Wolfgang Schäuble

For Varoufakis and Schäuble, there really is little hope of finding any common ground. They are personally too different to bridge the gap between their upbringings and beliefs. If they do not even agree to disagree, that is probably the best anyone can hope for.

Indeed, had they agreed to disagree, it is only likely they would have misunderstood each other.

By announcing the next Greek package before the election, Schäuble is manoeuvring Germany into his much preferred position of actively supporting closer European integration.

Germany’s highest court is currently considering an injunction to stop the German president from signing international treaties to establish a permanent European rescue fund and new fiscal rules for EU members. Markets are watching anxiously as they fear that constitutional difficulties will prevent the next bailout rounds and an eventual mutualisation of European debt.

The euro has been a moribund currency for years. The remaining options to buy it more time have been blocked by the German constitutional court. To end this farcical tragedy someone needs to put the final nail in the euro’s coffin. Who will it be?

In their open confrontation with the Americans and other European countries, the Germans have good arguments on their side. Trade restrictions are certainly not the way out of the world economy’s problems; and to prevent moral hazard, bondholders need to bear the costs of defaults.

As long as the Germans pretend that the current crisis was caused by speculation and not by inherent flaws of the European project, this crisis will not pass. They can ban short selling, regulate credit default swaps or outlaw hedge funds all they like, but this will not solve the competitiveness problems of Club Med countries.