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.