|
Germany’s Chancellor Angela Merkel said today
that Germany is making plans to help its banks in the event that Greece
Defaults. There is much internet chatter today regarding some unconfirmed rumour that Greece is officially going to throw in the
towel this weekend but nothing is confirmed. Greece’s finance minister
has denied the rumour as he should and would but
the sudden resignation of key ECB member Stark is still something that the
market doesn’t like and has contributed to a massive sell-off in the
Euro currency this morning. It is now below 137.00 vs. the USD as I write
this. (Wish I would have held those Oct. 141 puts for significantly greater
gains but oh well … I made a profit on the trade and in the end
that’s what counts)
European markets closed today down an average of 4%
across the board and we are seeing heavy selling in New York. All the news
seems to be centred around
Greek crisis and not helping matters was the report indicating that Germany
is making plans for the worst.
According to Bloomberg News:
Chancellor Angela Merkel’s government is
preparing plans to shore up German banks in the event that Greece fails to
meet the terms of its aid package and defaults, three coalition officials
said.
The emergency plan involves measures to help banks
and insurers that face a possible 50 percent loss on their Greek bonds if the
next tranche of Greece’s bailout is withheld, said the people, who spoke on condition of anonymity because the
deliberations are being held in private. The successor to the German
government’s bank-rescue fund introduced in 2008 might be enrolled to
help recapitalize the banks, one of the people said.
The existence of a “Plan B” underscores
German concerns that Greece’s failure to stick to budget-cutting
targets threatens European efforts to tame the debt crisis rattling the euro.
German lawmakers stepped up their criticism of Greece this week, threatening
to withhold aid unless it meets the terms of its austerity package, after an
international mission to Athens suspended its report on the country’s
progress.
Greece is “on a knife’s edge,”
German Finance Minister Wolfgang Schaeuble told
lawmakers at a closed-door meeting in Berlin on Sept. 7, a report in
parliament’s bulletin showed yesterday. If the government can’t meet
the aid terms, “it’s up to Greece to figure out how to get
financing without the euro zone’s help,” he later said in a
speech to parliament.
Schaeuble
travelled to a meeting of central bankers and finance ministers from the
Group of Seven nations in Marseille,France,
today as they face calls to boost growth amid increasing threats from
Europe’s debt crisis and a slowing global recovery.
|
