Germany's highest court has ruled that Angela Merkel's controversial decision to contribute billions of euros to the first rescue package of Greece and other fiscally troubled countries last year was not illegal. But the federal constitutional court also decreed that parliament should be more involved in such decisions. The ruling means that Germany's agreement to take part in the financial rescue of Greece will not be affected, but participation in future bailouts might be more complicated. European stock markets were boosted by the ruling, which heads off the prospect of total chaos in the eurozone but could lead to delays in further interventions. Presiding judge Andreas Vosskuhle told the court that although Germany's participation had not violated parliament's right to control spending, "the government is obligated in the cases of large expenditures to get the approval of the parliamentary budgetary committee". The verdict "should not be misinterpreted as a constitutional blank cheque for further rescue packages," he added. The three cases had been brought by a group of Eurosceptic academics and a rebel MP from the Bavarian sister party of chancellor Merkel's Christian Democratic Union (CDU). They argued that the bailouts violated German law, as well as European treaties, and could turn the EU into a "transfer union", where rich states such as Germany finance the fiscal indiscretions of poorer members like Greece.
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Thursday, September 8, 2011
Saving Merkel and the Bruxelles "shysters"
Germany's highest court has ruled that Angela Merkel's controversial decision to contribute billions of euros to the first rescue package of Greece and other fiscally troubled countries last year was not illegal. But the federal constitutional court also decreed that parliament should be more involved in such decisions. The ruling means that Germany's agreement to take part in the financial rescue of Greece will not be affected, but participation in future bailouts might be more complicated. European stock markets were boosted by the ruling, which heads off the prospect of total chaos in the eurozone but could lead to delays in further interventions. Presiding judge Andreas Vosskuhle told the court that although Germany's participation had not violated parliament's right to control spending, "the government is obligated in the cases of large expenditures to get the approval of the parliamentary budgetary committee". The verdict "should not be misinterpreted as a constitutional blank cheque for further rescue packages," he added. The three cases had been brought by a group of Eurosceptic academics and a rebel MP from the Bavarian sister party of chancellor Merkel's Christian Democratic Union (CDU). They argued that the bailouts violated German law, as well as European treaties, and could turn the EU into a "transfer union", where rich states such as Germany finance the fiscal indiscretions of poorer members like Greece.
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Don't underestimate the strength of feeling in Germany about the bailouts. Merkel knows she is likely to lose power if she carries on down this track. So if the courts don't stop her, the voters will.
Hans-Olaf Henkel, a real political and industry heavyweight, is already embarked on a single-issue "Save our Money" campaign which is attracting huge support. The hammering for the CDU and the FDP in Mecklenburg-Vorpommen last week was just a small taste of what is to come.
If Europe was still comprised of individual currencies it would all be over now, as it is not our "friends" are having to work harder and longer.
Would it be legal to put the names of all those involved in trying to topple the Euro in the papers, how much they move on the markets each day, how they invest and recoup, and where from and to? It would also be interesting to see a list of names investing in the hedge funds, just of course to ensure there are no criminals or bogus government investments there. There is also the matter of where these "entrepreneurial" folks are putting their profits? Let's face it when the propensity to do so much damage exists the process has to be transparent, hasn't it! .?
Let's face it all you need is one tiny thread and all sorts can come out, like in politics or the media!
Mr. Trichet, 68, today lost his cool with a reporter who asked whether Germany should abandon the euro and return to the mark as Europe’s debt crisis roils markets and spooks voters. Almost 13 years after its demise, the Deutsche mark retains enough potency to haunt Jean-Claude Trichet’s final days as European Central Bank president. “I would like very much to hear the congratulations for an institution which has delivered price stability in Germany for almost 13 years,” Trichet said in Frankfurt in an uncharacteristically raised voice. “It’s not by chance we have delivered price stability,” he said. “We do our job, it’s not an easy job.” The Frenchman, whose eight-year term ends Oct. 31., oversaw decisions to cut interest rates to a record low and provide banks with unlimited liquidity. He also took the unprecedented step of buying the bonds of countries including Ireland, Spain and Italy to lower yields. As the ECB’s involvement in crisis fighting increased, Trichet has criticized governments for not doing enough.
Mr Trichet has been at the forefront of efforts to save the region’s single currency. As Greece’s fiscal crisis ricocheted through European markets, he has spent much of the last two years shuttling back and forth between Frankfurt and national capitals for private meetings and a series of marathon summits.
“I’ve never seen Mr. Trichet get so angry before,” said Nick Kounis, head of macro research at ABN Amro in Amsterdam. “Trichet underlined to the German public that the ECB is still a trustworthy institution, as the question was punching hard against that view.” While the ECB has managed to keep inflation in the 17- nation region just below 2 percent since 1999, 37 percent of Germans said the country would be better off if it reintroduced the mark, according to an Emnid survey for broadcaster N24, published on Aug. 18. The same proportion said the country is better off with the euro, while another 19 percent said that a return to the mark wouldn’t change anything, the poll showed. The ECB left its benchmark interest rate unchanged at 1.5 percent today after its monthly meeting and the press conference was Trichet’s second last before he is succeeded by Italy’s Mario Draghi.
German finance minister Wolfgang Schauble said there will be no more money until Grecce "actually does" what it agreed to do. "I understand that there is resistance among the Greek population to austerity measures. But in the end it is up to Greece whether it can fulfil the conditions necessary for membership of the common currency. We offer no discounts," he told Deutschlandfunk. The wording has been taken as a threat to eject Greece from EMU, though is there no legal mechanism for such drastic action.
Dutch finance minister Jan Kees de Jager said the Netherlands "will not participate" in further payments to Greece unless it secures the go-ahead from the EU-IMF Troika, which left Athens abruptly last week after talks broke down.
The showdown in Greece came as the European Central Bank (ECB) abandoned its push for higher interest rates and slashed growth forecasts for the next two years, warning that the situtation is "extraordinarily demanding" and that "downside risks" have intensified.
"The hiking cycle has been aborted," said Carsten Brzeski from ING, adding that rates may even be cut from 1.5pc if the economy worsens and deflations rears its ugly head.
Jennifer McKeown, at Capital Economics, said the ECB will have to cut rates twice over the next six months as the global downturn deepens. The bank raised rates in July even though eurozone growth had already ground to halt, a move widely deemed to be a policy error
But the stability of the UK financial sector also depends on a stronger international framework for oversight of cross-border financial institutions. Coordinated multilateral frameworks for crisis management need to be developed with clear principles to guide information exchange and cross-border bank resolutions. Making progress on this critical issue will require difficult policy decisions and increased cooperation from all stakeholders involved.
Conclusion
In just a few hours, I will be traveling to Marseille, to join the meeting of G-7 central bank governors and ministers of finance. I look forward to a discussion of the outlook and the balance of risks at this pivotal time for the global economy, and what this means for their policies.
We will also be focusing on the challenges facing the Middle East and North Africa. The region is experiencing a historic transformation, which also has significant economic and financial consequences. Clearly, the countries themselves must take the lead in charting their forward course, to building stronger and more open economies. But they will have a strong partner in the international community—including the IMF. More broadly, the IMF will continue to support its members as they seek the best policies to deal with the challenges they face today—be they advanced, emerging, or developing economies.
In two weeks, our members will come to Washington for the IMF Annual Meetings. Together, we will discuss the critical challenges facing the global economy. The road ahead may be rocky, but a way forward exists—if we act now. With each country playing their part, we can identify the actions needed to achieve strong, sustainable and balanced growth.
Thank you.
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