The one critical piece to a successful Greek bailout (if one can call 10 year Bond spreads at 8% any indicator of success) has been the implicit assumption that the proposed rescue package can pass the critical approval of the German parliament in order for it to become legislatively valid. Reuters reports that in a new, pre-electionary development, Germany's main opposition party, the Social Democrats (SPD) have now decided to block Angela Merkel's plans for a Greek bailout, all but dooming the incipient Greek rescue even as G-Pap finally realizes that he will need to ask for assistance in the next several days.
Germany's main opposition party threatened on Wednesday to block government plans to fast-track approval of aid for debt-ravaged Greece, potentially delaying a critical bailout for weeks.
Against a backdrop of looming key regional elections in Germany, the budget spokesman for the Social Democrats (SPD), Carsten Schneider, said his party did not want to rush through any bill that might result in the government issuing guarantees for billions of euros worth of aid.
"We won't go along with this," he told Reuters. "First the government can't decide what they want to do and now they want to put us under pressure with the legislative process."
The main reason why Greece was successful in pricing 13 Week Bills this week had to do with investor beliefs that at least the €45 billion stop gap rescue will be in place, making their 3 month investment relatively safe. They may want to reconsider this assumption.
Investors are increasingly pricing in expectations that Greece will sooner rather than later tap into the aid package, agreed by euro zone states and the International Monetary Fund.
But resistance from the SPD and other parties could drag out the parliamentary approval process in Germany for weeks.
Despite Merkel's majority in the Bundestag, any attempt to accelerate the legislative process generally needed the approval of opposition parties, said Uwe Andersen, a political scientist at the University of Bochum.
Confirming that this is just yet another episode of political theater, during which any rational cause and effect disappears and which makes rational decisionmaking impossible, is the fact that opposition is now growing as more and more German parties seek to ride the wave of populist discontent with funding a Greek bailout.
Opposition to an accelerated approval process for the aid has come not just from the centre-left SPD. The conservative Christian Social Union (CSU), Bavarian sister party to Merkel's Christian Democrats, has also signalled it could do likewise.
It is, as always, stunning that America, which is not even on the same continent as Greece, and which will be forced to likely foot a major portion of a bailout, should one occur, has seen absolutely no popular reaction to the fact that it will soon be bailout out a country far, far, away.