Thursday, May 26, 2011

European Banks Fear Consequences of Unresolved Greek Debt Crisis

by David Zeiler

Seeking Alpha

May 26, 2011

Fresh signs of a possible default in Greece have revived a contentious debate between politicians and major banks in the European Union over what to do about the Greek debt crisis.

Yesterday (Wednesday) Greek Prime Minister George Papandreou had no success convincing opposition party leaders to support new austerity measures needed to comply with bailout terms set by the International Monetary Fund (IMF) and other European Union countries.

Without those measures, Greece will not receive the bailout money it needs to avert default. Default would destroy the country's credit for a decade, maybe longer.

Meanwhile, Bank of France Governor Christian Noyer, a member of the European Central Bank, spoke out against recommendations by Germany and other EU governments that Greek debt be restructured, calling it a "horror scenario."

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