Merkel Greek Gambit May Backfire

[marmar]

(Bloomberg) Germany and France’s drive to force Greece to honor its euro commitments risks backfiring on Chancellor Angela Merkel and President Nicolas Sarkozy.

A week after the currency’s guardians declared for the first time that countries can be ejected from the 17-nation bloc, U.S. stocks tumbled on concern German politicians are already creating exit chutes for the weakest members.

The sell-off suggests Europe’s crisis is spiraling into a new stage as investors bet on which countries are most likely to quit the euro, starting with Greece. The risk is that this will make it harder for debt-laden countries to convince investors they can get their finances in order and for policy makers such as Merkel, Sarkozy and European Central Bank President Mario Draghi to bolster the euro’s defenses.

“This is a dangerous phase,” Neil MacKinnon, global macro strategist at VTB Capital in London and a former U.K. Treasury official, told Bloomberg Television’s “On the Move” with Francine Lacqua today. “All of a sudden, we’re talking about the future of monetary union in its current format.” .............(more)

The complete piece is at: http://www.bloomberg.com/news/2011-11-10/merkel-s-taboo-breaking-gambit-opens-pandora-s-box-as-euro-exit-is-mapped.html

[Vincardog]

1. The international unregulated financial house of cards is getting ready to fall. How sad

[kentuck]

2. What if the euro is no longer any good for Greek debts?

What happens? I suppose most of the debt in Europe is either in euros or dollars? Would that mean the big banks would have to wipe off that debt or ask for another bailout? Which do you think they would prefer?