The only way Merkel could get the German Parliament to agree to the bailout fund was to remind them of the cost of failure. She raised the specter of World War I and World War II. She said she couldn’t guarantee peace without the fund. She said, “If the euro fails, Europe fails.” Still the vote was 503 for and 89 against with 4 abstaining. It was not unanimous. Maybe she needed to bring a photo of Hitler, too.
Late in the day Sarkozy surfaced boasting about the agreed upon 50% write-down for the Greek debt. He also talked about raising the fire power of the European Stability Fund four or five times. He didn’t say anything about recapitalizing banks or how to leverage the bailout fund.
One can’t help but see undercurrents. Hopefully the undercurrents won’t be strong enough to tear everything apart.