Wolfgang Schauble, Germany’s Economic Minister, still insists upon a restructuring of the Greek debt. He suggests a 7-year bond maturity extension plan vis a debt swap. Bond holders would shoulder some of the burden. That is what the German taxpayer will tolerate — nothing more.
How will this stand off be resolved? The ECB suggests a “gentlemen’s agreement” similar to the “Vienna Accords”. When the Greek bonds mature the banks will automatically buy new bonds.
Germany warns that is smoke and mirrors. Gentlemen’s agreements won’t work. Only austerity programs will.
It’s like the clash of the Titans. Who will win? Trichet or Schauble? Only time will tell. At least this time Germahy’s attempt to create a new kind of economic empire won’t end with Dresden firebombs. Perhaps there will be a financial panic or a second recession. But those are nothing compared to the invasion of Berlin and forty-five years under the Iron Curtain. It’s a new day, and everything’s in the numbers.
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