Germany sends warning to Greece not to cancel economic reforms
Germany is sending a clear signal to Greece that if voters put the communists in charge of the government, there will be no more bailouts.
The far left Syriza party has promised to end the austerity budget and roll back other economic reforms that were part of the agreement to bail out the country when default threatened. If Syriza carries through with those promises, the rest of the EU will abandon Greece to its fate - a probable eurozone exit along with a ruinous devaluation of their currency.
Euro zone politicians are not obliged to rescue Greece as the country is no longer of systemic importance to the single currency bloc, a senior member of German Chancellor Angela Merkel's party was quoted as saying.
In an interview with Rheinische Post newspaper published on Wednesday, Michael Fuchs also said Greek politicians could not now "blackmail" their partners in the currency bloc.
"If Alexis Tsipras of the Greek left party Syriza thinks he can cut back the reform efforts and austerity measures, then the troika will have to cut back the credits for Greece," he said.
"The times where we had to rescue Greece are over. There is no potential for political blackmail anymore. Greece is no longer of systemic importance for the euro."
The remarks are the clearest warning yet to Greek voters from a senior German politician that Athens might lose support if it flouts the terms of its 240 billion euro EU/IMF bailout after early elections next year.
Fuchs, deputy parliamentary floor leader of Merkel's Christian Democrats, has frequently expressed frustrations felt by many politicians and the German public about the pace of reform and political hold ups in twice-rescued Greece.
Polls suggest that Syriza will emerge as the strongest party in the Jan. 25 election, although its lead has narrowed. The party wants to cancel austerity and a big chunk of national debt but says it will keep Greece in the euro zone.
The head of Germany's influential Ifo economic research institute, Hans-Werner Sinn, meanwhile called a Greek exit from the euro zone an option.
"Further debt cuts will be needed again and again, unless the country is released from the euro zone and allowed to regain its competitiveness by devaluation," he told German daily Tagesspiegel.
Looks like Greek voters have tired of having adults running the country and want to put the adolescents back in power. When the bailout money runs out, Greece will be faced with the same crisis it faced in 2012 - giving debtors a huge haircut (nickels on the dollar) or simply declaring the debt void.After that, good luck getting any responsible company or government to invest in Greek bonds.
The only way Greek goods could be competitive outside the EU is to devalue their currency and uncouple it from the euro. Millions of Greeks would see their savings wiped out overnight and a real, live panic would ensue. Of course, this would play into the hands of Syriza perfectly, as the resulting social unrest would give them the justification to do just about anything they wanted.
Once before Syriza was ahead in the polls prior to an election. The people came to their senses and voted for the center right parties to continue the reforms begun 3 years ago. But the Greeks have tired of austerity and high unemployment and may look to give the opposition their shot to try and make life better.