Ignore Merkel And Brexit: According To Bill Blain, A New Threat Can Bring Europe Crashing Down

Blain’s Morning Porridge, Submitted by Bill Blain of Mint Partners
Europe is like a 4D game of Jenga, and Germany is a very wobbly block – as are the banks
Europe is an enormous 4 dimensional game of Jenga. At the moment there are far too many blocks in play. Some of them are likely to leave the edifice teetering but standing. The question is: will any cause it to tumble?
Top of the wobbly blocks list is Merkel – what happens next in Germany? The CDU’s disastrous shift left has opened the door for the extreme right, and has fractured her own support.
Merkel’s survivability is questionable. In her wake, all efforts to rejig Europe via closer union and monetary/fiscal harmonisation via banking union are absolutely on hold while the German constitutional crisis (yep, for that is what it is) plays out.
Markets don’t seem particularly worried – they have become blas about political risk and look to the upside of Germany’s apparent rosy and robust financial strength. What’s not to like about Germany? What can possibly go wrong – it regards the current Merkel issue as a short-medium term minor concern. Get over it.
On a purely German basis they might be right. The critical thing for Europe is who follows Mutti?
Merkel’s threats to call another vote rather than continue coalition talks looks like bluster – sounds like she’s trying to scare the opposition parties into a deal rather than go through the uncertainty of second election. If it comes to a second vote, it’s another miscalculation.

This post was published at Zero Hedge on Nov 21, 2017.