German leaders are now desperately trying to tone down their rhetoric about bondholders taking haircuts.We noted last night that Merkel is being blamed for stoking fears by talking about how taxpayer bailouts were not appropriate for troubled countries, and that bondholders needed to take the pain for the risk they took.
But they’re dialling that back, already.
FinMin Wolfgang Schauble says that’s a misunderstanding: Merkel was only talking theoretically under a future framework.
In the meantime, bailouts for everyone!
Irish CDS are rallying sharply.