German Chancellor Angela Merkel said there is no chance that Greece will be allowed to write down its debt again, this time by imposing big losses on its public lenders the same way it did to private investors, including wiping out some small bondholders in the Diaspora who had put their savings into trying to help their homeland.
Despite the continued contraction of the Greek economy and its shrinking Gross Domestic Product (GDP,) Merkel said there’s evidence that unrelenting austerity which she has insisted upon in return for her country footing much of the bill for $325 billion in two bailouts is working, although it’s created a record 27.4 unemployment.
Last April, 2012, under then-Finance Minister Evangelos Venizelos – who is now the leader of the PASOK Socialists and Deputy Prime Minister and Foreign Minister serving Prime Minister and New Democracy Conservative leader Antonis Samaras – Greece put 74 percent losses on investors, locking itself out of the markets to write down its debt by $134 billion.
That still hasn’t helped the economy recovery and talk continues that Greece wants to walk away from more of its debt without paying, which means taxpayers in other Eurozone countries would pick up the tab for generations of wild overspending by alternating PASOK and New Democracy administrations.
The possibility of granting Greece a second round of debt relief has frequently been floated. But asked in an interview with Germany’s Sueddeutsche Zeitung and five other European newspapers whether there will be a second writedown, Merkel replied: “I don’t see it.”
She said further that Greece has moved forward “thanks to the very reform-oriented Samaras government.”
Merkel added: “I assume that debt sustainability will continue to be assured,” despite all the evidence showing that it isn’t. She is facing a reelection bid in September and anxious to keep Greece’s problems and her role in austerity out of the news, analysts have said.
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