http://www.zerohedge.com/contributed/2012-07-16/euro-desperation-german-justices-already-buckle-under-political-pressure
Submitted by testosteronepit on 07/16/2012 19:47 -0400
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_20008_16/07/2012_452367
Euro Desperation: German Justices Already Buckled Under Political Pressure
- default
- European Central Bank
- European Union
- Eurozone
- Germany
- Greece
- International Monetary Fund
- Ireland
- Italy
- Portugal
Wolf Richer www.testosteronepit.com
Jean-Claude Juncker was desperate. The Prime Minister of Luxemburg and newly re-installed President of the Eurogroup—which brings together the Eurozone’s finance ministers to exercise political control over the euro—is the ultimate Eurozone infighter and insider. “We all know what to do, but we don’t know how to get re-elected afterwards,” he’d once said, now referred to as “Juncker’s curse.” But he knows how to get reelected, being the longest serving head of state in the EU—Prime Minister since 1995. So when he is desperate, even the eight justices at the German Constitutional Court listened.
Juncker made his desperation known when he criticized the decision by the justices to take their time—three months—to decide whether or not the latest bailout fund, the European Stability Mechanism (ESM), passes constitutional muster in Germany. It should have been operational by July 1, but with a few words, they’d thrown all bailout convulsions into even greater disarray [Read.... The German Constitutional Court Rules Against Euro Hysteria].
The delay had Juncker on edge. It’s “not helpful,” he told the Spiegel on Saturday, pressuring the eight justices to speed up the process. “I think they know in which maximum time frame we must act,” he said.
Because in September, it’s decision time: the bailout Troika—the European Union, the European Central Bank, and the International Monetary Fund—will decide whether or not Greece should receive the next bailout payment. The chances are not good. It has ignored most of the structural reforms it agreed to implement as part of the second bailout package, and the Troika is losing patience [Read.... Greece Flails About, Troika Inspectors Paint “Awful Picture,” Merkel Draws a Line, German Industry & Voters Back Her: It’s Almost Over For Greece].
If the decision is no, Greece will default on its debt and most likely exit from the Eurozone. The consequences will plow tsunami-like into banks and financial markets. The largest possible firewall would be needed to limit contagion, recapitalize tottering banks, and keep the Eurozone from unraveling. But the temporary bailout fund EFSF is already paying for Greece, Ireland, and Portugal, has committed €100 billion to Spain, and is waiting to bail out Cyprus as well. With its €250 billion limit, much of its dry powder has been spent. Hence, Juncker’s desperation.
And the Court yielded: on Monday, it promised to speed up proceedings. The decision would be made by September 12, in two months rather than three. Another indication that they might yield all the way by nodding the ESM through, albeit with some restrictions. Clearly, they don’t want to be labeled in history books as the eight Germans who killed the largest monetary union ever. They’d leave that up to politicians.
And politicians were scratching each other’s eyes out over it—in a show of just how confused and irrational the end-game-like euro fiasco has become. Because it’s apparently still not clear how, and to what extent, the ESM had been modified during the last EU Summit.
Klaus Regling, the anointed boss of the ESM,announced that, according to the agreement reached at the EU summit, banks would be bailed out directly by the ESM, thus “freeing the country from liability.” Juncker and Olli Rehn, the European Monetary and Economic Commissioner, backed him up.
Outcries everywhere. Sigmar Gabriel, chairman of the opposition SPD, without whose support these bailout measures would have difficulty passing in parliament,threatened to walk away if Chancellor Angela Merkel wanted to “convert the state bailout into a speculator bailout.”
Merkel slapped them down during a ZDF interview: there will be no direct bailout of banks from the ESM, regardless of what anyone says, she said, and countries would have to guarantee the loans to bail out their banks, at least for the time being. Her spokesperson Steffen Seibert laterconfirmed that “the state requests the bailout, the state receives the money, and the state is liable.” And that, he said, counted for the EFSF as well as for the ESM.
Now it seeped out that Merkel has concealed from parliament some explosive details of the Spanish bank bailout in order to bamboozle parliament into approving it when it comes up for vote on Thursday. Of the €100 billion, the first tranche of €30 billion should be paid in July. But unless parliament approves it, Finance Minister Wolfgang Schäuble cannot vote for it at the EFSF, where unanimity is required. Hence, ano by the Bundestag would axe the Spanish bailout package. Mayhem would break out on the spot.
So, to make sure the bailout vote would sail through the Bundestag, Merkel has cut some corners—or so claimed Frank Schäffler, a member of Merkel’s coalition partner FDP, in a letter to Bundestag President Norbert Lammert. And he asked that Lammert demand from the government to “inform the Bundestag carefully, in particular with regards to direct recapitalization of banks.”
Thus, the euro bailout strategy, so contingent on Germany, has become a disaster of disagreements—even basics, such has the contents of an EU summit agreement, lead to acidic confrontations. A sign that a solution is further than ever away. For the options following the Court’s ruling, read.... Will the Euro Survive This Year?
and......
Federal Finance Minister Wolfgang Schäuble (CDU).Source: Reuters
Berlin,the Bundestag, the Federal Government has apparently not been informed of details of the controversial bailouts for Spanish banks. This is from a letter from the present Handelsblatt Online FDP deputies Frank Schaeffler to Bundestag President Norbert Lammert (CDU) out. "Our information is withheld in order not to jeopardize the approval of the Bundestag to help Spain. With a clean disclosure would inform the Bundestag as well as the federal government and there were no information asymmetries, "writes Schaeffler.
Lammert should therefore call on the federal government to "rectify the inadequate disclosure of the Bundestag and the Federal Parliament is now carefully, particularly in terms of direct recapitalization, to inform," writes Schaeffler.
The Bundestag vote on Thursday on the alternative claim from Spain. € The group has already been to Spain provided assistance to 100 billion euros to recapitalize its banks in view. A first tranche of 30 billion euros will be disbursed in July. Without the green light of the Bundestag to flow the money, because Finance Minister Wolfgang Schäuble (CDU) is bound by EFSF matters to the vote of the parliament and decide the euro-zone countries have agreed
and meanwhile Greece grinds away attempting to come up with a plan to foist upon the Troika.....
Stournaras grinding out new cuts as talks with ministers continue
Stournaras is looking for 11.5 billion euros in savings for 2013 and 2014 but was unable to hit this target following talks with several ministers. The finance minister is expected to finalize the details with department chiefs today before meeting Prime Minister Antonis Samaras, who will hold talks with fellow coalition leaders, Evangelos Venizelos of PASOK and Fotis Kouvelis of Democratic Left, tomorrow. Samaras is also due to meet some of the ministers on Tuesday in a bid to overcome resistance to some of the cuts to their department budgets. One of those who will meet with the premier is Interior Minister Evripidis Styliandis. He is concerned that funding for local authorities will be reduced further. Compared to 2009, central government funding for municipalities has been slashed by 62 percent. There are concerns within the ministry that more cuts could lead to basic services such as nursery schools being scrapped. Defense Minister Panos Panayiotopoulos saw Samaras yesterday, when the pair discussed the possibility of avoiding cuts to the so-called “special salaries” received by military personnel. The government is reluctant to reduce the above-average wages in the armed forces. Further savings must be found in the health sector, where Minister Andreas Lykourentzos presented plans for the merger of some organizations but the reduction of costs was well short of the target for his department. There is also pressure on Labor Minister Yiannis Vroutsis to produce 5 billion euros in savings, 3 billion from benefits and 2 billion from pensions. Stournaras is due to receive a report today by the Center of Planning and Economic Research (KEPE) that will outline where savings could come from. Kathimerini understands that among the proposals are to limit basic and supplementary pensions to a total of less than 2,400 euros per month, which will save 1.5 billion euros, after the drop in tax revenues is factored in. There are also plans to save 1.5 billion euros from general government spending, which includes stopping pensions for the orphaned, singled or divorced daughters of deceased judges and military officers, which would save 220 million euros, and reducing MPs pensions by 20 percent to save almost 6 million.
and....
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