Funds Flee Greece As Germany Warns of "Fatal" Eurozone Crisis

Poor ol' Greece becomes a plaything in the hands of blood-sucking money changers

Germany has triggered a near-panic flight from southern European debt markets by warning that there will be no EU bail-outs, even though it fears the region's economic crisis has turned dangerous and could prove "fatal" for the entire eurozone.


Funds flee Greece as Germany warns of "fatal" eurozone crisis

The yield on 10-year Greek bonds blasted upwards by over 40 basis points to 7.15pc in a day of wild trading. Spreads over German Bunds reached almost four percentage points, by far the highest since Greece joined the euro, and close to levels that risk a self-feeding spiral. Contagion hit Portuguese, Spanish, Irish, and Italian bonds.

George Papandreou, the Greek premier, said in Davos that his country had been singled out as the weak link in a "attack on the eurozone" by speculators and political foes. "We are being targeted, particularly by those with an ulterior motive."

Marc Ostwald, from Monument Securities, said the botched syndication of €8bn (£6.9bn) of Greek debt earlier this week has made matters worse. Many of the investors were "hot money" funds that bought on rumours that China was emerging as a buyer, offering them a chance for quick profit. When the China story was denied by Beijing and Athens, these funds rushed for the exit.

However, a key trigger yesterday was testimony in Germany's parliament by economy minister Rainer Brüderle, who said there would be "no bail-outs" for struggling debtors and no move to a "European economic government".

"A few European nations are exhibiting dangerous weaknesses. That could have fatal consequences for all countries in the eurozone," he said. Despite the warning, he said each country must solve its own problems.

"Germany is not in a mood to be the deep pocket for what they consider profligate, southern neighbours," said hedge fund doyen George Soros.

Mr Brüderle's hard line contradicts a report in Le Monde that Franco-German officials are discussing a rescue for Greece in order to keep the International Monetary Fund at bay.

The paper cited a source saying that EMU partners were ready to "help" Greece. "It is a question of credibility for the eurozone. The IMF might want to impose monetary conditions."

Le Monde's story was shot down by Berlin and Paris, but there is little doubt that certain officials have been trying to build momentum for a rescue. It is clear that the EU family is split on the issue. Jean-Claude Juncker, head of the Eurogroup of finance ministers, backs "assistance", with support of EU integrationists hoping to nudge the EU towards full fiscal union.

This is fiercely opposed by Berlin, and the German-led bloc at the European Central Bank. There are reports that Berlin is deliberately bringing the crisis to a head, hoping to lance the boil early and force the Club Med states to reform before it is too late. If so, this is a risky strategy. German banks have huge exposure to Greek, Spanish, and Portuguese debt.

Hans Redeker, currency chief at BNP Paribas, said Greece will face "great trouble" if it has to pay 7pc rates for long. Athens must raise €53bn this year, mostly in the first half. It has a been relying on cheap short-term debt to fund the budget deficit of 13pc of GDP, but this raises "roll-over risk".

Tim Congdon, from International Monetary Research, said the danger is that wealthy Greeks may shift money to bank accounts abroad if they lose confidence (akin to Mexico's Tequila Crisis in 1994-1995). This would set off a banking crisis and become self-fulfilling.

Greece has been financing current account deficits – 15pc of GDP in 2008 – through its banks, which have built up €110bn foreign liabilities. "If foreign creditors want their money back, defaults and/or a macroeconomic catastrophe appear inevitable," Mr Congdon said.

Adding to worries, Moody's has issued an alert on Portugal's "adverse debt dynamics", saying Lisbon needs a "credible plan" to reduce a structural deficit stuck at 7pc of GDP rather than "one-off measures".

The deeper concern is Spain, where youth unemployment has reached 44pc and the housing bust has a long way to run. Nouriel Roubini – the economist known as 'Dr Doom' – said Spain is too big to contain. "If Greece goes under that's a problem for the eurozone. If Spain goes under it's a disaster," he said.

Jose Luis Zapatero, Spain's premier, replied wearily: "Spanish public debt (52pc of GDP) is 20pc lower than Europe's average; our treasury spends 5pc of revenues on debt costs, less than France and Germany. Nobody is going to leave the euro," he said.

Source: Telegraph.co.uk, Jan 28 2010
By: Ambrose Evans-Pritchard

Views: 50

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

Comment by youhavetoforgiveme on January 29, 2010 at 10:39am
I want a front-row seat for this one! :D

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Doc Vega posted blog posts
10 hours ago
tjdavis posted a photo
yesterday
Less Prone left a comment for Tammy
"Welcome"
yesterday
tjdavis posted a video

Mike Benz: DARPA & USAID are Weaponizing Music to Control Human Behavior

Watch every episode ad-free & uncensored on Patreon: https://patreon.com/dannyjonesMike Benz is a former State Department official and current Executive Dire...
Thursday
Tammy is now a member of 12160 Social Network
Tuesday
Less Prone commented on cheeki kea's photo
Thumbnail

The Cartel

"In his 1995 book; Bloodlines of the illuminati, Frits Sringmaier listed the following 13…"
Tuesday
tjdavis posted a photo
Tuesday
tjdavis posted a blog post
Tuesday
Less Prone commented on Doc Vega's blog post What Four UFO Whistle Blowers All Suffered in Common?
"This falls in the category of political assassination, a very shameful policy of eliminating people…"
Tuesday
Doc Vega posted blog posts
Tuesday
Doc Vega commented on Doc Vega's blog post The Forest Devil
"cheeki kea Thank you, just one thing. The Choctaw Indian who came to the rescue was a war veteran…"
Monday
cheeki kea commented on Doc Vega's blog post The Forest Devil
"Well that is one fine story you've got going there Doc V. with a very interesting roll up. I…"
Monday
Doc Vega commented on Doc Vega's blog post “Night of Horror” Finland WWII 1939 and a Russian Massacre
"Just another bizarre chapter in WWII that seems more suspect as paranormal."
Sunday
Doc Vega's 7 blog posts were featured
Sunday
Burbia's blog post was featured

Former President Trump?

When was this article written? It is attributed to Victor Davis Hanson. He is a Fellow at Hoover…See More
Sunday
Less Prone commented on Burbia's blog post Former President Trump?
"It must be an unintended mistake "former". But that Trump demanded to keep Khan away is a…"
Sunday
Less Prone favorited Doc Vega's blog post The Mistake We Made in America
Sunday
Less Prone favorited Doc Vega's blog post “Night of Horror” Finland WWII 1939 and a Russian Massacre
Sunday
Less Prone commented on Doc Vega's blog post “Night of Horror” Finland WWII 1939 and a Russian Massacre
"Quite an uplifting story of the winter war. Finland was overpowered by ten to one and could still…"
Sunday
Doc Vega posted a blog post

Elon Weighs in on Charlie Kirk's Assassination and How it is an Instrument of Social Control

For a very long time now there has been in place mass population behavioral control operations that…See More
Oct 11

© 2025   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted