GERMAN CHANCELLOR Angela Merkel has warned of the “serious consequences” of speculating in public about Greece’s financial prospects, a public put-down of her economics minister and deputy leader Philip Rösler.
The remark on Monday by Mr Rösler, leader of Dr Merkel’s struggling coalition partners, the Free Democrats (FDP), that discussing a Greek insolvency should no longer be taboo continued to unsettle markets yesterday.
One of the results was that traders began pricing such a development into their calculations.
“We have to keep an eye on everything we do, that everything is done in a controlled way and that we know the consequences,” said Dr Merkel to journalists. “Otherwise a situation can be created in the euro zone very quickly that we don’t want and which would have very serious consequences.”
After talks with Finnish prime minister Jyrki Katainen, the German leader said she was very optimistic of finding a solution to a standoff between Helsinki and its euro zone partners.
The new Finnish government, under domestic pressure, had insisted on collateral from Athens as a condition for Finnish contributions to new loans.
Germany and other partners have dismissed the proposed bilateral deal, fearing preferential treatment for Finland.
“We want to, and we will, find a way, open to all partners, that fulfils Finnish needs,” said Dr Merkel, adding that an expert working group was still discussing solutions.
Conscious that tensions within her coalition were unsettling financial markets, Dr Merkel took the unusual step of giving an interview to a Berlin news radio station yesterday.
“I have made my position very clear: everything must be done to keep the euro area together politically, because we would very quickly face a domino effect,” she told Berlin’s Inforadio.
“The top priority is to avoid an uncontrolled insolvency, because that wouldn’t just hit Greece. And the danger that it hits everyone, or at least a number of other countries, is very big.”
The return of members of the so-called “troika” to Athens was a positive sign, she said, suggesting the Greek government had “seen the writing on the wall”.
The German leader dismissed reports from Paris promising a paper to “take action” on Greece.
Meanwhile, the Frankfurter Allgemeine newspaper published an analysis yesterday by Japan’s Nomura bank suggesting that factoring an 80 per cent loss on Greek investments would cost German banks €9 billion and French banks €16 billion.
The total exposure to the European Central Bank, the analysis suggested, would be to the order of €75 billion.
“This loss would have to be carried by member states of the euro zone,” concluded the bank in its analysis.
