Germany Backtracks On Last Week's Summit

Tyler Durden's picture

Those curious why peripheral European bond yields have once again resumed their levitation creep higher, it is because not only did yesterday the key Merkel coalition partner, CSU, threaten to leave Germany's ruling party hanging "if further euro zone states secure bailouts, saying there were limits to how far his party was prepared to go", but today we have gotten even more furious backtracking on Mario Monti's history "success" less than a week earlier, after on one hand German opposition SPD has said it opposed Direct ESM aid to banks, but more importantly, the German Finance Ministry itself said that the entire bailout timeline is now in question, saying that it "remains unclear if Eurozone finance ministers will decide on Spain's request for banking sector aid at their next monthly meeting on July 9." The ministry also added that a decision could only come once the report on Spain by the troika - the European Commission, the ECB and the IMF - had been finalized. In other words, that much maligned Troika, which Monti had supposedly exorcised from intervening in the economies of Spain and Italy, will, after all be very much present, which also means that all the media spin about last week's "gamechanging" and unconditional bailout summit resolution, has been for nothing, in line with all the skeptical expectations.

From Market News:

Germany's largest opposition party, the center-left SPD, opposes the plan to allow Europe's permanent rescue fund, the European Stability Mechanism, to directly recapitalize banks, a senior lawmaker said in an interview published Wednesday.


The proposal allowing for direct capitalization of banks by the ESM was considered one of the key achievements of the EU leaders' summit in Brussels late last week. The leaders said, however, that direct capitalization would only be allowed once a new centralized European bank supervisor, headed by the European Central Bank, has been established.


"We strictly oppose enabling credit institutions to be financed directly from the rescue funds," Carsten Schneider, the SPD's parliamentary budget speaker, told German web media Spiegel Online.


If the planned aid for the Spanish financial sector were to flow directly from the bailout fund to the banks, then "it's hard for me to imagine that the SPD could approve this," Schneider said.


It is expected that the lower house of parliament, the Bundestag, will get to vote on the planned aid for Spain, which could be as much as E100 billion, at the end of this month. German Chancellor Angela Merkel's center-right CDU/CSU-FDP coalition government has a majority in the Bundestag.

Also from the same source, and more importantly:

Finance Ministry spokesman Martin Kotthaus said at a regular government press conference here that a decision could only come once the report on Spain by the troika - the European Commission, the ECB and the IMF - had been finalized.


"Up to now I've had no indication whether we will be able to decide already on July 9," Kotthaus said.


Government spokesman Georg Streiter said at the same press conference that Chancellor Angela Merkel and Horst Seehofer, the leader of her junior coalition partner CSU, were working well together. Reports that Seehofer had threatened to break up the coalition over future aid measures for ailing Eurozone states are wrong, he said.


Streiter also said the government expects a quick decision by the country's Constitutional Court on whether it will grant an injunction against the ratification of Europe's permanent bailout fund, the European Stability Mechanism.


Both houses of German parliament approved the ESM bill with a two-thirds majority on Friday. The court has announced it will conduct oral proceedings on the case July 10.

In other words, the European bailout meaahnism may or may not be activated at some point in the future. But one thing is certain: even combined, assuming they are fully funded, and with recent opposition by Finland, Holland and Slovakia they won't be, the ESM and EFSF, will certainly not have enough firepower to deal with both Spain and Italy, which means next on the regurgitated 2011 news agenda will be the same discussions that took place last year over levering up the EFSF, which like in 2011 will end up with the same sad conclusion. And during all this time, Europe will have finally run out of its last remaining assets, up to and including Spiderman towels.

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LULZBank's picture

Achtung Bitchezz!!! We are backing up!

knukles's picture

And why does this not surprise me?

Achtung Bitchezz

Now that is funny :)

Linus2011's picture

As a german with insight information i feel happy to release our inofficial plan to zerohedge:

Starting at the 1st of January 2013

  1. the EU will be renamed into Deutsches Reich
  2. the Euro will be converted into Reichsmark
  3. the capital of the new Reich will be moved from Brussels to Berlin
  4. all european assets are belong to the Deutsches Reich
  5. the language all within Europe will be deutsch
GeneMarchbanks's picture

I must say: I am neither German nor want to be one. Nor do I speak German.

I do fail to see how that would make things worse than they already are.

Again, I reiterate: not a German.

Sandmann's picture

Funny, I thought you had shot yourself in Karlsruhe today together with your hostages......or have your files simply been shreded by the Verfassungsschutz ?

DutchR's picture

Jawohl, herr Oberbockwurstgruppenkrautführer.



Colombian Gringo's picture

I guess this means that the EU leaders will have to meet and lie again about having a deal.

OttoMBMP's picture

And that is bullish isn't it?

knukles's picture

For the transportation, food, booze, coke and hooker businesses

Talk about neo-Krugmannian trickle down economics...

Stop pissing on my leg!

No I won't pull your finger.

CreativeDestructor's picture

"When it gets serious you have to lie"

Seriously they think we are just animal, sheep, pigs, cows. We need to be managed and controlled. All governments do. Teachings of fukin Freud and his nasty piece of work nephew.

Duke of Con Dao's picture

just to put everyone in the right festive mood Duke pulled this from the archives:

YouTube - July 4th Fireworks seen from the Rooftops of Brooklyn NYC

music: Richard Hell and the Voidoids  'Love comes in Spurts' 

Cdad's picture

It was impossible for anyone on planet see this coming.

knukles's picture

The alien invason has arrived....

Joe A's picture

Good on Germany not to give in on Southern European blackmailing who not even thought that beggars could be chosers, but that beggars could be imposers.

No more bad words about spiderman towels, though. What else are we going to lie on while sipping our frappés down at the beach?

Zero Govt's picture

"Europe will have finally run out of its last remaining assets, up to and including Spiderman towels."

May i be so bold as to say on behalf of all ZH bloggers the Spiderman towels are the only item we shall regret seeing the demise of in Europe

CuriousPasserby's picture

Just shoot it already! It's lingered near death for 3 years!

monopoly's picture

So this goes on and on and on in Europe. And when it reaches our shores it will go on and on to ad infinitum. This is all getting so old. They will try to wear us down so the truth will never have to come out. But it will not work. We will get the truth! Too bad none of the thieves that destroyed our system will ever be incarcerated. 

Happy Independence Day to this once great country. How many tears have our forefathers shed these last few years?

CrashisOptimistic's picture

There is nothing in those stories that says Germany isn't going to proceed with last week's surrender on the ESM.  

It is somewhat surprising that Merkel's opposition is against this, but that is likely finger in the wind politics.  They have been winning lots of local elections and polling stronger and stronger.  They'll say whatever the public wantss to hear.

But they are socialists.  They are going to be more willing than Merkel to ante up money, not less willing.


Hype Alert's picture

I hear the 20th summit is a charm.

Randall Cabot's picture

Well evidently some asshole somewhere just refuted these refutations in the last half hour because most European stock markets just viagra'd straight up!!!

Vegetius's picture

At least the Spiderman towels have a function, unlike much of the EU elite

Quote time -

"The European single currency is bound to fail, economically, politically and indeed socially, though the timing, occasion and full consequences are all necessarily still unclear." -- Margaret Thatcher

timbo_em's picture

I think it is important to know that last friday was the third time in a row that Chancellor Merkel did not get enough of her own coalition MPs in line to support her EU policy. This hasn't caused any larger turmoil outside Germany because the opposition parties supported her policy so far. But since there is no light at the end of this tunnel and it won't get any easier and more and more MPs realize this, sooner than later it's time to say "Auf Wiedersehen", bitchez to Monti and Rajoy.

Reptil's picture

they forgot about DRE.... eeeh Rutte LOL

Look at this face

then look at this one

we are sooooo screwed