It’s been hammered in here quite often, but always needs a repeat: All roads lead to Berlin as the European project was designed to fail. Having set up Greece to fail was only one part of the larger plan.
As Greeks suffer in multiple ways the effects of the economic crisis their country is going through, Germany has profited handsomely from the Greek crisis. This is a conclusion of research carried out by the Halle Institute for Economic Research (IWH). The study shows that the Greek debt crisis resulted in a reduction in German bund rates of about 300 basis points (BP). This led to interest savings of more than 100 billion euros ($1.10 billion) (equivalent to more than 3 percent of gross domestic product (GDP) during the period 2010 to 2015.
According to the study, Germany would still benefit if Greece defaults on all its debt. The savings would still be substantial if Greece does pay or pays at least in part. This is the result of investors’ increased demand for German bonds because of the greater safety they provide. Many investors would lend money to the German government at extremely low rates rather than risk losses on higher return enterprises.
Greece missed two key payments to the International Monetary Fund (IMF) in June and July, and the terms for a third bailout need to be reached by Aug. 20. On that date, Greece’s next debt repayment to the European Central Bank is due. Although Greek officials were optimistic about the results of the negotiations, German officials were more cautious. Steffen Seibert, Chancellor Angela Merkel’s spokesman, said that “thoroughness comes before speed.”
While German officials want Greece to implement credible pension reforms and privatization plans, the Athens government is desperately trying to find funds to recapitalize the country’s ailing banks. However, any deal will have to be ratified by German MPs, many of whom oppose further concessions to the Syriza government.
Unlike other European countries, the German economy is still expected to grow in 2015.
Full article: Germany Profits From Greece’s Hardships (The Epoch Times)