Germany’s Chancellor Merkel has finally been forced to admit what she has known all along (but has been unwilling to admit to her voters). The Guardian has the details:

Germany ’s chancellor, Angela Merkel, agreed for the first time yesterday on a “last-resort” rescue package for debt-stricken Greece, while pushing for a tough new regime of sanctions and penalties against European single currency countries whose fiscal misconduct endangers the euro. Prodded by Merkel and the French president, Nicolas Sarkozy, the 16 countries using the single currency agreed a mixture of bilateral European loans and International Monetary Fund help for Greece if it finds itself facing default, unable to refinance its ballooning debt…While the eurozone leaders hoped the package agreed last night would suffice to calm the markets and they would not need to supply tens of billions of euros to Athens, the statement agreed they were “ready to contribute to co-ordinated bilateral loans … This mechanism has to be considered ultima ratio”, or a last resort if Greece is unable to raise enough money on the markets to avoid the risk of sovereign default, the statement said. Faced with widespread hostility at home to bailing out Greece, Merkel has painted herself into a corner in the past fortnight by resisting strong pressure from elsewhere in the EU to concoct a rescue package for Athens that might calm the markets and reduce the high rates Greece faces for borrowing money.

Merkel has taken the right decision, but if she had any sense of honor she would now resign. I expect her to continue in office.