March 18 (Bloomberg) -- Greek Prime Minister George
Papandreou set a one-week deadline for the European Union to craft a
financial aid mechanism for Greece, challenging Germany to give up its
doubts about a rescue package.
Papandreou said he may turn to the International
Monetary Fund to overcome the debt crisis unless leaders agree to set up
a lending facility at a summit March 25-26. The IMF option has already
been dismissed by European Central Bank President Jean-
Claude Trichet and French President Nicolas
Sarkozy, who say it would show the EU can’t solve its own crises.
He's throwing the gauntlet down, and the gauntlet is made
out of US forged IMF metal. Greece is willing to diss the EU in order to
offer an ultimatum. Whose going to be the first to flinch?
“It’s an opportunity to make a decision next week
at the summit,” Papandreou told reporters in Brussels today. “This is an
opportunity we should not miss. When you have that instrument in place,
that could be enough to tell the markets hands off, no speculation, let
this country do what it’s doing.”
After reviewing your austerity plan, it appears that you
are doing more speculation than the market!
Greece pinned its hopes on the Brussels summit as
German officials voiced qualms about an EU-led rescue, potentially
backtracking on a commitment hammered out by finance ministers just
three days ago. Greek bonds and the euro fell.
Greece, which was brought to a standstill on March
11 by the second general strike this year, needs to raise about 10
billion euros ($14 billion) to refinance bonds that come due on April 20
and May 19. Papandreou said current markets rates are unsustainable.
The yield on Greece’s 10-year government bond rose
12 basis points to 6.21 percent. The euro fell for a second day against
the dollar, slipping as much as 0.7 percent to $1.3648. Credit- default
swaps on Greek sovereign debt rose 7 basis points to 295, the highest in
a week, according to CMA DataVision prices.
“There’s a good deal of brinkmanship involved to
get the EU and euro group members to come up with a more concrete plan,”
Baader, co-chief European economist at Societe Generale in London.
“It’s also directed at capital Markets, to reassure markets that Greece
is not about to go into default.”
German Chancellor Angela
Merkel yesterday ruled out “overly hasty” aid pledges, shifting the
pressure back to Greece to fix Europe’s biggest budget deficit. Signs
of a split in the German government emerged after Finance Minister Wolfgang
Schaeuble endorsed the use of European channels at an EU meeting on
premium on Greek 10-year bonds has more than doubled since the
beginning of November on concern about the country’s ability to bring
down last year’s deficit of gross domestic product, the largest in the
euro’s 11-year history.
Papandreou’s government has passed three packages
of deficit reduction measures this year to try to convince the EU and
investors it is serious about bringing the deficit down
to 8.7 percent of GDP.
I doubt this!
Soaring Greek borrowing costs threaten to erode the
fiscal gains made from forcing the country to make sacrifices including
wage and benefit cuts for public workers, Papandreou said.
“We are under a basically IMF program, whether it’s
called that or not,” he told a European Parliament committee earlier.
“We don’t have on the other hand facilities that the IMF would give. We
don’t want to be in a situation where we have the worst of the IMF if
you like and none of the advantages of the euro.”
Valid and honest point! For those of you who don't
subscribe, read up on my take on the Pan-European Sovereign Debt Crisis: