Schaeuble: Negative on New Greek Haircut



 

German Finance Minister Schaeuble gestures as he addresses a news conference to presents 2014 federal budget bill in BerlinThe German Finance Minister Wolfgang Schaeuble, in an interview with Bild newspaper appeared negative on the possibility of a new haircut on the Greek debt. “We had a debt reduction in late 2011 – early 2012, and that’s enough,” said Schaeuble who didn’t rule out a third bailout for Greece.

Schaeuble added, “Greece has bigger problems than the other countries in recession, therefore it will take longer for the country to stand on its own feet. With this as a given we had said, when adopting the current program and again before the election, that after the expiry of this program at the end of 2014, we will see if we should support Greece again, and if the country has met its obligations.” He also said that any new package would be “a much smaller amount” than the current one, and that it would not include a new haircut.

Schaeuble claimed  that the exit of Ireland and Spain from support programs is a proof that “the European policy linking the aid programs with reforms, is successful.”

When asked about the prevention of a possible new economic crisis in Europe, he replied that it can be achieved “by the consistent continuation of policy reforms.” He said that countries in crisis must put their budget in order, and continue with structural reforms. Europe can abolish the risk of a new crisis if it is strong and competitive.


25 COMMENTS

  1. Cut backs in Greece were absolutely necessary (including austerity despite what incompetent extremists that “generously” argue to spend foreign creditor money argue). Greece has to continue to fire unnecessary government employees (including privatizing money losing government run businesses) but by the same token it serves neither Greece not Germany’s interests for Greece to be perpetually near default

    Ireland and Spain’s debt load per capita wasn’t nearly as big as Greece nor did Ireland and Spain make nearly as dramatic cuts as Greece has done. Greece also has a standard of living and average wage considerably less than either nation. Schaeuble also seems to conveniently forget Germany had a far far bigger portion of it debts forgiven after WW2 then it has offered to Greece (including massive damages to Greece were never paid for despite Schaeuble’ dishonest assurances to the contrary).

    Greece can cut services and raise taxes until nothing is left. Schaeuble can be “negative” about a haircut all if he wishes. However with 27% unemployment and continuing mounting debt load due to the magic of compounding interest, there will plausibly be a far far bigger haircut through straight default. (making Schaeuble look incompetent for having allowed it to happen after dumping in so much German taxpayer money).

    If Schaeuble was really interested in improving the situation (rather than just punishing Greece in perpetuity for its mistakes) he’d spend more time encouraging German based multinational conglomerates to create some jobs in Greece rather than making promises he can’t necessarily keep for the sake of German populists (to help Greeks help themselves rather than just resorting to government handouts)

  2. The EU needs to start worrying about Spain. With the housing bubble Spain is about to collapse and when that happens so will the EU. Greece has had enough haircuts time to worry about the EU debacle.

  3. France is on its way to bankruptcy too….the whole thing will unravel much faster than the EU apparatchiks seem to think.

  4. Unilateral Default would mean Greece being automatically ejected from the EZ as the ECB/EU founding treaties forbid direct monetary financing of sovereign countries.

  5. Wages are now substantially lower in Greece then most of the rest of EU so there is room for jobs to come to Greece (if the good intentions are there). Schaeuble can’t create jobs directly but he certainly can encourage some German multinationals to come to Greece to take advantage of lower wages. If Greeks are unemployed it only makes it more likely that default will eventually happen.

    This isn’t a “threat”. Greece has made tremendous strides toward reducing spending but if it cannot pay debts because of compounding interest and high unemployment it will have no choice but to default. Moral narratives cannot beat the laws of mathematics.

  6. The main reason the US itself isn’t experiencing massive debt problems is because the Fed is effectively cheating by printing currency (a luxury Greece lost then it joined the Euro). This why countries like China and other countries that have a chunk of the massive American debt want to move away from US dollar.

  7. Can “encourage”?Who in their right mind would invest in an unreformed socialist economy dominated by the Unions and vested interests,where the workers are on strike every next day and where they get $100 000 retirement bonuses?ha ha ha ha,you are SO funny,but good for you for the positive thinking!As for Greece refusing to pay its debts and Defaulting,that will be the end of it in the euro,as I mentioned already.

  8. Yeah,and the only reason why Greece had not Defaulted yet,is because keeps getting bailed out with the money printed by the US Federal Reserve/ECB

  9. Greek salaries are nearly half of that of Germany. The lower wages and reforms means there is now economic incentive to invest in Greece. (as the Chinese have successfully done)

    Greece isn’t “refusing” to pay its debts. Had that been the wish of Greece it could have done that back in 2010. With mounting debt and high unemployment Greece is likely incapable of paying its debts (much like Germany post WW2).

  10. Yeah, and the trillions the fed has been printing are all earmarked to pay for limos to drive around foreigners.

    As we all know your own slavic homeland doesn’t have any government debt and certainly doesn’t have any socialist type spending right Tedi?

  11. Actually,considering that Greece is broke and only kept afloat by international bailouts,the current Greek salaries are way too high and need to go down at least 40% to reflect the Greek economy productivity and be sustainable.

  12. Your figures are arbitrary. The fact remains Greece’s wages (and pensions) are substantially lower than Germany’s with both countries part of the same trade zone. Low wages does provide economic incentive to invest — with the caveat those companies aren’t being encouraged to avoid some country though nationalist rhetoric. (e.g. many foreign companies leverage Nafta by building plants in Canada and Mexico to sell products to the higher waged US)

    The Troika asking to raise taxes even further certainly won’t help create create jobs. If anything it will encourage further tax evasion. With 27% unemployment there is little more the troika can do from the government reform end of things (other than perhaps pushing for improvements in existing tax collection and further privatizations).

    If there is little private sector, there will be no taxes to collect. Simple as that. This is why the debt is still rising even though government spending and private sector wages have fallen dramatically.

    This isn’t a threat or a demand. This is just the reality of what will happen unless the hyper-unemployment issue is addressed. Adding to it certainly won’t help Greece pay back its debts and catering to irresponsible populists will only achieve billions more in losses for creditors.

  13. You can’t compare yourself with Germany and the US.These countries have productive economies,Greece does not and it is broke.Greece can not afford its current standard of living and it needs to be stop borrowing.Of course that Troika wants its money back,therefore the new taxes.The money Troika lent you were no gift,Greece is supposed to pay it back,nobody promised Greece any gifts.That’s why they are called Loans,not Gifts.And if you don’t like the Troika imposed conditions,leave the Eurozone,simple.But Greece can not have foreign money to spend on its own terms!These money are not Greece’s to decide what to do with them.And to be honest,we don’t give a damn about the Greece’s economy and unemployment-this is not our problem,we simply want our money back!

  14. All Greece wants is lower interest (say 1%) and 50 year term extension from the current 12 years.

  15. TediUSA aka TROLL, AGAIN!!! Bring on the Greece hate, you know the bottom line is IMF = $$$$ from american tax payers purse strings, Greece = $$$$ yum yum yum & MORE!!!!!

  16. Look how shitty it is in The United Shitholes of America if you’re a kid.

    ‘…United States is the degree to which income inequality has increased the population of children who grow up in relative poverty, meaning that America’s famously abundant wealth does not equally benefit all children. Economists rate the U.S. economy as one of the most unequal in the Western world.’

    http://www.washingtonpost.com/blogs/worldviews/wp/2013/04/18/unicef-u-s-kids-worse-off-than-many-of-their-western-counterparts/

  17. All Greece wants is to spend more than it brings in. Socialism works great until you run out of money.

  18. The Vardar Banovina was a province of Yugoslavia between 1929 and 1941. It was located in the southernmost part of the country, ENCOMPASSING THE WHOLE of present day FYROM, southern parts of Southern and Eastern Serbia and southeastern parts of Kosovo (Serbia). It was named after the Vardar River and its ADMINISTRATIVE CAPITAL was the city of SKOPJE. The solution to the naming dispute between Greece and Skopia is for Skopia to revert to it’s original name “Vardar Banovina”

    “This Government considers talk of Macedonian “nation”, Macedonian “Fatherland”, or Macedonia “national consciousness” to be unjustified demagoguery REPRESENTING NO ETHNIC NOR POLITICAL REALITY, and sees in its present revival a possible cloak for aggressive intentions against Greece.”
    — U.S STATE DEPARTMENT Foreign Relations Vol. VIII Washington D.C.Circular Airgram(868.014/26 Dec. 1944)