US Treasury Secretary Tim Geithner flew to Europe and chastised European leaders on “loose talk” and infighting. Austria’s finance minister put Geithner in his place.
Please consider Geithner warns EU against infighting over Greece
Speaking at a closed meeting of eurozone finance ministers in Poland, he is reported to have told them that the divisions were “very damaging”.
Some eurozone ministers seemed unhappy with Mr Geithner’s comments.
They have also delayed a decision over Greece’s next bailout loan.
Mr Geithner reportedly said: “What’s very damaging is not just seeing the divisiveness in the debate over strategy in Europe but the ongoing conflict between countries and the [European] central bank.”
He said that “governments and central banks need to take out the catastrophic risk to markets”.
His presence at the meeting was measure of how concerned the US is about the danger of economic contagion from Europe’s government debt and banking crisis.
But his comments about ending divisions seemed to open up some new ones.
Austria’s Finance Minister Maria Fekter was one eurozone politician at the meeting who voiced her objection to Mr Geithner’s comments.
She said: “I found it peculiar that even though the Americans have significantly worse fundamental [economic] data than the eurozone, that they tell us what we should do.”
Greece Tranche Postponed Until October
Eurozone leaders will now decide in October whether to release the next 8bn euros ($11bn; £7bn) in bailout loans to Greece.
The move to delay a decision on the next tranche of Greek aid came after the country’s finance minister Evangelos Venizelos said Athens would meet its austerity plan and default was not an issue.
“The intention is to meet the fiscal targets for this year and next year without delay, without exception and deviations,” he said on arriving in Poland.
But there remains concern that the meeting has not yet resolved some fundamental issues, such as whether Greece should provide collateral in return for more aid.
Our correspondent in Wroclaw, Chris Morris, said that eurozone leaders remain as divided as ever over whether Greece has done enough to deserve further funds.
Ahead of the meeting, Finland’s minister Jutta Urpilainen played down the chances of resolving a dispute over providing more money to Greece.
Finland wants collateral in return for contributing money to a second Greek bailout.
But Ms Urpilainen said: “Unfortunately I don’t see that we can find a solution tonight.”
And Austria’s finance minister refused to rule out an eventual Greek default.
Geithner Believes “Woods Populated by Pixies”
The quote of the day goes to Jamie Robertson of BBC World News:
“There may be a few people who still believe Greece will not default on its debt, but my suspicion is most of them also believe elephants can fly and the woods are populated by pixies.”
In a sense, Geithner is correct. Infighting should stop. However, needs to with the bus in a logical spot, not in woods populated by Geithner loving Pixies. The logical spot is default, with further talk of a Eurozone breakup, not with everyone bowing to Geithner and Pixies.
Foe more on the reasons a Euro breakup is inevitable, please see Eurozone Breakup Logistics (Never Believe Anything Until It’s Officially Denied)
Mike “Mish” Shedlock
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