And much, much more.
That much-heralded “banking reform” that’s a central plank in Angela Merkel’s More Europe campaign is much less than meets the eye, at least when it comes to real reform. But it does consolidate power.
More challenges are confronting Merkel on her own turf, in the form of political and legal challenges and a bad election showing — but that hasn’t stopped a leading German corporate alliance from taking a shot at the PIIGS.
From Spain, socialists want to tax the rich [as does the French president], Bankia is getting another Brussels bailout, a conservative leaders calls for legislators to give up their paychecks, and the strings on the Spailout are revealed.
Ireland’s the target of more austerity demands from the IMF and the number two at the central bank says high unemployment will last for years. In England, the Tory-led government is cutting health and safety inspections.
Italian news is mainly bleak, with more bad economic numbers, a demand any bailout comes with no strings attached, a story about corruption, a protest by downsized workers, and a promise from the prime minister not to run again.
From Greece, the austerity-forced closing of a special needs program for children, a worse-tan-expected economic contraction, a big rebuff for Golden Dawn, and a major wave of strikes and protests.
Euro bank reform fails to kill the beast
The beast being the same mixing of banking activities that triggered the global financial collapse.
From John O’Donnell of Reuters:
The European Union will insist on higher reserves from banks and impose stricter oversight to protect taxpayers and savers from further bailouts caused by risk-taking, but will not break them up to separate investment banking from retail activities.
While there may be public backing for such a move, EU officials and banking experts said the splitting up of banks to lessen risks to the general public across the European Union would be too complex to achieve in the short term.
European banks, such as Barclays, Germany’s Deutsche Bank or France’s BNP Paribas, combine high street banking alongside that of riskier trading of stocks, debt and other securities. Royal Bank of Scotland’s rush to extend its investment arm resulted in it seeking the largest state bail-out of the crisis in Europe.
The European Union will use tighter capital rules and closer European Central Bank oversight to stop banks taking risks that imperil the financial system, the financial experts said.
Read the rest.
So basically the eurocrats are refusing to get to the root of the problem.
It was, after all, banks trading on all those derivatives [and other “black” investments [collateralized debt obligations and suchlike] that triggered the crisis.
But we can trust the central banksters, right?
Doubts linger over Merkel’s More Europe agenda
In addition to the latest stumbling blocks in Greece [covered here] there’s that German court challenge to the European Stability Mechanism and the accompanying fund.
While a ruling by Germany’s Constitutional Court had been expected this week on the legality of the measure, not it appears there’s going to be a delay.
From Louise Armitstead of the London Telegraph:
A delay to the highly anticipated German court decision on bail-out funding and a rebellion in the Greek government over austerity doused hopes that the European Central Bank will be able to stem the crisis after all.
Germany’s federal constitutional court said it might be forced to delay its ruling on the legality of the European Stability Mechanism (ESM) because of an eleventh hour objection by an MP. Peter Gauweiler, a member of Angela Merkel’s ruling coalition, argued that the court ruling, due on Wednesday, should take time to assess the impact of the ECB’s “outright monetary transactions”, announced last week.
The German Chancellor’s spokesman insisted that the ECB’s plan to buy unlimited sovereign bonds from countries being supported by the bail-out funds – dubbed the Draghi Plan – should not impact the court ruling. However, the court said it would consider the request and announce its decision on Tuesday. A delay could push ratification of the fund back until next year, when countries including Spain are expected to require help imminently.
Read the rest.
More from Spiegel’s Philipp Wittrock:
The fact of the matter is that the Constitutional Court is taking the current pending complaints about the euro bailout very seriously. The main case being heard is backed by 37,000 German people, making it the biggest constitutional complaint in German history. Even though the current decision is being conducted in expedited proceedings, the court’s justices have still allowed themselves more time than they normally would. They also took other unusual steps for expedited proceedings, including hearing oral arguments.
The question for the court now is this: If it wants to stick to the position it has held until now, will the court not also have to take the appropriate amount of time to consider Gauweiler’s complaint? Does it not need a few more days or weeks? Or has the court already taken into account in its ruling that the ECB might move ahead with a bond-buying program that would include a role for the ESM?
Read the rest.
More on the legal issues from Daphne Grathwohl of Deutsche Welle, who notes that at least 37,000 citizens have filed complaints spearheaded by a Nürnberg attorney charging that stripping the nation of financial autonomy breaches the German constitution:
And he’s not the only one. Together with former Justice Minister Herta Däubler Gmelin from the opposition party SPD, Degenhart has filed a constitutional complaint against both euro rescue mechanisms. According to him, the mechanisms risk whittling away the democratic principles at work in Europe and Germany.
All in all, 37,000 citizens have filed constitutional complaints against the ESM and the fiscal compact. Twenty five thousand of those have done so by supporting the complaints filed by Degenhart and former Justice Minister Herta Däubler-Gmelin.
The plaintiffs also criticize that there is no cancelation clause and no limitation of liability in the rescue mechanisms. If the ESM goes through, the Governors’ Board – the eurozone finance ministers – could in theory top up the capital stock whenever deemed necessary.
That would mean the German Parliament would lose its budgetary sovereignty. In addition, the authors of the complaint claim that the ESM stands in stark contrast to the no-bail-out clause written down in the European treaties which stipulates that no state can be liable for other countries’ debts.
Read the rest.
For the latest filing, see this Deutsche Welle story.
Merkel loses support in regional election
While Merkel’s party wasn’t expected to win the regional vote in a West German state, the margin of loss was greater than political experts predicted.
One has to wonder what role Merkel’s push for More Europe played in the defeat.
From Jean-Baptiste Piggin of Deutsche Presse-Agentur:
Support for Chancellor Angela Merkel’s Christian Democrats plunged below 26 per cent in a regional German election Sunday in North Rhine Westphalia state, vote count projections for public television showed.
The state-assembly ballot has been dubbed a German mini general election, as one fifth of Germans live in the western state. Merkel, who is personally popular but heads a fractious cabinet, faces a federal election in 2013.
Merkel had been expecting a setback, but the loss was even bigger than forecast by pollsters, who had tipped a Christian Democratic Union (CDU) result of 30-31 per cent after a gaffe-prone campaign.
The chancellor insisted days ago the poll was a regional event, not a verdict on her federal government. “The election on Sunday is an important state assembly election for North Rhine Westphalia, no more and no less,” Merkel said in a newspaper interview Thursday. She is not expected to comment publicly on the poll setback until late Monday.
Merkel‘s main rivals, the Social Democrats (SPD), won 38.8 per cent of votes, securing joint control, with the Green Party, of the state government, according to the normally reliable projections for ARD and ZDF public television. The data placed CDU support at 25.8 and 25.9 per cent, ZDF and ARD said respectively.
Read the rest.
Another German shot at the PIIGS
This time the austerian lash comes from the Bundesverband Großhandel, Außenhandel, Dienstleistungen [Federation of German Wholesale, Foreign Trade, and Services], the largest organization of its kind and representing industries ranging from agriculture and chemicals to publishing and jewelry.
From The Economic Times [India]:
The euro zone could break up if people living in crisis-stricken southern European countries do not accept structural reforms in the coming years, the head of Germany’s BGA trade association said on Monday.
Anton Boerner also dismissed concerns that Germany, Europe’s largest economy, could sink into recession in 2012 and said he expected German exports to increase both this year and next.
“If people do not say yes (to structural reforms), then the euro will not be able to exist in its current form,” Boerner told Reuters in an interview.
“If the southern European states say yes, we accept the challenges … then the euro will be stronger than ever before,” he added.
Read the rest.
And on to Spain. . .
Tax the rich, say Spanish socialists
What a concept!
With the economy trashed, unemployment setting records, and banks failing yet again, the Spanish socialists are actually taxing the have-mores.
From Vera G. Calvo of El País:
The Socialist Party is proposing higher taxes for Spain’s wealthiest individuals and corporations as an alternative to more spending cuts that affect Spaniards as a whole. Opposition leaders are also talking about a “social sustainability law” that would preserve some public Continue reading