Chancellor Angela Merkel meets with President Nicolas Sarkozy today to resolve the impasse over a second Greek rescue as Germany’s insistence that bondholders share the cost fans the risk of contagion.
Stocks plunged worldwide amid political turmoil and street fighting in Athens, putting the focus on the leaders of Europe’s two biggest economies to break the deadlock in Berlin. That means reconciling German calls for investors to help bail out Greece with European Central Bank warnings backed by France against any compulsory move that might trigger a default.
“Germany is playing a domestic political game” to appear tough, Henrik Enderlein, a political economist at the Hertie School of Governance in Berlin, said by phone. “It would have been much wiser to accept a purely voluntary solution one or two weeks ago. The collateral damage of this could be enormous.”
Bloomberg
