BERLIN/Athens (Reuters) - fresh fears that the Greece will have to restructure its mountain of debt, may be sent as early as this summer, the euro and some prices of binding the euro tumbling Monday block debt crisis intensified.
Sources of the German Government said Reuters in Berlin that they do not believe the Greece, which has sealed a rescue of 110 billion euros ($158 billion) of the EU and the IMF, a year ago, would make all summer without a restructuring.
The confidence of the markets is also affected by a new threat to rescue awaiting the Portugal, the rise of the anti-euro party in Finnish elections.
The anti-euro party of true Finns scored big gains in a vote on Sunday and pledged to push changes to a Portuguese rescue by the European Union which is expected to total 80 billion euros, when it is finalized by a delay mid-May.
After a brief lull in the debt crisis of the EU in early 2011, it exploded again, and some analysts are now openly speculate that Greece and possibly in other countries could finally forced to leave the block.
"You can see some countries decided to leave the euro because they deal with the force fiscal straitjacket it imposes on them," Andrew Lynch, a manager at Schroders Fund, stated to Reuters Insider.
Greek debt restructuring would be the first by a Western European nation in over half a century and represents a challenge for policy makers of the EU, of the difficulty in reconciling the interests of their citizens with the expensive steps necessary to preserve the integrity of the 17-nation currency zone.
Greece, faced with a burden of debt which is expected to swell to 160% of GDP in 2013, has repeatedly denied it intends to restructure. Greece Bank Governor George Provopoulos, warned Monday that he would have "of the catastrophic consequences."
"To be clear, the Greece has the money,"when considering public wealth that could be privatized, Member of the Executive Council of the ECB Lorenzo Bini-Smaghi told Reuters Insider before a New York event sponsored by Chatham House, home of the Royal Institute of International Affairs.""
"You have the possibility of sale of property and accelerate privatization or going in the direction of the major financial collapse, which happen in the event of default or restructuring."
But German daily Die Welt quoted an anonymous Greek Minister by saying that it was only a matter of time before the Government took such an approach.
And Government sources in Berlin told Reuters a form any of the debt restructuring now seemed inevitable and suggested Greece evolve quickly, rather than wait until its funding situation gets critical next year.
"Decisive voice in the Federal Government expect that the Greece will not make all summer without a restructuring", said a high-ranking German coalition source.
RISK OF CONTAGION
European shares sank to their lowest close in three weeks Monday, and the euro fell more than two hundred at its lowest level against the dollar briefly trade below $1.42, in almost two weeks as the euro-zone debt crisis rattled the market confidence.
US stocks also took a blow after Standard & Poor cut its credit for the United States to negative prospects in a reminder that the eurozone is not alone in suffering from deficits and high debt.
The cost of insuring Greek debt against default jumped and Spanish bond of 10-year yields rose to a record high close to 5.6%, while yields Portuguese hit a new peak of 9.4%.
European officials have been careful to note that the Spain can avoid the contagion that has forced the Greece, the Ireland and Portugal to rescues. Much larger economy could strain resources block breaking point, if it succumbed to the need for a debt rescue plan.
Data Monday showed a decline accelerated in Spanish real estate in the first quarter and increased yields at the auction of the Treasury of the Government.
Spain faces an additional criterion of the application of its debt on Wednesday when it aims to raise 2.5 to 3.5 billion euros with two issues long term.
DEBT GREEK LARGER THAN ARGENTINA BEFORE DEFAULT
To return the economy of the Greece to a sustainable path, most economists agree that it should write off the coast about half of the value of its outstanding debt, striking the private creditors with significant "haircuts" on their holdings.
The Greece of 325 billion euro debt load is nearly double the level of most economists regard as sustainable and much larger than that of the Argentina, when he did not at the end of 2001.
But EU leaders have promised no step that the holders of private debt to pay before 2013.
Doing so in the short term, when the block remains vulnerable, could raise pressure on the Portugal and the Ireland to restructure their debt also, threatening the balance sheets of banks in the euro area.
Winning creditor agreement for a more gentle form of restructuring, as a voluntary extension of debt maturities, is likely to be difficult.
And even if it does not work, it would probably not enough of a tooth to in charge of Greece debt to ensure viability long-term. Markets may view the option "restructuring lite" simply the first step in a restructuring of two floors, with the real pain still to come.
BAILOUT OF PORTUGAL AT RISK
Meanwhile, in the neighbouring Portugal, representatives of the European Commission, European Central Bank and the Fund International Monetary are met officials Monday to define the third rescue conditions of the block within a year of several billion euro deals with the Greece and the Ireland.
However, after the election in Finland, this rescue plan could come under threat.
Perussuomalaiset anti-euro party what big gains in Sunday vote, the wish to push changes to the Portuguese rescue.
It may take weeks to know if true Finns will now be part of a new Government in Helsinki and be able to respond to this threat. The party which won the most votes in Finland is pro-European and seems unlikely that his position of compromise, even if it leads to a coalition with the true Finns.
But the result highlighted the importance of public anger in Northern Europe to the series of agreements for assistance for the countries of the euro disaster area that poorly managed their economy and finance.
"It is extremely difficult for politicians in Europe ignore the strong signal of the Finland, said Steen Jakobsen, Chief Economist of Saxo Bank." The result could mean away rescue packages with no sharing by banks and private investors in the burden. ?
Any delay in the approval of the rescue for the beyond Portugal agreement could leave the country scrambling for new sources of funding. He faces an election on June 5 and has warned that it will run more money at the same time.
(Report and written by Noah Barkin; other reports by Al Yoon in New York)
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