ECB’s Weber Sees Threat of ‘Grave’ Greek Contagion

By Gabi Thesing

May 5 (Bloomberg) -- European Central Bank council member Axel Weber said Greece’s fiscal crisis is threatening “grave contagion effects” in the euro area as stocks fell around the world and riots in Athens left three people dead.

“There is a threat of grave contagion effects for other member states in the monetary union and increasing negative feedback loop effects on capital markets,” Weber said in a statement today as German lawmakers in Berlin debate the proposed rescue of Greece. “All in all, Germany’s contribution to the aid package for Greece is justifiable.”

The euro is tumbling as the Greek fiscal crisis spreads to other indebted nations such as Spain and Portugal. Moody’s Investors Service today placed its Aa2 rating on Portugal’s debt on review for a possible downgrade. In Germany, Chancellor Angela Merkel appealed to parliament to approve the country’s 22.4 billion-euro portion of the joint European Union- International Monetary Fund bailout amid public opposition.Read more