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Germany's Finance Minister Wolfgang Schaeuble Wednesday reaffirmed that Germany will oppose any attempt to prolong the European Financial Stability Facility (EFSF) beyond 2013.Alas this seems to blatantly contradict what the IMF said earlier:
"Anyone who believes that the EFSF will be prolonged beyond three years is putting our trustworthiness at risk," Schaeuble said in a speech here. "We cannot do that."
Rather, the time between now and 2013 needs to be used "to create better solutions for the euro," the Minister said. "Otherwise, it will be difficult to defend the stability of the euro," he warned.
The E440 billion EFSF was created earlier this year by EU leaders to mollify markets at the height of the Eurozone's sovereign debt crisis. It would provide emergency loans to EMU states that get into financial trouble and have no other recourse. Along with a pre-existing fund of E60 billion and another E250 billion pledged by the International Monetary Fund, the total available for that purpose would be E750 billion.
EU, IMF and ECB officials accompanied Finance Minister George Papaconstantinou on a two-day roadshow in London, Paris and Frankfurt this week to meet investors and persuade them of Greece's commitment to meet debt reduction targets.Since it is now obvious that nobody buys Greece unbelievable daily horseshit, and the country was forced to cancel its bond offering, we wonder just how the IMF will difuse this latest incursion by Germany into what was otherwise a nice zombie slumber for the PIIGSy region. Keep in mind, a persistent EUR at current levels means about 2% of GDP loss for Germany. And Germany will not take it.
A source close to the roadshow said that when asked what would happen after 3 years if Greece fully met EU/IMF demands to slash its deficit but failed to convince markets, the international officials told investors: "In that situation we would not walk away from Greece, we would not abandon them."