European Central Bank board member Jorg Asmussen, in Athens to assess progress on delayed reforms needed for release of more rescue loans, said has said that Greece must step up its pace and that the banking system will be fine once it’s recapitalized with 50 billion euros ($65 billion) from the government.
Despite an announcement from German Finance Minister Wolfgang Schaeuble that Greece will need a third bailout, Asmussen said he saw signs of the economy stabilizing, although he didn’t say what they were.
He said the record unemployment level of 27.4 percent, created largely by austerity measures demanded by international lenders in return for $325 billion in two bailouts, was unacceptable but he didn’t offer any solutions to reduce it.
He also said any notion of debt relief for Greece would depend on whether a primary surplus – excluding interest on debt, municipal budgets and the social security system which would otherwise create a deficit – is obtained by Spring of 2014. He said there’s been no talk yet of a third bailout after the first two have failed to put the economy on a course for recovery.
The ECB, along with the European Union and International Monetary Fund, make up the Troika putting up the rescue packages of loans for Greece, which has a still staggering $390 billion debt created largely by alternating administrations of New Democracy Conservative and PASOK Socialist governments packing public payrolls with hundreds of thousands of needless workers in return for votes.
While blamed for causing the crisis, they are in a coalition government being backed by voters who oppose the austerity measures it is imposing on them.