Papandreou appeals to reluctant Germans for help with Greek debt

Stephen Beard Sep 27, 2011
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Papandreou appeals to reluctant Germans for help with Greek debt

Stephen Beard Sep 27, 2011
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Steve Chiotakis: Greek Prime Minister George Papandreou is in Berlin today, talking with German Chancellor Angela Merkel. Greece’s debt crisis threatens to bankrupt the country, and could to spread to other countries.

Already, Ireland, Portugal, Spain, and Italy are having debt problems of their own. Germany is Europe’s biggest economy and is footing much of the European bailout, so Germans are in a catch-22 — take the hit now, or bail no one out and watch the eurozone crash.

From the European desk, Marketplace’s Stephen Beard reports.

Stephen Beard: He came not quite cap in hand, but nevertheless eager to reassure his creditors. Prime Minister Papandreou told his German audience this morning that Greece is cutting its deficit, and not wasting German taxpayers’ cash.

George Papandreou: I say first of all, we are borrowing to repay. And secondly we are investing in our strengths — not to become more dependent but to become more autonomous.

The timing of Papandreou’s visit was critical. This week the German parliament votes on a second multi-billion dollar bailout for the Greeks.

The measure is likely to get a very rough ride, says Christian Schulz of the Berenberg bank.

Christian Schulz: There’s a widespread feeling in Germany — and there are many surveys that confirm that — that Germans are unwilling to commit more money to Greece.

But most observers say the Germans will approve the bailout, and will eventually even agree to put in a lot more money into the bailout fund — just to save the euro. One economist has estimated that if the currency collapsed. Germany’s economy could shrink by as much as 20 percent.

In London, I’m Stephen Beard for Marketplace.

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