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Greece will most likely haircut its debt to creditor countries

17 September 2012 / 18:09:37  GRReporter
9114 reads

The truth is that Europe is like a very large vessel and as such, it is very difficult for it to move quickly and flexibly. It's like a captain who wants to make a manoeuvre with the ship and who must realize that it takes a long time and a lot of space. Unfortunately, Europe has neither the time nor space at present. Europe was relatively slow in its response to the challenges of the recession and the crisis in general. Not only in the case of Greece, but also with other countries - Portugal, Spain, Ireland and perhaps other countries with problems that are likely to emerge later. It was rather timid in its decisions; the steps taken were small, careful and thoughtful. But it failed to provide an effective response to the debt crisis in Europe and Greece. I fear that the next summit on 18 to 19 October will have to take very bold decisions on how to move forward together as united Europe, because it has become clear that many of the decisions have been postponed to the future, and things have been left adrift.
    I believe that the involvement of Germany and its position on all these issues is very important and I would like to make a remark here. Germany is facing a serious dilemma. On the one hand, being the first economic power in Europe, it is called to play a leading role in Europe's future - something the Germans want I guess, especially if we talk about economic leadership in the club of euro zone countries. But the strange thing is, on the other hand, that the Germans do not want to assume the responsibility typical for such a leader. This responsibility means potentially greater contribution from their side and in the permanent European Stability Mechanism ESM, possibly in the decisions concerning debt financing too. So, we see this contradiction - on the one hand, they are called to play a leading role which they want, but they do not want it to involve the respective responsibilities of the leader. These issues need to be solved in Germany. And there are other countries in its shadow - Austria, Ireland, countries that generally support the policy of fiscal austerity and discipline.

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Tags: Giannis MonogiosGreek debtOSIPSIGREXITInternational creditorsDebt interest ratesEconomic growth
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