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Someone Had to Blink - Perhaps Its a Pity It Had to Be Frau Merkel

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Angela Merkel rushed off from this week's EU Summit without commenting on the deal done to shore up the financial system.

Hardly surprising - other EU leaders like Ireland's Enda Kenny have described this as a "seismic shift" in policy - and we all know who he was talking about - the German leader.

Not great optics for Merkel who has been edging her own poll ratings up through the crisis with the 'Swabian housewife' in Middle Germany - refusing to give in to the 'moral hazard' of financing those who can't or won't wake up to economic reality.

Personally I have tremendous sympathy for Merkels hard line up until now - why should the prudent support the reckless?

But as the summitry has dragged on over the past year - and we have all grown weary of the rhetoric not matching the reality. With a lack of political will to agree a lasting solution to Europe's fundamental problems - something had to give. Someone had to blink.

Faced with a crisis that has now taken on existential proportions - Angela Merkel has blinked.

The election of Francois Hollande in France has proved a game changer in rhetoric as well as policy across Europe.

Time will tell if his approach is right but it has moved the dial on the overall policy stance and Merkel has nodded to that.

The crisis has also intensified significantly just in the past two months - central bank governors and financial regulators have rushed to podiums to make that case.

So the German Chancellor has had to shift recognising parts of Europe - the fundamental market for all of Germany - is in flames.

In many ways its a pity. I have a lot of respect for Merkel - she has been prepared to tell truth unto others about the fundamental realities of life.

Europe needs her voice around the table more than ever as a check on EU leaders who are all too willing to ignore fundamental economic realities.

Make no mistake - she faces a herculean task to sell this package to the Swabian housewife.

For all of Europe - I hope she can.

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