Tuesday, September 13, 2011

Merkel Disses Her Economic Minister and Signals Support for Greek Bailout

Walking a lone plank that threatens her political future, German Chancellor Angela Merkel dissed her own adviser and signalled that she was for the continued bailout of Greece. WSJ reports:
German Chancellor Angela Merkel sought to quash talk that cash-strapped Greece might have to declare bankruptcy soon or even leave the euro zone, rebuking her junior coalition partner for fuelling market speculation about Greece's fate...

The chancellor stressed that Germany remains committed to financing Greece through the euro zone's bailout funds until Greece can repair its own finances through austerity measures. She gave a thinly veiled rebuke to German politicians, including her own economics minister and deputy chancellor Philipp Rösler, who have suggested in recent days that Greece should be allowed to go bust...

Mr. Rösler, leader of the Free Democratic Party, junior partner in Ms. Merkel's conservative-led coalition government, wrote in a newspaper column published on Monday that Europe might have to put Greece through some sort of insolvency procedure in order the stabilize the euro. "There should be no taboos," his article in German newspaper Die Welt said.

Mr. Rösler's FDP, which is reeling from a series of electoral defeats and plunging opinion-poll ratings, has seized on the unpopularity of taxpayer bailouts of Greece as a way to win back voters, political analysts say. The party is fighting to avoid another heavy defeat in elections to Berlin's state legislature on Sunday, and has focused its Berlin campaign on the euro-zone debt crisis, with posters attacking proposals for common European bonds.
Bottom line: Merkel is in an impossible position, as a gloablist. Her allegiances are with the global banksters, but Germans are sick and tired of picking up the tab for the PIIGS. If she helps out the banksters, she loses even more domestic support. That's why we have from her the last minute support of PIIGS rescues. She's hoping not too many Germans notice.

Meanwhile, the real action is at the European Central Bank, where, for reasons unclear, ECB president Jean-Claude Trichet has become a prudent central banker and is not printing any euros. This could cure the eurozone of malinvestments and expanding government, if the EZ members bought into his program  and downsized their governments. The problem with this is that the EZ members under the most financial stress have populations that expect continued government handouts (Just like Karl Marx promised). Thus, spending goes uncontrolled, with no money to support it. This thing eventually explodes one way or the other. Either, the new ECB president Mario Draghi, who takes over 11-01-11, starts printing and creating a huge price inflation or he maintains the Trichet tight money policy and the eurozone disintegrates.


  1. In the meantime, we'll see if Soros' words come true:

    “This crisis has the potential to be a lot worse than Lehman Brothers,” said George Soros, the hedge fund investor, citing the lack of an authoritative pan-European body to handle a banking crisis of this severity. “That is why the problem is so serious. You need a crisis to create the political will for Europe to create such an authority, but there is still no understanding as to what the authority will do.”

  2. We have truly become (Via Democracy) The Planet of the Apes.

  3. Why is it so important to bail out Greece? Double digit negative gdp growth in the future for years. Something bigger must be going on. I think if the first domino falls(Greece),the rest will fall soon after.Merkel wants to continue to kick the can down the road. Greece should just default now and start anew. Lots of economic pain for all of us peons coming soon.

  4. She has no choice but to say this in order to stop the market slide...The Greeks aren't stupid. Democracy coupled with a fiat currency ALWAYS ends with hyper-inflation.