It doesn’t matter that the Greeks have passed the austerity measures amidst protests outside Parliament. German banks are objecting to a French proposal about the next EU loan to Greece because it is not 100% default-free. They remind the French that 64 billion euros worth o government bonds are coming due in the next 3 years. The government creditors of the EU, like Germany, don’t want to have to pay investors off.

They hope that France will come to its senses by Sunday, July 3 when the European finance ministers are to meet in Brussels. They are seeking private sector partiicipation in the bailout.

What is this obnoxious French proposal? It would be to get private bank holders of maturing bonds to agree to reinvest half of the proceeds in 30-year Greek bonds at the base inerest rate o 5.5%. This figure could rise to 8% if the Greek economy grows. An additional 20% top quality O coupon bonds which pay no annual interest but increase in value yearly will be added to the proposal to help pay back the loan.

Still the Germans shake their heads no. Wolfgang Schauble is probably leading the protests and demonstrating all over the place with a vigor that would challenge the massive Greek protests. But the Germans ought to look into themselves. Why are they resisting what they will surely have to do in the end to preserve their currency union? They must guarantee the Greek debt.