The key point to understand about the current round of efforts to get the latest (July’s) Eurozone bailout approved is that it is (in a sense) merely an attempt to build (and pay for) the stable door through which the horse has long since bolted. If there is one thing that has become obvious since July, it’s that the package negotiated that month will not be enough to stop the panic now engulfing the Eurozone. The chaos of the weeks that have followed has, however, also shown that agreeing a new, even larger deal will be almost impossible. That leaves the last line of defense with an European Central Bank that is itself under fire and holding less ammunition than is sometimes assumed.
Ambrose Evans-Pritchard discusses these issues in the Daily Telegraph here. His conclusion is that Germany’s parliament, like its consttutional court, has reached the limits of its patience, and that this means:
THERE WILL BE NO FISCAL UNION.
THERE WILL BE NO EUROBONDS.
THERE WILL BE NO DEBT POOL.
THERE WILL BE NO EU TREASURY.
THERE WILL BE NO FISCAL TRANSFERS IN PERPETUITY.
THERE WILL BE A STABILITY UNION – OR NO MONETARY UNION.
The caps are Evans-Pritchard’s. Noone has ever accused him of being an understated writer.
His general conclusions may be correct and I suspect that he’s right to think that (crucially) Germany’s constitutional court is at the end of its tether. Nevertheless, it’s too soon to write off the willingness of Germany’s political class to do its best to sell its taxpayers down the river. An increasingly large number of the governing coalition’s MPs may have had enough of the current farce, but there are enough euro-federalists in the ranks of the opposition to tempt Mrs Merkel into an attempt to cobble together yet another “rescue” plan. The bloggers of Open Europe have a good summary of the state of play within the Bundestag here.
Meanwhile, as Evans-Pritchard notes, “Germans have begun to sense that the preservation of their own democracy and rule of law is in conflict with demands from Europe”. He argues that ”they must choose one or the other.”
The all-important question is whether they will be given the opportunity to do so.
As I noted elsewhere, this is just a speedbump in the expanding Eurocracy, not a turn. The German people will ultimately do what they're told.
"This far, and no further", said the CDU leader. That of course means that the line will simply be redrawn and crossed many times. And again, the Eurocrats know this. They'll get the "ever deeper union" they crave.
Reply to this commentLinkReport AbuseExactly right in my opinion. As horrible as the bailouts are, they are not as bad as the alternative, or at least that's the way Euro-backers look at it. Evans-Pritchard works very hard to make it seem like a very loud YES by the German government was really a big NO, but it is what it is. Germany is nowhere near ready to face the music that the EU is over, some grandstanding by politicians and judges for local consumption notwithstanding.
Reply to this commentLinkReport AbuseAt least someone is standing up to the spendocrats.
The US could stand some of that, thankyouverymuch.
Reply to this commentLinkReport Abusethe eu 'n euro...an ahistoric anomaly destined to, deservedly, fail...unfortunately, their travails are mirrored (initially typed mired, mebbe more appropriate) in our falling, 'n flailing in the community investment/mortgage to losers fiasco....ah, brave new world from yore..
Reply to this commentLinkReport AbuseAll good (and bad) things must come to an end. Unfortunately, I predict the end for Europe will be another world war where the United States will be dragged into.
Again.
And again.
And then again.
Reply to this commentLinkReport AbuseThe Germans seem to know that Eurobonds are the end for them as the economic leader of the continent. The Eurocrats can dress it up however they like, but this is just a way for the rest of Europe to raid the German piggy bank.
If such a device were created, they will be treated by the market as German bonds and to a lesser extent, French bonds. The trouble is both countries will have handed authority to borrow on their behalf to an entity over which they have little control.
This would be like giving your teenage daughter the visa and dropping her off at the mall and telling her to buy whatever she needs. The German political class is not suicidal. Even the most zealous will not accept that deal.
Reply to this commentLinkReport AbuseI have a complaint. How is it that we've been hearing about imminent doom for the last 18-24 months or so, and Europe is plodding along just fine? This mess has been compared to Lehman Bros. many times, and we keep hearing about the looming financial collapse of Europe.
But it has not happened. I'm beginning to believe that the goal is to keep people in a perpetual state of panic while the treasuries of these nations get looted.
"Hey! Look over there!" (steal, rob) "NO! Not at me! At the Greeks!" (theft, plunder)
I'm starting to get Euro-Apocalypse fatigue.
Reply to this commentLinkReport AbuseIf you think Europe is plodding along fine, where there was a riot in the UK, perpetual riots in Greece, high unemployment throughout the continent, social incohesion (sic) between countries, and Germany on the brink of losing it because it is expected to bail everyone else out, then I wonder what you will think when Europe is completely a basket case.
Reply to this commentLinkReport AbuseWhen are Europeans not "rioting" about something?
Reply to this commentLinkReport AbuseWhen the checks flow freely.
Reply to this commentLinkReport AbuseDo you know any Europeans? There is discontent. There is concern. There is resentment for having the Greece mess affect them
Reply to this commentLinkReport AbuseI read Evans-Pritchard religiously and respect his opinion...... but I wish I could share his optimism that the German politicians will not shred the German constitution and override the will of the people to save their cherished "One Europe" fantasies (see the Irish Lisbon treaty vote).
Reply to this commentLinkReport AbuseAfter reading this post, I was left with the idea that someone should get a spell checker.
Reply to this commentLinkReport AbuseThere is still a Eurozone?
Reply to this commentLinkReport Abuse