“We give you cash, you give us Corfu!”

On Friday, Greece admitted it could no longer pay down its massive debts.  Athens is seeking the emergency loans before it must make additional payments on its debt next month.
The cost of insuring Greek government debt against default recently surpassed Ukraine to become the most expensive in Europe. On Monday, the spread hit another unwelcome milestone by widening at one point beyond 700 basis points (meaning it would cost $700,000 a year for five years to insure $10 million of government debt against default), making Greece more risky than Pakistan, noted Timothy Ash of Royal Bank of Scotland, in a research note. While that may seem extreme, Pakistan does have some advantages, Ash said in a tongue-in-cheek note to clients, including a debt-to-GDP ratio of 55%, roughly half that of Greece, and a 2009 budget defict of 4% of GDP, less than a third of Greece’s level. Pakistan managed to grow by around 3% in 2009, while Greece’s economy shrank by around 2% and shows little prospect for growth any time soon.

Picture: German magazine Focus showed the famous armless classical statue, now at the Louvre, raising her middle finger under the headline “Cheats in the euro family” – suggesting that Greece had deliberately misled EU peers to cheat its way into the eurozone.

Greece has defaulted or rescheduled its debt five times since gaining independence in 1829, the economists wrote in their paper “This Time Is Different,” published in 2008 and recently expanded into a book. Spain has the lead in Europe at 13 times since 1476. Germany and France have both done it 8 times, while the U.K. has never done it since William the Conqueror invaded in 1066. The authors, writing in 2008, say that Greece and a few other European countries have escaped their status as serial defaulters by integrating into Europe, but they end the paper with a prophecy: “Concluding that countries like Hungary and Greece will never default again because “this time is different due to the European Union” may prove a very short-lived truism.”

Greece must consider a fire sale of land, historic buildings and art works to cut its debts, according to the German position. Marco Wanderwitz, an MP for Merkel’s own conservative Christian Democrats, said Athens should provide collateral for any money it receives from the European Union to help it out of its debt crisis. "In this case, certain Greek islands also come into question," added Wanderwitz. "We give you cash, you give us Corfu," the Bild commented.

The country’s consumer federation, INKA, summoned Greeks to boycott German products, including supermarket chains and car dealerships, following a The German media’s chauvinist campaign against Greece.

"When we were carving beautiful statues like the Venus de Milos," said Sarandi Pitsas, referring to the cover of a German magazine which showed the statue gesturing obscenely under the headline ‘Greek cheats’, "they were living in caves and growling like dogs."

However, as news read today, Germany is starting to lay the legal ground for its contribution to the financial aid package for debt-laden Greece.  The government is seeking a speedy parliamentary approval for the controversial loan guarantees for Greece, adding up to some euro8 billion ($10.7 billion) for Germany.


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