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GERMAN CHANCELLOR ANGELA Merkel has told private bondholders they must contribute to a rescue package for ailing Greece – or face even costlier measures down the line.
In a significant intervention, Merkel hinted that she would not even attend a scheduled Eurozone summit in Brussels on Thursday unless a deal was done on the second bailout deal. “I’ll only travel there if there is a result,” she said yesterday.
The leader of Europe’s most powerful economy denied she was looking to arrange a Greek default, but said she wants private investors to share the burden. “We are trying everything we can to prevent [a default]“, she said according to the Wall Street Journal. “The more we can involve private creditors now on a voluntary basis, the less likely it is that we will have to take next steps [...] Private creditors have to be involved.”
Possible options for burden-sharing could include a rollover of Greek debt, swapping current government bonds for new ones, and a buy-back of bonds, Reuters reports.
However, the statements set her up for a clash with European Central Bank chief Jean-Claude Trichet. Trichet warned today that a government default – which would include any of the options for Greek burden-sharing – could lead to the ECB no longer accepting sovereign bonds as collateral for loans. This could potentially cut off funding to the Greek banking system, according to the Financial Times.
“If a country defaults, we will no longer be able to accept its defaulted government bonds as normal eligible collateral,” he said. “The governments would then have to step in themselves to put things right.”
Observers have suggested a burden-sharing arrangement for Greece could lead to an improved deal for Ireland.
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its going to default sooner rather than later just let it go . its been emotional .
German cow, never mentioned senior bond holders taking a hit here, she knows Greece can bring down here failed European project and Germany with it, let Europe fail, we are going to feel the pain either way but at least we can be the masters of our own destiny, we are nearly better off joining forces with GB and give Europe the bird
Greece Ireland Portugal and Italy are inevitably goin to hit a brick wall. The black hole is too big the banks are clearly absorbing all the bailout monies to there own needs while the working person wage is being cut and day to day cost of living is increasing, so THERE IS NO WAY OUT, short term or long term
Time to draw a line Europe and learn the lesson and try and save your people not your banks
Banks are bricks and mortar at the end of the day but people’s lives and future generations maybe destroyed under the current management structure.
It’s the same as a haemorrhaging animal unless you cut off your point of bleeding or in extreme cases amputate the effected area pumping all the blood( money) in the world will not change the result which will be the death of the economy
So time to cut some losses here, we might limp for a while bit we won’t be dead in the water and easy picking for the financial vultures.
Angela Merkel, meet Gerry Adams.
Burn the bondholders.
have your say