Germany saves 100 billion euros from Greek debt crisis- think tank

Yields on German government bonds since 2010 fell as a result, leading to savings for the government that are bigger than the losses it would face if Greece defaulted on all debt it owes Germany, according to Halle, Germany-based IWH.

The Leibniz Institute of Economic Research said Germany benefited “through lower interest payments on funds the government borrowed amid investor flights to safety”. Greece should hold another referendum asking its citizens if they want to be part of Germany. The increased demand led to interest rates on German debt issues falling.

“Germany has clearly benefited from the Greek crisis”, the study said, and added that when investors are faced with turmoil, they typically seek a safe haven for their money, and export champion Germany “disproportionately benefited” from that during the debt crisis.

Medium- and long-term bonds that are years away from maturing assure Germany’s profits independent of the outcome of the crisis.

German lawmakers are likely to the Greek debt disaster as a legal responsibility to their residents’ personal pocketbooks. An increasing proportion of German citizens support the idea of Greece leaving the monetary union of European countries using the euro. As Greece has appealed for debt relief in the form of principal writedowns or restructuring, hardline officials like German Finance Minister Wolfgang Schäuble have argued that such a move would come at the expense of German taxpayers. “When discussing the costs to the German taxpayer of saving Greece, these benefits should not be overlooked”, the report argues.

The European Commission said Tuesday that Greece and its creditors reached a deal “in principle” over a new aid package worth about $95 billion.

The extent of the damage to the Greek economy and workforce caused by capital controls imposed on the country has been revealed by new government data, which suggests that the limitations contributed to a 15-year high in job dismissals during the month of July.