France, Germany give Greece ultimatum on euro

**OfficerFarva** · 11-02-2011, 10:59 PM

CANNES, France (Reuters) - The leaders of Germany and France told Greece on Wednesday it would not receive another cent in European aid until it decides whether it wants to stay in the euro zone.

They also made clear that saving the euro was ultimately more important to them than rescuing Greece.

After emergency talks with Greek Prime Minister George Papandreou, German Chancellor Angela Merkel said: "We would rather achieve a stabilization of the euro with Greece than without Greece, but this goal of stabilizing the euro is more important."

French President Nicolas Sarkozy hammered home the same message, telling a joint news conference with Merkel: "Our Greek friends must decide whether they want to continue the journey with us."

Papandreou outraged European partners and caused panic on financial markets by announcing on Monday that Greece would hold a referendum on a second bailout plan negotiated with euro zone leaders last week.

The Greek leader, looking chastened after a torrid dinner with European Union decision-makers that Merkel called "tough and hard" on the eve of a summit of G20 major world economies, said the plebiscite would take place around December 4.

"It's not the moment to give you the exact wording, but the essence is that this is not a question only of a program, this is a question of whether we want to remain in the eurozone," Papandreou said.

Despite opinion polls showing a majority of Greeks, weary of two years of deepening austerity, think the bailout package was a bad deal for Greece, he said he expected more support from the wider population than he could muster in parliament.

"I believe the Greek people are wise and capable of making the right decision for the benefit of our country," he said.

Sarkozy and Merkel said euro zone finance ministers would meet next Monday to speed up decisions on leveraging the euro zone's rescue fund to build a firewall to protect other weaker members of the 17-nation currency area.

The EU and IMF said Greece would not receive an urgently needed 8 billion euro aid installment, due this month, until after the vote because official creditors wanted to be sure Athens would stick to its austerity program.

European Commission President Jose Manuel Barroso delivered this message to Papandreou before his arrival in Cannes, EU sources said.

This was after the Greek leader sent a letter to EU leaders saying he wanted to negotiate the details of the second package before the referendum, they said. The letter angered European officials, raising the level of mistrust toward Greece.

Papandreou said Greece had enough money to keep running until mid-December, when it has to redeem more than 6 billion euros in debt.

WEEKS OF UNCERTAINTY

Sarkozy's office said several euro zone leaders attending the G20, including the Spanish and Italian prime ministers, would meet on Thursday morning in Cannes to review the crisis.

In fresh signs of the market turmoil unleashed by the Greek move, the euro zone's EFSF rescue fund, which lends money to troubled member states, was forced to put on hold plans to raise 3 billion euros in the bond market.

And Italy's financial stability panel said some Italian banks were having difficulty raising money on international markets.

Asian G20 members piled pressure on Europe to tackle the crisis before it wreaks serious harm on the world economy.

China's deputy finance minister, Zhu Guangyao, said he hoped the uncertainty over the Greek referendum could be contained, adding that Beijing could not consider investing more in the euro zone's bailout fund given the lack of detail on proposals to leverage it.

South Korean President Lee Myung-bak said the G20 must act swiftly and boldly to contain the crisis, which was spilling over to the rest of the world.

If Papandreou loses the referendum, Greece faces a disorderly default which would hammer Europe's banks and threaten the much larger economies of Italy and Spain, which the bloc may not have the means to bail out.

The chairman of euro zone finance ministers, Jean-Claude Juncker, said Greece could go bankrupt if voters rejected the bailout package and Japanese Finance Minister Jun Azumi said: "Everyone is bewildered."

Juncker, Barroso, European Council President Herman Van Rompuy, IMF chief Christine Lagarde and a senior European Central Bank official attended Wednesday's talks in the southern French resort town.

ECB IN SPOTLIGHT

Doubt about Europe's ability to contain the debt crisis has once more sent markets into a spin and put Italy firmly in the firing line.

The risk premium on Italian bonds over safe-haven German Bunds hit a euro-lifetime high on Tuesday, despite European Central Bank buying of its bonds.

Italian Prime Minister Silvio Berlusconi scrambled to come up with measures to placate markets, holding an emergency cabinet meeting to accelerate budget reforms amid mounting calls for his resignation.

Ireland's finance minister said the ECB would be forced to pledge "a wall of money" to buy bonds, something many of its policymakers are deeply uncomfortable about.

Until the Greek situation is clearer, last week's package of measures is likely to be in limbo, leaving the ECB as the only bulwark against market attacks.

The head of Germany's banking association, Michael Kemmer, said agreement on a 50 percent writedown of Greek debt by its private creditors would have to wait. "I can't imagine a debt exchange taking place before the referendum," he said.

The Greek press, including dailies traditionally friendly to the government, almost unanimously condemned Papandreou.

Center-left newspaper Eleftherotypia described the prime minister on its front page as "The Lord of Chaos". Ethnos, another pro-government paper, called the referendum "suicidal".

(additional reporting by Dina Kyriakidou in Athens, Gernot Heller, Lesley Wroughton, Luke Baker and Gui Qing Koh in Cannes, and James Mackenzie in Rome; writing by Paul Taylor; editing by Noah Barkin and Ed Lane)

**smaj210** · 11-03-2011, 12:23 AM

best comment from the germans last week was if the euro fails it may leaad to war, well its been nearly a hundred years!

**LAM** · 11-03-2011, 01:08 AM

US banks have been lending to European banks big time the past 2 years, it's 30% of their current books, close to about 1T in direct exposure.

**Big Pimpin** · 11-03-2011, 05:26 AM

Originally Posted by LAM

US banks have been lending to European banks big time the past 2 years, it's 30% of their current books, close to about 1T in direct exposure.

At least their lending to somebody with all that interest free money they are getting from the fed.

**adrenaline** · 11-03-2011, 06:07 AM

Greece is screwed. It's just bailout after bailout. Maybe they better consider selling some of their islands to raise some capital. lol

**Big Pimpin** · 11-03-2011, 07:19 AM

Good thing Greece has high wages, plenty of unions, universal healthcare, a low retirement age and plenty of vacation time throughout the year. This is such a great economic model follow.

**LAM** · 11-03-2011, 07:51 AM

Originally Posted by Big Pimpin

Good thing Greece has high wages, plenty of unions, universal healthcare, a low retirement age and plenty of vacation time throughout the year. This is such a great economic model follow.

the debt problem in Greece is directly related to years of corruption and tax evasion and a spending spree when they adopted the Euro after just liberalizing their banking sector with an inefficient cost/profit structure.

**Big Pimpin** · 11-03-2011, 07:52 AM

Originally Posted by LAM

the debt problem in Greece is directly related to years of corruption and tax evasion and a spending spree when they adopted the Euro after just liberalizing their banking sector with an inefficient cost/profit structure.

Correct. ^^^This also played a big role.

**Dark Geared God** · 11-03-2011, 04:36 PM

Originally Posted by Big Pimpin

At least their lending to somebody with all that interest free money they are getting from the fed.

**Big Smoothy** · 05-15-2012, 11:31 PM

I did a search on this topics and found a couple of threads. I'll try to bump this one.

We've been hearing about Greece, Europe, the PIIGS states, and the Euro for a while now. Well, it's back in the news as we know.

Greece cannot form a government, the Greece may leave the Euro and go back to the Drachma. I suppose a Greek default is pretty much a given at this point and an orderly default is presumably preferred to a disorderly or choatic default.

Hollande beat Sarkozy in the French election and although austerity is rejected to (what degree?) Europe is back in the news.

All in all, it does not look good for the Euro.

As European Austerity Ends, So Could the Euro
By Peter Boone and Simon Johnson May 14, 2012

The euro currency is a malady that condemns at least a generation of Greeks, Italians, Spaniards, Portuguese and Irish to the economic infirmary.
In these nations, unemployment rates are now at their highest levels in recent decades, and there are few prospects for recovery in sight. The economists and politicians who created the system still proclaim it can survive. Their time would be better spent recognizing they made a bad mistake and preparing for an orderly dismantling of the euro before the damage spreads and further undermines European unity.

The problem isn’t just the region’s lack of competitiveness or its budget deficits or the high stock of existing government debt, which the International Monetary Fund now puts at 90 percent of the euro area’s gross domestic product (see Table 5 in this report). It is all of the above, compounded by five years of complete political denial.

Entire: As European Austerity Ends, So Could the Euro - Bloomberg

**Big Smoothy** · 05-15-2012, 11:33 PM

Another article (Greece will be leaving, I'm quite sure).

Merkel tells Greece to back cuts or face euro exit
Greece may be forced to leave the euro if the country refuses to implement spending cuts agreed with the European Union, Angela Merkel warned.

Entire:Merkel tells Greece to back cuts or face euro exit - Telegraph

**LAM** · 05-16-2012, 12:09 AM

the Greek debt crisis exposes the flaws with the European currency construction and the lack of a common treasury. when a single country gets into trouble it can't depreciate it's own currency like the US and other large country's.

and then there is this:

**Big Smoothy** · 05-16-2012, 02:14 AM

As for the current Stance by the Greeks it seems they want to take and not pay the consequences.

They'll be out of the Euro (which they should never have been in in the first place.)

**Robalo** · 05-16-2012, 02:47 AM

Greece, and then Portugal, Spain, Italy and so on...

There will be chaos and from chaos will born a new order

The Euro will fall and the Dollar will rule again, that's what this is all about.

**LAM** · 05-16-2012, 04:21 AM

Originally Posted by Robalo

The Euro will fall and the Dollar will rule again, that's what this is all about.

the dollar is done, rest of the world has caught up to the west...besides some tech their is nothing that the US makes that other country's cant.

EU country's that get into debt cant print their own currency like the US and other large nations with their own central banks and treasury's.

the US economy has been in the tank for a while bankers have most people fooled with their derivatives and other "fake wealth" financial innovations of the past decades since the cold war ended. it's not real wealth, can be removed with the stroke of a pen or keystroke on a computer keyboard. real wealth is commodities (food, oil, gold, trees, precious metals, etc.) and the means of producing such. money and/or currency isn't even real wealth, it's only the medium of exchange for purchasing commodities or goods and services.

**Big Smoothy** · 05-18-2012, 02:04 AM

Well, the next Greek election is June16th.

Syriza party is leading in the polls and I expect Syriza to win.....

Lots of articles being written now about this. Some hype? Hyperbole? Realistic assessments. Some unknowns. Shit-load of speculation going on. And that brings, uncertainty.

**heckler7** · 05-18-2012, 03:10 AM

china lends to the US and we cant pay them back so we lend to europe and they cant pay it back!? Its like me lending 20 bucks to a crack head and he lends 10 to a meth head. Ill never see that money again.

**LAM** · 05-18-2012, 03:59 AM

Originally Posted by heckler7

china lends to the US and we cant pay them back so we lend to europe and they cant pay it back!? Its like me lending 20 bucks to a crack head and he lends 10 to a meth head. Ill never see that money again.

the gov only works for to serve the markets and owners of capital at this point. labor has been kicked to the curb as the "free trade" agreements made over the years obviously only liberalize trade in specific work sectors.

the US does not function like a "real" country, painfully obvious that there is an agenda...

**LAM** · 05-18-2012, 04:00 AM

Originally Posted by heckler7

china lends to the US and we cant pay them back so we lend to europe and they cant pay it back!? Its like me lending 20 bucks to a crack head and he lends 10 to a meth head. Ill never see that money again.

the gov only works to serve the markets and owners of capital at this point. labor has been kicked to the curb as the "free trade" agreements made over the years obviously only liberalize trade in specific work sectors.

the US does not function like a "real" country, painfully obvious that there is an agenda...

**ctr10** · 05-18-2012, 10:21 AM

Damn Greeks are killing my 401K

**Gissurjon** · 05-18-2012, 08:11 PM

Originally Posted by ctr10

Damn Greeks are killing my 401K

yup and dey t'k or jobs!

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