Germany rattled as taxpayer losses loom in Greece

A draft version of the Troika report obtained by Spiegel magazine said EMU governments and the European Central Bank must accept their share of losses in order to bring Greece’s public debt back to 120pc of GDP by 2020, deemed the sustainable level.

Greece must carry out a further 150 reforms, some involving a drastic loss of sovereignty. Troika payments will be held frozen in a special account under creditor control.

The Troika will have power to raise taxes automatically. There must be new laws to make it easier to fire workers and adjust the minumum wage.

In exchange, Greece should be given two extra years until 2016 to meet budget targets, costing up to €38bn.

German finance minister Wolfgang Schauble said over the weekend that taxpayer "haircuts" were unthinkable. "The question has very little to do with the reality in eurozone member states," he said.
Public sector losses are politically explosive in Germany. Chancellor Angela Merkel has told her own people that bail-out loans to southern Europe entail no risk, and have been profitable to date.
She would have to account for any losses to the Bundestag. This would poison debate on further loans for Portugal, Spain, Cyprus, or Slovenia. The fast-growing eurosceptic camp in Germany would claim vindication.
Until now all losses from debt restructuring in Greece have been concentrated on a diminishing pool of pension funds, insurers, and banks, which have suffered an implied `haircut’ of 75pc. They have been squeezed dry.

Read more: http://www.telegraph.co.uk/finance/financialcrisis/9639512/Germany-rattled-as-taxpayer-losses-loom-in-Greece.html