Germany only pretended to go along with France’s idea several weeks ago that there would be a gentlemen’s agreement about the Greek bonds. All along it wanted to involve private bond holders in a solution. Now it is insisting upon it, and as Germany goes so goes the euro, which is really the old German mark. Even the Wall Street Journal in its article, “Europe Sets Summit On Greek Debt”, on Saturday, July 16 says “Berlin will impose its will on the Euro Zone”.

Sounds like Adolf Hitler? No quite! This is the kind of union that other countries WANT to be part of because it gives them a more prestigious currency. And if Germany sets the rules, they must go along with it. The question now is not whether they will do it but how and when.

Germany thinks that a Greek default is inevitable no matter what. They would rather have a manageable default so things don’t get out of hand and cause another recession.

The Germans are betting that this selective default won’t affect the long-term confidence that investors have in Germany’s currency. They think they can safely ignore ratings agencies.