Germany force Greece day of reckoning

2:30 PM force, Germany, Greece, reckoning No Comments

Editor's Note: this article was to reflect the release of the country, Jean-Claude Juncker represents and add the first name of the German Finance Minister, corrected.

After a short, late summer break are German officials set, drag the bolts back onto Greece, increase the prospects that Athens would leave the euro zone and one cause painful shock to the world economy.

In the last round of talks in Berlin this week to the Greek Prime Minister Antonis Samaras lobbying for a two-year extension of the deeper spending cuts and tax increases when he meets with German Chancellor Angela Merkel, French President Francois hollande and the Luxembourg Prime Minister Jean-Claude Juncker, that the euro-zone finance ministers meet directs.

German officials, but over the weekend, that is, expired time made it clear for the Greek Government. Exclude a different Greek rescue package, said Sunday, German Finance Minister Wolfgang Schauble that Athens only to deal with the economic pain still.

"There can be no help - we do not yet a new (rescue) program," Schauble in Berlin said a public meeting. "There are limits."

But several election rounds of budget cuts have left Greek officials with their own limits. After two years of contraction shrinking Greek economy by more than 6 per cent per year. Previous rounds of budget cuts caused massive, sometimes violent, demonstrations and upended the careers of politicians which they adopt.

The Greek Government must not money, a massive due before year's end to repay a pile of debt. The latest bailout deal, set up by the European Union and the International Monetary Fund have come under Greek officials budget cuts in the next two years EUR 11.50 billion ($14 billion). Those cuts alone represent more than 5 percent of falling gross domestic product of the country.

The pain in addition to facilitate cuts Athens wants two more years expected to cut its budget deficit to below 3% of GDP, of 9.3 percent this year. But more time means more money. Greece bailout extend by two years and another 20 billion euros ($ 24 billion to $60 billion) in addition to the €130 billion ($157 billion) is already paid or obligated, according to estimates by some euro-zone officials and economists costs would.

But the German public has no desire to send more of their savings to Athens after Greece has shown little to no progress in reviving the economy and slowing growth as also Germany. As Europe's largest economy-accounting about 30 percent of gross domestic product in the eurozone-is a German popular support for any Greek aid package of crucial importance.

"I have always said that we help the Greeks, but we can not responsibly throw money into a black hole,", said Schaeuble, reflecting a widely felt atmosphere with German voters.

Now German officials decided after dozens of peaks and repeated failed bailout plans, apparently, that time of reckoning for the countries of the euro area, the issued to free and took too many debts, according to Michael Crofton, CEO has arrived from Philadelphia Trust Co.

"they go hard stand against the euro," he told CNBC. "If you, if you don't do what you said that you do not pay the Piper to do if you do not cut on your budget and your economies impose abstinence, then you'll be gone."

Greece departure from the common currency may once unthinkable, near the city.

It would force almost certainly Athens euro to default on much of its debt, which is now about 160 percent of its annual economic output. European Governments and banks, which own about two-thirds that debt would have to write off much of it probably.

With each failed attempt to find a viable solution, stop Greece into the euro area weakened membership. Recently, did European officials more than just think about Greece departure from the common currency.

Europe's Central Bank contingency plans for the possible financial shock began bracing for the prospect, if Greece out is forced. Under the plan, reported over the weekend by Germany's per mirror magazine would that set up which is governing a firewall, debts, bonds of other struggling eurozone countries such as Spain and buy on Italy, setting interest rates on these bonds of threshold values rose.

Such a move could deter speculators from the pressures which would add to prices to a level that larger economies that contribute to the view access over a debt "Infection" included on Europe's core pain. Central bankers have also some form of bank deposits insurance panic withdrawals by private individuals and small businesses to curb whereas drawn.

"I think we are pretty well prepared a Greek exit," said Chris Watling, CEO of Longview economics. "This is something which the European Heads of State and Government have thought about it for two years." The bottom line is that the Greek numbers are not huge. "I think that it is very containable at this stage."

Containable, perhaps, but it will be, not totally painless operation for the financial markets and banking systems after a top official of the European Central Bank.

"A payout of Greece would be manageable," Jorg Asmussen said two German newspapers over the weekend. But "A withdrawal would be not so neat as some imagine." It would be associated with a lower growth and higher unemployment and very expensive. In Greece, all over Europe, and Germany also. "

Gillian Tett, editor-in-Chief of the financial times United States, explains how cost-cutting measures are expected to growth in the euro area cripple and whether Greece will leave the euro.