…says German Chancellor Merkel to at Greek bailout. No bail out of Greece, no bailout of anybody. Greece should go the IMF.

That means the rumors that circulated just a few days ago (and significantly aided the value of the Euro) were false. Oh it will be a record bailout, but it looks like it will be IMF money. 

On the other hand, the IMF option was dismissed by French President Nicolas Sarkozy and European Central Bank President Jean-Claude Trichet, who said it would show the EU can’t solve its own crises. Ahh, the shame of a politician more important to the politicians than the economic plight of millions of Greek citizens who will suffer as the crisis explodes. 

The Eurozone is deeply split over the issue. While an IMF solution would find support with the Netherlands, Finland and Italy, but the majority is still against it. 

The decision (or the lack of resolution) provoked strong reactions and unsettled markets. The euro dropped as much as 1.1 percent to $1.3587,  and the extra yield that investors demand to hold Greek 10year bond rose 18 basis points, CDS rose to 295bp. Bloomberg quotes George Papandreou saying that Greece can’t afford to hold out much longer at current market rates. His government still needs to raise another €20bn to repay bonds maturing on April 20 and May 19. Oh my.