Greece threatened with national bankruptcy – markets in turmoil

Greece threatened with national bankruptcy - markets in turmoil

The euro fell below the 1.21 dollar mark on monday, the lowest it has been in two years.

According to the "suddeutscher zeitung" (monday), the greeks’ reorganization program again has a hole in the double-digit billions, which athens could stop by making even more savings. However, the parties in government since june have ruled out additional burdens for the population. The euro partners, on the other hand, could provide further loans of up to 50 billion euros.

However, according to the paper, the lenders, above all germany, are no longer prepared to support the government in athens beyond the previous pledges. The "SZ" quoted from government circles in berlin that it is "unthinkable that chancellor angela merkel will once again appear before the bundestag and ask for approval for a third greece package".

According to "spiegel," the international monetary fund (IMF) has also signaled that it will not participate in any further aid for greece. The reason for athens’ delay is that almost all reform projects were put on hold during the long election campaign in the spring. In addition, the longer period required by the government to implement the reforms would result in increased financial requirements.

According to estimates by the "troika" of financial controllers from the EU commission, the european central bank (ECB) and the IMF, this is between 10 and 50 billion euros. The loans of 130 billion euros promised in the second EU aid package are therefore no longer sufficient.

Federal economics minister philipp rosler (FDP) no longer considers it unlikely that greece will leave the euro zone. "For me, a greek exit has long since lost its horror," he said on sunday in the ARD summer interview.

Such a step would be without precedent. The EU treaties do not provide for any regulation in this regard. However, greece could declare on its own initiative to leave the euro. But even in this case, this would be new territory for the entire euro system.

The troika is currently examining the extent to which the country is meeting its reform obligations. Athens hopes for money injections of 12.5 billion euros in august and september. Report expected in september.

Federal finance minister wolfgang schauble (CDU) spoke out in favor of waiting for this to happen. Indirectly, he argued against giving greece more time. "If there have been delays, greece has to make up for them," he told the "bild" newspaper (monday).

The federal government has no information that the IMF is refusing further aid to greece. When asked whether the chancellor would support a third financial package for athens, vice-government spokesman georg streiter replied: "I am not commenting on this."The government is waiting for the "troika" report.

FDP faction leader rainer bruderle spoke out in favor of bringing the report forward. "The troika and greece should move quickly to ensure clarity on the status of the greek reform efforts," bruderle told dpa.

The greek coalition government started in june with the firm goal of renegotiating the deadlines for the austerity measures imposed for the billion-euro aid.

Bad news also from the other problem child of the euro zone. For spain, the situation on the financial markets is coming to a dramatic head. Yields on government bonds reached new record levels in many maturities. In the meantime, the yield is not only in the ten-year range above the critical mark of seven percent. This high level for a state is not considered financially viable in the long term.

Handlers blame escalation mainly on financial problems of spanish regions. After the region of valencia had already asked the central government in madrid for help on friday, other regions were able to join in the request for help. Neither the new, drastic savings package of up to 65 billion euros nor the approval of financial injections of up to 100 billion euros for the ailing spanish banks by the euro finance ministers calmed the markets.

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