Merkel will have a lot of 'splaining' to do to the German people, columnist says
Greek financial situation far worse than was ever predicted
The financial situation in Greece is far, far worse than what was originally predicted. So much so, says Telegraph columnist Ambrose Evans-Pritchard, that German Chancellor Angela Merkel will have a lot of explaining to do, saying that her bailout would not negatively impact the German people.
'Having insisted for over two years that German taxpayers face no risk of loss on the Club Med rescue packages - and having indeed told them it generated a profit - she will have to explain why this has gone horribly wrong,' Evans-Pritchard says.
The public debt will reach 189pc of GDP next year and not the predicted 179pc. He goes on to list a gruesome litany of shortfalls - "The budget deficit will be 5.2pc (not 4.2pc) . The economy will shrink 4.5pc next year (not 3.8pc) . Unemployment is already 25.1pc and 55.6pc for youth."
The cumulative error is colossal, Evans-Pritchard says. "The EU-IMF Troika originally said that the economy would contract by just 2.6pc in 2010, before growing by 1.1pc in 2011, and 2.1pc in 2012.
"In fact Greek GDP contracted by 4.5pc in 2010, 6.9pc in 2011, and will shrink 6.5pc this year, and now 4.5pc next year."
This calamity equals an especially red-faced moment for Chancellor Merkel, "who will have to account for direct losses to the Bundestag. A line will have to be written into the German budget covering the X billions of euros. Other line items may have to be cut. Welfare support for Germans, perhaps.
"Having insisted for over two years that German taxpayers face no risk of loss on the Club Med rescue packages - and having indeed told them it generated a profit - she will have to explain why this has gone horribly wrong," Evans-Pritchard says.
"No doubt she will try to delay this awful moment until after the German elections late next year. But the calendar of simmering revolt in Greece is not in her hands. One of the three parties in the pro-Memorandum coalition has already refused to go along with the budget plans. The Government majority is thinning fast."
Evans-Pritchard says that he guesses that Merkel will be forced to admit to her mistakes to the nation, My guess is that Mrs Merkel will be forced to admit "that contingent liabilities are turning into real liabilities long before her elections."
In summations, Evans-Pritchard says that "Greece cannot claw its way out of a 190pc of GDP debt load. The official haircut is coming sooner or later, and it will be an explosive political moment."
© 2012, Catholic Online. Distributed by NEWS CONSORTIUM.
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General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
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Keywords: Angela merkel, Germany, Greece, debt, embarrassment
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