Why Did Schauble Almost Use The “Nuclear Option” – Tim Geithner Explains

• Why Did Schauble Almost Use The “Nuclear Option” – Tim Geithner Explains
  by Tyler Durden, www.zerohedge.com  
  While a Greek (pre) deal in some format was largely expected this weekend (especially following the unprecedented humiliation of Greece that would allow the Troika to repay… the Troika) the biggest stunner from the past 48 hours was Schauble’s insistence (which as we subsequently learned had been coordinated with Merkel) that either Greece accepts draconian terms which will strip the country of its sovereignty, or it will suffer a 5 year “time out” from the Eurozone.
  …. 
  But why did Schauble insist on this “nuclear option”? For the answer we turn to none other than former NY Fed president (and leaker) and US Treasury advisor and current Warburg Pincus president, whose 2014 memoir Stress Test lays it all out: 
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  A few days later [i.e., late July 2012], I flew to meet Wolfgang Schäuble for lunch during his vacation at a resort in Sylt, a North Sea island known as Germany’s Martha’s Vineyard. Schäuble was engaging, but I left Sylt feeling more worried than ever. He told me there were many in Europe who still thought kicking the Greeks out of the eurozone was a plausible — even desirable — strategy. The idea was that with Greece out, Germany would be more likely to provide the financial support the eurozone needed because the German people would no longer perceive aid to Europe as a bailout for the Greeks. At the same time, a Grexit would be traumatic enough that it would help scare the rest of Europe into giving up more sovereignty to a stronger banking and fiscal union. The argument was that letting Greece burn would make it easier to build a stronger Europe with a more credible firewall.
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