EU HEADS FOR BAILOUT CRUNCH AS BUNDESTAG TIES MERKEL’S HANDS

Bundestag to legislate against EU bond-buying and debt buy-backs

Angela Merkel may at times seem to be a German Fuhrerine, but even her own Party is concerned to ensure she isn’t mugged by other EU members.

In stark contrast to the UK Coalition on the subject of Brussels power and ClubMed bailouts, the German coalition that stands ‘behind’ Chancellor Merkel is determined to represent the views of German voters. It was disclosed last night that German MPs will introduce and pass ‘red line’ laws over the next few weeks.

Unlike their shambolic British equivalent, the Bills are said to include highly-detailed definitions of what is and isn’t acceptable to Bundestag members in relation to ‘Germany’s conditions for providing financial support to other countries’.

Specifically, the plan is to pass legislation that will outlaw the participation of any German Government in eurobond schemes, or any  mechanisms allowing effective ‘buy-back’ of their own debt by struggling ClubMed countries. The CDU’s finance spokesman Michael Meister deftly described the new laws as “a framework for strengthening the Government’s position” when the EU leaders meet again on March 17th next to thrash out further rescue schemes.

It was widely predicted in the German press later on yesterday that the legislation would pass without difficulty.

It is also widely believed that Merkel herself would not be unhappy to have it in her pocket. But Merkel favourite Wolfgang Schauble was reported to have been ‘shocked’ ealier in the week when he debriefed the CDU on increasing German guarantees to the ESM, and received a wave of howls and hostile questions for his pains.

The Bundestag move sets Germany on a direct collision course with both the ECB and the Council of Ministers. Effectively, it rules out the hopes of those who continue to insist that ‘a deal will be done’. It is looking increasingly like any deal will be entirely on German’s terms.

There may be good reason for all of us to thank Merkel for this one day. In the meantime, it seems highly likely that the markets will react by putting bond yields up – and steering clear of any further loans.

8 thoughts on “EU HEADS FOR BAILOUT CRUNCH AS BUNDESTAG TIES MERKEL’S HANDS

  1. In the mad world of the ECB and other institutions there has been an underlying appearance of common purpose that is so see through it is laughable.

    If Germany is to be the source or guarantor of all meaningful funds then it is obvious that any deal must be entirely on German’s terms.

    If any beneficiaries don’t like the terms they can look elsewhere.

    When the UK needs bailing out will my view change?!

  2. Obviously the German Parliament is keen to act in accordance with the wishes of the electorate and prevent the Federal Govt landing them with huge debts as the ‘banker of last resort’.

    Compare that to Mr Brown pouring £billions into the banking system and even the current govt continuing to guarantee bailouts without even requiring Parliament’s approval, let alone the electorate’s.

    Something is very wrong here…

    • I think you are right BT, something is very wrong here.
      The clue is in the political make up in Germany where, if I understand correctly, the Constitutional Court will make the ultimate decision based on what is best for Germany within their remit, irrespective of the pan European ambitions some of their politicians might have.
      Without a constitution we just don’t have that sort of control over our own home made numpties!

      • Right on, Mac :-) Britain doesn’t have a proper constitution, meaning that when we elect a new government they assume virtually unfettered powers to do as they see fit without further approval. And to make things worse, our Parliament doesn’t have a track record of holding the Executive to account nor for initiating new laws to control it.

      • You hit the nail on the head MAC. There are no checks and balances in our political system, its a mess and to use that well worn phrase “Its not fit for purpose”.

  3. Hype- inflation of the type under the Weimark Republic is still a folk-memory in Germany. Political pressure to avoid such a situation is intense. The UK and Europe are both about to undergo an inflationary period, made worse by the effects of QE. the Germans can smell the inflation and are taking steps to protect themselves from the worst of the PIGS excesses. It is to be hoped that Cameron’s overwhelming desire to be liked does not override more prudent counsel.

  4. “The clue is in the political make up in Germany where, if I understand correctly, the Constitutional Court will make the ultimate decision based on what is best for Germany within their remit, irrespective of the pan European ambitions some of their politicians might have.”

    That sounds rather a lot like the EU Comission.

  5. Pingback: REVEALED: MERKEL & SCHAUBLE EYEING SWEEPING CHANGES TO GERMAN CONSTITUTION | The Slog

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