Merkel: Greek default would destroy faith in Europe

Reuters
September 25, 2011

Allowing Greece to default on its debt now would destroy investor confidence in the euro zone and might spark contagion like that experienced after the bankruptcy of Lehman Brothers in 2008, German Chancellor Angela Merkel said on Sunday.

"We need to take steps we can control," Merkel said, drawing a parallel between the Greek situation and that of Lehman, whose bankruptcy helped trigger the global financial crisis.

"What we can't do is destroy the confidence of all investors mid-course and get a situation where they say that if we've done it for Greece, we will also do it for Spain, for Belgium, or any other country. Then not a single person would put their money in Europe anymore."

In a one-hour interview on the euro zone crisis with the popular German talk show host Guenther Jauch, Merkel said she relied on the view of the International Monetary Fund (IMF) when assessing how to handle Greece.

As long as the IMF was convinced Greece's debt was sustainable, then she supported that position, she said.

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