Ger­many ben­e­fited from Greek cri­sis

Kathimerini English - - Front Page -

Greece’s debt cri­sis saved the Ger­man gov­ern­ment about 100 bil­lion eu­ros in bond in­ter­est pay­ments, out­weigh­ing the pos­si­ble bud­get im­pact of a Greek de­fault, an eco­nomic in­sti­tute said. Ger­many ben­e­fited “dis­pro­por­tion­ately” as in­vestors fled to the safety of bunds, the IWH in­sti­tute said in a study pub­lished yesterday. Yields on Ger­man gov­ern­ment bonds since 2010 fell as a re­sult, lead­ing to sav­ings for the gov­ern­ment that are big­ger than the losses it would face if Greece de­faulted on all debt it owes Ger­many, ac­cord­ing to Halle, Ger­many-based IWH. “These ben­e­fits should not be over­looked,” IWH said in an e-mailed sum­mary of the study, which put Ger­many’s ex­po­sure to Greece at about 90 bil­lion eu­ros, in­clud­ing the pro­posed third bailout pack­age. The sav­ings were cal­cu­lated by sim­u­lat­ing “a hy­po­thet­i­cal Ger­man gov­ern­ment bond yield in a sce­nario in which Ger­man in­ter­est rates would be in­de­pen­dent from the Euro­pean debt cri­sis.” Ger­man Chan­cel­lor An­gela Merkel has drawn crit­i­cism for her stance on Greece and some have urged Ger­many to pass on the sav­ings to Greece to help speed the coun­try’s eco­nomic re­cov­ery. In­stead, Merkel is ac­cel­er­at­ing debt-re­duc­tion plans as record-low yields re­duce re­fi­nanc­ing costs. The Ger­man gov­ern­ment says it plans to re­duce fed­eral debt to less than 70 per­cent of gross do­mes­tic prod­uct in 2016 and to 61.5 per­cent by 2019. The limit set in the Euro­pean Union’s Maas­tricht Treaty is 60 per­cent. While low rates help the gov­ern­ment cut in­ter­est on the na­tional debt, they also mean lower in­come for savers, Ifo eco­nomic in­sti­tute Pres­i­dent Hans-Werner Sinn

An em­ployee of a glass prod­ucts com­pany car­ries a pane of glass in the in­dus­trial area of Sin­dos, west of Thes­sa­loniki. A sur­vey con­ducted by the city’s lo­cal cham­ber of com­merce (EVETH), which was pub­lished yesterday, found that 83 per­cent of Thes­sa­loniki busi­nesses were af­fected by the im­po­si­tion of cap­i­tal con­trols.

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