Greece blames US banks for crisis

16 May 2010 - 20:01 By Sapa-AFP

Greek Prime Minister George Papandreou raised the possibility of taking legal action against US banks, which he said bear "great responsibility" for Greece’s debt crisis. Prime Minister George Papandreou raised the possibility of taking legal action against US banks, which he said bear "great responsibility" for Greece’s debt crisis.

Asked in an interview with CNN whether Greece was the victim of US investment banks, he said: “This is where I think, yes, the financial sector—I hear the words fraud and lack of transparency. So yes, yes, there is great responsibility here.” When asked whether legal action were a possibility, Papandreou responded: “I wouldn’t rule out that this may be a recourse,” according to a transcript of the interview provided by CNN.

The Greek parliament is currently looking into deals Greek authorities carried out in 2000 with help from Goldman Sachs that allowed them to mask the extent of Greece’s debts through the use of complex financial instruments.

Papandreou said the parliamentary investigation would look at “how things went in the wrong direction and what kind of practices were negative practices.”

German Chancellor Angela Merkel has led criticism in Europe against banks’ role in the debt crisis, slamming “treacherous” practices during the Greek drama and urging governments to crack down on speculators hunting profits in the turmoil.

Greece is paying a painful price for its past overspending with the government forced to slash civil servants’ pay and pensions while raising taxes as a condition for a 110-billion-euro EU-IMF bailout.

Germany’s economy minister lashed out at the head of the country’s top bank over the weekend for casting doubt on Greece’s ability to pay back loans made to it under the EU-IMF bailout.

“At a time when the debate is being carried out so publicly, such a strong statement on the television is not helpful,” Rainer Bruederle was quoted as saying on the website of the financial weekly Wirtschaftswoche during a visit to Singapore on Saturday.

In an interview aired late Thursday, Deutsche Bank chief executive Josef Ackermann said he was “doubtful whether Greece will really be in a position to achieve” the repayment of billion of euros in emergency EU loans.

Ackermann’s comments weighed heavily on the German stock market and the euro, drawing fire from the press, with the Financial Times Deutschland saying his remarks were “dangerous for everyone” and “outrageous.”

A poll published Sunday in the Ethnos newspaper found that most Greeks, 58.8 percent, think their country will be able to steer clear of bankruptcy, while 36.6 percent considered default inevitable.

While 56.2 percent of the 1,028 people polled by the Marc SA institute considered the austerity measures to be “necessary”, 87.8 percent judged them to be “unfair”.

The EU and IMF have also agreed a package worth almost one trillion dollars designed to prevent any contagion in the eurozone from the Greek crisis and allow its members to restore their public finances to health.

But stocks and the euro continued to tumble last week as investors showed their doubt in the ability of European countries to make difficult budget cuts, prompting Spain, Portugal, Italy, and France to announce belt-tightening measures.

Merkel said Sunday that recent speculation against the euro “is only possible because of huge differences in the economic strengths and debt levels of member states.”

With the eurozone rescue package, “we have done nothing more than to buy time until we have brought order to these competitive differences and to the budget deficits of individual euro countries,” she told a conference of the Confederation of German Trade Unions.

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