Friday, March 19, 2010

A Gefechtskehrtwendung

Also known as let the Americans IMF bailout Greece-RW

by Ambrose Evans-Pritchard

During the Battle of Jutland in 1916 or Skagerrakschlacht as it is known in Germany, the Imperial German Navy carried out a brilliantly executed “battle about turn” after straying into a death trap beneath the guns of the Royal Navy’s Grand Fleet.

Admiral Scheer’s High Fleet vanished into the mists within four minutes — his retreat covered by a torpedo attack and the “death ride” of four German battlecruisers that charged into Admiral Jellicoe’s guns in an act of supreme sacrifice. The actions saved the Imperial High Fleet. It has gone down in German history as the

I was unaware of this until it was brought to my attention by Commerzbank this morning in a note by their currency chief in Frankfurt, Ulrich Leuchtmann. He drew the parallel with the astonishing volte-face by German leaders yesterday in suggesting that Greece should go to the IMF for a rescue after all.

“A Gefechtskehrtwendung is a 180-degree turn that saves you. I think this may save Germany from a bail-out that they don’t like, that they can’t sell to German voters, and that creates legal problems under the no-bail-out clause of Article 125 of the EU Treaties.”

“We think the IMF is the ideal solution anyway, and would actually be good for the euro. It would establish discipline and avoid moral hazard. It is much easier for the IMF to enforce austerity conditions,” he said.

“The markets are still focused on the fact that we still don’t seem any closer to an EU rescue for Greece, so they are treating this IMF story as negative,” he said.

I agree entirely with Dr Leuchtmann. The EU top brass have of course been saying for weeks that it would be intolerable to let the camel’s nose of Washington’s IMF under the eurozone tent. Eurogroup chair Jean-Claude Juncker said it would shatter the credibility of monetary union. But is this all EU religious stuff: ideology and totemism.

Read the rest here.

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