Germany’s Position on More Greek Aid

Germany Sees Cheaper Loans as Key to Greek Deal – WSJ.com.

Germany is in campaign mode with its election to be held in the Fall of 2013. Merkel is loathe to request a Greek write-down, because Bundestag members do not want to explain to their constituents why they voted to give more money to Greece.

Merkel is attempting the guide the process down a middle path. Germany is willing to lower interest rates on Greek loans and lend Greece more money, but it will not write-down the debt.

The Germans claim that a write-down would cost money, take pressure to reform off Greece and set a precedent for Portugal, Ireland and Spain to request write-downs.

Whatever deal is reached, Greece will eventually default. The eurozone should just get on with the write-downs, because these loans are never being repaid anyway.

 

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