The second Greek bailout, agreed on July 21, is under threat as eurozone nations argue about collateral for the loan.

Greece agreed on August 16 to put €600 million in an escrow account as collateral for Finland’s part of the bailout—if Greece doesn’t pay Finland back, Finland gets the €600 million, plus interest.

Austria, the Netherlands, Slovakia and Slovenia responded by throwing a tantrum. Finland got a collateral agreement and we didn’t, they complained. We want one too.

But Greece can’t keep putting money inside escrow accounts. It’s short of cash—that’s why it needs a bailout in the first place. So on August 22, Germany said that Finland’s deal must be approved by the whole eurozone.

Finland shot back by saying if it doesn’t get collateral, it will not sign up to the bailout. And Germany failed to speak with one voice. Labor Minister Ursula von der Leyen supported Finland’s demand for collateral, saying, “Several states are making big efforts to service their debt. This must be honored. But to keep up those efforts in the long term, collateral is needed.”

To make matters worse, the Bundesbank, Germany’s central bank, published its monthly report on Monday, which said that the bailout deal might break German law.

“Far-reaching extra risks will be shifted to those countries providing help and to their taxpayers, and entail a large step towards a pooling of risks from particular emu [European Monetary Union] states with unsound public finances,” the Bundesbank said. “Unless there is a fundamental change of regime involving a far-reaching surrender of national fiscal sovereignty, it is imperative that the ‘no bailout’ rule—still enshrined in the treaties—should be strengthened by market discipline, rather than fatally weakened.”

The whole thing is a mess. Greece could end up having to give everyone collateral. And rating agency Moody’s warned that the issue could cause the whole bailout package to unravel.

The fiasco shows the Bundesbank is right. These bailouts cannot work until “there is a fundamental change of regime involving a far-reaching surrender of national fiscal sovereignty.” The rich countries won’t tolerate giving away their money without this.

Europe has come a long way toward becoming a superstate, but it faces more economic turmoil before it reaches that destination. For more information on where this is leading, see Trumpet editor in chief Gerald Flurry’s latest article: “World’s Greatest Danger: Germany Domineers Over Europe Again!”