Greek bankruptcy worse than Lehman, says Trittin

Jürgen Trittin has warned of more dramatic effects than after the collapse of Lehman Brothers if Europe allows Greece to go bust.

The influential German Green Party official told Austrian newspaper Die Presse today (Tues) he was certain an insolvency of the struggling Southern European country would have a more serious impact on developments on the global financial and stock markets than the bankruptcy of the US investment bank which kicked off the economic crisis in 2008.

“Greece must not yield an inch from what it agreed with the IMF (International Monetary Fund), the European Commission (EC) and the European Central Bank (ECB) – a restoration of the state budget, improving its situation considering earnings of the state and trying to become more competitive,” the former environment minister stressed.

Trittin accused Free Democratic Party (FDP) boss and German Economy Minister Philipp Rösler of a “lack of knowledge” for claiming that a regulated insolvency procedure must be considered as an option for Greece. The head of the German Greens’ faction in the federal parliament in Berlin also hit out at Bavaria’s Christian Social Union (CSU) for suggesting to force Greece out of the Eurozone. The term describes the 17 European Union (EU) members which use the Euro. Trittin labelled the CSU as “crazy” for its proposal.

Trittin claimed the “Greek problem” existed because the country’s former conservative government “cheated” on Europe in reporting information considering the state budget. He added: “The German Greens called for a European stability facility early on in contrast to the hesitation of Miss Merkel (German Christian Democratic Union (CDU) Chancellor Angela Merkel). Such a measure is now coming up, with a delay of one year.”

The ex-environment minister – who could become Germany’s next finance minister if his party performs strongly in the upcoming election – admitted speaking to Die Presse that the Greek government could itself decide to leave the Eurozone. However, Trittin warned of such a step’s negative consequences on other EU member’s financial demands on the ailing country.

The Green Party official warned that Europe had not managed to get over the current debt crisis yet. He pointed out that the public debt rate of economically strong countries like Germany and solid states like Austria also soared strongly in the past years.

Austrian Chancellor Werner Faymann warned of an “escalation” of the debate about the condition of Greece. The Social Democrat (SPÖ) said today the main priority had to be to make sure the cash-strapped country fulfilled criteria as spoken out by the EU, IMF and ECB to get support from the Eurozone.

People’s Party (ÖVP) chairman and Foreign Minister Michael Spindelegger – whose party cooperates with the SPÖ – warned of a difficult situation if Greece ignored the tasks it had to do considering its economic strength and the public debt. The foreign minister said yesterday it was now up to Greece to convince its partners.

Meanwhile, Austrian National Bank (OeNB) Governor Ewald Nowotny put Viktor Orban’s claims into question that a “Greek fate” was possible for Hungary. The Hungarian prime minister recently warned his country could experience similar difficulties as the South European nation if it failed to get the budget in order and the economy back on track. The announcement was widely considered as an attempt to argue controversial measures such as possible further tax increases and fees heaved on firms operating in the country which borders Austria.

Now Nowotny announced that “there can be no talk of a potential Greek destiny for Hungary.” The OeNB boss claimed Hungary’s problems could not be compared to the situation Greece was in. Nowotny pointed out Hungary was doing much better than Greece as far as the budget deficit, the amount of debts and the federal economy’s performance were regarded.