German finance minister: Let’s get real here, Greece is going to need a third bailout

posted at 10:01 pm on August 20, 2013 by Erika Johnsen

The big news out of the eurozone of late is that the currency bloc has finally managed to wend its way out of the technical economic recession in which they have lately been languishing, but let that not be somehow confused with the notion that all of the zone’s underlying problems have been solved for the long term. Case in point:

Germany’s finance minister Wolfgang Schaeuble has said for the first time that Greece will need another bailout to plug a forthcoming funding gap. …

His boss is Germany’s leader is Angela Merkel, who said recently it was too early to talk about new funding.

But Mr Schaeuble told an election rally: “There will have to be another programme in Greece.”

Mr Schaeuble’s comments place him as one among many who believe Greece will have to be given new funding to balance its books, but they are at odds with his party leader’s public stance on the matter.

The amount of new money in question is likely to be far smaller than the 240bn euros (£205bn, $320bn) already granted by the International Monetary Fund (IMF), the European Central Bank and the European Union.

The IMF last month estimated Greece will need around 11bn euros in 2014-15.

The admission is kind of a big deal because Germany is barely a month away from their major national elections and Merkel, who’s running for reelection, has so far been holding such questions at arm’s length. As the bloc’s largest economy, Germans know full well that more bailout money for more flailing eurozone countries means that they’re the ones who’ll end up shouldering at least a plurality of the costs, and the European debt-crisis nightmare just refuses to end. The admission that more bailouts could be on deck is not a popular one, and Reuters reports that the minister’s comments have indeed spurred the much-feared commentary from the opposition:

Schaeuble’s comments played into the hands of the opposition, who throughout the election campaign have accused Merkel of failing to tell voters the truth about Greece.

“I have made clear that saving Europe and keeping the continent together comes at a cost, also for us Germans,” Merkel’s Social Democrat (SPD) challenger Peer Steinbrueck said after Schaeuble spoke. “Now it’s time that Frau Merkel tells people the truth.”

Greens leader Juergen Trittin said Schaeuble had exposed Merkel’s “deceit” and criticized the chancellor for advocating austerity policies in Greece that had failed to reduce its debt load. …

“Greece is a dangerous subject. It is not clever to bring it up again just as there was a general feeling of calm,” said Emnid pollster Klaus-Peter Schoeppner.

Alas, the veneer of calm is evidently just that — a veneer.


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Well that didn’t work. Let’s try it again.

Flange on August 20, 2013 at 10:04 PM

Spain and Cyprus soon to line up for theirs.

SouthernGent on August 20, 2013 at 10:04 PM

The amount of new money in question is likely to be far smaller than the 240bn euros (£205bn, $320bn) already granted by the International Monetary Fund (IMF), the European Central Bank and the European Union.

rotf — “New money.” Is that what they’re calling it? It’s like the old money, only less existency.

Axe on August 20, 2013 at 10:06 PM

This is just going to continue dragging out for the next several decades, isn’t it?

Timin203 on August 20, 2013 at 10:06 PM

Heh, veneer… very apt.

Like we are getting shellacked here…just saying…

Scrumpy on August 20, 2013 at 10:07 PM

It’s like the old money, only less existency.

Axe on August 20, 2013 at 10:06 PM

So true! :)

Scrumpy on August 20, 2013 at 10:08 PM

This is just going to continue dragging out for the next several decades, isn’t it?

Timin203 on August 20, 2013 at 10:06 PM

The EU has 2 years left. And all during those two years, the opportunistic imams will be selling Islam as a better system (no interest will be a major selling point). And you don’t wait and see how many of them take the bait.

nobar on August 20, 2013 at 10:08 PM

But Mr Schaeuble told an election rally: “There will have to be another programme in Greece.”

Man, German election rallies sound like pretty boring affairs…

JohnGalt23 on August 20, 2013 at 10:09 PM

So I guess Noam Chomsky realizing Palin was right must be KOTD, huh.

Lanceman on August 20, 2013 at 10:11 PM

The admission that more bailouts could be on deck is not a popular one, and Reuters reports that the minister’s comments have indeed spurred the much-feared commentary from the opposition

…well then! …they need to elect our jackasses!…they don’t care about the crying opposition…the law…or public opinion!…what’s wrong with their media?/

KOOLAID2 on August 20, 2013 at 10:12 PM

and criticized the chancellor for advocating austerity policies in Greece that had failed to reduce its debt load.

Definition of ‘Austerity’
A state of reduced spending and increased frugality in the financial sector. Austerity measures generally refer to the measures taken by governments to reduce expenditures in an attempt to shrink their growing budget deficits.

Austerity measures are generally unpopular because they tend to lower the quantity and quality of services and benefits provided by the government. Beginning in 2009, several nations were forced to embark on unprecedented austerity measures. These measures were necessitated by budget deficits that soared to record levels because of actions these countries took to stimulate their economies following the massive credit crisis and global recession of 2008.

Austerity. Its good, and good for you.

BobMbx on August 20, 2013 at 10:15 PM

How can Greece be broke ? Lamb is incredibly expensive nowadays.

Greece needs to provide the nations helping them with free lamb for everybody except for Weiner, Filner, Spitzer, Clinton and any Kennedys… for obvious reasons.

viking01 on August 20, 2013 at 10:16 PM

-What happened to the old money we gave you?

“We uh…we lost it. Came down the next morning and it was just gone.”

Bishop on August 20, 2013 at 10:17 PM

Greece, as I’ve stated from the first “bailout,” is beyond bailing out. Just as you can’t spend your way to prosperity, neither can you cut your way to it. Sometimes your binge just goes too far. It’s why we have bankruptcy laws here for businesses and individuals, because you can’t always dig your way out of debt, even with help from strong allies.

Greece needs to default, and bring back their own kronos, leaving the euro behind. It will be difficult for a couple of years at least, but it’s the only way to really give them a fresh start.

`

Naturally, all the European zone banks and the ECB who are on the hook for all the bad loans, including both bailouts, don’t want to face the music and write down their loans because investors will start looking hard at their balance sheets – and guess what? They’re carrying at least $1 trillion in bad paper as “assets” even now!

Some big banks are going to fall, some rich people will be wiped out, and a lot of EU politicians will be going down with them. Now you know why they have been so adamant about keeping Greece in the EU – no matter what it does to the Greeks.

Adjoran on August 20, 2013 at 10:24 PM

Greece — the Detroit of countries!

ShainS on August 20, 2013 at 10:34 PM

Guess more austerity is needed

greataunty on August 20, 2013 at 10:44 PM

The EU has 2 years left. And all during those two years, the opportunistic imams will be selling Islam as a better system (no interest will be a major selling point). And you don’t wait and see how many of them take the bait.

nobar on August 20, 2013 at 10:08 PM

I hope we can track and sink the French SSBMs.

Steve Eggleston on August 20, 2013 at 10:55 PM

Alas, the veneer of calm is evidently just that — a veneer.

Definition of ‘Austerity’
A state of reduced spending and increased frugality in the financial sector. Austerity measures generally refer to the measures taken by governments to reduce expenditures in an attempt to shrink their growing budget deficits.

Austerity measures are generally unpopular because they tend to lower the quantity and quality of services and benefits provided by the government. Beginning in 2009, several nations were forced to embark on unprecedented austerity measures. These measures were necessitated by budget deficits that soared to record levels because of actions these countries took to stimulate their economies following the massive credit crisis and global recession of 2008.

Austerity. Its good, and good for you.

BobMbx on August 20, 2013 at 10:15 PM

.
Austerity in Europe IS a veneer.

It has never been undertaken prior to a country in the EU/euro currency zone defaulting on its debt.

“Austerity” in Europe means the same thing as in Washington – slightly reduce the rate of growth in spending.

Side note: Keep an eye on India – it’s currency is entering into hyper-inflation territory – when India “capsizes” on an economic basis there is going to be an enormous amount of blowback to companies/countries that have used India to lever up their productivity.

PolAgnostic on August 20, 2013 at 11:07 PM

I hope we can track and sink the French SSBMs.

Steve Eggleston on August 20, 2013 at 10:55 PM

.
The NSA couldn’t find anything of interest in advance of the Tsarnev brothers bombing the marathon despite repeated phone calls to known terrorists, travel to Chechnya and public displays of Islamic extremism …

… hopefully, a whale will fart and the French SSBMs will surface and surrender to a fishing boat.

PolAgnostic on August 20, 2013 at 11:11 PM

Let’s buy Greece – take it off Merkel’s hands. Start installing weaponry, to get ready for WW III (aka Liberals declare war on Reality… once more).

Also, in his waning days, Obama can actually speak (teleprompt) in front of a real Greek temple, instead of the styrofoam he’s used to.

virgo on August 21, 2013 at 12:15 AM

The NSA couldn’t find anything of interest in advance of the Tsarnev brothers bombing the marathon despite repeated phone calls to known terrorists, travel to Chechnya and public displays of Islamic extremism …

… hopefully, a whale will fart and the French SSBMs will surface and surrender to a fishing boat.

PolAgnostic on August 20, 2013 at 11:11 PM

The good news – the NSA isn’t in charge of anti-submarine warfare.

The bad – outside the SSN fleet, the US Navy doesn’t know how to do ASW anymore.

Steve Eggleston on August 21, 2013 at 12:26 AM

there was a general feeling of calm

All is well!

Patriot Vet on August 21, 2013 at 2:06 AM

Let’s get real here, Greece is going to need a third bailout and we’re just the idiots who’ll do it.

FIFY

BDavis on August 21, 2013 at 2:17 AM

German finance minister in 2014: Let’s get real here, Greece is going to need a third fourth bailout

Fenris on August 21, 2013 at 3:20 AM

But they’re doing so well in the yogurt business…

MT on August 21, 2013 at 7:42 AM

At about the 14th bailout they may stop and realize that something’s broken and can’t be fixed.

mad scientist on August 21, 2013 at 7:51 AM

What Germany needs to say is… “We are not going to entertain bailing out a poorly run country with nothing in return. Thus, we propose collateral. We will provide a loan, with set terms, with the Acropolis as collateral to start, or maybe one of your resort islands with a beautiful beach for our citizens to enjoy.”

dominigan on August 21, 2013 at 9:27 AM

How can Greece be broke ? Lamb is incredibly expensive nowadays.

viking01 on August 20, 2013 at 10:16 PM

So is Greek yogurt–about twice as much as Fruit On The Bottom yogurt.

Angela Merkel could solve this problem once and for all by telling the Greeks to bring back the drachma, and by bringing back the Deutschemark to the Bundesbank.

Then if the Greeks still want their socialism, they devalue the drachma, while Germans will find Greek vacations cheap if they need a little sunshine to brighten their lives.

Steve Z on August 21, 2013 at 10:12 AM

It will never stop. Unless countries are allowed to fail and fall, they will drag in a wider and wider net of enablers that will suffer the same fate.

MarkT on August 21, 2013 at 10:17 AM

The message is loud & clear. Politicians can continue to lie & promise the moon to get elected and who pays when the final bills come due? The more hard working, financially responsible, sucker parts of Europe.

Chessplayer on August 21, 2013 at 10:23 AM

Austerity. Its good, and good for you.

BobMbx on August 20, 2013 at 10:15 PM

Reality compelling them to live within their means is not the real definition of “austere.”

Germany need to cut the parasites loose. When they start to starve they will be motivated to work. Greeks “retire” at 50.

BTW have you all seen that the Cypriot banks stole 47% of people’s deposits? (Except for those elites who got an early heads up.)

dogsoldier on August 21, 2013 at 11:21 AM

It will never stop. Unless countries are allowed to fail and fall, they will drag in a wider and wider net of enablers that will suffer the same fate.

MarkT on August 21, 2013 at 10:17 AM

Yes. We must do that here as well and we must highlight the failure, use it to educate.

Detroit is a prime example of how socialist policies fail and fail and fail.

California’s up next.

dogsoldier on August 21, 2013 at 11:26 AM

“The problem with socialism is that you eventually run out of other people’s money.”

Margaret Thatcher

The German Chancellor is going to find a real challenge coming after her coalition in the next series of elections as there is an anti-Euro political party gaining considerable traction.

They are taking the realistic look that one cannot just keep taking German funds and ‘lending’ them to nations that are fundamentally bankrupt because of decades of irresponsible statist / socialistic / progressive policies.

California’s up next.

dogsoldier on August 21, 2013 at 11:26 AM

There is a progressive coalition ranging from the Governor to Assembly to the major press in the US and California to continue to slap lipstick on the fiscal pig that California is. The state is not seeing any recovery – and the draconian policy newly enacted to hammer CA’s small businesses to regain over $100 million in tax breaks is just the latest act of desperation to try to plug the leaking dam.

California remains totally boned because we haven’t even got to the point where the progressives are pointing fingers at ‘bad implementation’ of ‘good progressive policies’ – they continue to deny that there is a problem because as they see it – the citizens of California have plenty of money to give the state.

Athos on August 21, 2013 at 11:46 AM

and criticized the chancellor for advocating austerity policies in Greece that had failed to reduce its debt load.

Right, if only they had spent an extra 500 billion Euros more they could have had an even higher debt load… so the proposals on the table are “Give them a large chunk more money, to keep struggling along” or “Give them a trillion more and let them spend like there is no tomorrow… again; and hope this time it magically gets better”.

Seriously, this is the alternative for Germany?
Good luck with that one guys, you’ll need it.

gekkobear on August 21, 2013 at 2:39 PM