Analysis: Latest Political Statements on Greece

Angela Merkel Backs Samaras on Greece’s Euro-Zone Future – Bloomberg.

The article leads with this statement:

Chancellor Angela Merkel said that Germany will stand behind the Greek government as it struggles to overhaul the economy, rebuffing European critics who advocate Greece’s exit from the euro.

What this means is that Germany is determined to maintain the status quo. Germany will use its best efforts to keep Greece afloat as long as Greece goes along with the plan by continuing to punish its citizens with austerity. The austerity is not helping, but the suffering it causes gives the German government the necessary political cover to keep Greece sputtering along with an occasional aid payment.

This political cover is important, because other German politicians are attempting t0 use the Greek situation to their advantage. The German public also believes that Greece is being coddled and Greek suffering allays these concerns.

The next statement of importance in the article is

Merkel said she and French President Francois Hollande agree on their approach to Greece, which includes waiting for a report by Greece’s international creditors due next month before making decisions on Greek requests for more time to meet economic targets.

This means that Merkel and Hollande only agree on one thing, waiting for the report to take action. This is because they are far apart right now. Hollande believes that Greece needs pro-growth policies, but Merkel does not have the political capital to agree with him in public (see above). Therefore, she must stick to the austerity narrative. A Greek default is way too expensive to contemplate, so one way or another Greece will get enough money to keep scraping by regardless of tough talk of sticking to commitments and Grexits.

https://dareconomics.wordpress.com/2012/08/23/the-immediate-future-for-greece/

 

 

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s