The interest rate on two-year Greek notes has climbed to 24.99%, on fears of debt restructuring, aka, bankruptcy.
Even more pressures on Greece developed over the weekend, the result of German Chancellor Angela Merkel’s Free Democratic Party coalition partner signalling a hardening of its stance on aid to Greece and the other PIIGS.
At a convention today, Economy Minister Philipp Roesler called for penalties on bailout recipients that miss debt-reduction targets. It appears that as many as 50 coalition lawmakers are ready to reject the post-2013 euro rescue fund when it goes to parliament, enough to make Merkel reliant on opposition votes.
FDP lawmaker Frank Schaeffler, who last year called for Greece to sell its islands to cut debt and who favors ejecting states from the euro “at short notice” in cases of rule breaking, said that “a good many Free Democrats share the view in private that something is going badly wrong in solving this crisis.”
As many as 50 coalition lawmakers are prepared to join his revolt against the European Stability Mechanism due to take over from the current rescue fund in mid-2013. That’s an increase of at least 10 votes in the past three weeks, enough to eliminate Merkel’s 41-seat majority over the opposition when the ESM goes to a vote after the summer recess, according to Bloomberg.
Twenty percent of Germans view Merkel’s decision last year to help Greece as “right,” according to a poll published May 8 by consumer survey company GfK SE. Another 47 percent of respondents said the decision was “wrong".