Tuesday, March 23, 2010
Well, it looks like they're really going to have something to discuss this Thursday and Friday when the European Union meets to talk about what the group can and can not do to help Greece with their little debt problem. This story at Reuters makes clear that the Germans are open to offering some assistance, but, only as a last resort and only if the IMF is involved.
A senior German official spelled out Berlin's conditions for any aid mechanism ahead of an EU summit starting on Thursday:While the Germans hate the idea of a bailout, the rest of Europe hates the idea that the Washington-based IMF might have to come to the rescue, all of which makes the "polite default" mentioned by Martin Feldstein noted here earlier today that more likely.
"The condition for action, as a last resort, is that Greece's financing on the capital markets is exhausted," the official said.
- Greece would have to be unable to access credit markets;
- The IMF would have to contribute to any rescue;
- European Union states would have to agree to negotiate "additional instruments" to enforce budget discipline, beyond existing rules that failed to prevent Athens running up huge debts and deficits that have shaken the euro zone.
"Furthermore, it would be necessary for the International Monetary Fund to provide a substantial contribution," he said, stressing there will be no decision on actual aid at the summit.