Posted on 02/12/2010 4:33:32 AM PST by Cheap_Hessian
Angela Merkel, the German chancellor, mounted stiff resistance tonight to any swift bailout of Greece, as a rift opened up between European capitals over how best to tackle the risks posed to the euro.
Despite a show of Franco-German unity on the crisis and the first statement from EU leaders pledging to safeguard the currency's stability, hopes on the markets of a German-led rescue plan to shore up Greece's critical public finances were dashed by Merkel, who repeatedly emphasised that Athens would need to put its own house in order and brushed aside all questions of financial support.
"Germany is stepping totally on the brakes on financial assistance," said a senior EU diplomat. "On legal grounds, on constitutional grounds and on principle." Another senior diplomat said of the Germans: "They're not waving their chequebooks."
An EU summit of 27 government chiefs in Brussels was the first opportunity to tackle the Greek crisis and also send a strong message to the financial markets, which have been betting against the euro for the last week.
Following talks between the Greek prime minister, George Papandreou, Merkel, President Nicolas Sarkozy of France, and Jose Manuel Barroso and Herman Van Rompuy, the European commission and European council presidents, the leaders issued a statement aimed at restoring calm and voicing political support for Papandreou's programme of swingeing budget cuts and structural reforms.
(Excerpt) Read more at guardian.co.uk ...
Nice to see thier model of progressive change has worked so wonderfully for them! We are infected with this cancer and we have been treating it with asperin for many years even denying that we have it. Look whats instore for us folks
In other news:
Stocks set to drop at open
http://money.cnn.com/2010/02/12/markets/premarkets/
NEW YORK (CNNMoney.com) — U.S. stocks were set to open lower Friday as investors fretted over international economic turmoil, including the plan by China’s central bank to raise its reserve requirement ratio, Germany’s stagnant economy and Greece’s lingering debt problems.
Let’s see how the market manipulators can spin this around for another 100+ point rally today.
Yes..afraid this will set the market back a few hundred points. They were pushing ahead of the Euro bailout, it may be another bleak Friday market...
Now that we know Germany won’t bail Greece out, we are left with two scenarios. If the IMF bails out Greece then it will be dollar negative (Risk trade on), but if Greece does not receive any bailout then it is dollar positive (Risk trade off).
“
Angela Merkel, the German chancellor, mounted stiff resistance
tonight to any swift bailout of Greece,...
“
Interesting to see the lead country of the EU actually understands
the concept of “moral hazard”.
(encouraging further economic problems by bailing out places
like union-run Greece...)
Maybe, but I don’t see much Dollar negative potential in this entire PIIGS scenario at all. If the IMF bails out Greece, I say it is still Dollar positive because the credibility of the Euro and the EU as a whole will still be seriously undermined nontheless. In addition, an IMF bailout will set a dangerous precedent as the remaining pigs will eventually come to the trough for their “fair share.”
Either way, the Euro’s days are numbered...
just my 2 cents worth :-)
Ping and double ping.
The rally yesterday was absurd.
So what if the EU bails out Greece? Italy, Ireland, Spain, and Portugal are in far worse shape than Greece. Is the EU going to bail them all out? Even if they said, “Yes,” that should destroy the DJIA because the EU will have nothing left with which to purchase our exports.
The market these days is about as real as NeverLand.
I’ve been studying economics, finances, and central banking from the perspective of the Austrian School for a while now. Watching what is happening these days I can only equate to taking the “brown acid” at Woodstock.
They should never have gone to a common currency. There is no reason why Germany should be impacted by Greece’s disastrous economy. Let Greece go bankrupt.
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Yes...agree. The market was going up on the hope of a bailout of the Euro (Greece). However, several other countries are awaiting such a bailout so Germany and France (the strongest partners) necessarily want to hold back. The problem is that they almost have to agree to bail out the stricken countries to protect the Euro. Of course, it is a devil if you do and devil if you don’t scenario.
If they do bail out Greece, there are other countries within the group that would need the same. If they bail out all of the stricken countries, the Euro will fall against the dollar. If they don’t, the Euro will fall due to defaults by several countries...
Either way, America’s dollar goes higher, causes a lower stock market, etc... I expect that the market will fall by 140 points or so depending upon what the major Euro powers decide to do.
Mercy...it is getting complicated isn’t it. Seems that we are way too closely tied to external influences these days.
Those who keep saying “we’re a global economy now,” do so as if that is a good thing. To me, it means we serve the rest of the world. When they gain, they gain. When we gain, they gain. When they lose, we lose. When we lose, we lose.
We need to get away from central control and get back to free-market, competitive forces “Social control” vs. “State control,” as Jay Nock discussed it.
You’re certainly right regarding global economy! Seems that we go the way of the rest of them these days. Not sure how we could extricate ourselves at this point though... It is what it is...
Hopefully, her stern words (along with almost equally stern warnings from French financial institutions) will finally force the Greek government to "clean house" and then the European Central Bank (ECB) can help rebuild the Greek economy the right way.
I only wish we had done the same with our institutions, like GM, Fannie and Freddie, etc.
Yah, won’t it be ironic if the EU remains the last man standing in the developed world because they actually pursue the most conservative policies?
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