Wolfgang Schauble has a new challenge on his plate. Italy and Spain may not be able to participate in the next bailout payment to Greece in September, the one due under the first bailout plan that was agreed upon in 2010. Why not? Italy and Spain have been forced to sell their sovereign debt at a higher interest rate. So Schauble has to work out a system whereby those two countries don’t have to pay anything this time around. In other words, he will let them opt out.
This could set a dangerous precedent. If the third and fourth largest economies in Europe are allowed to opt out of a bailout plan, that might leave Germany and France holding the bag. Schauble certainly doesn’t want that! All those irate German taxpayers would decide they wanted a different government with a new Chancellor instead of Angela Merkel. And Merkel would certainly hold her Finance Minister responsible for such a fall from grace.
Perhaps Schauble should suggest that the European bailout fund take care of the deficit. The only problem with that is that it is a very new thing. IT’s not fully set up yet. And who knows about its funding and where it comes from. Nobody, not even Schauble, can say whether it can make the 5.,8 billion euro payment to Greece in September.
But he is a brilliant Finance Minister. We are sure he can come up with something original that the German taxpayer will buy and at the same time will let Germany off the hook for giving Greece an outright sum of money that doesn’t have to be paid back.