Greece needs decade to get competitive

Reuters
September 24, 2011

German Finance Minister Wolfgang Schaeuble said in a magazine interview published on Saturday that Greece would not be able to return to capital markets next year and would need a decade to make its economy competitive.

Schaeuble told business weekly WirtschaftsWoche that it was "clear that Greece will not be able to return to capital markets in 2012, as we thought in 2010."

"Greece will need a decade rather than a year to get fully competitive," added the minister from Chancellor Angela Merkel's center-right government.

With anxiety about a possible Greek sovereign debt default rising in Europe, the chief economist of German insurer Allianz (ALVG.DE) said a major haircut for Greek government bondholders would only increase the risk of contagion in the euro zone.

"I don't believe the time is right for a debt haircut like this," Michael Heise told German radio, in response to Greek media reports -- denied by Athens on Friday -- that one option was an orderly default with a 50 percent haircut for creditors.

The economist said such a default scenario would create more problems and increase the risk of contagion to other euro zone countries, which would create "a very, very serious situation."

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