IMF Won’t Say How Much Aid Greece Will Need
International Monetary Fund Managing Director Dominique Strauss-Kahn said the size of Greece’s rescue package has yet to be decided as officials prepare to wrap up talks on the terms of the loans in Athens this weekend.
Greece may need as much as 120 billion euros ($158 billion) in aid, Green Party lawmaker Juergen Trittin quoted Strauss-Kahn as telling German deputies in a briefing in Berlin today.
That is triple the amount the IMF was talking about a week or two ago. See how the banks work? If you give them a bail-out early, it will cost you $30 billion. Delay a couple of weeks, and the price tag quadruples.
Germany had better get on board soon, or they might have to bail-out the creditors of four or five countries to the tune of $500 billion or $1 trillion or something.
And if they don’t?
ECB president Trichet and the head of the IMF Strauss-Kahn will be in Berlin today to brief parliamentary leaders about the financial help package for Greece. The idea behind the briefing is to explain to MPs the consequences of a Greek default (i.e what are the second and third round effects) and why it is in the German interest to help.
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Süddeutsche Zeitung reports from a CDU board meeting, citing a participant of that meeting, in which chancellor Merkel said that it is very difficult to justify help for Greece but it would be necessary in the end in order to prevent an even worse outcome.
From Trichet’s point of view, there is probably already a huge run on Greek banks (at least). I bet the ECB discount window is pretty busy these days. “Welcome to the ECB; may I take your order? Thank you, please drive through”
Of course, the bail-out will not be for Greece; nobody cares about Greece. The money is for Greece’s creditors. In Europe, as in the U.S., they have the real power.
I expect a “shock and awe” announcement from the IMF this weekend.
Can California and Illinois cut in line ahead of Ukraine for an IMF bailout? That would really help.