Greece Becomes Apple Of Discord Between Merkel And Schauble As Dissent Grows

Tyler Durden's picture

One of the redeeming features of the failed experiment known as Europe, at least to date, was that while everyone else may bicker, squabble and posture, Germany, or the true core of the Eurozone kept a cohesive front, and at least pretended to have a unified view vis-a-vis daily events. This is no longer the case, as the approach as pertains not only a broke Greece but every other insolvent European country has now caused a schism at the very top, and created a rift between Angela Merkel (whose political position was dealt a huge blow today with the resignation of German President Wulff) and Finance Minister Wolfgang Schauble. Goldman explains.

Growing dissent between Chancellor Merkel and finance minister Schäuble regarding Greece. Several newspapers report about diverging views among the German government regarding the second Greek financial help package. Süddeutsche Zeitung, for example, is citing a source in the EU Commission as saying that "depending whether one speaks with someone from the chancellery or the finance ministry, the message can be quite different".


While Chancellor Merkel seems to be worried about the potential contagion on the rest of the periphery, the finance minister seems to be increasingly of the view that a ring-fencing would be possible. According to these news reports the finance minister has little hope that the Greek government would be able to implement the necessary reforms. In fact, the finance minister said himself in a recent interview that "we had to find out over the last several months that it is easier to promise something than to implement it. This is a problem". The second Greek package will need to be approved by the Bundestag and the skepticism of the finance minister is probably shared by a growing number of MPs.

A bigger problem is that now Merkel is again in salvage mode, and the general public which has handled her handling of the European situation, which involved implicitly pushing Greece away, will now be tested, and if Merkel backtracks and says she was only kidding, and is willing to risk tens of billions of German capital to preserve what little is left of Greek pensions, then the electoral question mark comes into play once again.

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homer8043's picture

So when is Merkel named President as well...

Black Forest's picture

Never. Eventually she will go into exile in Holland like Wilhelm II did in 1918.

Ghordius's picture

that was Hitler - allow the Germans to make some new mistakes from time to time instead of expecting to repeat the old ones

homer8043's picture

Fair enough. They have banks, not Panzer divisions this time.

Ghordius's picture

well, France has much more banks than Germany, and the real master of all banking is still dear old Blighty

no global bank can exist without a branch in the City of London

disabledvet's picture

I'm sure the Swiss would have something to say about that. How about Central Banks as well? I hear those latter folks can make some pretty good sales pitches...

Ghordius's picture

ok, ok, let me specify: you are a global bankster if you have to have a branch in the City where you can rehypotecate at will and do all the things every country forbids, including the UK.

Credit Suisse and UBS, for all purposes global banks that happen to have a HQ domicile in Switzerland, they are no different.

Central Banks are not banks - not in the normal sense (particularly because they are not for profit). And yes, they have the BIS, which I believe is headquartered in Basle.

Careless Whisper's picture

Goldman explains.




stocktivity's picture

Why do I keep thinking that every time "Goldman explains" something to me, they are really doing the exact opposite trade.

_underscore's picture

There once were some banksters in Blighty,

Whose banks were once high & mighty.

Now they're leveraged to heaven,

With no assets to leaven,

Their Ponzi scheme's broke almost nightly.

He_Who Carried The Sun's picture
>>As Dissent Grows<<

Forget it. They are one! Think of it as the Good Cop/Bad Cop team. They support each other marellously and - believe me - they know it ;-) hehehehe
malek's picture

The role of president is meaningless (and powerless) in Germany...

KMS's picture

Someone needs to revise her script. Didn't she get the memo on the scheduled default on 23 March?

Ghordius's picture

The big contention: haircuts, trust and Greece stays in the eurozone or haircuts, no trust and no eurozone for Greece?

Meanwhile Monti is arguing that Italy, Portugal and Spain are salvageble (I think he is right), so any firepower wasted on Greece is less for the others...

And the British Press continues to lie, lie, lie - poor darlings, they can't research properly on other european countries, they speak foreign there!


Just recently Umberto Eco - my intellectual master and political nemesis - had an interview with the BBC and was appalled by the ignorance of the interviewers about all things european (he was diplomatic about it, though), by their obsession on the EUR and their specific dumbwittedness of how parliamentary system works - with the constant blablabla idiocy of "technocratic" and "unelected". Seems I'm not the only one...

Ghordius's picture

good one. have you seen this Ambrose Evans-Pritchard's piece?

About Schäuble issuing an ultimatum to Greece? well, I was convinced Ambrose got it right, still, I checked - the SRW 2 (transcript in German here below) interview is taken totally out of context - Schäuble was praising Italy and definitely not making any diktats to Greece.

But hey, it was enough to make the Greek President explode and now also the Finns and the Dutch are taken aback...


disabledvet's picture

well...what would you like the Greeks to do then? Is there a solution you are offering here or not? I'm all ears...not that the folks at the Sun in London aren't either of course...:"shall we talk the Americans" let alone..."Iran"?

Ghordius's picture

me offering a solution? well, start with reinstating all the checks, balances and banking regulations that were scrapped in the last 30 years "because this time is different". this implies that nearly all derivatives have to go (with the exception of those the real economy needs).

without CDSs, for example, Greece could have had an haircut deal of 70% brokered last summer. CDSs are just a way for banks to chain themselves to each other and make themselves invulnerable to any default - the "Really Too Big To Fail" situation where they can continue to be the undisputed masters of the universe

I still maintain that one bankster pack in the City is doing as much as possible to salvage the hedgies that "invested" heavily in Greek CDSs and then in cheap Greek Bonds just to take their pound of flesh...

investing is not betting - or at least it used not to be

agent default's picture

The real economy needs derivatives?  That's a new one.

Ghordius's picture

ask cocoa or wheat producers, they are very happy about futures - but hey, they are generally backed

agent default's picture

I don't think any futures commodity market can cover the contracts floating in the market.  This is definitely the case with the COMEX, but I don't think it is any better elsewhere, with the possible exception of the oil market, I don't think issuers can settle all of their volume in physical underlying. 

GeneMarchbanks's picture

Futures are considered derivatives, you could argue that people in the Ag sector have benefited greatly from them. Yet speculators seemed to have crowded out all productive capacity as the casino gulag capitalist model is taking over. It's about ethics more than anything else as in all faith based systems.

Ned Zeppelin's picture

You reduce the deritatives market to its proper size simply by making sure the buyers and sellers have skin in the game. No naked positions, and all issued through an exchange that actually regulates. Presto. Done.

IAmNotMark's picture

"It's about ethics more than anything else as in all faith based systems."

Yep.  That's why we're screwed.

Ghordius's picture

sorry, specifically to your question what the Greeks should do: the Greek political class has to wake up. either they rebuild their mutual trust to the other partners of the european clubs or they have to realize that the UK and the US won't be able to keep them there the way they pushed them in in the first place.

the trust relationship was quite shattered when the partners realized that they were not only cheating, but cheating big (thx, GS) and continuing to cheat.

now the haircut - with resistance from several vulture hedgies - is nearly brokered. The Question for the Greek Leaders is: do you want the monetary umbrella with all obligations or do you prefer to go alone? But they have to answer...

agent default's picture

Greece is over because Greece has no productive capacity to speak of.  They created a consumer economy based on borrowed money and that's it.  But I don't think that the rest of the periphery can survive without some sort of debt relief either.  All the austerity measures forced on these countries so far seem to treat the situation like a liquidity problem rather than a solvency problem, they are effectively pushing the periphery deeper into a hole.

I don't think the IMF/ECB etc are that stupid.  They want some countries out and they want to do it with the minimal cost on all fronts.

disabledvet's picture

if you have a single cement plant...congratulations! you have productive capacity! and guess what! "a worthless currency doesn't matter a whit" to it.

fonzannoon's picture

Futures running again. Greek deal about to be announced. Dow 14k. Fireworks. Nasdaq 3k. Skyrockets at Night. S&P 1400 Rainbows and unicorns running around. Retail investor re-enters the market...


The Swedish Chef's picture

..and then: default. The exit gets very, very crowded. See ya on March 23. 

Rot-10's picture

Amazing!  Bernanke spent trillions trying to save the markets and all he really needed was a bunch of (free) empty promises out of Europe.  What a bargain.

BandGap's picture

We should set this to music, it needs to be choreographed......

_underscore's picture

My overall impression of Mrs Merkel is of a pretty cute chick (cute in the English sense of 'acute') & her gut instinct of letting Greece go away was the correct one. Surely it's the only way to get the Greek economy actually going again, which is the over-riding imperative - if it doesn't it means endless loans to subsidise an ever decreasing GDP - the spiral of death.

Procrastinating Bitchez!

Nachdenken's picture

Horst Seehofer, who is now acting German President until  the next President is elected, has asked for Greece to be removed from the Eurozone, and is pressing for a referendum in Germany over German  Euro-rescue committments.  It is unlikely tha the will sign any legislation now passed in support of the EFSF.  Closer to the ZH scenario of a disorderly exit for Greece and the likely thereafter.

Azannoth's picture

A year ago I would not have been surprised if Germans voted for the Greek bailout, but now 1 in a Never chance of that happening

dcb's picture

the german's won't be voting, the elected representatives will be voting, and yes they will go along, jus the same way it happened in greece. the greeks don't vote.

Ghordius's picture

wake up, in general only the Swiss vote, all the others elect proxies

Nussi34's picture

Ditch the bitch!

LongSoupLine's picture



It's all by design...agree, then disagree, then deal, then no deal, paperwork, then no paperwork...

It all burns minutes off the clock and distracts the public while, (quietly in the background), the REAL goal and operation takes controllers feeding the CDS zombie banks fiat liquidity.


Any questions?

Canucklehead's picture

It looks like game, set, match.  Merkel is on her way out.

How do you deal with one of the most corrupt regimes in the world?

The problem is some will correctly think I am referring to Greece while others will spin that comment to mean Germany.

If there are no accepted rules to the game, there comes a time when you take your ball and go home.

IAmNotMark's picture

I initially thought you were refering to the U.S., but the context was wrong.

DavidC's picture

Reuters has just had a headline saying that there IS consensus.


Are we being too bearish here on ZH?


Azannoth's picture

Holy crap I thought you needed to be seriously stoned to come up with such 1-liners, nvm. those in charge are seriously stoned

mick_richfield's picture

They will be stoned indeed if they keep going the way they're going.

Black Forest's picture

Consensus on optimism?? I would call this information noise.

LongSoupLine's picture



So...they all agree they're optimistic?  Yep, that's worth a few algo load shots. 

Vince Clortho's picture

So optimism solves debt? Get this news to the U.S. Congress so they can vaporize 16.4 Trillion in debt by thinking happy thoughts.

Uchtdorf's picture

First they will need to join hands and sing, "I"d like to buy the world a Coke."

Coke? Maybe that's what they're on...

Rot-10's picture

"we had to find out over the last several months that it is easier to promise something than to implement it. This is a problem"

They're all making a strong case for Anarchy!

Monedas's picture

Lower welfare benefits or raise taxes.....that is always the bottom line....and the "tax payers" (the Germans) are always lose !  Monedas  2012  Humour are me !