German Lawmakers Give Greek Deal Go Ahead

German lawmakers gave their go ahead on Friday for the euro zone to negotiate a third bailout for Greece, heeding a warning from Chancellor Angela Merkel that the alternative to a deal with Athens was chaos.

The Bundestag lower house of parliament, whose backing is essential for the talks to start, decisively approved the move by 439 votes to 119, with 40 abstentions.

Popular misgivings run deep in Germany, the euro zone country which has already contributed most to Greece’s two bailouts since 2010, about funneling yet more aid to Athens.

Finance Minister Wolfgang Schaeuble has questioned whether a new program will succeed, although the creditors’ offer to Athens includes the conditions for more austerity and economic reform that Berlin had demanded.

But Merkel argued for negotiating a new deal to prevent a Greek exit from the euro – the “Grexit” that might undermine the entire currency union – and said suggestions Athens might temporarily leave the euro wouldn’t work.

“The alternative to this agreement would not be a ‘time-out’ from the euro … but rather predictable chaos,” she told the Bundestag. “We would be grossly negligent, and act irresponsibly, if we didn’t at least attempt this way.”

via Reuters

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 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