Schaeuble lays it on the line in the Bundestag. I agree with him.

Wolfgang Schaeuble – Appeal for new Greek rescue plan

Greece – More austerity measures to be rolled out

Euro zone finance ministers will create a working group to hammer out ways to involve private investors in any new aid for Greece, Germany’s Wolfgang Schaeuble said today.

In an impassioned speech to the German parliament seeking to convince deputies to back more aid for Athens, the German finance minister said it was essential to act quickly to oblige private banks to do their part.

He said a disorderly default could have a disastrous impact on markets.
‘In order to find a good solution which the European Central Bank can support, which the ECB must support, we have decided within the Eurogroup to create a working group that will assess the narrow window between involving private investors and seeing potentially negative consequences for financial markets,’ Schaeuble said.

He has insisted for weeks that a second rescue package being negotiated for Greece must include contributions by private creditors, banks and investment funds.

Schaeuble told the Bundestag lower house that a new package was ‘inevitable’ and would establish ‘a fair distribution of risks between the taxpayer and private creditor,’ to send ‘the message that you cannot simply dump the risk on the taxpayer’.

Many German deputies and taxpayers are deeply reluctant to offer another lifeline to what they see as the spendthrift Greek government. But Schaeuble said the decision was in their long-term interest for the sake of the euro single currency, although he acknowledged that the decisions at hand were ‘difficult for many citizens’.

Schaeuble also said that the situation in Greece and in Europe was serious and demanded that Greece make far-reaching reforms in exchange for more aid.

He said that Germany had a responsibility to lead in Europe but must also work with its partners to find a solution to the Greek debt crisis.

A new rescue package is expected to amount to around €90 billion, following a €110 billion package set up last year.
Berlin laid out its conditions this week for new aid for Greece, which would include requiring private banks to forego collecting Greek public debts for seven years.

In a letter sent to euro zone partners and made public on Wednesday, Schaeuble said an agreement could be reached ‘through a bond swap leading to a prolongation of the outstanding Greek sovereign bonds by seven years.’
Greeks to hear of latest austerity plans today

Greece’s finance minister is to outline details of a new round of painful austerity measures today a day after the country’s Cabinet approved the plans and submitted them to Parliament.

Greece has been slipping on reform targets of its €110 billion international bail-out, and the new austerity drive is essential for the debt-ridden country to continue receiving rescue loans.

Plans to be detailed include tax hikes and spending cuts, including extra income, fuel, property and car taxes. Civil servants and pensioners will suffer more income cuts, while health, education, defense and social spending will be further curtailed.

They include €6.4 billion in remedial austerity this year, a €22 billion package for 2012-2015 and a €50 billion privatisation programme.