The German Chancellor has decided to do the only thing she was ever going to do.
It will come as no surprise to committed Sloggers that Spiegel today carries a story saying that Angela Merkel will not be allowing Greece to exit the eurozone.
On May 28th this year, I posted this:
‘Finally – and this is the last time I’ll say it – Greece isn’t going to leave the eurozone: Draghi won’t let them, the Greeks themselves are wrongly terrified by the idea, and anyway a more pro-bailout Party line-up will emerge after the June 17th elections. Somehow in some way, there will be a compromise at the end of a long stand-off.’
Aside from the bollocks about that being the last time I’d say it, the prediction above has proved pretty spot on. This is a briefly extracted summary of the Spiegel stuff:
‘Merkel has already made up her mind. She has sided with French President François Hollande and the European Commission. The report from the troika will undoubtedly conclude that Greece can remain in the euro zone. Merkel’s newfound determination to rescue Greece is a remarkable U-turn for the chancellor. Until recently, Merkel was prepared to drop the country if it failed to meet its commitments. But she now regards a Greek departure from the euro zone as entailing too many risks.’
The ‘only just decided’ stuff I think is almost certainly tosh. On August 12th, I posted ‘Deal has been done to forgive residue of debt’:
‘Now a close French diplomatic contact has told The Slog:
“Brussels or Berlin…or both…or others…have given Samaras a big reassurance that if he sticks with the [austerity] programme, Greece will not be thrown out of the euro. Those same people have given similar assurances to the key players in the IMF and bondholder groups…that if they take another haircut, the EU will pay off the balance and give them their money back. The secrecy is to do with Merkel being flayed alive at home if they thought she was doing this, and Draghi ensuring that his central bank doesn’t become an open door for insolvent States and panicky bondholders.”’
Today, Spiegel asserts, ‘If the Greeks need more money in the fall, the payment tranche will be increased accordingly. Later transfers would be reduced in return.’
Sounds like debt forgiveness to me. On August 28th, The Slog had this to say:
‘I have said from the start of this ridiculous tableau that there would be a Schäuble of bombast followed by a slither of softening-up of spin, followed by the deal which was scoped out a fortnight ago. This is just the beginning. The fact is that there is no real anxiety in Washington about a possible Greek exit. As I’ve maintained from Day One, there isn’t going to be one. Samaras has alternative fish to fry, and the EU knows it. It also doesn’t want Greek instability at the same time as Spanish banking collapses.’
‘If Greece withdrew from the euro zone, her advisers fear that this could mean that it would eventually be necessary to create a common “debt union” to stabilize problem countries like Italy and Spain.’
To be fair to Spiegel’s correspondent, he obviously thinks the Chancellery ‘changed her mind’ line is guff too. He writes, ‘Attentive observers already noticed the chancellor’s apparent change of heart two weeks ago. Merkel has suddenly discovered a deep affection for the downtrodden people of Greece. She compassionately expressed empathy for “what many in Greece have to suffer,” and said that “it does make one’s heart bleed.”
Whether you think Frau Doktor Merkel has feelings or not, the assumption of the Spiegel piece overall is that she is still in the European driving seat, which of course isn’t true at all….as recent events have shown. Mario Draghi stuck two fingers up her nose on the bond-buying bonanza, and the Greek prime minister Antonis Samaras has failed to deliver the approval of his two coalition partners for the €11.5bn of cuts – both of whom think the Germans will negotiate in the end.
What’s more, the Karlsruhe Court is stalling on the ESM decision, and the troika has not accepted that the measures being proposed by the Athens coalition will cut the mustard.
So while Slog de Big’ead is very happy to be proved right, Spiegel is – for my money – vastly overestimating the degree to which Geli is still The Supreme Being.
And so it goes on. George Soros today piped up (as George always does when minded to directionalise something) and told Berlin it was “time to lead or to leave”. You read it here last May: Germany will leave the eurozone before Greece does.