Last week reports surfaced indicating that the economic crisis in Greece could improve at a faster rate if the government was given a two-year extension on the austerity agreements they made in exchange for two EU bailouts. Although there was little doubt that Germany would continue to hold its ground, on August 19 AP reported that an ally of German Chancellor Angela Merkel insisted that there is no room for concessions to the Greek government regardless of their current economic situation.
While it is clear that the EU bailouts are unpopular with the citizens of the more prosperous and stable nations like Germany and France, there have been some who have been holding out hope that the EU member nations would do whatever possible to avoid Greece exiting the Euro. Those hopes may have been dashed in no uncertain terms by Volker Kauder, the parliamentary leader of Merkel's center-right party, who said that "The Greeks must stick to what they agreed to...There is no more latitude, either on the timeframe or the matter itself Â— because that would again be a breach of agreements.
Although Mr. Kauder was not as definitive when asked about the possibility of a third rescue package, saying that those decisions will have to wait until after the report from the international debt inspectors, he seemed to acknowledge that there would be massive political obstacles. Even If the German government actually had a desire to deliver more aid, nearly all Eurozone rescue decisions have to pass through German parliament, which would be unlikely.
Although it is hard to fault the German government or the German people for being opposed to what must seem like an endless money vacuum, the effects of Greece exiting the Euro aren't completely predictable. It seems unwise to assume that damage from such an event could be contained when there are still a couple EU member nations whose economies are only a few months past being on the brink of collapse.