Papandreou Says Obama ‘Supportive’ of Measures on Greek Crisis
March 09, 2010, 7:50 PM ESTBy Kate Andersen Brower
March 10 (Bloomberg) -- Greek Prime Minister George Papandreou said U.S. President Barack Obama expressed support for measures being taken to deal with Greece’s financial crisis.
Papandreou said after meeting with Obama at the White House yesterday that he also got a “positive response” about European initiatives to curb market speculation. The issue will be “high on the agenda” at the next meeting of the Group of 20 nations, he said.
“We’re not asking for a bailout, we’re not asking for financial help from anyone,” Papandreou told reporters. “What we are doing is first of all revamping our own economy. We are taking measures to put our economy on the right path.”
Obama made no statement after the meeting. Papandreou said he described for the president the “necessary structural changes” he’s making in the Greek economy, including cutting government spending.
European Commission President Jose Barroso said yesterday the 27-nation region will consider banning “purely speculative” credit-default swaps, and German Chancellor Angela Merkel called for a crackdown on derivatives trading to prevent a rerun of the economic turmoil in Greece.
Papandreou, on a three-day visit to Washington, warned in a speech two days ago that the crisis in his country posed financial risks to the U.S. as well as to the EU.
Economies in the euro region grew 0.1 percent in the fourth quarter of 2009, and steps taken to stem the fiscal crisis may impede efforts to spur greater growth.
Drag on Economy
That, in turn, may act as a drag on the U.S. economy and impede Obama’s efforts to bring down the country’s unemployment rate, which was 9.7 percent in February, down from 10 percent in December.
Obama’s spokesman, Robert Gibbs, said the administration believes the European Union should take the lead in dealing with the Greek crisis.
“This is an issue for the European Union,” Gibbs said at a briefing as Papandreou and Obama met. “We believe they have and possess the capabilities to solve that.”
Papandreou and Greek Finance Minister George Papaconstantinou also met U.S. Treasury Secretary Timothy F. Geithner yesterday. They discussed Greece’s budget plan, as well as efforts by Europe and the U.S. to improve financial oversight and increase supervision over derivatives markets, the Treasury Department said in a statement.
The euro is down about 5 percent this year against the dollar partly because of a concern a Greek default would destabilize the 16-nation monetary union.
‘Unprincipled Speculators’
Papandreou said “unprincipled speculators” are liable to spark a new global financial meltdown.
He compared investors buying protection on underlying assets they don’t own -- so-called naked swaps -- to someone taking out fire insurance on a neighbor’s house. They then have an incentive to burn it down to collect, he said.
Greek officials have been working to reduce the nation’s budget deficit of 12.7 percent of gross domestic product, the largest in Europe, while they lobby the EU for an aid package. Investors had been growing less skittish after Greece sold 5 billion euros ($6.8 billion) of bonds last week and passed 4.8 billion euros of spending cuts, reducing the risk of default.
--With assistance from Nicholas Johnston and Rebecca Christie in Washington, Rainer Buergin in Berlin and Ben Moshinsky in Brussels. Editors: Christopher Wellisz, Don Frederick
To contact the reporter on this story: Kate Andersen Brower in Washington at kandersen7@bloomberg.net
To contact the editor responsible for this story: Jim Kirk at jkirk12@bloomberg.net.
