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Explaining The German Constitutional Court Ruling
European reformist think tank, Open Europe, which has so far been spot on in its very skeptical assessment of the drunken, meandering rumble that various European authorities have engaged in over the past two years to mask that the EUR is predicated by a failed and discredited model, has released its comprehensive assessment of today's German Constitutional Court ruling. For anyone even remotely close to trading the EUR pairs, or their derivatives: stocks and bonds, this is a must read. In a nutshell: "Giving the Bundestag’s Budget Committee the final say over the use of the bailout fund is welcome from a democratic point of view, but will add another element of uncertainty to the eurozone crisis. However, so far the Budget Committee has consistently taken the government line on the bailout, albeit reluctantly, and it remains to be seen whether it dares to exercise its new power. The calls for the whole Bundestag to have a greater say in the dispersion of financial aid are, therefore, likely to continue.... the wording used by the Court also seems to suggest that joint debt in the eurozone could be constitutionally allowed if it involved a stronger German say over other member states’ fiscal policies. This could set Europe up for a major clash of national democracies in future, should Eurobonds be deemed necessary to hold the Single Currency together in the long term. Controversially, the Court did not give an opinion on the legality of the ECB’s bond purchase programme – despite the potential implications this programme has on price stability and the ECB’s independence. This unsettling question is likely to resurface in future." Expect this court to feature far more prominently in the months to come.
Full report:
Open Europe responds to German Constitutional Court ruling
Open Europe has today responded to the German Constitutional Court ruling against the claims that the eurozone bailouts are illegal. As expected, the Court ruled that the eurozone bailouts are compatible with German Basic Law, since, according to the Court, they do not provide an excessive burden on the German budget, do not constitute a significant transfer of power away from the Bundestag nor impact negatively on the euro’s purchasing power, as had been suggested by the claimants. However, the Court also gave the Bundestag’s Budget Committee an effective veto over future activation of the eurozone’s bailout fund, the EFSF, and reinforced German constitutional restrictions on the introduction of Eurobonds.
Open Europe Economic Analyst Raoul Ruparel said,
“Giving the Bundestag’s Budget Committee the final say over the use of the bailout fund is welcome from a democratic point of view, but will add another element of uncertainty to the eurozone crisis. However, so far the Budget Committee has consistently taken the government line on the bailout, albeit reluctantly, and it remains to be seen whether it dares to exercise its new power. The calls for the whole Bundestag to have a greater say in the dispersion of financial aid are, therefore, likely to continue.”
“The ruling also seems to further entrench the German government position that Eurobonds are a no-go, by warning that Germany should not assume other countries’ liabilities. However, the wording used by the Court also seems to suggest that joint debt in the eurozone could be constitutionally allowed if it involved a stronger German say over other member states’ fiscal policies. This could set Europe up for a major clash of national democracies in future, should Eurobonds be deemed necessary to hold the Single Currency together in the long term.”
“Controversially, the Court did not give an opinion on the legality of the ECB’s bond purchase programme – despite the potential implications this programme has on price stability and the ECB’s independence. This unsettling question is likely to resurface in future.”
What did the Court say?
Although finding the complaints non-substantive, Chief Justice Andreas Voßkuhle stressed that the verdict “should not be misinterpreted as a constitutional blank-cheque for further aid-packages”.
The Court also ruled that, in order to conform to the constitution, “the Federal Government is in principle obliged to always obtain prior approval by the [Bundestag] Budget Committee before giving guarantees.” This gives the committee a significant role in the approval of any future use of the EFSF, the eurozone’s bailout fund, a marked change from the current situation where it can only give a non-binding opinion on the issue.
Additionally, the Court also flagged up some red lines over any future mutualisation of debt. The Court’s press release states that, “The Bundestag, as the legislature, is also prohibited from establishing permanent mechanisms under the law of international agreements which result in an assumption of liability for other states’ voluntary decisions, especially if they have consequences whose impact is difficult to calculate.” This seems to suggest that any move towards Eurobonds would be unconstitutional, even with agreement from the Bundestag. However, the phrasing of the statement does also hint that if Germany were to have a greater say over the fiscal policies of other states, where it had assumed a liability, then in fact, it may not be unconstitutional. The full implications of the ruling, however, still remain unclear.
To read Open Europe’s preview briefing on the ruling – which reflects the content of the actual verdict, click the link below:
http://www.openeurope.org.uk/research/Karlsruhefactor.pdf
And for a totally different argument, here is Goldman's take:
A qualified 'yes' to the EFSF from Germany's Constitutional Court
As widely expected, Germany’s Constitutional Court rejected complaints against aid measures for Greece and the EFSF on the basis that it saw "no violation of the Bundestag’s budget authority" as the measures would not "establish or consolidate an automatism by which the Bundestag would relinquish its right to adopt the budget and control its implementation by government". In addition, the court did not specify an upper limit for the total guarantees that can be provided. Thus, a further increase in the EFSF would be possible from a constitutional point of view (although politically it could prove difficult to obtain approval for them). Note, however, that the court also said that limits exist to the extent to which the Bundestag may forgo its budgetary autonomy. We would interpret this statement as implying that the court would have clear reservations about an outright collectivisation of government debt, for example in the form of Eurobonds.
However, the court qualified the measures by saying that "every larger-scale aid measure of the Federation taken in a spirit of solidarity and involving public expenditure at an international or European Union level must be specifically approved by the Bundestag. Sufficient parliamentary influence must also be ensured with regard to the manner in which the funds that are made available are dealt with". Specifically, the court ruled that "the Federal Government is in principle obliged to always obtain prior approval by the Budget Committee before giving guarantees" and that today’s ruling “is not a carte blanche for future help packages”.
The Bundestag will need to specify in the EFSF law (currently under discussion) whether this means that the budget committee will have to approve not just an increase in guarantees and new programs but also every disbursement under existing programs and debt purchases in the secondary market. Given the overall mood among coalition MPs, we think that the Bundestag will want a rather broad participation of the budget committee in this process, even if it is not strictly required by the Constitutional Court ruling.
All else equal, this would make the approval process more cumbersome and increase the risk that the budget committee would at some point reject a decision taken by the EFSF’s board. At the same time, approval by the whole Bundestag – and not just the budget committee – would make the process even more difficult - indeed, potentially a lot more difficult. Thus, we still think that today’s ruling does not significantly reduce the EFSF’s overall effectiveness. After all, it will be much easier for the government to gain a sufficient majority in the budget committee than in the whole Bundestag. Note also that approval by the budget committee can be given ex post if the circumstances make this necessary.
Overall, the ruling was broadly as expected. The next hurdle will be the vote in the German parliament on September 29 on the second Greek package and the expansion of the EFSF.
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Should? I have read this book already. It is merely a matter of when, not if.
Thanks for this. The headlines from MSM are chaos --as usual.
http://www.bundestag.de/htdocs_e/bundestag/committees/a08/members.html
Ultimately the court will do what it is told to do. Sure there will be a power struggle. But when it all comes down to brass tacks, the court is there to legitimize the state. And it will do so in order to legitimize itself.
You're right on that, the power of the court does not come from the people but from the government's monopoly on violence
Wrong. This court is not part of the government, it is above the government. Its power does not come from the government it comes from the constitution itself.
Try finding judges through history that have had this same thought. Then answer one question, "Did they survive?". I wrong your wrong.
Here is a good starting place if you want to do some research on this question:
http://www.martinarmstrong.org/files/Is%20Artificial%20Intelligence%20Re...
That changed LONG ago...these days...judges are as owned as politicians.
Agreed. On future bailouts/Eurobonds-related challenges, as a rule, the BVG, like the SCOTUS, can't issue advisory opinions, which means they can only decide on those issues if and after they are issued, and then they would be likely to uphold them, since the political cost of unwinding a done deal would be too large.
However, some of the "unsettling questions" will likely reemerge very soon, because the court postponed resolution on some of the constitutional challenges relating to the same Greece I bailout it decided on today. The way the German system works, this means more red lines and more "yes, but"-s may come after the remaining claims are reviewed and decided.
One issue that is very much still to be ruled on is how the German assumption of any guarantees or other conditional (let alone unconditional) liabilities relates to its constitutional debt brake: if the Germans are jointly and severally liable for, say, Eurobonds, should the whole issuance count towards the debt-to-GDB cap? Would it be legal to hold bailouts off-balance sheet? And how do you calculate the German expected sovereign exposure to start with? The Court *hates* to deal with any economic issues, because they think it is not their job to set economic policies (which the BVG President Vosskuhle said openly) and because they don't really understand economic complexities (which he didn't say). But they just may have to say something on the subject. And soon.
The court said that the money (flushed already) is gone and don't bother arguing the legitimacy.
Future money to be flushed will be run by someone to argue about, but it is gone also.
Saving the deadbeats and the Euro is more important (at the moment) then what Germany wants.
After all, there is all of Europe to consider............
What was that about Sour Krauts and PIIGS?
What a joke the developed world is. An absolute joke. I hope anyone harbouring 1st-2nd-3rd world dichotomies is listening.
All people are 3rd world. Nose to the grindstone germans included.
Trouble is, when a dream is shattered, irrationality ensues.
Karl's Rueful decision, indeed and word.
V
One of these will get you anyways.
http://aadivaahan.wordpress.com/2011/05/09/population-control-vectors/
ORI, exactly why your current real estate is important, depending on location, precise who controls those vectors can vary wildly.
Precisely LOP. Very important to know and understand your surroundings.
In the US, everything looked so good and clean on the surface, till one learned about flouride in the water, chemtrails in the air, GMO in the food. Invisible but deadly.
I'll say this though, sitting in Bangalore, my surroundings do not look so good right now! :-)
V
In other words, "we few have decided what is good for the world and OUR bottom line." Many questions will start going unanswered moving forward as the taxpayer no longer needs to know what is going on. Hedge accordingly.
Legitimacy ploy. Everything will be passed exactly as it would have prior to this ruling. The difference is they can claim it was well within the democratic process. As usual: HORSESHIT
See, along the words to already paid "help" was illegal.
There has been no ruling AGAINST that. Case closed already.
"Make it better next time" - oh rite. KTHXBAI. How about the ALREADY paid stuff?
It was only 22bn + 112bn? Making it "including" 211bn - oh wait, there's a 20% margin. Count it up: 250bn in guarantees.
While a typical Haushalt is 305bn? Riiiiite.
Got canned food?
All about the Physical.
http://www.theglobeandmail.com/report-on-business/international-news/global-exchange/international-experts/if-youre-looking-for-bubbles-dont-look-at-gold-coins/article2156529/
I'm wondering how much money it took to buy this ruling?
$1.4 Quadrillion is my guess.
I might be off by a few trillions...
How long can Europe and the U.S. be held together with duct tape? Seriously--can this farce go on another year/2/3/4/5....? How long can we run the printing press before fiat collapses, etc. Any predictions? Are the sheeple who put full faith in the idea that Ben can mask the problem indefinitely sort of right? My father calls me every time the market is up and smugly tells me its time to get back in--ride the stimulus wave in an election year. Is he right--am I naive for not picking up my spoon and chowing down on the bullshit?
No truer words have ever been spoken as ... Markets can remain irrational longer than you can remain solvent
I will tell you the story of my college roommate's mother in 2000. She kept on going on about how she was up $250k and that the stock market was the easiest money she ever made. She quit her job and told my roommate not to worry about his $100k in student loans because she would pay them off. She expected by Christmas her nest egg would double again and that she would be a multimillionaire in a few short years.
I told her to sell everything she had and book the gains right now. I told her that the market is completely irrational and that valuations were based on phantasms. I said do you really think Pets.com and Diapers.com are going to be multibillion dollar businesses? The stock market is a game for fools, trust me.
She didn't listen and a year later when both me and her son were still looking for work and just about everybody turned up for the reunion since we didn't have jobs to worry about, he said my mom should have listened to you. She lost just about everything down to about $15k but the problem is she bought a new car and a whole bunch of other stuff. She tried to get her old job back but they aren't hiring.
Short term your dad may be right. Your paper gains main go up dramatically but you got to know when to fold. You can be assured the insiders will all get out before your dad can and his paper gains will vanish in the blink of an eye. The trick is not to be greedy.
I have never lost more than $20 in Vegas because I never take out more to bet from the beginning and I walk away if I lose two in a row or lose the first bet. I was up $280 last time and then lost two $20 bets so I walked away with $240. I will never allow myself to lose more than $20 so I can't be out more than that ever because I know the game is rigged and I'll never truly win.
In Vegas, the games are not rigged, but the percentages ARE against you!
They'll challenge the 'need to come to Germany' clause. The other part has been found 'legal', the other part is a throw in that will be challenged.
Pacts with the devil don't always play out like you think they will. You gave them what they needed, now they'll screw you out of needing to ok it.
Of course Germany's fiscal gestapo will surely endear Germany amongst the fucked over populace of Europe.
Glass-Steagall
Call in the next 10 minutes, and we'll waive your membership fee for the first 30 days. But wait.. there is more!
Nigel Farage in Croatia ,European Union membership debate , Part 1- September 2011
Nigel Farage in Croatia ,European Union membership debate , Part 2- September 2011
Its looking more like a sequence of straw men, to be taken down one by one...the only striking thing about the ruling, and the only sound bite i was looking for, is that they emphasize greater financial participation should be rewarded with greater power to set policy in the Eurozone; its all there. Basically, we cant participate in more bailouts unless you let us tell you what to do. Checkmate, talk about something falling into your lap?
Not polite, but the Rothschild cabal in City of London won the war.
Meaning German gold in the NY FED is basically forfeit, & Germany's High Court won't challenge London's banking cartel.
Breaking that cartel's money power is essential for freedom in Germany, the US, UK & elsewhere.
"Expect this court to feature far more prominently in the months to come."
Ya, they're going to need a new ramp in the future and what else to do but call out their bought and paid for court. The average person is so fucked...
In the debate about who will leave the Euro first, the PIIGS or the core Germanic industrial north (note: not IF but WHEN)
This is what seemed to me to be most relevant; "...joint debt in the eurozone could be constitutionally allowed if it involved a stronger German say over other member states’ fiscal policies..."
To me this says that Germany will offer to buy (or at least rent at what amounts to gunpoint) sovereignty/assets from the poorer nations, if only Hitler had thought of this he would not have had to level a continent and still lose.
Did any judge vote against this ruling? Did he write an opinion?
One judge voted against it. I don't think he wrote a separate opinion.
He was of the opinion that he didn't want to wake up next to a dead hooker in a boutique hotel in Manhattan, so he shut the hell up.
The elites are desperate and making up the rules to try hold things together with duct tape for the sake of the banks, not the democracies. It won't work. The people see their democracies slipping away and they don't like it.
The German people should not be put in the position of having to be the enforcer for the banks. If/when the Germans ever try to dictate to a politician, eg., like a Berlusconi to double the Italian tax rate he will respond with his middle finger. So how is all the bill collecting going to be enforced upon the other sovereigns without War? Threats? Embargo? In the end it all has to be enforced. The Banks can't do it, so they're pushing the enforcement conundrum off on the German sovereign.
The German people are already resentful about this idea because they realize it will make them insolvent if they don't enforce austerity on the slackers. And anyway, the future make up of the Bundestag and the Bundestag budget committee can quickly change, creating a new set of problems for the EU and making the current excercise moot.
My only question is, Where do people think all this money is going to come from?
How are these corporations going to increase sales 250% or more to justify current stock prices?
I mean the governments are going to need to step in and buy trillions worth of products just to destroy the inventory to prop up sales. The consumer can't purchase the amount of inventory produced in a million years. They keep giving tax credits on inventory write downs so corporations just produce inventory for the tax savings. they keep giving tax credits for purchasing new machinery and equipment so companies just buy things they don't need just to write it off. They keep allowing corporations to write off losses on future taxes so there is no incentive to actually make a profit. Defaults are backstopped with free money so default is actually a beneficial way to do business.
If you fire your CEO you get a instant 14% increase in your stock price.
If you hire a fired CEO from another company you get another jump in your stock price becausethis time will be different.
The world is run by complete idiots or people clinically insane. It really truly is. As a rational being you are the sane person accidentally admitted to the nuthouse.
...and this is what that world will look like
http://shofing9.files.wordpress.com/2008/07/img_16502.jpg
At first blush I was not surprised to see the German court kowtow to the Banksters. I still think so to a certain extent but now augment that belief with the notion that as patriotic Germans (you would hope so) the court saw the opportunity to seize more control of the EU.
If you control the flow of money, you have the world by the balls. In this case, increasingly for Germany, the EU.
The notion of there are some more equal than others....applies even more now to the EU vis a vis Germany.
In three words, "I see nothink."
Basically, if I read it right, the German court clearly stated that the eurobonds are illegal. They haven't stated it explicitly though, and used the language (control over other sovereign fiscal decisions), that is impossible to implement in Europe now. The German court said "no taxation without representation", and good luck implementing the representation part.
The gates to hell are open in Germany, now. It will take a little bit more time to break lose.
At least the germans 'do' gothic in high style. Hell will look like it's supposed to.
Acht du Lieber!
http://lonerangersilver.wordpress.com/2011/08/30/pyramid-of-capital-syst...
"As expected, the Court ruled that the eurozone bailouts are compatible with German Basic Law, since, according to the Court, an they do not provide excessive burden on the German budget"
Eurobonds light (60% basic debt covered by Eurobonds) would be 5tr. EUR/year. This means 1,2 trn. for Germany. That would kick the GDP/debt ratio to 160%.
Excessive burden is defined at Japanese levels?
Who determines who is on the [Bundestag] Budget Committee? I'd bet it isn't the people. bwdik