U.S. analyst says Germany must urge the IMF to offer some sort of face-saving measure for Greece or risk further economic fallout. Deborah Lutterbeck reports.
With Greece poised to default on a loan to the IMF Tuesday, a U.S. analyst says the focus should be on Germany, Greece's biggest creditor.' Chairman Of Sonecon Economic Advisory Robert Shapiro. (SOUNDBITE) (English) ROBERT SHAPIRO, CHAIRMAN OF SONECON ECONOMIC ADVISORY FIRM, AND FORMER UNDER-SECRETARY OF COMMERCE SAYING: "The real problem is Germany. If Germany put pressure on the IMF, I think Christine Lagarde would go along." German Chancellor Angela Merkel ruled out new negotiations with Greece until after it votes on a proposal from creditors, leaving virtually no hope to avert a midnight default despite a plea from Athens for a last-minute bailout extension. It's a dangerous game says the former U.S. Undersecretary of Commerce. (SOUNDBITE) (English) ROBERT SHAPIRO, CHAIRMAN OF SONECON ECONOMIC ADVISORY FIRM, AND FORMER UNDER-SECRETARY OF COMMERCE SAYING: "The most important thing is for Europe to communicate to global investors that they will not allow a failed state inside the Eurozone. The thinking of a lot of Europeans, in particular, inside the German government is exactly the opposite. A failed state inside within the Eurozone would send a message to the other members of the Eurozone that they have to clean up their acts more. That's a dangerous game of chicken and we could all be injured if their calculations are off and their calculations have been consistently off for the past three years." If Greece misses its payment, it will be the first time in the history of the IMF that an advanced economy has defaulted on a loan from the world's financial backstop, putting Athens in the same bracket as Zimbabwe, Sudan and Cuba.