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Migrant Mother

German Constitutional Court To Deliver Verdict On Greek Euro Bailout

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Germany's highest court will this week deliver a ruling on the legality of last year's multibillion euro rescue package for Greece and other troubled countries.

Theoretically judges could force Germany to demand the money back, putting the future of the euro at risk. Analysts believe they are more likely to impose restrictions on future bailouts.

The constitutional court in Karlsruhe is due to give judgment on Wednesday in three cases brought by a group of euro-sceptic academics and a rebel MP from the Christian Social Union, Bavarian sister party of chancellor Angela Merkel's Christian Democratic Union. They argue that bailouts violate German law, as well as European treaties, and could turn the EU into a "transfer union", where rich states like Germany finance the fiscal indiscretions of poorer members like Greece.

The future of the euro is at stake if the claimants win – because the German government could theoretically be forced to retrospectively withdraw its substantial contribution to the eurozone rescue fund, the European financial stability facility (EFSF) – a debilitating move given that a quarter of the initial €440bn (£390bn) package pledged by eurozone leaders last year came from German coffers. It would also endanger the second bailout, soon to be debated in the Bundestag, which increases Germany's share of guarantees to as much as €211bn.

Analysts believe the court will not take the potentially catastrophic step of ruling the bailout illegal, but they are likely to impose restrictions on the way the German government approves future decisions, something many German politicians are also insisting on before they vote on the expansion of the EFSF in the Bundestag, Germany's lower house of parliament, on September 29.

It is a development investors worry will slow down the already sluggish decision-making mechanisms in the eurozone.

The verdict comes at a time when many German MPs, including an increasing number in Merkel's own coalition, are concerned they are being bypassed as she unilaterally makes costly decisions that are hugely unpopular among the electorate.

Although a majority in the September 29 vote is a foregone conclusion given that the opposition Social Democrats have indicated they are likely to vote for the legislation, Merkel would face pressure to dissolve parliament and call new elections if she is unable to secure a majority with conservative allies alone. Her coalition has 330 seats in the 620-seat Bundestag, meaning she can afford 19 dissident votes.

On Monday evening, her governing coalition held a test vote on EFSF expansion. The result was not good for Merkel, reeling from yet another plunge in support in regional elections in Mecklenburg Pomerania on Sunday, as well as the death of her father over the weekend.

Fourteen from her camp – a coalition of her conservatives with the business-friendly Free Democrats – voted against the reform and seven abstained, according to Spiegel Online.

But before parliament even starts debating the EFSF expansion, Merkel must wait and see what the constitutional court has to say about the initial bailout.

"Widespread market fears that the constitutional court might possibly demand the reversal of crisis management decisions taken at the European level are probably largely unfounded," Deutsche Bank economist Barbara Boettcher told Reuters.

"The focus is likely to be on the rights of the Bundestag to have a say in these matters, particularly with regard to budget responsibility."

In a briefing on Monday, one of the claimants, economics professor Wilhelm Nölling, said the euro could only be "made functional by limiting it to a maximum of seven strong countries".

He told the briefing: "The other countries should recognise the beauty and efficiency of individual made-to-measure solutions and/or alliances and reclaim them for themselves."

Another academic plaintiff, Joachim Starbatty, said exiting the eurozone was the only way Greece and other indebted euro states could revalue their currency and gain competitiveness. Without that, the end of the euro zone was near. "It'll go on for two more years, then it's game over," he told reporters.

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German news is reporting that the case has been rejected by the supreme court, but that future decisions must be made with wider consultation.

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A German court has rejected a challenge from eurosceptics that aimed to block eurozone bailouts on the grounds they were illegal.

The German parliament's budget committee will need to approve further bailouts

However from now on, the court said the government must seek the approval of parliament's budget committee before handing out further rescue funds.

The requirement could further slow down Europe's response to the debt crisis.

"It's being taken as good news, they can carry on bailing out the eurozone," one trader said.

"But it's the decision that was expected, we need to see what the caveats are or whether it makes any difference to the bigger picture."

Prominent critics had bought the cases against the German government, arguing that its bailouts of Portugal, Ireland and Greece violated parliament's right to control spending of taxpayer money.

http://news.sky.com/home/business/article/16064313

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A German court has rejected a challenge from eurosceptics that aimed to block eurozone bailouts on the grounds they were illegal.

The German parliament's budget committee will need to approve further bailouts

However from now on, the court said the government must seek the approval of parliament's budget committee before handing out further rescue funds.

The requirement could further slow down Europe's response to the debt crisis.

"It's being taken as good news, they can carry on bailing out the eurozone," one trader said.

"But it's the decision that was expected, we need to see what the caveats are or whether it makes any difference to the bigger picture."

Prominent critics had bought the cases against the German government, arguing that its bailouts of Portugal, Ireland and Greece violated parliament's right to control spending of taxpayer money.

http://news.sky.com/home/business/article/16064313

Good grief :(

Surely this house of cards must come down some how, some day?

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I have not seen any opiniom former point out the fact that the bailoouts now have to be authorised by a democratically elected body . Surely this meams that in the near future Angela MERKEL may well be able to gain approval with her shaky majority. However elections are near and Germany is incensed by all these bailouts . I think that the new Bundestag may well say "never again " and that is only months away. Not in time for this financial mess to be over. In short they have passed the parcel but in it is a time bomb.

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Surely this house of cards must come down some how, some day?

I expect the market's apparent relief today will to be as short-lived as it was after July's inconclusive Greek 'deal'. (See chart.) There's still plenty to go wrong and, by re-affirming the rights of individual parliaments to dither and demur, plenty of time for things to wrong. Slovakia has said it won't ratify anything before December. There is a real question mark over how long some countries and banks can hold out.

chart.jpg

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http://www.telegraph.co.uk/finance/financialcrisis/8746664/German-court-warns-ruling-no-blank-cheque-for-bailouts.html

The Constitutional Court rejected on Wednesday a series of lawsuits aimed at blocking the participation of Europe's biggest economy in emergency loan packages.

However, it said the government must seek the approval of parliament's budget committee before granting such aid.

"This was a very tight decision. But it should not be mistakenly interpreted as a constitutional blank cheque authorising further rescue measures," the presiding judge Andreas Vosskuhle told plaintiffs, government officials and members of parliament in the courtroom in Karlsruhe.

It's an interesting fudge, the current bailout is deemed legal yet any further funds must seek approval. Logically this means the first bailout is in fact illegal as it didn't have approval unless of course the judges have just rewrote the German constitution that the first 1 or 2 bailouts are free from political approval but if you want a 3rd you'd better get approval.

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Even though I can't claim any expertise on the modern German constitution, it's pretty obvious that realpolitik has trumped the law on this, in the form of a decision that allows Merkel and the markets to absorb the fact that there will be no more bailout money from Germany forthcoming, but that existing commitments are not in jeopardy.

Agreed with posters above - this buys time to mitigate the impact of the inevitable (i.e. to engineer a semi-planned breakup of the Eurozone as distinct from an instantaneous nuking of it), but it doesn't solve the underlying problem.

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Even though I can't claim any expertise on the modern German constitution, it's pretty obvious that realpolitik has trumped the law on this, in the form of a decision that allows Merkel and the markets to absorb the fact that there will be no more bailout money from Germany forthcoming, but that existing commitments are not in jeopardy.

Agreed with posters above - this buys time to mitigate the impact of the inevitable (i.e. to engineer a semi-planned breakup of the Eurozone as distinct from an instantaneous nuking of it), but it doesn't solve the underlying problem.

I got news for you. :)

They'll do another bailout. This stuff is to get the german population to stfu while the politicians carry on with the EUSSR.

Next time the language will be more severe, and the bailout will happen. Then there will be some apparent extremely hostile arguing about it from two major politicos one of whom will rally popular support to him and then mysteriously fail, and the bailout will happen. Any popular grass roots movements against the bailout will get co opted, and the bailouts will happen.

This ends when either the german population hand their euros back in or they buy nothing in the shops due to inflation.

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This stuff is to get the german population to stfu while the politicians carry on with the EUSSR.

While that was certainly the politicos plan, this should add a measure of constraint. At least it is preventing the automatic transfer of powers to the centre and will encourage other parliaments to shore up or assert their rights. I agree that the court really had no case to answer . . . appropriation of Eurozone taxpayers' money without representation can't legally fit with any state's constitution.

The recent 'kingmaking' talks between Sarkozy, Merkel and van Rompuy must have set a few alarm bells ringing. It is to be remembered that Merkel is a product of the DDR, where austerity for anyone outside the politburo was the norm for 40 odd years.

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While that was certainly the politicos plan, this should add a measure of constraint. At least it is preventing the automatic transfer of powers to the centre and will encourage other parliaments to shore up or assert their rights. I agree that the court really had no case to answer . . . appropriation of Eurozone taxpayers' money without representation can't legally fit with any state's constitution.

The recent 'kingmaking' talks between Sarkozy, Merkel and van Rompuy must have set a few alarm bells ringing. It is to be remembered that Merkel is a product of the DDR, where austerity for anyone outside the politburo was the norm for 40 odd years.

It's a payout mechanism for the german political class.

That's all.

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However, it said the government must seek the approval of parliament's budget committee before granting such aid.

That sounds like the government must seek the approval of the government . Much like how they do things in the UK.

At least now that it's "approved" it's bound to be ok and above board :lol:

Edited by billybong

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That sounds like the government must seek the approval of the government . Much like how they do things in the UK.

It'l lbe just like the american shambles, the vote will only go through once everyone has had a nice big fat bribe.

But it'll go through.

Printy printy to destruction, 100% guaranteed.

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Surely this house of cards must come down some how, some day?

Yes, but no-one wants to take responsibility. Modern government is an exercise in pass the buck, and the court just did that.

If they'd said this was illegal, they would get the blame when the EU collapses. That might mean they don't get to retire on a fat pension.

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  • 337 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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