Banker: $1 trillion rescue only buys time
By Juergen Baetz
BERLIN (AP) — The 750 billion euro ($1 trillion) rescue loan package only bought eurozone countries more time — it didn’t resolve the Continent’s underlying debt problem, the European Central Bank’s chief economist says.
The market turmoil will calm down only if the 16 eurozone member states reform their economies and reduce their deficits, Juergen Stark told the Frankfurter Allgemeine Sonntagszeitung newspaper on Sunday.
“We bought time, not more than that,” he was quoted as saying, adding the euro was not in danger “but in a critical situation.”
Mr. Stark urged European Union leaders to use the limited time to introduce new rules to increase stability and growth, stressing the need for new automatic sanctions for countries that don’t abide by the EU’s debt rules.
“The process has to be depoliticized,” he was quoted as saying.
In the wake of Greece’s debt crisis, the euro has come under intense pressure because of fears about problems spreading to other heavily indebted eurozone countries. The euro sank to near a four-year low against the dollar on Friday in late New York trading, buying $1.2355.
Another top German top banker, meanwhile, expressed doubts about Greece’s ability to repay its huge debts in an orderly fashion.
Dekabank Chief Economist Ulrich Kater on Sunday told the German news website Handelsblatt that he shares the doubts voiced by Deutsche Bank AG Chief Executive Josef Ackermann.
“It will be very, very difficult for Greece to orderly repay its debt,” he was quoted as saying.