Karlsruhe Decision: German Taxpayer Pillage Can Continue (But With EUR190bn Cap)

Tyler Durden's picture

UPDATE: EURUSD unsure - but seems like 'Unlimited' ECB Bazooka's trigger (ESM) is now capped at EUR190bn from Germany.

The Kardinals of Karlsuhe kame through. As somewhat expected, they declined the complaint that, simply put - and among many other things, the ESM structure (i.e. German payments into it) stretches German constitutionality and can proceed to a broader vote next year - but basically - in a nutshell - there's no coming back now. As expected there are conditions though - that the market seems perturbed by:


Limited ESM (primary market) vs Unlimited secondary bond market buying (OMT). Go figure it out


Pre-Karlsruhe: EUR 1.2870, Spain 10Y 5.677%, ES 1434, 10Y TSY 1.7100%, 10Y Bund 1.5700%, BE500 (Stocks) 187.13 (as the decision was made EURUSD cracked 60 pips lower and back up - perfectly normal algo stop-run)

Post-Decision (positive reaction): EUR 1.2895 (+25pips), Spain 10Y 5.70% (+3bps), 10Y TSY 1.732% (+2bps), 10Y Bund 1.614% (+4bps),  BE500 (stocks) 187.7 (+.57)

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bank guy in Brussels's picture

Merkel rolling over, supporting Draghi and ECB ... German court rolling over ...

What about Mark 'jack in the box' Grant and the other pundits ... who have been saying for weeks that the 'tough hard-money Germans' were just not gonna go along with paying for other countries and bond-buying ...

Whereas many of us said all along that Germans only talk tough for domestic politics, but they will roll over ... must  protect the German banks, insurers and pension funds, after all

QE to infinity, in many ways and many forms ... what the banks need and want will be provided ... as Jim Sinclair said long ago


spdrdr's picture

Exactly, bank guy.

Jim Sinclair has been 100% correct so far, although I personally think he is becoming a slight bit deranged as of late.

However, to be fair, if the recent ramblings have been a rational response to current events by JS, then we are all well and truly fucked. 

{Insert your favourite invisible all-powerful entity's name here} save us all.

mick_richfield's picture


{Insert your favourite invisible all-powerful entity's name here}

John Galt.

TwoShortPlanks's picture

No different to any other Bill, just Steam-Roll the fucker through and we'll fix-up all the minor points later...190B Euro will become 1.9T Euro given enough time and enough Political ill-will.

Bullish Gold tho!

Comay Mierda's picture

I heard Chief Justice John Roberts called the German Court to give them pointers on how to shit on their constitution

Popo's picture

Too bad 190 Billion will be gone in about 6 months and we'll be right back where we are now, except in a deeper hole.

Carry on.  The debt and spending problems have apparently been solved with more debt and spending.  What could go wrong?

fonzannoon's picture

Mark Grant can stop playing with his war figurines in his mom's basement now.

andrewp111's picture

Yes. The Eurozone will only break when the voters in some state have passed the breaking point and vote to exit. Even Greece, with all the stress it is under, hasn't  come anywhere close to this point.  As long as the ELA keeps on flowing and the banks stay sufficiently alive to maintain the deposit accounts, it seems nothing will change.

Ar-Pharazôn's picture

No, to break up Europe you just need one country leaving it. market are too much interconnected.

what do you think would happen if greece default (aka says to europe fuck you, we dont want to pay back the debt)? Bank failing all over Europe. and guess what's next if bank start failing all over Europe?

frenzic's picture

Boots on the ground baby. In the name of freedom and democracy we will defeat the terrorists. NATO will be involved. Nothing a couple of 1,000,000,000,000 of brand spanking new fiat won't fix. Go team fascism! Oh and a shitload of propaganda. Move along folks, nothing to see here.

Comay Mierda's picture

"The Eurozone will only break when the voters... vote to exit"

It's so cute that you dont realize elections are rigged

ElvisDog's picture

Not only that, but it will never be brought to a popular referendum. Look what happened to the Greek PM when he even suggested he might do it.

YuropeanImbecille's picture

They Germans have no say in this. The Zionist-satanist controll that state to the fullest since at least 70 years.

CDSMonkey's picture

Yes all the Nein Nein Nein stuff without seeing what was really going on has been dead wrong! Since "whatever it takes" day the path has been leading to positive not negative outcome

No Euros please we're British's picture

But you have to laugh. A cap on ESM when 30% of the funds to bail out Spain and Italy are coming from......Spain and Italy. And if anyone really expects France to actually shell out anything approaching another 20%, think again.

eigenvalue's picture

Yes, the ESM is capped but they can create another new facility. Problem solved.

Just Ice's picture

Or simply continue bailing out countries by printing through the backdoor (ELA) while pretending the euro is hard rather than monopoly money.  ELA is why they are all so anxious for Spain to request a bailout now...but also why Spain is hemming and hawing and in general dallying, to others' great annoyance.

eigenvalue's picture

In my opinion, whether the ESM is capped is not important. Once Spain applies for a bailout from the ESM, the ECB can start providing unlimited clandestine financing for Spain's government in the following way. 

Step 1: Spanish banks buy SPGB on the primary market.

Step 2: Spanish banks flip SPGB to the ECB and receive Euros

Step 3: The ECB tries to sterilise the bond purchase through issuing to Spanish banks debt certificates or some thing else.

Step 4: Spanish banks pledge the debt certificates to Spain's Central Bank through ELA and get Euros

Step 5: Go to Step 1.

Zero Debt's picture

It is a takeover of Germany. That's all there is.
And yes, 190bn is a lot of hard earned tax money. 190bn too much.
Federation ECB next. Appoint a strong handed banking fuhrer and build a new political reich on top of the banking reich. Crush gold bugs and shut down the blogosphere. Rinse, repeat.

Treason Season's picture

First we take Manhattan then we take Berlin

MKULTRA Star Leonard Cohen

frenzic's picture

Hmm Ken Kesey and Leonard Cohen. Wielding great influence on a younger me. Shit keeps getting deeper and deeper.

michael_engineer's picture

Maybe the contributions from spain and italy will be where the rub is. Obtaing those percentages may not be easily done. Or if france or any other country can't or won't come up with their percentages then that might scuttle it.

Fuh Querada's picture

These people are at least as politically "independent" as the Federal Reserve.

eigenvalue's picture

The German judges are just the same gutless tossers as their American fellows. 

asteroids's picture

190B seems like a really small number. But of course with 100:1 leverage it will all work out fine, won't it?

Zero Govt's picture

don't ask Judges to do maths, they can't even interprit the Law correctly

falak pema's picture

the french are useless in economics; but they know how to kick up their heels; at least their women do! 

samcontrol's picture

Especially the idiot who sold the south part of the US for pocket change.

I would be way prouder if Louisiana and co. where French. Wow, imagine Canadians to the north an Frenchies in the south. I could also migrate to the US , but then you guys prefer Mexican backpackers to Frenchies.

Debtonation's picture

Nobody cares about the taxpayer anymore.

Gandalf6900's picture

tax payer is so informal, I'm a bloody human being....

Colonel Klink's picture

You're only a bloody human being AFTER you stop being a taxpayer!!

Don't forget it.


-Teh management

samcontrol's picture

Can,t beleive thatwith all these brilliant minds here, you guys have not found a way Not to pay taxes. But then, where i live a 40' tv is over a $1000. Want another example? Ford focus 1.6 costs $25k . I Live in P-------a.

i_fly_me's picture

Well ... the percentage they let you keep is anyway.

magpie's picture

Who needs him after QE and OMT

Zero Govt's picture

what happens after OMT?

you mean when the OMT is spent, what next when vessel of last. last, last, last resort is a frazzled crisp?

nobody thinks that far in Europe, nobody thinks in Europe let's be honest!

Gandalf6900's picture

thanks for the assraping...can I have some more

obvious_sarcasm's picture

Say hello to German VAT tax increase in 3....2.....

Zero Govt's picture

"it's on like Donkey Kong"

Europe goes into complete LaLa Land ...even the Judges have lost their marbles and want to socialise losses (on their countrymen)

this isn't going to end well


Anasteus's picture

German 'Nein' has just vanished.

Non Passaran's picture

Nein, it hasn't.


It's One. Nein. Zero. BILLION! Euros.

Anasteus's picture

That's barely sufficient for Spanish banks.

Tirpitz's picture

But it allows the over-leveraged northern banks another lease on life.

giovanni_f's picture

I said so in my ZH comment on 04/09/2012:

"Nothing ain't gonna happen: The judges will down-calibrate the whole issue to a minor not-really-constitution-related-parliamentary-decision-process-formality-violation-or-so that the government has 10 years time to look into and propose ideas for remediation. Problem solved (for the judges). In no instance has a German supreme court (in a serious case) ruled against the kids pretending to be in charge of caring for 80.000.000 souls."

andrewp111's picture

As I said before, just like the US Supreme Court ruling in favor of ObamaCare. There is no way judges will overturn the elected leaders on something this big.  Not even judges in red robes.

Tirpitz's picture

KIDS in red robes.

While kids would be innocent, unlike the organized crime running the current courts of injustice.

Reptil's picture

yup and I was wrong there, I'd hoped they'd say "NI" lol

The germans are pathetic cowards just like the rest, if they let this continue.

I did warn everyone and their mum to buy physical gold. I hope that counts. ;-)