over the next two years in order to unlock the next instalment of its €130 billion bailout package – the second for the cash-strapped country in two years.

But Greek Finance Minister Yannis Stournaras said Tuesday that the country's coalition government had yet to agree on about one-third of the needed spending cuts for 2013 and 2014 and that negotiations would continue until the end of August.

The troika's auditors are expected to return to Greece in September. Their report will determine whether the indebted country will receive the much-needed next tranche.


The Local (news@thelocal.de)

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Your comments about this article

11:39 August 8, 2012 by Aasvogel
'Impossible!' became 'unthinkable', then 'undesirable'. Now it's 'managable'. Soon it will be 'inevitable' - as it always has been since the day Greece was allowed to fudge their figures to join.

Portugal, Spain, Italy and France will follow; a matter of 'when' rather than 'if'.
11:57 August 8, 2012 by smart2012
Aasvogel, what about Ireland? and Serbia? and Belgium, and Holland? ... what u say is Germany should stay alone???? Let's do this deal, Germany leaves Euro... Please, this would save Euro
13:40 August 8, 2012 by rmarquina

Serbia don't have the Euro, and not even member of the EU. They're only an official candidate to become part of the EU, but not yet.

And due the geographically location of Germany and its economic importance within the European market, I don't think the euro survives if the Deutsche Mark comes back into play
15:54 August 8, 2012 by finanzdoktor
@smark2012: Apparently, you did not know or read that Germany is the biggest lender in the EU for bailouts, like that for Greece. If Germany were to leave the EU, who would the remaining EU members go to for bailouts? ECB? IMF? Bond market? All of them would exact either higher funding costs, in interest rates, or more conditions to receive funding. They are not going to give it away for free.
17:07 August 8, 2012 by Peepopaapo
Germany leaving the Eurozone would actually result in other strong members like the Netherlands, Austria or Finland leaving this currency, too. But to be honest I don't see a reason why it should be Germany that leaves the Eurozone, for it was Greece which cheated into this currency by showing wrong figures and which used to live way beyond its means just like the other PIGS and Cyprus, but also France used to do - and which country would then save the south of Europe from going bankrupt?
19:31 August 8, 2012 by smart2012
If DM comes back, euro would work better, of course not for Germany which would lose the manufacturing competitiveness. Germany need euro much more than Greece, Spain, Italy, France, Portugal. And if those guys would go, it would be the same as going back to DM for Germany
20:35 August 8, 2012 by Peepopaapo
Wrong, Germany would still be competitive due to the high quality of its products. At the beginning it would be hard though, but after a few years the situation would improve, 'cause they would not have to waste anymore money on the unproductive PIGS, but instead could invest billions into education and science. But well, the PIGS are not forced to stay in - they can leave if they want to, but in this case the financial aid should be ceased, too.
20:49 August 8, 2012 by smart2012
Peepopaapo, have u ever been in chinese top quality companies? I have been, and they r really good. And why top 3 car companies for quality are not Germans? U r dreaming.. And btw, why then kohl was one of the main architect of Europe, if Germany would be great without it? Wake up
21:05 August 8, 2012 by IchBinKönig

I think you're the one that needs waking up from the Propaganda dream. Germany sold plenty of product pre Euro.
21:32 August 8, 2012 by Peepopaapo
Sorry smart2012, but in the quality rankings I know German companies are very well in the top three worldwide with Porsche even being on top of them. Kohl was one of the main architects of the German reunification and the Eurozone because he wanted to be remembered as "Kanzler der Einheit" and as one of the fathers of the Eurozone - like many other politicians he was only concerned about his reputation and the way he would be shown in future history books.

Moreover reducing the competitiveness of Germany's economy only to Germany having the Euro - like you do - is a libel against Germany and every hard working German.
05:59 August 9, 2012 by lenny van
It is encouraging to read so many comments agreeing that the EU would be better off without the Germans. The best way to achieve this is if all the countries in the EU, except Germany and Austria, would drop out of the E.U. and let the German countries have the Euro to themselves. The other European countries could then join a European free trading zone with a federal ¦quot;economic only¦quot; parliament to take care of business that is better taken care of jointly and paid for with a common currency. (The national currency could also be used when paying bills or traveling in the free trade zone or paying federal taxes.

The member states would print their own national currencies, which would float against the federal currency. In this way any member states, is happier with a more amenable life style rather than having to work harder to grow the economy faster, can simply devalue their national currency..

Of course, this would never be possible with money-worshiping Germans or American capitalists calling the shots. If German and American capitalist policies force Greece or any other country out of the Euro Zone, the non-German peoples of Europe should immediately give up the Euro, withdraw from the E.U. and join the ¦quot;Democratic Economic Non-capitalist Community of the Independent Free-market Social-welfare States of Europe.

If you don't like the name, don¦#39;t play the game, but if your blood is stirred, spread the word. Let's get the ball rolling before it gets too late. Our politicians can't think outside of the capitalist box.
11:40 August 9, 2012 by smart2012
Lenny van, i always appreciate and agree with your comments, however Germany will never allow the split as they will lose the manuifacturing competitiveness they have achieved thanks to the Euro (quality topic mentioned by some guys above is just a laugh, big companies produce where it is cheaper, then they build up quality there with no problem - AUDI produces in Czech Slovakia for instance). let's not forget that so far the country that has most benefited by Euro is GERMANY, as without Euro they would still be paying a huge interest rate to pay off the East German debt (interest rate which was buffered on all other EU countries, ie other EU countries paid more to help Germany - BILD of course is not saying it......)

MERKEL is now plaing a dirty game, which is making EU falling apart. U could even say: Germany löost two wars, now they are trying to colonialize EU economically (after btw were stealing GOLD to countries like Greece), that is why this is a dangerous territory which may end up in a WW3
18:55 August 9, 2012 by lenny van
I agree and that is why the other countries will all have to leave the E:U and drop the Euro, leaving Germany and Austria alone in the EU. The Euro will double in value and, if the Germans become uncompetitive as a result, theycan solve the problem, themselves. No one else gets hurt.

Here is something Europe could do to solve the debt problem without German money:

Unemployment is a result of the technical and robotic advances that should have made life easier for everyone. Unfortunately, only the capitalist is benefitting because the fewer jobs that are available are not shared out among the working community.

The capitalist says that the answer to the high rates of unemployment is more austerity and hard work so that we become as "efficient" as the overseas sweat shop, so that he doesn't have to out source his production in order to make his profit. (Of course he doesn't want tax cuts on the very rich, financial regulation to stop corruption and shamefully high bonuses and rely on cutting benefits for the working class.)

In fact, the answer is that those who are employed must work LESS, not more, so that jobs are created for the unemployed. A four day, 32 hour work week needs to be established. This 20% increase in employment will create full employment in Europe (and America, but the 1% will never allow this. Initially, weekly wages will have to be reduced by 10 %. Because the worker is working 20% fewer hours, the initial sacrifice will be shared equally between capital and labour (The capitalist has to pay 10% more for the same amount of work.). As soon as employment rises, however, wages and consumer demand will immediately follow and the 10% ¦quot;sacrifice will soon be absorbed and forgotten.

With full employment, the government will obviously save many billions in not having to pay unemployement and welfare benefits and tax revenues will increase considerably with veryone working. With vastly reduced expenses and the large addition of additional revenue will cause the national debt ratio of debt to GDP to fall very fast and everyone will be better off financially and have normal three day weekends. (One day out of seven could be used for studying and additional training to increase the capability of the work force to keep up with technology.)

The capitalists will argue that they will have to make extra benefit contributions because they will have more employees. This will not happen because in the new order of things businesses will no longer be involved in either contributing to or deducting unemployment, pension and health benefit payments. These will be paid by every individual through a progressive tax system. .
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