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"Das Geht Nicht, Germany Told Greece And Italy

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Germany has decided and France would necessarily follow. The upcoming amendments of the rules of “economic governance” are changing the economic and political conditions for countries stricken by debt crisis and political delinquency such as Greece and Italy.

The message had been sent at the meeting of the Eurogroup Working Group on Monday to both Greek and Italian representative. It has been delivered to their governments, and a barrage of fiscal measures followed. The political expectations for a new political negotiation by passing by the troika have died out in a few days. 

"Das geht nicht" said the Germans to Giorgos Zanias and asked him to explain to the Greek government that staying in the Eurozone for any troubled country would also mean loss of control and management of the economy in the near future. 

The changes prepared under the European “economic governance” provide “transfer” of national economic governance to the European institutions to redress the imbalance. 

German representative at the EWG meeting said that there is no room for political negotiation and Greece has to discuss with the Troika. This time, Germany had the direct and unconditional support of France, which however seems to start feeling the pressure of the imminent crisis, moving sharply from the European periphery to the core of the financial system. 

Hence the immediate reaction of the Greek cabinet on Tuesday, proposing an unprecedented package of measures to deal with two key points: public expenditure (uniform payroll, job reserve, layoffs) and labour cost in the private sector (full deregulation of labour relations). 

Greece would gain a small adjustment in deficit targets due to the recession and promises that the troika would approve the release of the sixth aid tranche if it considers the measures sufficient, even if some Eurozone countries still object to the EU agreement of July 21. 

Capital.gr was told that a partial disbursement of the next tranche is possible in order to cover debt service requirements and not the state budget. 

Capital.gr was also told that another issue was discussed at the EWG meeting: the growing crisis in the financial system of the Eurozone and the interweaving with sovereign debt crisis. 

However, for this very issue it seems that positive news would arrive from ECB, probably within the week.
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