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.