Deutsche Bank considers the possibility of a haircut of Greece’s public debt by the end of the year ‘inevitable’, according to a report in German tabloid Bild.
The newspaper cites a classified Deutsche Bank internal circulation document which allegedly states that the Greek debt must be reduced by about 200 billion euros. And that, Bild alerts its readers, is expensive. It corresponds to about 700 euros for each citizen in the Eurozone, states Bild.
The report further notes that by the end of 2015 Greece’s public debt will be 340 billion euros, or 200 percent of Greek GDP, 140 percentage points more than the Maastricht treaty allows Bild points out. This means that no economist truly believes Greece will be able to repay its debts.
Europe expert Lüder Gerken, Chairman of the Centre for European Policy, told Bild: “Greece’s economy is broken, the consumption ratio is too high, the investors are missing. A haircut is economically inevitable, as well as a fourth rescue package. The only rehabilitation program that could act, is the Grexit. And even then the restoration of the Greek economy will take years “.
The tabloid however adds that should a haircut of the Greek debt be deemed necessary, the decision to carry it out will be less of a financial one and more of a political one, and it will be made after negotiations between Athens and its creditors.
