Germany Again Openly Opposes IMF, Says Will Not Extend European Bail Out Facility Beyond 2013
With the euro surging, it was only a matter of time before the rickety house of European cards was put on full display once again. Sure enough, not 24 hours after the EURUSD hit a "German export industry suicidal" 1.34, here comes Germany's FinMin Schaeuble, who has said that if the IMF/EU hope to extend the duration of the European Bail Out Facility beyond 2013, they have another thing coming. As a reminder, Reuters reported a few days ago that "Greece's international lenders assured investors this week that they would not abandon Athens at the end of a 3-year bailout plan if it fulfilled tough reforms but failed to regain market trust." Additionally, Greek newspaper Ta Nea reported over the weekend that EU officials are considering an extension of the aid package for Greece beyond the agreed three years, due to fears that the country’s economy will not have sufficiently recovered by 2013. The reason - in 2013 Greek public debt is expected to hit its peak of 150% of GDP, a level far higher than where it is now. Regardless, it seems that Germany is once again sowing the seeds for the next crisis, as the ECB is unable to go "full retard" with QE.X right now as that would destroy the credibility of recent lies that Europe was doing oh so well (and as we are expecting a tide of European GDP revisions lower, Italy just announced a few hours back that its GDP would not meet a previous target of 1.5% as previously disclosed). In other words, the next step in the devaluation race will be out of Europe, possibly accompanied by the provisional semi-ejection of the PIIGS from the Eurozone just to make the point that not only Bernanke is a middle-class destroyer.
More from Market News:
Germany's Finance Minister Wolfgang Schaeuble Wednesday reaffirmed that Germany will oppose any attempt to prolong the European Financial Stability Facility (EFSF) beyond 2013.
"Anyone who believes that the EFSF will be prolonged beyond three years is putting our trustworthiness at risk," Schaeuble said in a speech here. "We cannot do that."
Rather, the time between now and 2013 needs to be used "to create better solutions for the euro," the Minister said. "Otherwise, it will be difficult to defend the stability of the euro," he warned.
The E440 billion EFSF was created earlier this year by EU leaders to mollify markets at the height of the Eurozone's sovereign debt crisis. It would provide emergency loans to EMU states that get into financial trouble and have no other recourse. Along with a pre-existing fund of E60 billion and another E250 billion pledged by the International Monetary Fund, the total available for that purpose would be E750 billion.
Alas this seems to blatantly contradict what the IMF said earlier:
EU, IMF and ECB officials accompanied Finance Minister George Papaconstantinou on a two-day roadshow in London, Paris and Frankfurt this week to meet investors and persuade them of Greece's commitment to meet debt reduction targets.
A source close to the roadshow said that when
asked what would happen after 3 years if Greece fully met EU/IMF demands
to slash its deficit but failed to convince markets, the international
officials told investors: "In that situation we would not walk away from
Greece, we would not abandon them."
Since it is now obvious that nobody buys Greece unbelievable daily horseshit, and the country was forced to cancel its bond offering, we wonder just how the IMF will difuse this latest incursion by Germany into what was otherwise a nice zombie slumber for the PIIGSy region. Keep in mind, a persistent EUR at current levels means about 2% of GDP loss for Germany. And Germany will not take it.