Markets Are Getting Whipsawed By Contradictory Headlines About Germany And Eurobonds In The Last Few Minutes

merkel, schaubleGerman finance minister Wolfgang Schaeuble and Chancellor Angela Merkel

Photo: AP

A report out of WSJ has had investors jumping in the last few minutes.The Journal reported that Germans could accept some sharing of European debt burdens to stave off the crisis even before full treaty change, citing an interview with German Finance Minister Wolfgang Schaeuble:

Germany may be willing to move sooner than expected to accept shared liability of euro-zone debt and would support short-term measures to deal with the acute financing problems facing some of the region’s governments, German Finance Minister Wolfgang Schäuble said in an interview with The Wall Street Journal ahead of today’s European summit.

Mr. Schäuble said Germany could agree to some form of debt mutualization as soon as Berlin is convinced that the path toward establishing centralized European controls over national fiscal policy is irreversible. That could happen before full implementation of treaty changes.

“We have to be sure that a common fiscal policy would be irreversible and well coordinated. There will be no jointly guaranteed bonds without a common fiscal policy,” he said.

According to CNBC, however, Schaeuble is denying the report.

The idea that the Germans will “blink” and accept more radical movements towards fiscal union more immediately than they have said they would has been common chatter among analysts recently, with many speculating that Chancellor Angela Merkel’s hardline stance is truly political posturing.

No matter what, it is clear that Germany will only accept true burden-sharing once it has wrung some very deep concessions from the rest of Europe, and put other European countries in a position to accept such agreements. Whether it currently has this bargaining power is unclear, but it’s something we’ll be watching today as the EU summit gets underway.

Check out the upheaval in the euro in the wake of these headlines:


Photo: DailyFX

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