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Lagarde: The situation in Greece is a close call

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In an interview with US television channel CBS yesterday, the chief of the International Monetary Fund, Christine Lagarde said that when you have a single currency and when you dont have a single or at least very closely coordinated fiscal policy then you run the risk of having part of the territory go into one direction and other part of the territory go into another direction. "And thats exactly what happened", she stressed.

Lagarde also noted that the divide exists between Northern Europeans -- the Germans, the Dutch and the Finns -- who are industrious, prosperous and frugal, and the Southern Europeans -- the Greeks, the Portuguese and the Italians -- who are much more relaxed about work, money, and paying their taxes.

Lagarde said it didnt matter much until 2008, when the global financial crisis rolled in, separating the savers from the spenders.

According to the chief of the IMF "you know, its like when the tide goes away, you see those that do not have their swimming costume on. And that was the case in Europe".

The largest of the countries left totally naked was Greece. The nation of just 11 million people was a half a trillion dollars in debt and unable to pay its bills, leaving Europe with a Lehman Brothers-like dilemma: either bail the Greeks out or let them go broke, a risky proposition that could trigger another huge financial meltdown.

"Theres still medicine to be taken. And thats whats happening in most of these Southern Eurozone states at the moment, plus Ireland".

The situation in Greece is a close call, lets put it that wa, Lagarde said.
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