Things In Europe Go From Bad To Worse As Germany's FDP Party Seeks Referendum Over EFSF

No sooner has the EFSF "passed" the German constitutional court (with large caveats, most notably that the German government will have a much greater say in any and all future European bailouts, assuming such are actually needed and the Euro does not implode), that we learn that yet another hurdle for the Greek bailout presents itself courtesy of primary fund provider, Germany, which is now finally very angry (as suggested first here "The Fatal Flaw In Europe's Second "Bazooka" Bailout: 82 Million Soon To Be Very Angry Germans, Or How Euro Bailout #2 Could Cost Up To 56% Of German GDP" two months ago) at what it realizes is an ongoing transfer without checks and balances (remember: the insolvent PIIGS hold all the trump cards) of capital from Europe's prudent workers to those who are, well, not. To wit, according to the Spiegel, German FDP Party has just announced that it will seek a referendum on the ESM/EFSF. What this means is that while the hurdle is not insurmountable from a legal perspective, it will merely add further uncertainty to the final bailout of a country that according to the market at least is 100% bankrupt in an alternative universe in which fundamentals matters.

Google translated:

Several front against the Liberals make permanent euro rescue ESM. With a membership vote, a group wants to prevent the FDP politician Schäffler and stag party for the approval of the aid package.


The Christian Lindner letter reached Friday afternoon by 17 clock by messenger. Since then, should the weekends of the FDP-General to be thrown overboard. In order to prevent the approval of the FDP faction in the Bundestag for permanent euro rescue ESM in the fall, a group aimed at the euro-skeptic Frank Schäffler and the Old Liberals Burkhard Hirsch, a membership vote on. "The discussion in the FDP on more measures to rescue debt-ridden countries in Europe is an important political issue and requires a broad discussion in the FDP," it said in a letter to FDP General Secretary Christian Lindner on Friday. The letter is from SPIEGEL ONLINE.


In a decision that the critics of the euro rescue measures apply to "permanent emergency measures for which Germany is liable for the debts of other European states." It continues: "The FDP opposes hence the establishment of a permanent European Stability Mechanism (ESM)." Should not the previously agreed measures prove to be sufficient, says the FDP in favor of over-indebted countries in an orderly exit from the to allow Euro to avoid a messy break-up of our currency. "


For Chancellor Angela Merkel (CDU) and the FDP, the party leadership is bad news. And it comes at an inopportune time. Just ECB chief economist Juergen Stark has resigned. In addition, the conservative-liberal government is currently fighting for the majority of the extended, temporary rescue EFSF. Now threatens the later vote on the following permanent pilot chute for ESM to be cliffhanger. Lacks the Chancellor with such a central issue in European politics with a majority, it could mean the end for the black-yellow coalition.


Especially since it is not excluded that the Euro-critics with their application be successful. 3,400 signatures have to collect the protesters for the action, which is five percent of about 68,000 FDP members. It provides for the Rules of Procedure. The last and only time the FDP had consulted their members in 1997 when the Great eavesdropping. The party leadership has the opportunity to amend the critics with its own alternative proposal to counter. One-third of the members involved in the decision, the result is official policy position of the FDP. The faction in the Bundestag must vote accordingly.


Initiator of the request is € tireless critic Frank Schäffler. That he is supported by Burkhard Hirsch, a Liberal of the old school, his concerns should give a new impetus. "I'm for Europe. But I am afraid that the way we want to save the euro, it says that we will divide Europe at the end," said Hirsch SPIEGEL ONLINE. "I am against a slide into a debt union. So far, all the billions we have paid to Greece, led to no result."

We expect the market will take the usual several hours to process this.