Germany Takes Hard Line

German Finance Minister Wolfgang Schaeuble told the widely circulated Bild newspaper that Greece must adopt new and tougher austerity measures as a condition for the approval of the $60 billion aid package. The Athens government has already implemented tax hikes and wage and pension cuts. The austerity measures are unpopular and have prompted strikes and demonstrations. Schaeuble told reporters, “The fact that neither the EU nor the German government has taken a decision (on providing aid) means that the response can be positive as well as negative. This depends entirely on whether Greece continues in the coming years with the strict savings course it has launched. I have made this clear to the Greek finance minister.” On Friday Greece surrendered to market pressure and asked for the loan package from the EU and the IMF.  At the present time the aid package is valued at 45 billion Euros ($60.49 billion USD)but some economists say more may be needed.

Greece Will Not Restructure Debt Says Papaconstantinou

In Germany the Greek aid package is a political hotspot and opposition to the aid package runs deep among the German public. Greek Finance Minister George Papaconstantinou is in Washington for talks with the IMF and is negotiating a three year loan plan with the agency. Papaconstantinou said that investors will “lose their shirts” if they bet that Greece will default. He also said the funds will be available “rather soon” and that Greece will not restructure its debt. Papaconstantinou’s words failed to calm markets and the yield on Greece’s two year bond rose 169 basis points to 12.62%. Greece faces the maturity of 8.5 billion Euros ($11.3 billion USD) worth of bonds on May 19th. Any delay in implementing the loan package could cause a selloff of Greek assets and put global markets under pressure. IMF Managing Director Dominique Strauss-Kahn said that the talks will end “in time to meet Greece’s needs.”

Austerity Measures Must be Sustainable

EU governments have indicated they are ready to loan Greece 30 billion Euros and the IMF will provide an additional 10 to 15 billion Euros. Germany’s Chancellor Angela Merkel said Germany is ready to approve the loan package if the Athens government approves more austerity measures. Germany has taken a hard line regarding the Greek aid package which is highly unpopular throughout Germany.  The measures are highly unpopular in Greece and have prompted strikes and protests throughout the country. Merkel said the austerity measures must be sustainable. Investor concerns over Concern over sovereign credit risk have pushed the euro and Greek bank stocks lower in global markets and have pushed the cost of insuring Portugal’s debt to record highs.

Quick Forex Tip: The fastest and easiest way to engage in forex trading is with the internet. Since the advent of the internet, currency trading has boomed. If you are just getting started with forex, you’ll definitely want to try out online currency trading forex. Online currency trading allows you to trade forex from the comfort of your own home and is a great way to get involved in the forex market.