Germany Worries About Greek Costs

“Greece elects a euro monster!” exclaimed tabloid newspaper Bild. “How many billions is this going to cost us?”

And that pretty much sums up the mood here in Germany. The government in Berlin must wait to hear what kind of concessions the new Greek government might seek but already its position is clear.

“It is important for the new government to take action to foster Greece’s continued economic recovery,” said Angela Merkel’s spokesman. “That also means Greece sticking to its previous commitments.”

And, one by one, politicians from both sides of the governing coalition went on record to emphasise the same point: there’s not much more Germany can offer in the way of concessions to Greece.

“We have already restructured the debt,” one MP said to me. “We have very, very low interest rates. We have very long maturity.”

There is a sense of frustration here.

Just a few days ago the European Central Bank announced its programme of quantitative easing. A measure that Germany has fiercely opposed. The Bundesbank was unequivocal: structural reform is the answer.

Its president is still making the same argument. The answer for Greece, says Jens Weidmann, lies in reforming its finances, its economy. A debt “haircut” is not a long-term solution.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza