"What's left of the euro?"

This question is asked on today's frontpage of Germany’s leading financial daily Handelsblatt, against the backdrop of a 50 euro note going up in flames (see picture).

The quite sensational splash is apparently a reaction to ECB President Jean-Claude Trichet's announcement yesterday that the ECB would continue accepting Greek "junk" bonds as collateral - an announcement that came as interest rates on Greek bonds rose again, giving a clear signal that the eurozone's assurances of assistance to Greece are not enough to calm the markets.

With thinly disguised indignation, Handelsblatt goes on to say,

Trichet made it obvious that he has changed his opinion under political pressure. This has suddenly given rise to questions, which at least in Germany, awake traumatic memories. What remains of the hard Euro, when the Central Bank bows to political pressure? Will the debt crisis, which all Western states suffer from, be followed by a loss in the value of money?

And being even more dramatic, a leader in the newspaper by its Chief Editor Gabor Steingart argues that

yesterday, the German Bundesbank died (...) ECB President Jean-Claude Trichet is no longer a follower of the monetary guardians in Frankfurt, who have set one big goal for themselves: never again inflation! Never again should savers and people with small incomes be deprived of the fruit of their labour...But in the Greek crisis it appears that the European Central Bank is pursuing political goals rather than the stability culture of its predecessor.

He quotes a former Bundesbank President who once said: “Those who flirt with inflation, marry her”, adding: “Trichet yesterday kissed her. For the spirit of the Bundesbank, that was a kiss of death.”

One shouldn't over-read the mood in Germany, but this is strong stuff. One of the eurozone potential flashpoints was always Germany's stern anti-inflation view and fundamentalist belief in a strong euro. This view was bound to be put to a rather unpleasant test as soon as a real crisis hit the eurozone - triggering a range of unpredictable consequences.

Well, that day has now arrived.