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Christian Science Monitor Interview on Greece

The Christian Science Monitor interviewed a German Member of the EU Parliament and myself on a bailout for Greece: As Athens protests, Germany scoffs over Greece debt bailout

My comment about Greece not making sufficient efforts was supposed to refer to the last ten years and not just to the present situation. Joining the Eurozone had huge benefits for Greece, but Athens failed to take this opportunity to reform the economy and get the government budget in order.

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David on :

Congratulations, Joerg! Are you available for "Meet the Press"??

John in Michigan, US on :

Congratulations on the quotes! '"There is a concern that Greece is like [the failed US bank] Lehman Brothers," he says. “If the crisis gets bigger and starts to include other eurozone countries, it would have lasting, negative repercussions on the German attitude about Europe.”' Hmm...it isn't clear if the author, Mr. Francis, intended for this Joerg quote to counter-balance the previous, anti-bailout Joerg quote...or is it supposed to support that previous quote? Perhaps it would be more clear if the quote said 'like AIG'. Lehman was not thought to represent a systematic risk, and so it was allowed to fail, while AIG was rescued due to fears of systemic risk. But, saying 'like AIG' suggests that Greece could still hope for a rescue...is that what you (or the article) are trying to say? To reinforce the anti-bailout position, one could say: 'There is speculation that Greece is like Lehman Brothers, the crisis could get bigger without negative repercussions in the Eurozone.' That sounds more polite and less ominous. It doesn't sound like Germany is threatening Greece with negative repercussions; but at the same time, it doesn't suggest there will be a rescue. But maybe you, or the writer, wanted it to sound a bit ominous? I guess all I'm saying is, if one wants to be anti-bailout, compare them to Lehman, or if pro-bailout, compare them to AIG. Of course, there was a possible systemic risk from the failure of either company...but even in hindsight, we still don't know how close the system was to the tipping point. Not only do we not know how close, we don't even know exactly how to measure the distance to the tipping point! It seems to me the Eurozone tipping point might be a bit closer because a) the eurozone is newer and therefore has been tested fewer times than the US financial system b) everyone understands that banks or insurers can fail, and understands how bankruptcy would work; but if a country fails, it is a much bigger deal, and bankruptcy for a country is less well defined. But if the markets judge that the Eurozone is more regulated (and that regulation is a good thing), the tipping point might be farther off than in the US system. It is hard to say. One thing we do know, is that a major AIG creditor was Goldman Sachs, who managed to pull off quite a coup getting AIG rescued...I wonder, who are Greece's major creditors...could they include Goldman? Why yes, it appears that they might! Hmm...not making predictions, but very curious to see how this turns out. Who are the other major Greek creditors?

Pat Patterson on :

No Goldman sold that debt to a Greek bank years ago but what is disturbing is that it also appears that the largest owners of Greece's sovereign debt are German banks.

John in Michigan, US on :

True, I got carried away with rhetoric (I was enjoying some lovely French wine you see). That sentence about Goldman and Greece was just too tempting, even if it isn't technically true anymore. I do think Goldman must be maintaining an ongoing relationship with the Greek government, even today, so it is likely Goldman will have a certain ability to influence events. I'm not suggesting a giant conspiracy, perhaps just an ordinary scandal.

Pat Patterson on :

Probably! The hallmark of a good confidence scheme is to repeat scamming the initial mark as they are the most gullible and usually a bit more desperate than some others.

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