Canadian commentator discerns Germany's Euro Endgame!

A Canadian article "What Germany really wants: A two-tiered Europe" by Carl Mortished, picks up on the Wolfgang Schauble interview in Der Spiegel which I linked from this blog yesterday. It may be read in full from the Globe and Mail site linked here, but the following conclusion contains the essence on the future for the Euro:

What seems to now be on the table is a regime whereby lenders to troubled sovereigns will be forced to undergo a managed process of default, in which bond maturities will first be lengthened and then, if that isn't enough, bond holders will suffer a partial loss of capital.

No surprise that Irish and Greek bonds are being pounded. It costs almost €600,000 to insure €10-million of Irish debt while Greek 10-year bonds are yielding almost 9 percentage points more than German bunds. Bond investors have been saying loudly for some time that the euro zone project as it stands is unworkable, and the voices are now shrill. What is new is that Germany is finally contemplating the managed default of euro zone member states. When that happens, I reckon that Germany will begin to work on the endgame, which is a two-tier euro zone of core members, mainly comprising the northern states sheltering under the bundesbank's iron apron and a gaggle of Club Med states, with currencies loosely linked to the euro but free to devalue to perdition.