Merkel Lessens Fears Over Greece

Wall Street Journal
September 14, 2011

German Chancellor Angela Merkel sought to quash talk that cash-strapped Greece might have to declare bankruptcy soon or even leave the euro zone, rebuking her junior coalition partner for fueling market speculation about Greece's fate.

Ms. Merkel's comments helped to calm jittery markets on Tuesday, and contributed to a sharp rebound in French banking stocks, which have been hammered recently by fears of a chaotic Greek bankruptcy that could inflict painful losses on banks elsewhere in Europe.

The chancellor stressed that Germany remains committed to financing Greece through the euro zone's bailout funds until Greece can repair its own finances through austerity measures. She gave a thinly veiled rebuke to German politicians, including her own economics minister and Deputy Chancellor Philipp Rösler, who have suggested in recent days that Greece should be allowed to go bust.

"I think we will do Greece the biggest favor by not speculating much, but instead encouraging Greece to implement the commitments it has made," Ms. Merkel told RBB Inforadio, a public broadcaster in the Berlin region. "What we don't need is unrest in the financial markets—the uncertainties are already big enough," she said.

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