Relax

Every time a German official makes a comment, the market freaks out. The German Parliament is expected to vote on the EFSF this Thursday and it is expected to pass, despite the fact that it is unpopular in Germany. I believe German politicians are talking tough to give themselves the political cover to pass the EFSF. Talk about leveraging the EFSF does not help their cause and only angers the masses.

At a later date I believe the Germans will likely to agree to leverage the EFSF, in return for a Greek bankruptcy to placate the people. From a political standpoint it is counterproductive for German officials to talk about leveraging the EFSF before passing the EFSF and before securing an agreement for a Greek bankruptcy.

No comments: