So far the Greek melodrama is playing out almost exactly to script. And all the players are playing their stereotypes to a tee.
The latest this morning is that there is no deal until Greece spells out details of its austerity cuts not only for this year but next as well. Why spell it out? No government likes to spell anything out in front of the children. Especially bad news. So why force them? Neither the Germans nor the IMF will give them steam from their dinner until commitments are put down in black and white. However I believe their motives differ.
For those in Germany who don’t want Germany to pay for a bail-out perhaps the hope is that by forcing the Greeks to spell out the horror, they push the Greek government closer to the edge of civil disorder and collapse. If the government is toppled there is an opportunity for those anti-bail out forces in Germany to say, ‘we cannot bail out a country that can’t even govern itself and certainly will not possibly be able to carry through on its austerity programme’.
The IMF, for its part, simple likes nothing better than a power vacuum to create misery into which it can eventually reach and dictate terms unopposed.
Merkel faces an important regional election and a possible legal challenge to any bail out. Which would at the very least hold up any German agreement possibly until it was too late anyway. There is a large political ‘tabloid’ voice in Germany much like our tabloid voice here in GB. And like here, politicians there ignore it at their peril.
The German newspaper Bild insisted that the only real solution for Greece would be ‘a clean break’. Greece had to leave the euro, voluntarily, for its own good. Another German paper FAZ argued that the only solution for Greece was for it to exit the euro zone, devalue and restructure its debts. Of course none of these papers are thinking it through to wonder what a default will do to German banks. Personally I think Commerz might go under. Deutsche on the other hand is much more the European Goldman. I think they will be found to sit at the centre of a sticky, stinking, fly infested funnel of CDS bets to which everyone is tied. But that would be next months headlines. Why rush the fun and misery?
The IMF doesn’t like re-structuring but I think can make common cause in breaking up the euro zone.
The French newspaper Le Monde, for its part, called out “There’s only one hope when it comes to breaking the vicious circle: European solidarity…. But …as usual, Germany is dragging its feet.” It’s like Allo Allo with long words!
Meanwhile the Portuguese and the Spanish wait and watch. Santander and Banco de Bilboa stand proud and … hollow I suspect. Still expect Santander to go under. Be a beauty and a catastrophe when she rolls and pitches arse-up before gurgling under in a swamp of debt.