Phoenix Capital Research
March 12, 2012
While the Second Greek Bailout may or may not be complete (depending on whether we get a credit event as a result of it), Germany can and will walk from the Euro if it needs to. This is the unforeseen black swan everyone is ignoring.
Obviously, Germany wouldn’t want to do this as it would result in Germany being blamed for the Euro failing. So thus far, “Plan A” for Germany has been to offer bailout funds that are contingent on requirements so unpalatable that Greece or any other PIIG would likely end up preferring to walk rather than submit to them.
Case in point, before the second Greek Bailout German Finance Minister Wolfgang Schäuble proposed that Greece should postpone its April elections as part of the bailout package.
In simple terms, Schäuble is concerned that the unpopularity of the austerity measures being imposed on Greece as part of the second bailout package would lead to a “wrong” democratic choice.