Germany debt chief hints at Greek rescue

By Ambrose Evans-Pritchard, International Business Editor Published: 8:24PM GMT twenty-five February 2010

Comments 47 |

"If one part of of the eurozone were to step out for any reason, this would be a fall of the complete system," pronounced Carl Heinz Daube, executive of the Finanzagentur. "It would meant that after ten years, the euro examination has ended."

Mr Daube pronounced a range of options are "under discussion" for a probable benefit for Greece but confessed that the issue is a really prohibited potato in Germany. "It is really tough to explain to a man on the travel because one nation should step in to assistance an additional country," he told the Euromoney down payment association in London.

Greece"s "worst fears" reliable says PM Papandreou Greek conflict on "Nazi" Germany puts rescue at risk Goldman Sachs faces Fed exploration over Greek debt

The comments strengthen the drawn out perspective that Germany contingency in conclusion determine to loan guarantees, if usually on a proxy basement and underneath such difficult conditions that no alternative nation will wish to continue the ordeal. Germany"s regulator BaFin fears that the Greek predicament risks environment off "downward spiral" opposite Southern Europe, posing a complement risk to the monetary system. It pronounced German banks hold €522bn of state holds from the region.

Moritz Kaemer, head of Europe ratings at Standard & Poor"s, told the forum that "a emperor default is not going to occur in the euro zone. Greece is still absolutely an investment grade."

However, he additionally warned that Greece not be equates to to tame the long-term debt, since the aging predicament and the murky opinion for Western economies. S&P expects open debt to reach 138pc of GDP by 2012, arguably nearby the point no lapse for debt dynamics. The group warned this week that it might hillside Greece dual notches inside of a month.

Mr Kraemer pronounced it would take Greece 33 years to revoke debt to the already high turn of 100pc of GDP even if it manages to connect at the rate of the last expansion cycle in bang times that might not be repeated.

Greece squandered a "golden opportunity" to correct finance management when it assimilated the euro and pocketed a asset benefit of 3pc of GDP in reduce seductiveness costs. Instead of profitable down debt and enjoying a just round as in Belgium, it outlayed the lot, and more, augmenting open spending by 7pc of GDP.

Leaders that commence the kind of mercantile fist indispensable in Greece or Ireland know that they are "marching in to the sunset", you do the right thing even if it equates to domestic self-immolation. Ireland"s Taoiseach has supposed his predestine stoically. Will Greece"s leaders additionally follow Zeno, or Epicurus?