Greece will never pay Germany backBeware the rage of the Grecian street.
IFO’s Hand-Werner Sinn has warned, quite simply, that Greece is a bum. Any investor thinking of lending them a pfennig should be warned. The same is true for governments, and anyone buying the bonds of those governments that lend to them will see the rates creep up.
All fine and dandy, if you don’t think that they’ll default, but this is bad news for the taxpayers in those countries which will see the repayment cost on bond obligations rise.
The warning came as a new poll showed nearly two-thirds of Germans were opposed to helping Greece, with a majority believing that membership of the EU brought more disadvantages than advantages.Of course the feelies have to ring in as well, despite the fact that markets need to be left to establish the real, repayable, and durable value of what those loans will cost. German commentators, investors, and government are being accused to making things worse for Greece by merely thinking about what they are being asked to get into. How dare they consider the consequences to themselves.
Asked on MDR radio if Berlin would ever get its money back, Sinn, who heads the Ifo institute and is one of the top economic advisers to the government, said: "To tell you the truth, no."
Greece "will not be in a position to carry out the necessary budgetary rigour" and will eventually have "to ask for Germany to waive the debt," he said.
He warned that bailing out Greece could set a precedent for other euro area countries labouring under high debt and public deficits.
The Greeks are mainly responsible for their current predicament. But the German government has made the country's situation worse with its lectures and reluctance to provide assistance. Chancellor Angela Merkel is mainly to blame for the fact that German taxpayers now have to suffer.How? By her reluctance to lend an alcoholic the money to buy another bottle of Thunderbird only to have that vagrant smelling vaguely of urine show up again? It’s stupider than feeding squirrels.
Have no doubt about it, many in Europe will continue to carry on as though they’re Bolivian peasants “seeking justice” (and other people’s resources for free). Further, reason for the silence of the other EUvian über-champion economies (i.e. France, the UK, the Scandinavians, etal,) is rather obvious:
"It would be understandable if the Italians or the Spanish put pressure on us to pay up now because it is an important precedent for them," said Sinn.Perhaps Berlin should bite this bullet, and leave the “national NINJA loans” of the likes of Italy, Spain, Portugal, and Ireland to the EU member states that are helping to be generous with German citizens’ resources now.
Thursday, April 29, 2010
The Pot-Banging Idiots are in Charge
Posted by Joe at 08:32