Even though the German government vehemently denies the possibility of a further haircut of the Greek debt, an ever-increasing number of economists in Germany believe that discussions for a new cut will initiate after the German elections in September.
According to Jorg Rocholl, associate professor at the European School of Management and Technology in Berlin and member of the German Finance Ministry’s science council, a new haircut is “inevitable”.
Mr. Rocholl explained to the Frankfurter Allgemeine Zeitung newspaper that the primary surplus documented is simply not sufficient to cover the payments of interest, therefore a debt restructure involving the reduction of debts by at least 50% is “necessary and inevitable”.
Professor Dr. Henning Klodt of the Kiel Institute for the World Economy asserted that the federal government in Germany “will announce that there is no alternative to a haircut, after the elections” and that lenders could face a 65% loss of their loans to Greece.
