Pondering the Ides of March?
‘Easier to sell Firewall after Greek default’ claim backed by bad Greek economic data
One thing still puzzling a lot of spectators and players across the world is what the logic and/or ploy might be behind Wolfgang Schauble’s odd insistence that he probably will bend on the eurozone firewall issue, just not yet. There’s an air of ‘I’m going to fall in love with, but not for a year or two’ about it.
Either way, things got sillier still this morning when the SudDeutsche website ran a piece about the Firewall – based on ‘information received’ about the Fuhrerine in Berlin. The translation of one key phrase is this: that Merkel has decided ‘…to give up her resistance to a temporary increase of the credit upper limit of 500 billion euros towards nearly 750 billion euros. The final decision is to fall however only at the end of March.’
This suffers from the same Teutonic time-dilation as Schauble’s witterings. I mean, if you want to reassure the markets, why not openly say “Yes, let’s make it 750 billion euros”? Why wait to deliver the good news? Why keep China and Japan – just gagging to give you money – waiting to scribble those cheques any longer? (Hint: there is irony present in that last question)
The answer is, because for some people – Fritz the German voter, Hermann the banker, Otto the FPD member und so weiter – guaranteeing to do this is very bad news indeed. Bad enough, in fact, to get worked up about it.
But if that’s true – and trust me, it is – then why signal your willingness to do it by the end of March at all? Why not just keep schtum?
I may have been handed the answer to this one. And given that it involves corroboration without collusion between an American civil servant and a German banker, I am impressed enough to run with it….especially after reading the SudDeutsche piece….and this afternoon’s Athens News website.
“There is one very big thing that may change between now and the end of March,” a German contact told me yesterday afternoon, “and that is that Greece having to be bailed out may no longer be an issue. If Greece is declared insolvent before then, the bill for a firewall suddenly begins to make a lot more sense to everyone. So it’s a lot more saleable for a politician in trouble”.
Intriguing that one, isn’t it? And what if you know that – barring a major SNAFU – Greece will default during w/c 20th March? Anyway, I put the same question without emphasis or bias to a Washington source last night. He got back to me half an hour ago.
“We hear there are some very bad Greek numbers going to appear,” he began, “and you can be sure the Troika was expecting it. It’s because of this kind of sh*t that the White House wants to amputate…..Greece is a black hole. If the Troika knows, Berlin knows. Let’s be fair here, we all know what’s coming. But if you still have the [bailout] money in escrow…and if the bondholders vote in favour…well, it’s still highly likely that this kind of news could give everyone the excuse to back off, right? I think the only way to explain their [Merkel and Schauble’s] statements is that they either expect or know about a Greek default before end March. They’re hedging their bets. If they thought bailout really is a done deal, they wouldn’t need to.”
It works for me. And after some searching around after 16:00 GMT today, this is what I eventually found at Athens News:
The Slog 