German Court Backs ESM Rescue Fund in Double-Edged Ruling
Source: The Telegraph (UK)
Germany's highest court has cleared the way for ratification of the eurozone bail-out fund but capped German contributions and fired a cannon shot across the bows of the European Central Bank.
By Ambrose Evans-Pritchard
8:34PM BST 12 Sep 2012
Markets breathed a sigh of relief across the world after the Constitutional Court in Karlsruhe ruled that the European Stability Mechanism (ESM) and the EU’s Fiscal Compact are compatible with the country’s Basic Law. The euro surged to a four-month high of €1.29 to the dollar.
...
Yet it was a double-edged ruling, with plenty of cheer for the 37,000 citizens who had filed complaints in an outpouring of civic protest, including the neo-Marxist Left Party, the More Democracy movement and a core of eurosceptic professors. In keeping with rulings on the Lisbon Treaty and earlier rescues, the eight judges issued a “Yes, but” verdict, imposing constraints that greatly reduce Berlin’s room for manoeuvre in the future.
...
The court capped Germany’s ESM share at €190bn and ordered the government to “express clearly that it cannot be bound by the Treaty” if the limit is breached. This stops the ESM increasing Germany’s share if Spain and Italy seek top-up funding. “The cap could prove a real obstacle,” said Raoul Ruparel from Open Europe
Read more: http://www.telegraph.co.uk/finance/financialcrisis/9539695/German-court-backs-ESM-rescue-fund-in-double-edged-ruling.html
This is a very important story -- it should have been reported on LBN yesterday