Angela Merkel has to stay firm. Greece cannot be saved by the ESM, they have to return to an own currency, else face sudden death by bankruptcy. Cooking the books, wide-spread tax cheating and "legal" tax loopholes have been going on, and the new Greek government is overburdened with the demands, quickly crying for breathing space.
Well, what the Greeks have done so far are self-inflicted wounds that cannot heal quickly, and the ESM / fiscal pact challenges are quite equal to a heart surgery without anesthesia. The best remedy for them would be exiting the euro and printing their own money again, of course with a huge devaluation effect. With this means, the Greek government might be able to avert sudden financial death and gain a foothold.
Thus, it really doesn't make sense to dissolve Euro tax payers' money in a financial blackhole.
The socialist approach of Portugal, Italy, France and Spain (PIFS) doesn't make sense either. This left-wing thinking that deficit spending and high taxing is appropriate is misguided indeed.
The northern EU countries - Denmark (own currency DKR), Sweden (own currency SKR), Finland (Euro) - are getting their budgets and deficits in order, making the necessary home-works.
The Dutch, the Germans and Austrians hammer down their austerity packages and want to get rid of budget deficits within the next 5 years and reduce overall debts by reducing the interest rates on state-issued bonds.
Ireland has been nudged to make necessary adjustments and is on good course.
The southern PIFS alliance is obviously not willing to get the job done.
Well, one "crucial" step, Spain has made so far, is abolishing the "siesta" when shops use to close during lunch hours.
Dear friends, that is not enough.
In 1990, Germany was reunited, and the Federal Republic of Germany took over a virtually bankrupt GDR state with few assets and huge burdens, especially in terms of rotten infrastructure and environmental pollution.
What everybody has to bear in mind is that then West Germany had to create values for the East German pensioners whose social security system had only been able to exist before by printing money whose value could not be evaluated in a financial market system.
By doling out pensions to East Germans from the existing W German social security fund then by additional tax money from the federal budget led to an extremely widening of the fiscal deficit and overall debts of federal, state and municipal coffers. The add-on 5.5 pc tax on income taxes, called solidarity contribution or SOLI, will probably stay forever although the government has promised to phase out this additional tax by the end of the decade.
Germany has to contribute a share of at least 27 percent to the ESM - a second "GDR" cannot be bailed out, that's for sure.
Germany, the Netherlands, Austria should create a "counter-alliance for stability" with the other Euro states against the PIFS, and seek close shoulder with the UK.
Europe's "superpower" in giving unnecessary monetary advice, Luxembourg, should be silenced and neutralized by Angie's firm stance against "Euro bonds".
Heating up water to have a warm bath demands energy which also means money - look at the meter.
Softening the fiscal pact to make it cozier for the PIFS demands more and more money; where taking from if you don't wanna steal it, huh?
Btw, a lot of 'ordinary' Americans I spoke to also deemed it unfair to bail out a country that still cheats about the reality and steadily kicks against the shinbone of their Euro partners, esp. Germany.