Friday, 14 September 2012

Spiegel: Euro Ruling Not as Simple as It Seems

The German Constitutional Court ruling on Wednesday with respect to the European Stability Mechanism (ESM) was not as straight forward as many people might think. Spiegel International reports,
The Karlsruhe ruling explicitly states that the ESM cannot "become a vehicle of unconstitutional state financing by the European Central Bank." The Constitutional Court's interpretation of the ESM treaty itself is that it stipulates that the permanent euro bailout fund can only borrow money on capital markets and not from the ECB. Under the clear guidelines provided by EU law, the justices said the ESM treaty could only be interpreted to mean that "borrowing operations" with the ECB are "not permitted."
That's why Beck [legal affairs expert with the Green Party in parliament] fears that the ESM will be robbed of "part of its possibilities for taking action," because it would not have the ability to "increase its firepower" through borrowing from the ECB.
But it is precisely this limitation that has attracted praise from the petitioners in the case. Christoph Degenhart, a Leipzig-based constitutional law professor who represented the more than 37,000 people who had joined together under the group Mehr Demokratie, or "More Democracy," to file the constitutional complaint, said he "wasn't entirely unsatisfied" with the ruling. "The main goals have been reached."
 
So, not all bad news then for those of us who oppose ECB intervention and bailouts with the use of tax payer money.

Read the whole article here.

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