Things are starting to look very nervy for Merkel. The Bundesbank is pretty steamed up about all this dolling out of hard earned. Its head, Axel Weber told a German newspaper, "The purchase of government bonds poses significant stability risks and that's why I am critical of this part of the ECB's council decision even in this extraordinary situation". It seems he was pretty pissed off that the likes of Sarkosy made the announcement of the buy back decision by the EU before the ECB had spoken! The Bundesbank representatives on the ECB broke ranks and accused Trichet (Pres of ECB) of caving in to political pressure (so no change there then, this is France we are talking about after all). Their objection is to the ECB buying PIGS government bonds outright and hence effectively printing money and moving to a Quantitive Easing policy (printing moolah) which Trichet was castigating when the hated Anglo Saxons did it, further evidence that the politicians are trying to dictate monetary policy and Axel and the boys from Frankfurt ain't having it! Word is that CDU political grandees are reported as saying they have lost confidence in Merkel's ability to lead and have called for her resignation after this, her 'Greek Policy' is already proven as a failure waiting to happen. Worse still for Merkel, she has been forced to publicly abandon tax cut plans to pay for the Greek problems and as she has lost control of the upper house cannot push her planned public expenditure cuts through. I also read that the so called 'sterilised' bond sales may not even happen and was only pushed into the text to calm German fears of another inflationary spiral.
The amusing thing about all this is that the 'rescue' package was only increased in size after Obama phoned Merkel and Sarkosy to say half measures would not cut the mustard. His ulterior motive, of course, was the concerns of the effect the half arsed measures originally in place were going to have on the US banks. They jumped to attention (yes, the dollar does still carry a heavy punch, get used to it if you don't like it) and although through the judicious use of weasel words avoided reference to this strong arming have fallen into line.
The heaping of ironies upon ironies in this situation is only exceeded by the irony of the two main movers not really having an understanding of what irony really is.
