US growing impatient on Greece rescue effort

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US growing impatient on Greece rescue effort

By Gregor Waschinski (AFP) – 2 hours ago

WASHINGTON — The delay in finding a durable solution to the Greek debt crisis is

causing impatience in the United States, where there is mixed support for any

new bailout.

The US has been watching the Greek situation for more than a year and now is

paying closer attention to the latest developments from Germany, France and

other EU members with the crisis threatening the overall global economy.

" The US has been closely following the euro crisis since the outset. It has

understood the potential upset that it could have on the world and the US

economy, " said Domenico Lombardi, senior fellow at the Brookings Institution in

Washington.

Officially, the US administration has simply urged Greece to undertake reforms.

But some irritation is showing.

US Federal Reserve chief Ben Bernanke said the Greek sovereign debt crisis poses

grave threats not only to Europe but to the US and overall financial system.

" If there were a failure to resolve that situation, it would pose threats to the

European financial systems, the global financial system and to European

political unity, " he told a news conference.

Bernanke stressed that the Fed is not part of the negotiations to resolve the

crisis, but has been " kept well-informed, " citing a conference call over the

weekend with the G7 (Group of Seven) rich countries on the issue.

Greek Prime Minister Papandreou is negotiating a new bailout worth some

110 billion euros, as Europe enters a crucial period to ringfence the euro

crisis.

While he said it was " too early to give a precise amount, " the final sum would

be " similar to the first aid package " in May 2010, which was not enough to

prevent the government in Athens from slipping ever deeper into the red.

Greece needs to impose ever more unpopular austerity on a restive people on June

28, with the European Union placing its faith in Athens to clear parliamentary

opposition and a general strike.

US Treasury Secretary Geithner meanwhile called on European Union

authorities to speak with a single voice on the Greek debt crisis.

" I think it would be very helpful to have Europe speak with a clear, unique

voice over a strategy " to tackle the crisis, Geithner said at a Washington

conference.

" It's very hard for people who invest in Europe to understand what the strategy

is when you have so many voices. "

Sheila Bair, head of the Federal Deposit Insurance Corp., said bond investors

may need to take a " haircut " on a new Greek aid plan.

" Perhaps that Greek debt needs to be restructured, and people who are holding it

are going to have to take some losses, " she said.

Ed Yardeni at Yardeni Research said even though some see the situation as a

potential calamity like the Lehman Brothers failure in 2008, Americans are

others " are getting weary of watching the Greek drama playing out over and over

again. "

" While everyone knows that a Greek default could play out as Lehman II, there is

a widespread view that it is inevitable. So let?s get it over with and deal with

the consequences, " Yardeni said.

Yardeni said a Greek default " could trigger a Lehman-like contagion " but that

" there would also be a Lehman-like response by the ECB (European Central Bank)

and the Fed to flood the financial system with liquidity and provide emergency

lending facilities to contain the contagion. "

Kotok, chief investment officer at Cumberland Advisors, said some fears

may be overblown.

" Will Greece eventually right its sinking ship? We are skeptical. So are most

observers, " he said.

" But we note that Turkey did it and is now a powerful emerging market. We

remember the Asian contagion in 1997-98. The world did not end. We recall the

collapse of the Russian ruble. We saw the peso crisis in 1994. Full collapse and

demise is not a foregone conclusion. Look at the evidence from history. "

Copyright © 2011 AFP. All rights reserved.

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One would think the US would spend more time looking at its own debt crisis.

Administrator

US growing impatient on Greece rescue effort

By Gregor Waschinski (AFP) – 2 hours ago

WASHINGTON — The delay in finding a durable solution to the Greek debt crisis is

causing impatience in the United States, where there is mixed support for any

new bailout.