Euro Crisis U-Turn: Merkel Changes Her Mind on Grexit Risks

[sysop]

Angela Merkel has made a surprising U-turn in her policy on Greece. The German chancellor now wants to stop Athens from leaving the euro zone at all costs -- even if it means massaging the figures in the upcoming troika report. For the German leader, it is essential to avoid the consequences of a Grexit before national elections next year.

http://www.spiegel.de/international/...854879,00.html

[Liberalitärer]

Thank you for this great article which explains the dynamics of politics in Berlin to people abroad. Dr. Merkel's strategy change, if there ever was one in the first place - reflects growing realismn that a Grexit might have enourmous consequences, maybe not so many for Germany herself but for neighboring countries such as Luxembourg. This tiny state has piled up receivables that a Greek failure would cast doubt on the European finacial system as a whole. Moreover the future of Belgian based Dexia bank is uncertain. The ECB decision was a vital one, because measures can be taken to stabilize the European banking system, a major cause for the current crisis. Greece and others need growth and investment and most important they need to see light at the end of the tunnel. Whenever the strategy change occured, the Euro is in much better shape to survive.Policy measures cannot stop here. The problem of an efficent banking control board remains an trade imbalances within the Eurozone need to addressed to get the target 2 system up and running again. However now there is a glimpse of hope.

[ballymichael2]

Originally Posted by sysop

Angela Merkel has made a surprising U-turn in her policy on Greece. The German chancellor now wants to stop Athens from leaving the euro zone at all costs -- even if it means massaging the figures in the upcoming troika report. For the German leader, it is essential to avoid the consequences of a Grexit before national elections next year.

http://www.spiegel.de/international/...854879,00.html

This article has definitely got a lot of attention in the world media.

#1 this projected bringing forwards of tranches would rely on "cooking the books"of the debt sustainability analysis.

http://ftalphaville.ft.com/blog/2012...-book-cooking/

And the reporting of it in greek media is being credited with lifting the athens stockmarket by 4%.

http://www.ekathimerini.com/4dcgi/_w...09/2012_460474

[muley63]

Good Lord, Merkel, people have been telling you for two years to prevent another Lehman moment. You have done nothing to educate your people about the responsibility they must assume. I hope it works out, because if Europe fails, the world suffers.

[Eleos]

It wont go away. EVERY concession will be followed in time with another pleading for more. Germany must leave the Eurozone, while maintaining its credits at the ECB for Euro transfers including the repayment of bonds issued in Euros, until they are exhausted. Hopefully Austria, Finland and the Netherlands will join the new group, but the most important move is to stop further damage by detaching its assets from the ECB.