Thursday 19 February 2015

In Germany ein Vertrag ist ein Vertrag. In Greek please?

Not as surprised as the markets and banks by Berlin's veto on Greece's request for a new loan. The Tsipiras government thought they had pulled a fast one by technically agreeing to ask for an extension is the current deal, but implying that they had no real intention of continuing the current cuts. Everyone else was just about happy to go along with it for the moment to avert an instant crisis. But it has long been my opinion that Germany has drawn a - possibly wiggly - line in the sand; but a line no less. There has been agreement between Frankfurt and Berlin that the single currency might need precisely such a test as this to survive long term. In other words they may not WANT the Greeks to leave the €  but have worked out that Greece is the best subject to test the rules on, and make clear that it's either the same rules for everybody or its back to doing money on your own. I do not see Wolfgang Schaeuble backing down. The Greeks might get money but they will have to offer more than vague promises. Merkel can do a Thatcher 'the lady's not for turning ' on this one. 

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