Thursday, December 01, 2011

Merkel & The Eurozone: A Battle, or a Game of Chicken?

Angela Merkel is very clear about what is going on with the latest crisis in the Eurozone – a battle between the forces of good and the forces of evil:

Merkel, who has signaled she doesn’t want financial markets or even her own economic advisers imposing solutions for the debt crisis, is sticking to the crisis-fighting arsenal built up since Greece, the euro area’s most-indebted country, was bailed out in May 2010.

Six months later, as Ireland prepared to join Greece in requesting a rescue, Merkel said policy makers have to assert “primacy” over the markets in “a kind of battle.”

Germany and Europe don’t have “unlimited financial strength” to counter the crisis, Merkel’s chief spokesman, Steffen Seibert, told reporters Nov. 28. That’s “why the German government reacts so skeptically to the many calls for Europe to finally free up the really big, final financial reserves, which the Anglo-Saxon world likes to call showing the bazooka.”

And what does the other side in this monumental battle think of Fieldmarshall Merkel?

This is how one opposing general described it:
O'Neill of Goldmans

The EFSF looks like “yesterday’s story” as German policy makers play a “huge game of chicken” over future economic and monetary union to achieve their budget-tightening aims, said Jim O'Neill, chairman of Goldman Sachs Asset Management.

“How close to the edge do you want to take this?” O’Neill said in a Bloomberg Television interview with Francine Lacqua. “It needs Germany and the ECB to decide whether they want EMU to exist or not, because that’s how it’s going.”
My money's on Merkel.

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