Who will blink first, Schäuble or Trichet?

Germany and the European Central Bank (ECB) are at a stalemate over what to do about Greek government debt. Germany demands significant private sector involvement in returning Greece to debt sustainability, while the ECB has gone nuclear and said that any restructuring or reprofiling of Greek debt will force the central bank to reject Greek government debt as collateral for its lending facilities. Who will blink first?

I think Germany will end up backing down.

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