Who is Merkel’s audience?

27/01/2012 § 2 Comments

Chancellor Merkel suggested yesterday that Greece might not survive in the euro. Have her staff been reading the blogosphere? Have they seen what many have seen, that negotiations seem to be on the road to nowhere? Perhaps, perhaps.

But I wondered, to whom is she speaking? In one sense, the substance of her comments contained nothing new. The news is that she said it. Why, and why now?

Here are some possible audiences:

  • Investors: Merkel is saying, don’t judge the euro by Greece. Yes, we have this gangrenous lower limb, but we will amputate if necessary, and it isn’t very big, anyway.
  • Greece: Merkel is the resolute cop, who arrives at the scene where Greece is holding the euro hostage. The cop says, ‘I’m not afraid to shoot the hostage.’ Greece drops the hostage and capitulates.
  • Institute of International Finance: Maybe Merkel is a poker player? Is she calling the bluff of Greek bond holders? ‘You’ve been talking a pretty big game there. Now it’s time to show yer cards.’

I’m not sure her comments change anything on the ground, but it is interesting to hear her make them.


§ 2 Responses to Who is Merkel’s audience?

  • JC says:

    Her audience is the Germans who invested in the Clubmed countries. Germans might be great savers, but they and their banks were dumb investors in dumb and corrupt countries.

    Merkel is therefore covering German Govt, bankers and investors butts for stupid investing.. its all the fault of Greece/Spain/Itlaly/ etc!.. nothing to do with honest German investors who were sucked in by the evil Clubmeds.

    Unless the German investors are superlatively objective I think Merkel will succeed in redirecting all the blame and thus ensure the failure of the Euro project.


    • Bill says:

      The issue I have with this interpretation — not saying you’re wrong, just trying to sort it out in my own mind — is, what happens after the euro fails? It’s all well and good to apportion blame, but that won’t get German investors their money back. I don’t know the terms of the euro contracts or what happens if Greece institutes the new drachma, but I suspect it will be a lot harder to get paid on contracts in a currency that no longer exists (yes, I know there are examples of this happening).
      So, do you think that Merkel thinks that the investments are now worthless? Greece has offered to repay them with a 50 or 60 percent forgiveness/haircut. Is Merkel turning her back even on that?

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