Europe, Asia, brace for Greek election

June 15, 2012 at 3:44 PM
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PARIS, June 15 (UPI) -- Financial leaders in Europe and Japan said they were prepared to react to a market jolt that might occur after the Greek election Sunday.

Speaking to economists in Germany, European Central Bank President Mario Draghi said, "The Eurosystem will continue to supply liquidity to solvent banks where needed."

Draghi also said he was working with President of the European Council Herman van Rompuy and President of the European Commission Jose Manuel Barroso to put together a region-wide financial plan, The New York Times reported Friday.

In Britain, Chancellor of the Exchequer George Osborne said, "we are not powerless in the face of the eurozone debt storm."

The governor of the Bank of Japan, Masaaki Shirakawa, said the bank was "prepared to take all possible measures to ensure the financial system does not come under threat."

The central bank in Switzerland also said it was ready to react to the election in Greece that could decide the fate of the eurozone.

The election pits the pro-bailout New Democracy party against the radical Syriza party, which has pledged to toss out much of the bailout program that has meant higher taxes and spending cuts, although it has kept Greece from falling into default.

Should Greece go into default, it would be forced to exit the 17-nation eurozone and adopt its own currency, which could trigger a capital flight from Greece and from Europe in general.

A top French official said German Chancellor Angela Merkel and other conservatives who support austerity budgeting and fiscal discipline are driving much of Europe into a serious slump through "blind ideology."

French Minister of Industrial Renewal Arnaud Montebourg said Merkel, the "German right" and other increasingly partisan conservatives were to blame for the eurozone's austerity-driven downturn.

"Certain European leaders, led by Mrs. Merkel, are fixated by blind ideology," he said in remarks quoted by the British newspaper The Daily Telegraph.

Merkel has warned the German Parliament the agenda of next week's Group of 20 summit in Mexico would be dominated by the euro crisis.

She said there are limits to what Germany can do to save the eurozone economy, but she also spoke about her desire to maintain European unity.

"Germany is strong, Germany is the economic engine and ... the anchor of stability in Europe," she said.

Her country would use "its strength and its power to use for the well-being of people, not just in Germany, but also to help European unity and the global economy," she said.

"But Germany's strength is not infinite," she said.

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