Today's Coming Crisis Movie

Friday, June 17, 2011

Greek bail-out hopes rise after German retreat: And the can continues rolling down the street

Angela Merkel was forced to abandon Germany's tough stance on Greek debt amid warnings a failure to yield would trigger the eurozone's first-ever default.

With just days to go before the vital Brussels summit to agree the future of Greece, the German Chancellor agreed to back France and the European Central Bank (ECB) and ask bondholders to "voluntarily" roll-over their debts, rather than force a restructuring.

The concession came as Alan Greenspan warned a Greek default was "almost certain". Speaking in the US, the former boss of the Federal Reserve said the chance of Greece being unable to repay its debts was "so high that you almost have to say there's no way out".

The urgency led to Ms Merkel and President Nicolas Sarkozy swiftly announcing the result of their crisis talks in Berlin on Friday.

Although there were no details, the pair said they had agreed four principles: that any restructuring would be voluntary; it should not trigger a credit event in the financial markets; it should have the backing of the ECB; and that a deal should be reached quickly.

Mr Sarkozy welcomed Germany's retreat, calling it "a major breakthrough". He added there was "no time to lose" and appeared to suggest a deal should be reached by the end of next month. (read more)