Germany is attempting to engineer a default on Greek bonds, according to a claim in BankingNews.gr , a Greek language business news site.
Despite an outward appearance of supporting a financial rescue, the website argues, “the actual position of Germany is that Greece should go bankrupt.”
Banking News argues that regardless of whether or not Greece gets the next installment of rescue funds, eventually it will default on its bonds. The only choice is whether or not Greece defaults and stays within the euro zone or is forced to leave.
It should be noted that officially, the German government supports a rescue for Greece. The accusation from BankingNews is not sourced to any official statements or documents. It is a speculative argument.
But it is worth asking: why might Germany prefer a defaulted Greece to a rescued Greece?
One answer might be the growing awareness of the potential for a financial domino effect if Greece is rescued. One of the conditions for Greece to receive the next installment of rescue funds is an agreement from private creditors to reduce the amount Greece owes them—the so-called “private sector involvement” or “haircut.”Page 1 of 3 | Next Page