The German Constitutional Court Rules Against Euro Hysteria

Wolf Richter's picture

Wolf Richter

Chancellor Angela Merkel did the right thing. She left Germany. And Germany is in turmoil. The bailout policies she and her government had pushed through and that parliament had passed just after the EU summit ran into discord, accusations, and threats. Everybody was applying pressure. And the Federal Constitutional Court would have to decide. On Tuesday, it began its hearings on the permanent European Stability Mechanism (ESM) and on the fiscal union pact. A high-urgency, top-priority, super-rush hearing, restricted to oral arguments to speed things along. Very unusual for the Court. A sign it was taking the time pressures seriously.

Plaintiffs had swarmed the Court from all sides: the Left, conservative Peter Gauweiler (CSU), former Minister of Justice Herta Däubler-Gmelin (SPD) with the association More Democracy, representing now over 23,000 citizens, and the Association of Tax Payers. They claimed that the Bundestag, in passing the laws, had transferred critical parliamentary rights—controlling the national budget—to other organizations, thereby curtailing the rights of voters to participate democratically in budget decisions. [Read.... The “European Monster State"].

Andreas Voßkuhle, President of the Constitutional Court, opened the session with a stunner: time. It would be impossible to examine all the issues and rule on the constitutionality of the laws in the time expected due to their complexity. Instead, the Court would decide by the end of July whether or not to grant an injunction that would prevent President Joachim Gauck from signing the laws. Then it would take another three months to rule on the constitutionality of the laws.

Yet the ESM was supposed to be operational by July 1. It had been ballyhooed as the insurmountable firewall that would keep contagion at bay. It was supposed to save the Eurozone, and by extension, the economy of the world.

So Merkel did the right thing: instead of pressuring the eight justices in Karlsruhe by showing up and threatening the end of the world if they dared to stop the ESM and the fiscal union pact, she flew to Indonesia—which wants to buy 100 used Leopard tanks from Germany. A trade that made some people nervous. But at the press conference following the meeting between Merkel and President Susilo Bambang Yudhoyono, he clarified: “We will never use tanks and helicopters against our people.” It had a calming effect and confirmed that a deal was being made. Business is business. And Merkel met IMF Managing Director Christine Lagarde at the hotel. A surprise meeting: “She asked me if we should meet for a beer,” Lagarde explained later. So there they were, the two bailout women, relaxing over a beer or two.

Outside the court room, it was a veritable slugfest. Bundestag President Norbert Lammert (CDU) warned of “hefty consequences” not only for Germany but also for the entire European system of treaties, if the court stopped or delayed the ESM. “It would be politically and economically fatal,” said Helmut Brandt, CDU delegate. “Every judge knows what this is about,” said Christian Ahrendt (FDP). President Gauck had a change of heart and was “happy” that the court was looking at the laws; instead of supporting Merkel, he showed a preference for the plaintiffs’ position. And European parliament delegate Alexander Graf Lambsdorff (FDP) complained that the justices were not always “sufficiently familiar” with all the processes in Europe and occasionally arrived at “erroneous judgments.”

Then there were those who lashed out against those who’d lashed out against the Court: “The Law in Europe has been continually stepped on during the euro crisis,” warned Frank Schäffler (FDP). “That doesn’t have to be repeated in Germany in that the Constitutional Court is maligned.” CSU legal expert Thomas Silberhorn told Bild, “The highest German court doesn’t need anyone’s political advice but everyone’s respect for its independence and dignity.” Horst Seehofer, head of the CSU and Minister-President of Bavaria, resented what was said over the last few days in public; it was “unappetizing,” he said, “certain that the justices would correctly evaluate things.”

Inside the court room, experts had five minutes each to present their case orally. Finance Minster Wolfgang Schäuble warned that stopping the ESM could lead to “considerable economic upheaval with unpredictable consequences for Germany,” similar to the crisis of 2009. Doubts on Germany’s ability or willingness to preserve the stability of the Eurozone could aggravate “crisis symptoms” and could lead to “more forceful speculation” that some nations would exit the Eurozone. And it “could lead to significant insecurity in the markets.”

He tried to push the court into making a quick decision not only on the injunction but also on the constitutionality of the laws. But Voßkuhle slapped down his efforts. The court was familiar with the misinterpretation by the foreign media if the injunction were granted, he said. “We’re all seeing the headline: Euro Bailout Stopped by Germany.’” And just before lunch, he told the government: “Please think if the ESM might become like a systemically important bank to be fed with ever more money to save the Eurozone.”

Bundesbank President Jens Weidmann spent his five minutes in the afternoon dialing down the drama. Estimating the consequences of stopping the ESM was “highly speculative,” he said, and part of the delay of the ESM was “already priced in” by the financial markets. Further, the EFSF would suffice for the immediate needs of Spain and Cyprus, he said.

On the other hand, the ESM wasn’t a panacea anyway, he said, and a “quick ratification wouldn’t guarantee that the crisis didn’t get worse.” State guarantees were only credible if markets believed that payment obligations would be fulfilled. And the fiscal union pact was “not sufficient” to guarantee that there would be a “solid foundation for the monetary union.”

So calm down, everyone, he seemed to say. Even if the Court ruled for the laws in no time, it wouldn’t solve the Eurozone debt crisis. And if it ruled against the laws, it wouldn’t be such a big deal.

After eight hours of discussions, it was clear: the court wasn’t eager to decide. The decision might be condemned by politicians and entail crashes cascading around the world. Even a mere injunction could be interpreted as a decision to scuttle the European bailout policies. Hence, the court’s play for time: it would allow euro hysteria to settle down, and markets could get comfortable with all possible outcomes. So the court’s first decision—more time—was its first major response in an era of euro chaos, hectic summits, frantic bailouts, failed mechanisms, and hasty treaties.

Germany and France exist in two different universes, apparently: France, safely ensconced in a Eurozone without bailouts and with nary a debt crisis on the horizon, debates its social model. Germany sees a Eurozone ravaged by a debt crisis with mind-boggling bailout costs and risks that stir up a furor on all sides, and everything is getting questioned, even the euro itself. Read.... France, Germany, And "The Reintroduction of the D-Mark."

And to sprinkle some humor into that dogged Eurozone drama, here is “Merkel at Wimbledon 2012,” a funny video by down-under comedians Clarke & Dawe.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
robertocarlos's picture

My gut feeling is the German court will allow the ESM rescue.

shovelhead's picture

The tanks are for drunken Australians smoking bongs on the beaches.

Got to teach em some manners.

Printfaster's picture

The language on the use of the Leopard tanks by Indonesia, is very measured.  "Our people" refers only to the Moslems in Indonesia, not the Balanese, the Timorians, nor those on New Guinea.

Guess where the tanks will be deployed?  Not on "our people", just minorites that need to be subjugated.  Shame on Germany for dumping them.

HardAssets's picture

'Germany' is a concept, an illusion. 'It' cannot be 'shamed'. Certain specific individuals made the decision regarding the tanks, for specific benefits to specific individuals. (Or they wouldnt have done it.)

Until people see underneath conceptual illusions, they will remain imprisoned by their own minds. They will run off to 'defend' 'America' or 'England' or 'Germany' or whatever - - - without questioning their mental conditioning. But afterall, someone told them - - so it must be true. And real thinking for yourself is such hard work.

Sandmann's picture

At least US supplies to Bahrain will be for humanitarian purposes under Saudi supervision !

MFL8240's picture

Will be nice to see a court rule that has some integrity!!  They planning on leaving town on vacation after the ruling?

Bob's picture

Damn, you'd think they would have a Hankfurt Paulsonsturm all lined up for when they needed him! 

Thinking this shit through could ruin everything the banksters have worked so hard for. 

HardAssets's picture

In the meantime - - - what's going on & how are things in Iceland ?

We never much hear about that in the 'media', do we ?

I wonder how you say "F*ck the bankers!" in the Icelandic language.

MarkM's picture

A 'surprise' meeting between Merkel and Lagarde at a hotel in Indonesia! Should we be reading something into that? Wasn't it Germany who was printing money recently? Is this part of paving the path for Germany to leave the Eurozone?


Cast Iron Skillet's picture

I'm very impressed with the German Federal Constitutional Court for not succumbing to pressure from politicians demanding an instant decision. Germans have something to be proud of.

somecallmetimmah's picture

Glad to see Germany still 'has a pair'.

Aussiekiwi's picture

We shall see, no decisions yet, just delaying tactics while they decide whether their pair is big enough to make the decision that they need too, my guess is nope, not going to be big enough.

Joe A's picture

Indonesia first wanted to buy the tanks from the Netherlands but that sparked a debate in that country about human rights issues in Indonesia. So Indonesia decided to buy the tanks from the German government which does not have a problem with human rights issues apparently, although there was a lot of debate on it in Germany as well. Indonesia promised not to use the tanks on its own people. That is usually also not the designated use of tanks: you use them against other countries' people.

Sandmann's picture

Netherlands does not manufacture tanks. It probably uses Leopards and Indonesia wants reconditioned Leopards. They could have bought them from Greece or Turkey but still need Germany to agreee so spares can be obtained. No doubt China would supply or even the USA - it seems to have no problems supplying Saudi Arabia - that paragon of Middle East Democracy in upholding human rights for women and Shias

q0paz's picture

classic tank country and all...

DoChenRollingBearing's picture

Excellent article, Wolf!  + mucho...

Please keep contributing pieces that help us understand Europe.


Europe matters!  Everything all matters!

Stay aware everyone!  We are on the edge of the precipice...

Do I have to say it again?   Buy physical gold as your own circumstances permit...

silverdragon's picture

They may not use them directly against their people but they will definitely use them to scare the sh*t out of their people.

Aussiekiwi's picture

I'm just relieved the Indonesian Government has decided not to use them to run over it's people or blow them into little pieces with their 105mm guns, I assume there is some sort of guarantee involved, like Germany gets to take its toys back if they are or do they just get to say 'hey!, you said you would not do that'

TulsaTime's picture

Now we all know that germany is going to have to sell out it's own people if it plans on keeping the date with destiny. And of course that destiny is the drivers seat for the united states of europe.  They can't stay above the fray and keep the export economy too.   Even if the court abdicates and goes with the grand euro bailout plan, bonds and all, it is too late to stop the world depression that is creeping up from the nether regions.  All they can do is position for the after, maybe keep the next war from being eurocentric AGAIN. 

HardAssets's picture

Yep - - - its all going down the tubes. And quite possibly was designed to do so in order to create a crisis that would lead to the United States of Europe region within the New World Order. Bankrupt every citizen by throwing their resources down bottomless artificially created financial pits and make them dependent on the central government.

Will these German judges resist ?  There is lots of time to apply all sorts of pressure on them (use your imagination). With the money and power at stake, does anyone really think that the screws won't be applied to the judges?

After the judges go along (by leaving some opening for the banksters & politicians in their vague ruling), the question will be - - - how do the German people react ?

And will people around the world continue to believe what 'their' government politicians tell them ? Will they believe that it was all a dumb, greed driven acccident and now someone at the top is looking out for their interests? Will they go along with the new 'communism'/'fascism'/'feudalism' - - - words describing nothing more than being robbed of their money and their freedom by psychopath criminals.

Mareka's picture

Hopefully the Federal Constitutional Court has not been compromised and will support German sovereignty. 

Somewhere there has to be a firewall to protect democracy and the rule of law from the new world order steam roller.


williambanzai7's picture

I am curious to know who is going to invade Indonesia to wage a tank battle, besides arms merchants.

Estrella's picture

The US Army wasn't using Leopards in St. Louis last week, were they?

geno-econ's picture

Tanks are only being sent over to Indonesia to temporarily prop up export statistics. Actually contract calls for return of tanks with new paint job and insignia--- depending on court decision.  Care to offer a rendition of what taks will look like

































Aussiekiwi's picture

lol, that is a good point, perhaps they are just for hunting wild game.

FeralSerf's picture

There is no wilder game than the one that the opposition politicians play when their constituent mobs are hungry.  Perhaps the Indonesian politicians and generals are getting mixed signals on their Ouija boards.  Tanks are for holding and taking population centers.

Bicycle Repairman's picture

The tanks are for a recreation of the battle of Kursk which is being held on Java.

falak pema's picture

there are two possibile answers to that question :

1° It replies to the famous perennial Stalin quote at Potsdam : The Vatican how many divisions? You need military muscle when India, China, and every body's elder cousin is buliding testosterone doped muscle in the region, now hub of future global growth.

2° It also replies to the superstitious strain of the man in the street. "If we have those Leopard tanks we will never have another Tsunami like in Aceh! Mother nature you are warned!"

This must please the bearded ones who dread God's ire and want Indonesian fire power to beat the shit out of local non believers in Allah! 

Having beer in Djakarta, with mutti Merkel and Duchess Lagarde, must be an awesome fiat beer fest!

Red herrings of Karlsruhe apart. 

bank guy in Brussels's picture

Indonesia does have some contentious and occasionally violent land borders ... several major islands are split with other countries, Indonesia does not quite have 'natural' boundaries

Timor ... East Timor

New Guinea ... Papua New Guinea

Borneo Kalimantan ... Malaysia

Nonetheless the point is well-taken ... the Western heavy-arms business is a dubious addition to the power of many governments and a cause of harm to the world

Maybe there should be a deal ... the government can buy tanks etc. if every citizen can buy an AK-47 or similar too

TulsaTime's picture

China and the new panzer armies mien herr!

q99x2's picture

Obama has been going there giving them advice on how to use the tanks.

Solon the Destroyer's picture

I thought the exact same thing. There's no way those tanks are for anything but using on their own population.

Thank god the IMF was there to oversee the deal.

Criminal bitchez.

Don Diego's picture

correct, but in that case an old M-60 would suffice no need for a modern Leopard II, my guess is that Indonesian Genrals want new toys or maybe one day Australia will be a juicy target.

TPTB_r_TBTF's picture

the tanks are purely defensive:

the tanks are to protect gov troops *from* the population,

as in protection from IEDs placed by the population.

dogbreath's picture

just a chance coincidence that christine legarde was strolling through the hotel lobby.  now what are they going to talk about over beers?

HardAssets's picture

Recorded by an electronic bug in the hotel lobby:

"Your room or mine, sexy ?"

Maybe they were trying to pick each other up - - -to each their own.  Live & let live.

world_debt_slave's picture

Finally, someone with some reason.

Zero Govt's picture

Where, where, where, where, where?????

50 years of this EU farce and nobody has brought the sham to a halt. In fact the only thing bringing the tragedy to a head is maths (not wisdom but the usual, running out of other peoples money)

Proving conclusively politicians have no financial control, never see anything coming and are societies village idiots

pashley1411's picture

Leaving S Europe in the crock pot, cooking away.   Vengenance against French for beating them at, hmm, the Marne? 

Bollixed's picture


Sacre bleu! Is that even legal?

barliman's picture


How droll of the judges to rule that ... 

... time was on their side.

Jagger is a German name, nein?


genr8n's picture

A majority Germans want a referendum on the Fiscal Union. Something that could possibly be arranged, implemented and provide far more concrete meaning (and lead to a faster resolution) than the outcome of a Constitutional Court hearing.

bank guy in Brussels's picture

German Constitutional Court in full has sixteen judges on two levels, 8 judges in each, almost enough for football

The cast of characters with photos:

DeadFred's picture

But you would have to kidnap and hold hostage many more family members to insure the 'correct' result.