A week or so ago, German Chancellor Angela Merkel characterized the Europe debt crisis as a struggle between politics and markets.

"In a way it is a struggle between politics and the markets. We must re-establish the primacy of politics over the markets," Merkel told Germany's Bundesregierung.de. "It is up to politicians to compensate for tensions on the markets. We must proceed step by step, and in step as far as possible. All parties in the German Bundestag are called on to do so."

In an unexpected move, German chancellor, Angela Merkel, called for the "orderly insolvencies" of member states.

Germany says it wants to get tough on European Union members to prevent another Greek crisis. Germany has been against helping Greece, and only under pressure from the EU and the IMF did it agree to participate in the bailout.

Now, the Germans want to let member states default to avoid any repeat of the Greek crisis. What they fail to realize is that defaults are often messy and not orderly. What could happen is that confidence in the eurozone would disappear as would the euro.

A day after signaling rigorous scrutiny of Greece's austerity plan, German Chancellor Angela Merkel did an about-face, of sorts, Wednesday, vowing a quicker approval of aid to the deficit-plague euro-zone country. Not before, however, the chancellor's earlier remarks rattled bond, currency and stock markets around the globe.

Standing beside International Monetary Fund Managing Director Dominique Strauss-Kahn, Merkel said, "It's completely clear that the negotiations between the Greek government, the European Commission and the IMF need to be sped up now," Bloomberg News reported Wednesday.

Despite market sentiment that suggests a Greek debt default is ahead, it won't occur if Europe remains on the path it laid out Friday when the Mediterranean nation asked for implementation the European Union's bail-out package. And that path includes tangible evidence by Greece, forwarded to German officials, that it's implementing the first phase of austerity measures.

German Chancellor Angela Merkel said "first I want to see the program," before Germany releases any funds to debt-plagued Greece, Bloomberg News reported Tuesday. Merkel's Christian Democratic party faces state-level elections in May at a time when most German citizens are opposed to the bailout.

Events are moving rapidly in the EU, led by Prime Minister Merkel of Germany and Nicholas Sarkozy of France who are pushing the EU to regulate or ban outright credit default swaps on sovereign debt.

Jose Manuel Barroso, EU President, said he would ban speculative derivatives trades outright. CDS trading is a $40 trillion dollar global market which insures corporate and government debt.

Tuesday's key developments in As The Eurozone Turns:

Greece is expected to announce an additional 3.5-billion-euro ($4.85 billion) deficit cut, to address concerns voiced by European Union members that the Mediterranean nation has to do more to correct its profligate fiscal ways, The New York Times (NYT) reported Tuesday .

Word of additional heavy-lifting by Greece comes after German Chancellor Angela Merkel said Greece "in the coming days" must reveal new measures to address EU member concerns that Greece is not doing enough to resolve the fiscal crisis, Bloomberg News reported Tuesday. Merkel is set to meet with Greece Prime Minister George Papandreou on Friday, March 5.

All-in yet regarding Greece? Nope, not quite, but Germany, as expected, has taken the lead in coordinating an aid package for the euro-zone's beleaguered font of democracy.

Further, France, Bloomberg News reported Wednesday, has quickly voiced support for the German initiative, and if it follows the pattern of previous interventions, investors will soon learn that France fully-supports Germany's plan, but also underscores that Germany, with the euro-zone's largest economy and resources, should bear most of the financial burden/risk of any package.

Germany is considering an assistance package for fiscally-strapped Greece, two lawmakers from Chancellor 's governing coalition said, Boomberg News reported Tuesday.

"We are considering support," Michael Meister, the Christian Democratic Union's deputy parliamentary leader and the party's financial affairs spokesman, told Bloomberg News Tuesday in a phone interview. "If Greece gets aid, it will only happen under strict conditions and if the Greek government undertakes far-reaching state reforms."

Following the instructions of President John F. Kennedy, "I appreciate candor almost as much as I appreciate good news," we're moving forward with candor, however unpleasant.

Investors take heed: the U.S. recession most likely just got longer.

The European Union, led by Germany, has rejected Eastern Europe's pleas for an aid package of about $228 billion, citing budget concerns in their own Western European countries, Bloomberg News reported Sunday.

The E.U.'s failure to provide aid and fiscal stimulus to Hungary, the Czech republic, Slovakia, Romania, Bulgaria, Latvia and Poland will hurt both the U.S. and global economies.

German Chancellor Angela Merkel said continental Europe should take the lead in financial market reform because the "Anglo-Saxon" model of regulation had failed, The Financial Times reported Wednesday.

Merkel, speaking before her meeting with U.S. President Bush and ahead of next month's G-8 leading industrialized nations economic summit, called for a European credit ratings agency to counter-balance Moody's and Standard & Poor's (NYSE: MHP), adding that despite the progress Europe has made with the euro, the financial regulatory framework is still "a strongly Anglo-Saxon dominated system."

Reforms sought by Berlin will include a ban on agency ratings for products they helped to create, new capital adequacy ratios for banks, and the prevention of bank sale of products they don't understand.

London-based economist Mark Chandler told BloggingStocks Wednesday he agrees with Merkel on the need for both financial market reform and a Europe-based counterweight to complement the largely U.S.-based regulatory framework, but is slightly surprised by Merkel's rhetoric.

DaimlerChrysler AG (NYSE:DCX) shares are up 2.8% to $64.51 in early morning trading (10:00 a.m.) after the company announced it sold a third of its stake, or 7.5%, in European Aeronautic Defence & Space Co., the parent of planemaker Airbus. The company retained a 15% stake in EADS. A private investment group will pay DaimlerChrysler €1.5 billion ($1.95 billion).

The sale comes ahead of the expected Feb. 14 fourth-quarter results, which should show a decline in net income as Chrysler models lost U.S. market share. DaimlerChrysler will most likely announce a restructuring plan for the Chrysler Group at that time. The disinvestment in EADS shows a continued strategic effort by DaimlerChrysler to focus on its core automotive business.

DaimlerChrysler wanted to sell its entire 22.5% stake in EADS, and have been trying to do so for quite some time. However, political pressures also played a role here as Merkel, the German PM, wanted to keep German control of EADS.

Of course, today DaimlerChrysler also enjoyed an upgrade by Citigroup from Hold to Buy. Citigroup believes that the restructuring plan (yet to be revealed) is a source of optimism, expecting "a Chrysler repair and build strategy." Target price was raised to €60 a share from €45 a share.

We'll just have to wait for next week's results and restructuring plan to see if Citigroup's trust is warranted.