Merkel-Germany will help Greece when conditions met

Source: Reuters

BERLIN, April 29 (Reuters) - Germany will help Greece as soon as the country meets conditions on overhauling its economy, Chancellor Angela Merkel said on Thursday.

Merkel said there was no alternative to Greece committing to credible, tough austerity measures.

Merkel said the legislative process in Germany would begin as soon as negotiations between the International Monetary Fund, the European Union and Greece were completed.


Read more: http://www.reuters.com/article/idUSBAT00536220100429?type=marketsNews

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There ya go! It's a standoff. She says no money unless "austerity" measures are adopted and the Greek people say no way.

Why is it GERMANY'S problem to help Greece?

Is it because of their status withing the EU?

Is it because they are on the best financial footing?

Greek bonds (debt) have to be denominated in Euros.

being called by Obama. Why just Germany?

Are they the lone hold out?

Biggest economy. France is helping. England is broke.

Germany is, as noted, the largest Euro economy, so it has the most say on what happens; and it's Germany that's been the most reluctant to lend to Greece, because the German voters think they're bailing out the Greeks because of their bad finances. France already seems a bit keener on the loan - see eg http://www.google.com/hostednews/ap/article/ALeqM5gnpt7Ohy6rIWHyyc8N07ybv2eIDgD9FAP2S81

Interestingly (and I don't know if this is affected Sarkozy's position or not), Dominique Strauss-Kahn, the head of the IMF, is a possible Socialist candidate for the French presidency in 2012.

but they have, as every one else has, been effected by the global economic down turn. It is a gamble for Germany to just hand Greece the funding they require, certain restriction apply and I agree with Merkel. Germany wants to make a secure loan to Greece and that want to know that Greece is dedicated and willing to make adjustments in order to turn their economy around.

That is careless and reckless to say the least. Germany does have to protect themselves as well, they are not going to allow themselves to be pulled under by a frivolous government body that is not going to do anything to change course, from the very things that got them into the mess they are in now.

just mentioning why they might be doing this. I agree it is an unfair burden on one country, you'd think all of the union would pitch in collectively.

:sarcasm:

"Reasons for taking austerity measures

Austerity measures are typically taken after a government's bond rating is downgraded, making it more expensive to borrow money. Government bonds are typically downgraded when debt grows substantially as a portion of GDP. Government debt grows as spending exceeds tax revenue. Such excess occurs when tax rates are cut or kept low while government spending is increased. Such excess can also occur when the economic activity stagnates or decreases, such as in a recession, thereby reducing the government's tax revenue.

Banks, or inter-governmental institutions such as the International Monetary Fund (IMF), may require that an indebted government pursue an 'austerity policy'. This typically occurs when the government must refinance loans that are about to come due, for which the government cannot pay. The government may be asked to stop issuing subsidies or to otherwise reduce public spending. When the IMF requires such a policy, the terms are known as 'IMF conditionalities'.
Typical effects

Development projects, welfare, and other social spending are common programs of spending for cuts. Taxes, port and airport fees and train and bus fares are common sources of increased user fees.

In many cases, austerity measures have been associated with short-term declines in standard of living until economic conditions improved and fiscal balance was achieved."

http://en.wikipedia.org/wiki/Austerity

Germany, who has been effected by the economic down turn along with every one else, is lending Greece money and Germany wants to see that Greece is willing to make adjustments to make sure that their economy will turn around and that Germany will be paid back. So if Greece is not willing to take the measures necessary to turn their economy around, then Germany should not lend them the funds.