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“Everyone else has attacked Merkel so much it’s her Falklands moment almost. German people are drawing ranks around her and I don’t think they’re going to move.”
While much has been written about the importance of a weak euro to German exports, the currency's depreciation could also mean that more German businesses will become potential takeover targets, which would not be well-received in the country, according to David Marsh, co-chairman, OMFIF.
“Germany’s caught between very unpleasant economic and political consequences of either saving the euro or letting it go down. Either way, it’s going to expose them to enormous risks and costs,” he told CNBC Monday.
What Germany Wants
Essentially, what Germany wants in return for propping up the euro zone, whether via joint Eurobonds or other methods of fiscal consolidation, is more centralized, EU control of elements like national budgets.
There is deep-seated suspicion about Germany’s motives in those countries it previously occupied. Greece, where one of the leaders of the resistance to Nazi occupation has recently become a political figurehead for left-wing Syriza, is a prime example of somewhere where memories of brutality during World War II still hold sway.
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