In Brief
Expert claims Greece won’t be able to return the money BERLIN (AFP) – Germany would likely never again see any loans it might provide to debt-wracked Greece, a top economist said yesterday, as German Chancellor Angela Merkel prepared to host a series of talks on the crisis. Merkel was poised to meet with the managing director of the International Monetary Fund, Dominique Strauss-Kahn, among others, as she weighed whether to contribute to a bailout of Greece that is deeply unpopular with voters. In comments likely to fuel increasing public sentiment against Greece, the head of one of Germany’s top economic institutes warned that Athens would not pay Berlin back and a bailout would only prompt more demands for German cash. Asked on MDR radio if Germany would ever get its money back, Hans-Werner Sinn, head of the Ifo Institute for Economic Research and one of the top advisers to the government, said, «To tell you the truth, no.» Greece «will not be in a position to carry out the necessary budgetary rigor» and will eventually have «to ask for Germany to waive the debt,» he said. «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,» added the economist. EU calls on rating agencies to act ‘in responsible way’ BRUSSELS (AFP) – The European Commission yesterday called on credit rating agencies to act «in a responsible way» after Standard & Poor’s downgraded Greece’s sovereign debt to junk status on Tuesday. «We would expect that when credit rating agencies assess the Greek risk, they take due account of the fundamentals of the Greek economy and the support package prepared by the European Central Bank, International Monetary Fund and European Commission,» said Chantal Hughes, the EU executive arm’s spokeswoman on financial services. «It’s not up to the Commission to say whether the rating given by any one credit rating agency is correct or not. What we can say is that we have full trust in Greece and the action being taken,» she said as eurozone leaders and the IMF scrambled to prepare emergency loans for debt-laden Greece, a member of the 16-nation eurozone. Odds on restructuring Financial analysts see a roughly one-in-three chance of Greece restructuring its debt sometime in the next five years, and an approximately one-in-10 chance of it leaving the eurozone, a Reuters poll showed. The poll of 54 economists, who mostly responded before Standard & Poor’s downgraded Greek debt to junk status on Tuesday, gave a median 10 percent chance of a debt restructuring in the next three months. Greece and the European Commission, conducting talks on an international bailout of Athens, have insisted their plans will not include a restructuring, which would mean debt holders losing some of their principal or accepting delayed payments. (Reuters) US watching The budget and debt crisis in Greece is «of great concern» to President Barack Obama, White House spokesman Bill Burton said yesterday. «We’re monitoring it very closely,» Burton told reporters traveling with Obama to a speech in Quincy, Illinois. Treasury officials «are in close contact with folks in Europe about the issue.» (Bloomberg)
