In a radical first, German Interior Minister (Innenminister) Hans-Peter Friedrich has stated, in Der Spiegel, that he thinks Greece should leave the Eurozone in order to regenerate (regenerieren) itself and restore its competitiveness.
The way to achieve this, according to Friedrich, is not to throw the Greeks out, but to make them an offer they can’t refuse – create incentives that [they] can’t say ‘no’ to… – (Anreize für einen Austritt zu schaffen die sie nicht ausschlagen können).
Let’s put it this way: either Friedrich will be out of a job by Monday, or you have just seen Germany’s new approach to the Greek drama.
On Monday, the German Bundestag votes on the new Greek bailout. It seems certain to go through. However, a Bild am Sonntag poll shows that only 33% of Germans are in favour of the bailout. Thin ice in Berlin, in other words. Time to get the broom and the carpet out.
I’ve said several times in the past that it might come to this, and there are a few options as to what might happen next.
First, Portugal and Ireland will in all likelihood also come knocking for an offer they can’t refuse. And so might the country where such offers were -ostensibly- invented, Italy.
Interestingly, Merkel and her people must feel (and have surveys prove them right) that their voters prefer a lump sum for Greece now over continued bailout support, even if initial costs are much higher. How those same voters will view a whole series of those lump sums for the entire periphery is up in the air, especially when they figure out what the real costs will be (which will be “artfully” hidden at first).
Second, there’s the little detail of credit default swaps. Can Greece leave the Eurozone without defaulting? Can Portugal and Ireland? Italy?
Whatever else happens, rest assured: if Hans-Peter Friedrich still has his job by Tuesday morning, Germany has a new -albeit unofficial – policy towards Greece in place.
After that, their predictions for what might happen next are as good as yours or mine; they will have opened a minefield where they are at the very best the one-eyed in the kingdom of the blind.
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