Germans say "Yes" to Greece's rescue package

The German Bundestag voted in favour of the bill of broadening the authority of the EFSF under the agreement of the July 21st Summit.

The “battle”, which the whole planet was literally in uproar over and during which in theory nothing happened, was won after scenarios of the Merkel government coalition’s deposition being proven incorrect. The final outcome of 523 “For” votes against 85 “Against” technically shows that the Chancellor has full power and influence still in the political arena.

This is something which Peter Altmaier, parliamentary spokesman of the Christian Democrat party  quickly hightlighted. According to him, the bill would have passed without the opposition’s support since 315 members of his party had already voted for it.

If his count is correct, then of the 20 CDU “rebels”, more than half supported Merkel.

Based on these calculations, Frau Merkel’s benefit from the vote was double: the EFSF bill was passed and the final number of people against it is not enough to cause any issues of consistency within the ruling coalition for the foreseeable future, especially during troubled decisions ahead which will NOT have the opposition’s support.

However, a verbal duel was characteristic of the underlying tensions between Finance Minister W. Schäuble, who was forced to leave open the possibility of further amendments to the operation of the mechanism, and Klaus-Peter Willsch, who stated that the continuation of Euro-problematic states is equal to a “loan of today’s generation to its children and grandchildren in order to fund an experiment”, adding that the loan is very risky.

Why analysts remain unconvinced…

In any case, markets awaited the outcome of the vote within the Parliament with great interest (France-Germany up by 0.7%, reduction of losses for London). Those unconvinced are the German Handelsblatt, which cites banking source and fund managers to support the view that a “haircut” of the Greek debt, perhaps by more than 50%, no longer meets with any resistance. The question is why: the newspaper replies that after the EFSF strengthening vote, the road of Greece’s debt reduction is open up until 2012, since by then banks could  have “greatly reduced the Greek bonds in their portfolio, so that a haircut would be manageable for them”!

Bloomberg also speaks of similar “projects” after a survey, in which 93% of analysts “foresee” Greek bankruptcy by 2012.