Business Insider
January 29, 2012
Greece has angrily rejected a German proposal that would co-opt control of the struggling country's budget in exchange for the next round of bailout funds to keep it afloat, according to the BBC.
In an interview with local television, Greece's education minister and former EU Commissioner Anna Diamantopoulou even called it, "the product of a sick imagination" (via the Telegraph).
Greek Finance Minister Evangelos Venizelos even said today in a report from the Greek eKathimerini, "Whoever puts before a people the dilemma of choosing between financial assistance and national dignity disregards basic historical lessons."
However, the Telegraph reports that the IMF, too, has signaled its support for more EU control of Greece's budget. And if the IMF is on board with the plan, this could be a momentous sign.
We've argued before that the odds of private investors going through with a "voluntary" plan to impose haircuts on Greek bonds are incredibly small, regardless of whether or not representatives of the banking sector can come to an agreement with Greek officials. Beyond legal challenges, a high-handed effort to skirt CDS payouts would destroy confidence in CDS altogether, and in EU leaders' willingness to play by the rules.
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