Greece, the Euro, and the Battle of Jutland

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During the
Battle of Jutland in 1916 or Skagerrakschlacht as it is known in
Germany, the Imperial German Navy carried out a brilliantly executed
“battle about turn” after straying into a death trap beneath
the guns of the Royal Navy’s Grand Fleet.

Admiral Scheer’s
High Fleet vanished into the mists within four minutes – his
retreat covered by a torpedo attack and the “death ride”
of four German battlecruisers that charged into Admiral Jellicoe’s
guns in an act of supreme sacrifice. The actions saved the Imperial
High Fleet. It has gone down in German history as the
Gefechtskehrtwendung.

I was unaware
of this until it was brought to my attention by Commerzbank this
morning in a note by their currency chief in Frankfurt, Ulrich Leuchtmann.
He drew the parallel with the astonishing volte-face by German leaders
yesterday in suggesting that Greece should go to the IMF for a rescue
after all.

“A Gefechtskehrtwendung
is a 180-degree turn that saves you. I think this may save Germany
from a bail-out that they don’t like, that they can’t
sell to German voters, and that creates legal problems under the
no-bail-out clause of Article 125 of the EU Treaties.”

“We think
the IMF is the ideal solution anyway, and would actually be good
for the euro. It would establish discipline and avoid moral hazard.
It is much easier for the IMF to enforce austerity conditions,”
he said.

“The markets
are still focused on the fact that we still don’t seem any
closer to an EU rescue for Greece, so they are treating this IMF
story as negative,” he said.

I agree entirely
with Dr Leuchtmann. The EU top brass have of course been saying
for weeks that it would be intolerable to let the camel’s nose
of Washington’s IMF under the eurozone tent. Eurogroup chair
Jean-Claude Juncker said it would shatter the credibility of monetary
union. But is this all EU religious stuff: ideology and totemism.

Mr Juncker,
the Commission’s Jose Barroso, and their allies, have been
trying to exploit the crisis to advance the EU Project, pushing
the boat stealthily across the Rubicon towards fiscal federalism
and a de facto debt union. They hoped that the Germans would not
realize fully what was being done to them until too late.

Chancellor
Angela Merkel appears to have balked at this – understandably
– seeing a standby facility for Greece as the beginning of
a slippery slope that would leave German taxpayers on the hook for
€3 trillion of Club Med debts.

At least that
is how I interpreted her comment yesterday that one should “perhaps
call in the IMF”. The plot thickened when her Christian Democrat
finance spokesman in the Bundestag, Michael Meister, said: “We
have to think who has the instruments to push Greece to restore
access to capital markets: nobody apart from the IMF has these instruments.”
No doubt there will be further utterings today.

This morning,
Greek premier George Papandreou openly threatened to go to the IMF
in an address to the European Parliament.

These are the
quotes that have just been relayed to me the floor by our very sound
Brussels Correspondent Bruno Waterfield.

“We are
not asking for money from the Germans, Italians or French, what
we are saying is that we need strong political support for reforms
and to make sure that we do not have to pay more than necessary.”

“We need
to borrow at rates that are normal, similar to the rates other states
in the EU and eurozone can use.”

“In fact
we are under an IMF programme. However we do not have the facilities
that the IMF could give – money if necessary.”

Read
the rest of the article

March
19, 2010

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