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GreekReporter.comGreeceTrichet’s Position Reverses New Loan Plans

Trichet’s Position Reverses New Loan Plans

ECB President’s opposition against the possibility of a selective Greek default causes the redeployment of initiatives for a solution with the participation of the private sector. President Jean-Claude Trichet restated on Thursday that the bank’s position has not changed and is still against any kind of partial failure or credit event, indicating the governments’ responsibilities in discussing with private investors and insisted that any participation should be strictly voluntary.
These statements have exacerbated the climate that had been created recently after the modest outcome of the bankers’ meetings in Paris and Rome and the downgrade of Portugal’s ratings, which indicates that the debt crisis has crossed Greek borderlines. Petros Christodoulou, head of the Greek debt management agency, attended the meetings.
European Union officials noted that decisions shouldn’t delay, expressing fear of contagion in Spain. Under the new conditions, sources said that earlier proposals have revived in order to reach decisions at the new Eurogroup meeting on Monday.
They also note that these developments are related to the visit of FinMin Evangelos Venizelos in Germany, while such a meeting with French officials is possible before the critical meeting of Eurogroup, as now the burden is on Eurozone government to reach a solution that would be welcomed by the markets.
The solution should be sustainable, and not causing a “credit event” according to Trichet. It should also not increase the cost of servicing of loans, as the debt would continue to grow rather than solving the problem.
The proposal of involvement of the European rescue fund has been revived. The head of Institute of International Finance, Charles Dallara, said on Thursday that the venture would have greater changes of success if it included the retiring of outstanding debt through organized buybacks.
(source: capital)

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