Merkel caved today, agreeing to go along with the European Central Bank’s “gentlemen’s agreement” instead of insisting on restructuring of the Greek debt. But she did so not after listening to the Greek Prime Minister’s eloquent speech. He said, “We are at a critical moment. Ether Europe will write history, or history will write off the European Union.” Instead she paid attention to Alan Greenspan’s calculations of almost certain default if she didn’t compromise. She didn’t want to start a financial collapse in the EU.

As it is, it may still be too late. The Greek Prime Minister has a majority of only 5 seats. He just got rid of his Finance Minister and appointed Evangelos Venizelos. A vote of confidence is scheduled for Tuesday. If his Socialist government doesn’t survive, the new government may drop out of the EU anyway.

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Alan Greenspan

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