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As expected, Germany's Constitutional Court says the eurozone's ESM rescue fund and the "fiscal...

As expected, Germany's Constitutional Court says the eurozone's ESM rescue fund and the "fiscal compact" are constitutional as long as agreed fund levels are kept. Live blog here.
Comments (24)
  • dividend_growth
    , contributor
    Comments (2899) | Send Message
     
    The situation must indeed be serious that even the judges are scared.
    12 Sep 2012, 05:11 AM Reply Like
  • User 353732
    , contributor
    Comments (5065) | Send Message
     
    Why is this a surprise? The Court is an integral part of the Regime and what the Regime wants it gets. The law is what the Court , not the Constitution or custom or tradition says it is.
    The rule of grasping men and women rather than the rule of law is now the norm in Europe.
    12 Sep 2012, 05:23 AM Reply Like
  • undeRGRound
    , contributor
    Comments (6) | Send Message
     
    ...and the USA is not far behind...
    12 Sep 2012, 11:00 AM Reply Like
  • undeRGRound
    , contributor
    Comments (6) | Send Message
     
    It's funny how the headlines seem to say 1 thing and digging in-depth seems to say another thing all together. Like all these twits went to the same "journalism" school. APPARENTLY TPTB know that many (most?) will just read a headline and draw conclusions from that.
    12 Sep 2012, 11:13 AM Reply Like
  • filipo
    , contributor
    Comments (4203) | Send Message
     
    User,
    Bloomberg reads:
    "the court said ratification of the European Stability Mechanism (ESM) could go ahead with the "proviso" that German liability be limited to 190 billion euros, as agreed in the ESM treaty.
    Any increase in that amount would require prior approval by the Bundestag lower house of parliament."

     

    What's €190 billion ?
    Only Spain's debt is already way higher than that.... and soaring. Within a few years you'll buy a beer with that money.
    I consider the Court's decision as a rebuff of Club Med's needs.

     

    The true test will come on Thursday when Bernanke delivers his speech.
    12 Sep 2012, 06:29 AM Reply Like
  • dividend_growth
    , contributor
    Comments (2899) | Send Message
     
    If ESM is the equivalent of TARP, then it will be used to recaptitalize banks directly, including the ECB.

     

    ESM is not supposed to buy sovereign debt directly, that task is left to the ECB.
    12 Sep 2012, 06:33 AM Reply Like
  • jhooper
    , contributor
    Comments (6139) | Send Message
     
    According to MarketWatch this is how it is supposed to work:

     

    Unlimited Bond Purchases:
    The decision clears the way for the European Central Bank [ECB] to employ the program of unlimited bond purchases it detailed last week. That plan relies on distressed countries, such as Spain and Italy, applying to the ESM for help. The ESM would then buy government bonds in the primary market, while the ECB would make purchases in the secondary market in an effort to reduce the risk tied to fears of a euro breakup.
    12 Sep 2012, 08:50 AM Reply Like
  • untrusting investor
    , contributor
    Comments (9964) | Send Message
     
    ESM now full steam ahead. But if German liability is limited to 190 billion euro, the ESM will be out of euros in no time at all. Bailouts of Spain or Italy could run through the ESM funds within a matter of months if the ESM and ECB become the only buyers.
    12 Sep 2012, 09:21 AM Reply Like
  • dividend_growth
    , contributor
    Comments (2899) | Send Message
     
    To raise the limit, a simple majority in Bundestag is enough.

     

    The court basically gave ESM full green light.
    12 Sep 2012, 12:09 PM Reply Like
  • Manzke
    , contributor
    Comments (5) | Send Message
     
    Yes, not much of a surprise.

     

    However, if you read the verdict, it does not agree with buying "unlimited" amount of debts.
    It sets the limit to 190 billion euros. Higher amounts have to be agreed by parliament. If this will ever have to be decided, the outcome would be much less certain.
    (It will definitively not be like the US senate passing the bank bailout bill in 2008.)
    12 Sep 2012, 06:47 AM Reply Like
  • youngman442002
    , contributor
    Comments (5129) | Send Message
     
    That is 190 billion from Germany...
    But I bet their new offshore accounts are full of cash..or gold right now...a nice donation was made to help lube the decision...sarc on
    12 Sep 2012, 06:49 AM Reply Like
  • kyleg17
    , contributor
    Comments (174) | Send Message
     
    Europe has done a good job containing this whole mess. I can't believe I'm actually saying this but good job..
    12 Sep 2012, 09:30 AM Reply Like
  • Noneleft
    , contributor
    Comments (612) | Send Message
     
    I can't believe you are saying it either. Open your eyes and see the unmitigated mess which has been getting worse for years, and the total failure of Europe's politicians to contain it.

     

    This latest development is also a half cocked measure which will be stretched way beyond the 190 billion in attempt to gain more centralised control over Europes once sovereign states.
    12 Sep 2012, 10:53 AM Reply Like
  • filipo
    , contributor
    Comments (4203) | Send Message
     
    kyleg,
    I can't believe the markets perceive this Court decision as something positive that makes the euro deserve a higher rate.
    What will happen is this:
    1/ Within a few months the € 190 billion will appear to be inadequate.
    2/ The German Bundestag will have to decide whether an increase of the German contribution for the rescue fund is appropriate at that moment.
    3/ There will be new political tension between pros and cons in the Bundestag.
    4/ Assuming the pros win, they'll vote for the increase and a bit later they'll have to vote for an increase of German taxes; imagine the turmoil that is going to cause;

     

    In the meantime high German productivity keeps on killing Club Med's Trade and Industry. As a result Club Med's debts keep on growing because these people claim a right to have the same decent life as they have in Germany. I wonder how long German people will be found ready to support these debts.

     

    The eurozone problem is structural and as long as politicians don't acknowledge this, there is no solution.
    12 Sep 2012, 03:08 PM Reply Like
  • RM13
    , contributor
    Comments (1039) | Send Message
     
    Europe has done a good job? Hardly. The problems underlying this mess have not been fixed - fundamental differences in productivity and lifestyle choices between north and south of Europe. Yes, this may push the cart further down the road, but if this continues, southern Europeans will be storming German embassies and taking to the barricades. The eurozone system as currently administered is not sustainable to good portion of European population, whether they know it yet or not.
    12 Sep 2012, 10:08 AM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (11935) | Send Message
     
    Germany should have thought twice before joining the Euro. Their rights keep getting curtailed because they remain the only moderately fiscal conservative in the union. The ruling is expected but it is also a bit sad that the court would not side with the people they represent.
    12 Sep 2012, 10:25 AM Reply Like
  • Manzke
    , contributor
    Comments (5) | Send Message
     
    Every country who has joined the Euro should have thought twice. At this time, I don't see any country being happy with it.
    Greece and Spain probably have much more pain right now than Germany.

     

    I remember the discussions in the 90ies, and why the Maastricht Treaty will absolutely prevent what happens right now...
    12 Sep 2012, 10:53 AM Reply Like
  • kyleg17
    , contributor
    Comments (174) | Send Message
     
    Yes they have done a good job look at our markets. No they haven't fixed the underlying problems and they probably never will. There will always be problems. But all these doomers and gloomers are just getting out of control. Europe has been contained for the time being. And if it's gets outta control they will just print more money which is what everyone's been doing for years now. Sure it doesn't fix the problem but it kicks the can a little further and further. Who knows how long they can kick it but I'm guessing a long long time now with these new measures in place. Ben has been printing money forever now. There will always be problems but there will also be someone there to print. It's all good in the neighborhood...
    12 Sep 2012, 12:01 PM Reply Like
  • Noneleft
    , contributor
    Comments (612) | Send Message
     
    A strange idea of containment. If bubbling stock markets is the only measure of a healthy economy, then yes we can say look at the markets, they have done a good job.

     

    I understand your viewpoint that money and debt can be created indefinitely, but I don't think it's true. All it does is add more carriages to the train wreck.
    12 Sep 2012, 01:17 PM Reply Like
  • Noneleft
    , contributor
    Comments (612) | Send Message
     
    When (not if) the crisis deepens, and the EU190m is not enough, the political class can now simply nod through a massive expansion of that amount as required.

     

    The parliamentary 'safeguard' to this current court decision is no safeguard at all - it is just paying lip service to the German people and constitution, while giving into massive political pressure.

     

    All they have done is put the decision into the hands of the political class to take as much they want. The politicians already know this is going way beyond the EU190m. They just can't say it yet, but the green light is now in place.

     

    At the end of the day, it was either constitutional or it wasn't. But the decision of the court basically ignores the constitutional question (which was the whole point) by leaving it all up to the politicians - EUtrillions here we come.
    12 Sep 2012, 12:23 PM Reply Like
  • kyleg17
    , contributor
    Comments (174) | Send Message
     
    ^ doomer
    12 Sep 2012, 12:46 PM Reply Like
  • Noneleft
    , contributor
    Comments (612) | Send Message
     
    Fair enough. It's your money, and your freedom. Lets come back in a few months and see if I'm not right.
    12 Sep 2012, 01:01 PM Reply Like
  • kyleg17
    , contributor
    Comments (174) | Send Message
     
    I would agree with you if it weren't for the "bernanke put" and the central banks flooding the world cheap money. No ceilings in this market lol..
    12 Sep 2012, 01:27 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (2845) | Send Message
     
    Let's not forget that the Bureaucrats are one of the three pillars of the Triumvirate, of which the other two are the Politicians and the Bankers.
    12 Sep 2012, 03:09 PM Reply Like
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