Open Europe Briefing On What The German Constitutional Court Ruling Will Mean For The Eurozone Crisis

Tyler Durden's picture

While today's market action is merely a reaction to pent up negative news over the weekend, all attention now moves to this week's most critical binary event: the much anticipated German Constitutional Court's vertdict on Eurozone bailouts. While a ruling that destroys the eurozone is unlikely, there are quite a few interesting nuances that may come out of the main event on Wednesday. For those who are unfamiliar with the story here is a critical briefing from Open Europe.


On 7 September, the German Constitutional Court will deliver its keenly anticipated verdict on the eurozone bailouts, following several challenges against the rescue packages of Greece, Ireland and Portugal in addition to complaints against the ECB’s bond buying programme.[2] The Court will almost certainly approve the bailouts, fearing that any other decision would spell disaster for the euro. In order to protect its reputation, however, the Court could well demand more influence for the German parliament and lay down additional constitutional red lines – possibly including restrictions on joint debt liabilities in the eurozone – in return for approving the bailouts. Any such limits would hugely complicate any move towards a fiscal union in the eurozone. Injecting more parliamentary democracy into the eurozone crisis is clearly a good thing, but it will also further limit EU leaders’ room for manoeuvre when dealing with the crisis, which in turn could increase market uncertainty. Unfortunately for the ECB, under such a scenario it would once again be forced to pick up the responsibility of lender of last resort, as the EFSF will be too inflexible and unresponsive to play that role.

Full report (pdf)


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walküre's picture

Greek default is being priced in. Hence the market action.

The Euro will stand as the EU's common currency.


walküre's picture

This wasn't an either / or poll.

The Greek default is being priced in AND the Euro will stand as the EU's common currency.

What's my exposure to a Greek default? Well it sucks but hey, at least Olive oil will be priced in Drachmas!

LawsofPhysics's picture

To quote your own article “An angry population will take matters into its own hands, the government will collapse and we may end up with political crisis in a near-bankrupt euro-zone country which nobody will know how to control.”

I can think of more than one population where this could be the case.

how to trade armageddon's picture

I didn't write that line, that's an unnamed Greek cabinet minister (my guess Venizelos) talking to the WSJ.

The point is he's threatening Germans what will happen if they refuse to fund Greece's deficits and debt payments. I don't think Merkel can afford to buckle here. She's going to leave it to the boys of the IMF, for whom brushing off these kinds of threats from backsliding aid recipients is part of the workaday routine. Unless the Greeks change their position, I don't think the troika even bothers to go back to Athens.


Sudden Debt's picture

Merkel lost already to many elections. Or she's got nothing to lose and will go on risking a revolt

Or she'll try to cut the losses for her party and cut the aid. Which will be more likely.


walküre's picture

As if the SPD, Grüne, Linke et al would let their Southern amigos starve!

The sensible thing is to let Greece default and move on. Spain and Italy are viable economies with growth potential. Greece is shit!

Rynak's picture

Actually, linke opposes bailouts and supports partial defaults and breaking up the banks.

And anyways, what does not bailing out the banks have to do with starving the populations? Bailing the banksters out and making the populations pay for it IS what "starves" out the countries, NOT the other way around.


misterc's picture

I promise you nothing will happen on wednesday. All the judges are party members of CDU/CSU or SPD. You can only get appointed as a constitutional court judge if you are in one of the two major parties (+CSU). Germany = banana republic without bananas.

molecool's picture

I want my Deutsche Mark back!

redcorona's picture

Reichsmark - even better.  Get off your knees Germany.

Sudden Debt's picture



walküre's picture

Why? Let's just call it Euro Mark.

Greece has to go. They've got nothing of value and can't afford the Euro. Italy and Spain have large industry and manufacturing capacities.

Greece has nothing. I don't even remember who invited them into the Euro Party? Do you? We should talk to THAT guy!

We could trade Greece for Croatia and / or Turkey. There are better prospects of growth there.

I'm getting really annoyed at the Greek spectacle. It's September 2011 already. Give these guys a kick in the arse and call it a day.

Rynak's picture

Umm, i think it was us that let them in, because one year after being rejected, they magically fixed all their finances.... of course we had NO way at all of knowing that this stinks... lalala

Don Diego's picture

but but Ambrose said the court is independent because it is based in Karlsruhe, far from Berlin..... \ sarc

chubbar's picture

What is the point of having a court system if the purpose isn't to uphold the law? If the law is decided on what is politically expedient then just crash the fucker and let's hope we can put together some semblance of a fair system from the ashes. That goes double for the former republic on this side of the ocean.

Aductor's picture

And what exactly is upholding the law? You can have gazilliions (well, almost) of different interpretations of law, exceptions from main rule based on legal principles, etc for any and each case. You can argue (although I wouldn't) that the law is whatever the Supreme Court, Bundesverfassungsgericht, Conseil Constitutionnel or what have you say it is.

Just saying.

Thomas's picture

I asked a constitutional scholar--a former Ginsberg clerk--whether the Supreme Court knowingly ignores the constitution. He said "They will never admit it." We discussed the termination of the gold standard as the most obvious. I listened to an audiobook by the Teaching Company on the Bill of Rights and came to the conclusion that precious few aspects of the Constitution are really pinned down solid. It is indeed a living, breathing organism (not unlike athlete's foot on a bad day).

StychoKiller's picture

"The Dirty Dozen, How Twelve Supreme Court Cases Radically Expanded Government and Eroded Freedom",  ISBN: 978-1-935308-27-0

Jump into the rabbit hole...

snowball777's picture



- the decision has been reached and leaked

- tre(card)monti was informed the ECB won't be bailing any more italian sewage

- downgrades imminent across the EZ

"...we're gunna run to the party and dance till the rhythm it gets harder

Ba da ba bye bye
Ba da ba bye bye

Me and my girl we got this relationship
I love her so bad, but she treats me like shit
(On lockdown) like a penitentiary
She spreads her lovin all over
and when she gets home
there's none left for me"

hungarianboy's picture

Is this real what you've wrote?

snowball777's picture

Speculation (pun intended) on my part,...but plausible.

Thomas's picture

(Whoever first posted this really got in my skull.)

jules from aus's picture

zee Germanz haz europez ballz in their handzies

Ecoman11's picture

In other words, bailouts will resume until war commences.

unum mountaineer's picture

precisely..look forward to more colorful acronym bailout vocabulary and wars fought being called humanatarian efforts, aids and such other rose colored terms

Religion Explained's picture

At some point, someone, somewhere is going to say enough. We may just have the when (Sep 7), who (German justices), where (Germany). Yes, pull the f plug.

Roger Knights's picture

The next thing that could happen would be for the FDP to drop out of Merkel's coalition, provoking a new election. It could win if it ran on the single plank of opposing further bailouts, promising to give ministries to other parties and to resign once the Euro crisis was over, or its approval rating dropped below some percentage for two consecutive polls.

jmc8888's picture

So just like the American constitution, the german constitution isn't worth shit anymore. (sadly ofc)

If this happens, many Germans are going to be pissed off.

But of course....they'll see nothing....nothing...(before hand)


Something is obviously wrong when instead of doing what's in your constitution, you bend over for the banksters, and instead latch onto more fascism as the alternative to getting what you want. 

It's a bit like saying you should put down the beer in ones hand, but instead you swig it and go grab the bottle of Jack. 

Well, we'll see.  Right now the decision isn't down.



Die Weiße Rose's picture

Great Britain and the USA have far bigger problems and by far greater deficits and Debt-problems than the whole of the Euro-Zone will ever have. The British have been obstructionist ever since Margret Thatcher wanted to rebuilt the Berlin Wall. England and the USA are Not part of the Euro-Zone and therefore their interference is obstructionist and totally unacceptable to anyone that is part of the Euro-Zone. wr ;)

Schröder: Great Britain is causing the biggest problem. Great Britain is not part of the euro, and yet the British always want to have their say in the design of an economic zone. This is inconsistent. And besides, the British have been very skeptical about every integration step, and that's putting it very diplomatically.

SPIEGEL: In reality they've been obstructionists?

Schröder: Yes. I was originally of the opinion that Great Britain could be treated like France. But what was overlooked, also by myself, is that Great Britain still sees itself in a sort of middle position between the United States on one side and Europe on the other. In other words, it's in an "in-between" position. And that is unacceptable.

SPIEGEL: But if nothing works with Great Britain, what role can the British play in the future?

Schröder: The decision on the concrete configuration of the economic government can only be made by members in the euro zone, and not by the Council (the powerful EU institution comprised of European national leaders) as a whole.,1518,784357-2,00.html

walküre's picture

UK = Unholy Kingdom of Windsors and Rothschilds

Fuck both of them.

i-dog's picture

Correction: Unholy Kingdom of Saxe-Coburg-Gotha (+ Hanover) and Rothschild (of Frankfurt). The UK is a subject territory of the German Reich.

The USA gained its independence from the German Reich (George III of Hanover) in 1776, then lost it again in 1868 when the 14th Amendment was deemed ratified (because a majority of the independent sovereign states would not ratify it).

ReactionToClosedMinds's picture

let me get this straight ...... you quote Schroder ..... the German PM who 'negotiated' pipeline wtih Russians as PM ....... then immediately became Director of Gazprom.


Are you kidding me - Schroder has negative credibility to say anything about "Germany' or the UK/USA .... and if I were German ....... I would seek to remove Schroder's German citizenship?


Either you are a 'propagandist' or you are seriously deluded

ramirez's picture

And Merkel too. Ooops, I just forgot how ugly she is.

fajensen's picture

The Court will almost certainly approve the bailouts, fearing that any other decision would spell disaster for the euro.

The court is not asked to consider what might happen to the EUR or "the big picture". The question asked is: "Does the handover of authority over of almost the entire German GDP to foreign powers violate the German constitution"?

I think it does. Most Germans think it does too. If the court allows this it will bring fond memories of the Versailles Treaty.

Tuffmug's picture

If the Court approves the bailouts via a "BS" decision the politicians may get the green light they want but also the unexpect collapse of public confidence and increased public resistance as the people realize their institutions and national laws are meaningless shams and they are being herded into a "United States of Europe" that only a few power hungry politicians want. This ruling could light a fire under a majority of Germans, Frenchmen, Italians, Spaniards, Dutch, et al. who would NEVER introduce themselves to you as a EUROPEAN.

Azannoth's picture

They will pull something/anything out of their ass to let the bailouts continue, the court (especially) german court will not be the 1 to put the final nail in the European coffin, now if we where talking Finish court than maybe

To bad Germans where robbed of their soul after WW2

bankruptcylawyer's picture

the only force powerful enough to get any people to change the direction of their countyr is not the people's courts or the people's 'reresentatives'. 


it is a demogogue with loyal followers willing to murder and die for their brethren. usually we call these people nationalists of one form or another. 

jhm's picture

Well. Demagogue we had, austrian one, noisy fellow, did not really work out properly and ended rather unpleasantly for each and everyone.

Oh, and had Emperor before, was allright and rather good and prosperous for quite a time but stumbled stupidly into a useless foreign war, got sacked by the military whilst that war and then thrown out to the dutch by a pseudo-revolution of silly socialists and commies.

Democracy worked quite a while, after all, until useless greedy politicians got into bed with the financial powers too often and tried a silly european takeover with the french and the italians whilst population was too lazy and bloated to prevent that bullshit.

Any other way to interfere in the principal layout of the future without having the grim reaper lurk around all the time and without having to ruin our and our neighbours lifes? Something with more peace and hope and less greed and fear, maybe?

youngman's picture

I have to practice my Goose step.....

Chestire's picture

 UPDATE: Repost to own blog EUPublic

Die Weiße Rose's picture

Anglophiles and Brits have always been extremely jealous of continental Europe...

even though they would rather live in Spain or the south of France, than on their narrow and rainy little Isle...;)

Herman Strandschnecke's picture

Brits have always travelled as indeed England has many krauts living here. As for being narrow it has many advantages: never far from the seaside and a variety of commerce within easy mileage without the need for overnight stops. But the best bit about Britain is our heritage and fairness, and people of integrity and friendliness. Unlike the dictatorial and grey continentals, of course. You can shove your EU flag up where you don't like it.

Herman Strand-Schnecke