Germany Isn't Even Discussing a Greek Bailout

According to Ambrose Evans-Pritchard, when EU members met recently to discuss the fragile Greek financial situation, and a possible bailout, German Chancellor Angela Merkel had other things on her mind:

The white smoke has at last emerged from the Bibliotheque Solvay in Brussels, but global markets do not like its odour. The Greek rescue plan agreed by EU leaders after a week of leaks is strangely thin, raising suspicions that Germany, Holland and the creditor states of Northern Europe still cannot agree on the terms of any bail-out.
The euro tumbled 1pc to a nine-month low of $1.36 against the dollar and Club Med debt yields jumped as investors read the summit text, searching in vain for details of debt guarantees or bilateral loans, or guidance on an EU eurobond. All they found was an expression of "political will".

"Euro area member states will take determined and co-ordinated action, if needed, to safeguard financial stability in the euro area as a whole. The Greek government has not requested any financial support," it read.

The 27 leaders never even discussed how they might shore up Greece or the rest of Club Med. German Chancellor Angela Merkel said she was not willing to broach the subject at all. The only relevant topic was whether Greece was complying with Treaty obligations, and how the country would slash its budget deficit from 12.7pc to 8.7pc this year – in a slump

It is really hard to see how a bailout gets done, unless German banks are so exposed to PIIG debt that they ratchet up the pressure on Merkel even more. Otherwise a Greek default becomes more and more of a possibility with each passing day. A breakup of the EuroZone is not as strong a possibility, but can also not be ruled out. If Greece goes bankrupt, there has to be at least one of the other PIIGS who will think they are much better off on their own, by attempting to reintroduce their former currencies.