It is three years shy of the 100th anniversary of World War I, the First World War, or the Great War. This is no way to celebrate the men who laid down their lives with useless slaughter so their troops could advance a few yards in the mud or at best hold onto their entrenches positions. The European Union was created in the aftermath of World War II, the Second World War. The member sates ought to value it enough to make sacrifices to keep it together.
Instead Germany’s lower house of Parliament approved a non binding motion to support further “tranches”. They will continue to support the current 110 billion euro package of 2010 and the new aid package for the next two years only if the IMF assistance is assured and only if there is adequate participation by private investors.
On the other hand, Jean-Claude Trichet’s minion, Stark, said, “The ECB can’t compromise without threatening its credibillity.” He claims that if the Germans have their way, the Greek banking system will be crippled.
It doesn’t help that if you listen carefully you discover that Jean-Claude Trichet and Wolfgang Schauble really don’t disagree with each other at heart. They both think that the Greeks can’t pay back their debts and that default of some sort is inevitable. The only disagreement is about a smoke and mirrors arrangement of the ECB called the “gentlemen’s agreement” or the “Vienna Accords”. The Germans insist that everything be on the table. The ECB wants everything hidden from view. According to Trichet, it’s OK if the private banks buy more bonds from the Greeks with a new, longer term maturity. But they must do it voluntarily and without signing anything first. This implies a lot of jawboning behind the scenes, arm twisting out of public view, a lot of what Americans would call “political intrigue”.
The ECB should consider if this sort of trench warfare that doesn’t accomplish anything is really appropriate for the twenty-first century. After all, this was how the twentieth century began in the most inauspicious fashion in history. After all, we don’t want those Vienna Accords to become another Treaty of Versailles.