The Slog’s prediction of EU-wide problems as a result of the Franco-German rift it coming to pass….with disturbing consequences.

A deadlock was reached yesterday as to what the real solution might be to Greece’s insolvency, The Slog has learned.

Ad in another reversal for unity, Angea Merkel’s legal finance spokesman Michael Meister came out publicly this morning to insist that the IMF is the best answer to Greek difficulties.

The statement – which will infuriate European leaders Jean-Claude Trichet, Jean-Claude Juncker and Nicolas Sarkozy – reflects yesterday’s breakdown in discussions to decide on an EU-funded rescue plan. It is certain to make currency markets and credit managers nervous.

A senior French-based credit executive told The Slog yesterday, “None of this makes any sense at all. It confirms the market’s worst fears about the EU being slow and argumentative. The Germans are arguing amongst themselves, and French statements are contradictory. It’s obvious they can’t agree. And it’s clear that Germany is not going to get dragged into a never-ending bailout process. The situation could be disastrous for the Euro”.

Since the start of last week, The Slog has been monitoring the growing rift between French and German views of how to help the Greeks in particular, and the Union’s economic development in general. The Slogger retains his long-held view: nationalist concerns will eventually pull the EU apart. If the Euro is a single currency within a Federal Union, why would the IMF get involved with one member State? The parallel would be Schwarzenegger going to the IMF about California’s deficit.

The Euro weakened against the Dollar and the Yen in overnight trading.