Germany Begins to Suggest Greek Default

October 21, 2011 by · Leave a Comment
Filed under: International 

Philipp Roesler, Germany’s vice chancellor and economy minister, wrote in an op-ed piece that appeared in Die Welt that “To stabilize the euro in the short term there can’t be any taboos…That ultimately includes Greece’s orderly insolvency, if the necessary instruments are available.”

This is a significant break with German Chancellor Angela Merkel’s calls for patience in dealing with the ongoing Greek debt crisis. Other senior European and German officials also insisted a Greek default was not being considered as a viable alternative.

The credit-default swaps market project a greater than 90% probability that Greece will be unable to meet its obligations. And the Greek government estimates that they only have enough money to keep operating for approximately two weeks.

The speculation that the Germans and others in the European Union will not extend additional support to Greece has caused stock values for France’s three largest banks that are heavily invested in Greek bonds to fall dramatically. Likewise rumors that Greece will be forced to give up the euro has led to speculation that other countries in trouble like Spain, Portugal, Italy and others could also be pushed out. This has caused the value of the euro to fall precipitously.

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