The Reaction of German Citizens
to the European Stability Mechanism (ESM)
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Moment of Recognition
It appears a majority of German citizens have finally had enough of chancellor Angela Merkel saying one thing and doing another in regards to bailouts. They have also had enough of Mario Draghi and his policies.
According to Der Spiegel a Majority of Germans Want the Constitutional Court to Kill the ESM.
- 54% want the court to reject the ESM outright. Only 25% want the court to ignore the Euroskeptics
- 53% are against transfer of more powers to the EU. Only 27% are in favor.
- 42% want Greece out of the Eurozone. Only 30% want Greece in the Eurozone.
Merkel's Disingenuous Reservations
Another article in Der Spiegel claims Merkel has also expressed reservations on ECB decision.
Merkel frequently says one thing and does another. If she has reservations, I suggest the reason is political expediency. Too many Germans are against the ESM for her not to express reservations.
Other German politicians are much easier to read.
CSU General Secretary Alexander Dobrindt reacted anxiously: "I stand by my warning that a public finance by printing is wrong and extremely dangerous." He could only urge Draghi strongly "not to open the floodgates for comprehensive purchasing programs." Dobrindt warned: "The ECB must be a bank stability and must be no inflation bank."
Sharp criticism of Merkel came from the opposition: SPD parliamentary leader Frank-Walter Steinmeier appreciated the decision of the ECB as a "document of failure" of Chancellor Merkel. You know "that in its own coalition has no majority for more bailouts," Steinmeier said in Berlin on Thursday. Therefore, the chancellor had assigned all responsibility for the euro bailout by the ECB. "What follows now is taking place with much reduced parliamentary control," said ahead of the SPD politician.
Even Green group leader Jürgen Trittin criticized Merkel. With their hardline attitude to the question of debt repayment pact Merkel, ECB President Mario Draghi have left no choice but to introduce as a pooling of debt through the back door, Trittin said on Thursday in Hanover. The danger now is that the German billion support for the bailout fund could be used up indefinitely. There were no strict rules for the use of aid
The EU treaties give the ECB the task of watching over the price stability in the euro area and set monetary policy. The financing of government budgets is the ECB therefore not allowed. Critics argued in recent weeks repeatedly, through the purchase of government bonds from crisis countries, the central bank financiers but indirectly budgets
Court Ruling Coming Up
On September 12, the German constitution court is expected to rule on the ESM as well as the fiscal treaty chancellor Angela Merkel signed in March.
I believe bond purchases by the ECB are in violation of the Maastricht and Lisbon treaties which explicitly ban state funding. Nonetheless, I expect the court to OK the ESM with reservations and warning.
One thing that might influence a no vote is Mario Draghi's plan that allows unlimited purchases. Thus approval by the court is not guaranteed by any means.
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Originally posted at Mish's Global Economic Trend Analysis
(c) Mike "Mish" Shedlock
Investment Advisor Representative