Germany and China Refuse To Bailout Greece By Taking The Losses

The Germans and the Chinese do not want to buy insolvent nations debt. And who could blame them for that? Only politically driven liars such as Geithner and Trichet could come up with such silly ideas...

Bloomberg News - Sep 13, 2011 — China shouldn’t buy bonds issued by individual euro-area countries because their leaders and the European Central Bank are in disarray, said Yu Yongding, a former adviser to China’s central bank. 

“China has to wait until it can see a clearer road map by euro countries for solving sovereign-debt problems,” Yu, who is based in Beijing, said in e-mailed comments today. The nation is not a lender of last resort for “troubled countries,” he added.

Bloomberg News - Sep 14, 2011— Chinese Premier Wen Jiabao, facing calls to widen support for indebted European countries, signaled that developed nations should cut deficits and open markets rather than rely on China to bail out the world economy. 

“Countries must first put their own houses in order,” Wen said today at the World Economic Forum in the Chinese city of Dalian. “Developed countries must take responsible fiscal and monetary policies. What is most important now is to prevent the further spread of the sovereign debt crisis in Europe.” 

China can best contribute to the global economic recovery by ensuring steady growth at home, Wen said, calling on the European Union and U.S. to allow more Chinese investment in return.

Sept. 17 (Bloomberg) — Germany’s top two finance officials rejected using the European Central Bank to boost the euro-area rescue fund’s firepower, rebuffing a suggestion by U.S. Treasury Secretary Timothy Geithner.[...]
“We don’t think that real economic and social problems can be solved by means of monetary policy,” said German Finance Minister Wolfgang Schaeuble, speaking alongside Weidmann after the meeting of EU finance ministers and central bank governors. “That has never been the European model and it won’t be.” 

Neither German policy maker ruled out leveraging the backstop’s lending capacity, saying the feasibility of the idea depends on how it’s done. It wouldn’t be acceptable to leave the ECB with the risks from such an operation, said Weidmann.

Now the real question is: when will the markets and the politicians finally realize that there will be easy solution, and that Greece will default (first) and many many other sovereigns will follow? The sooner these uncertainties are resolved, the sooner the recovery can start.