Merkel, Sarkozy Battle Over Greek Default by Marlene J.Satter

There is a great divide yawning between Germany and the rest of the eurozone over the question of whether Greece should be allowed to default. While Germany says it will do all it can to avoid such an event, France is desperate to avoid it at all costs.

A default would mean potential disaster for French banks as well as a possible loss of the country's Triple-A credit rating. And if that goes, the financial rescue mechanism for all the eurozone could fall apart; France is the second biggest guarantor of the fund after Germany.

Bloomberg reported Friday that Angela Merkel, German chancellor, is pushing to prepare investors for an inevitable Greek default. Opposed to using the European Financial Stability Facility to recapitalize banks, something French President Nicolas Sarkozy is advocating, Merkel instead wants to wall off Greece from the rest of the eurozone without it departing the currency bloc entirely.

For more: Merkel, Sarkozy Battle Over Greek Default