The Future of the European Union May Be Decided in Less than a Week

[Hawkowl]

September 1,
2011

By Shah Gilani, Capital Waves Strategist,
Money Morning

The clock may be ticking on the future of the European Union (EU). After being shaken to its core by the sovereign debt crisis, the entire Eurozone now runs the risk of blowing up within a week. Germany's highest court, the German Federal Constitutional Court, on Sept. 7 rules on the legality of German participation in the euro rescue fund that was established to bail out Greece. If the court rules that Berlin's commitment to the European Financial Stability Facility (EFSF) goes against EU law, or worse, against the German constitution, the entire Eurozone could collapse. Think of the Eurozone as a minefield full of bombs that have long lay dormant, but are all still very active. Now, Germany's court ruling - itself a single bomb timed to go off next Wednesday - could ignite a massive chain reaction.

What's at issue for the Constitutional Court is whether Berlin broke the EU's Maastricht Treaty, which unequivocally stipulates that member states cannot assume each other's debts. And, more germane to German citizens and the center-right coalition government, will be the Court's ruling on whether German Chancellor Angela Merkel's decision to fund the bailout facility circumvented constitutional requirements to put such fiscal matters before the German parliament.

Without Germany's intervention, European sovereign debts will sink the EU, as well as the global markets.

http://moneymorning.com/2011/09/01/the-future-of-the-european-union-may-be-decided-in-less-than-a-week/

[Divernan]

1. Der Spiegel: "German Court Likely to Rule 'Yes, But' on Euro Bailout"

Snips from Spiegel Online International:
http://www.spiegel.de/international/europe/0,1518,772674,00.html

"Did the German government act lawfully by committing billions of euros to the bailout of Greece? The answer of the Federal Constitutional Court, which began hearing the case on Tuesday, will probably be 'Yes, but.' The judges are likely to grant parliament greater power in decision-making and perhaps even set an upper ceiling on any future rescue package.

It is unlikely that the judges will thwart the bailout of Greece and the attempts to save the euro. But it is equally unlikely that they will just accept the status quo. Comments made by the judges so far suggest they will opt for a qualified approval of the government's actions -- a "Yes, but."

They are likely to set limits and to require the government to consult parliament more in future bailouts, but they probably won't call into question the measures taken to rescue the euro -- either legally or in terms of whether the actions were economically wise.

The ruling will probably be proclaimed in the autumn. Vosskuhle stressed the court was restricting itself to deliberating constitutional issues. "The future of Europe and the right economic strategy aren't being debated in Karlsruhe," he said. "That is up to the politicians, not the judiciary."

[Taitertots]

2. They should disband, the large nations are setting monetary policy to screw the smaller nations

All while complaining as if they were the victims.