IMF Slams Germany, Says Greece "Needs Debt Restructuring"

Earlier today, confirming that Germany sternly refuses to change its tune about a Greek debt haircut or even a debt "reprofiling" of Greece and would not budge an inch on Tsipras tacit request for at least some debt leeway, we reported that "the German government does not see any reason to grant Greece either a classic debt haircut or any other measures that would slash the value of money on loan to the crisis-ridden country, a spokesman for the finance ministry said on Wednesday."

"At the moment and in principle we see, as the chancellor said expressly in her press conference in Brussels, no occasion at all to discuss this issue - there is no leverage or basis for that," Martin Jaeger said at a news conference.

"That refers to a haircut in the classic sense but I explicitly add we also take that to mean measures that aim to bring about a reduction in the cash value of debt - those are things that you hear in discussions under profiling, restructuring and similar things.

This put Gremany in clear confrontation with the IMF (and various other European countries who are far more inclined to consider debt haircuts for others and for themselves) so we, and many others, were wondering how Christine Lagarde would react.

We got the answer moments ago and here it is:

  • IMF'S LAGARDE SAYS DEBT RESTRUCTURING NEEDED IN GREECE
  • IMF'S LAGARDE SAYS FUND REMAINS 'FULLY ENGAGED' WITH GREECE
  • IMF'S LAGARDE SAYS IMF CANNOT GIVE GREECE SPECIAL TREATMENT

... thereby starting a very clear, and very determined war of words with Germany and the "no-haircut" axis which is also waging a cold war against none other than the US, under whose guidance the IMF released its debt sustainability report last week over the objections of Merkel, Schauble and company.

To be sure, this statement makes life for Tsipras very difficult as the local population will demand why he didn't fight for the debt haircut he promised, a haircut which even the IMF says is not critical.

But the ball is now in Germany's court, and of course Greece's, which now has a very determined, and very unexpected ally, one which Tsipras called "criminal" three short weeks ago.