Another one to watch

[Mega]

https://www.telegraph.co.uk/business...revolutionary/

Mike

[GRG55]

Re: Another one to watch

Right on cue Weidmann weighs in to promote stability:

https://www.reuters.com/article/ecb-...-idUSF9N2AB01Q

Bundesbank's Weidmann to back ECB efforts to appease court

However...
The ECB compromises continue to increase, and that would not seem sustainable. But, as we have learned, these imbalances can go on a lot longer than anyone imagined.

This isn't helping the exchange rate of the Euro. Although Weidmann's follow up statement targeted exactly that, along with the potential for an Italian and Spanish yield blow out. This latter is a serious risk that I can't see how the EU can avoid without massive fiscal assistance from the "north" to the "south", which Germany will not agree to so far.

Brexit fallout is still fresh in everyone's mind, and puts more pressure on German and Dutch EU budget funding. Exactly what their politicians believe they cannot sell to their citizens.

I don't see a lot of options at to how the EU can ultimately fix this mess without a German exit and a subsequent, further, devaluation of the Euro. So far the cost (and pain) of leaving exceeds the cost of remaining, so the status quo prevails. But I cannot help but think Germany (and the Dutch) continue slowly losing this long, drawn out battle, as the French have lined up with their southern neighbours.

https://www.telegraph.co.uk/business...vid-trillions/

Macron issues ultimatum to Europe's German bloc: cough up Covid trillions or lose the single market
24 APRIL 2020

European leaders have dodged their "moment of truth". The Covid-19 emergency package averts an immediate crisis but fails to draw the political poison now threatening monetary union.

It has not cut Italy’s borrowing costs to bearable levels and is too little either to ensure the economic viability of southern Europe’s debt bloc or prevent the North-South divergence from spiraling out of control.

It leaves the European Central Bank holding the fort, compelled to cover to the exploding debt issuance of eurozone treasuries and to work overtime to stave off a run on Club Med bond markets. This places the institution in an invidious legal position...

[Mega]

Re: Another one to watch

The German bloc knows the rest are bankrupt ...they bankrupted them via the single market.......so either become "Germainia" or go back to the 70's

[GRG55]

Re: Another one to watch

This really does bear watching imo. I am surprised this thread didn't attract more attention. I continue to believe at some point the Germans will determine the cost of staying exceeds the cost of leaving by enough margin to exit at least the Euro currency.

That the European Commission President is a German, and the longest serving of Angela Merkel's former cabinet ministers, is an added bit of entertainment to all this.

https://www.reuters.com/article/us-e...-idUSKBN22M0KN

MAY 10, 2020 / 10:04 AM

EU could open legal case against Germany over ECB bond-purchases ruling: Commission

BRUSSELS (Reuters) - The European Commission could open a legal case against Germany over a ruling by the country’s constitutional court that the European Central Bank had overstepped its mandate with bond purchases, the EU executive arm said on Sunday.

The German court in Karlsruhe last Tuesday gave the ECB three months to justify its flagship euro zone stimulus scheme or said the Bundesbank might have to quit it.

In response, the European Union’s top court - which had previously gave its green light to the ECB scheme - and the European Commission have said that EU law holds precedence over national regulations. They added that the European Court of Justice’s rulings were binding for courts in the 27 member states of the bloc.

On Sunday, Commission President Ursula von der Leyen went a step further, saying the EU executive might end up opening a legal case against Berlin.

“The recent ruling of the German Constitutional Court put under the spotlight two issues of the European Union: the euro system and the European legal system,” she said in a statement.

“We are now analysing the ruling of the German Constitutional Court in detail. And we will look into possible next steps, which may include the option of infringement proceedings,” she said.

Infringements are legal cases the Commission can bring before the Luxembourg-based Court of Justice of the EU, if the Brussels-based executive deems a member state is violating EU law. The court can order a nation to make amends, or face hefty fines.

[jk]

Re: Another one to watch

in sum, i believe the eu's position is that any national court, including the german constitutional court, is subject to the ecj. thus the german decision is moot.

the italians and the spaniards may well be asking what kind of union they are in, when it essentially ignores their financial and health crises. perhaps it will be the south that leaves the eu and the euro, leaving germany et al with a very strong euro undermining their export industries, adding to the pressure of chinese competition in export markets.

[jk]

Re: Another one to watch

However...
The ECB compromises continue to increase, and that would not seem sustainable. But, as we have learned, these imbalances can go on a lot longer than anyone imagined.

This isn't helping the exchange rate of the Euro. Although Weidmann's follow up statement targeted exactly that, along with the potential for an Italian and Spanish yield blow out. This latter is a serious risk that I can't see how the EU can avoid without massive fiscal assistance from the "north" to the "south", which Germany will not agree to so far....



I don't see a lot of options at to how the EU can ultimately fix this mess without a German exit and a subsequent, further, devaluation of the Euro. So far the cost (and pain) of leaving exceeds the cost of remaining, so the status quo prevails. But I cannot help but think Germany (and the Dutch) continue slowly losing this long, drawn out battle, as the French have lined up with their southern neighbours.

https://www.telegraph.co.uk/business...vid-trillions/

Macron issues ultimatum to Europe's German bloc: cough up Covid trillions or lose the single market
24 APRIL 2020

European leaders have dodged their "moment of truth". The Covid-19 emergency package averts an immediate crisis but fails to draw the political poison now threatening monetary union.

It has not cut Italy’s borrowing costs to bearable levels and is too little either to ensure the economic viability of southern Europe’s debt bloc or prevent the North-South divergence from spiraling out of control.

It leaves the European Central Bank holding the fort, compelled to cover to the exploding debt issuance of eurozone treasuries and to work overtime to stave off a run on Club Med bond markets. This places the institution in an invidious legal position...

germany was already on the edge of, if not in a recession prior to the covid crisis. they cannot sell their cars to southern europe anymore [the southerners are broke], and global car sales are now down sharply. also a hard brexit will kill their substantial uk export market. a german recession will help lower the euro currency while germany remains in the union.

[GRG55]

Re: Another one to watch

We seem to be heading beyond hairline cracks now.
We should see the Euro take another drop against the US$.

https://www.nasdaq.com/articles/excl...ces-2020-05-26

EXCLUSIVE-ECB prepares for the worst: life without the Bundesbank - sources

FRANKFURT, May 26 (Reuters) - The European Central Bank (ECB) is drafting contingency plans to carry out its multi-trillion bond-buying programme without the Bundesbank in case Germany's top court forces the main participant in the scheme to quit, four sources told Reuters.

In this worst-case scenario, the ECB would launch an unprecedented legal action against the German central bank, its biggest shareholder, to bring it back into the programme, said the sources, who spoke on condition of anonymity.

The moves would likely mark a moment of truth for the euro, testing Germany's commitment to a currency it played the biggest role in creating and forcing it to tackle some deep-seated reservations within the country about ECB policies.

Germany's constitutional court has given the ECB until early August to justify its massive buying of government bonds or continue the scheme without the Bundesbank, which is supposed to carry out more than a quarter of the bond purchases.

[shiny!]

Re: Another one to watch

Can the EU survive without a Euro? What would happen if some or all of the individual countries went back to using their own currencies?

[FrankL]

Re: Another one to watch

Can the EU survive without a Euro? What would happen if some or all of the individual countries went back to using their own currencies?

- Make it easier for speculators to take positions in the currency with a size to influence the exchange rate (bigger fluctuations in exchange rate)
- More susceptible for politicians in mediterranean countries to engage in inflationary policies (as before the Euro)
- Massive waste of money doing trade/tourism across borders due to currency exchange commissions.

[jk]

Re: Another one to watch

Can the EU survive without a Euro? What would happen if some or all of the individual countries went back to using their own currencies?

europe got along without a euro for thousands of years. the eu includes but is not limited to the eurozone. non-eurozone countries aue full participants in the trade, travel, etc arrangements of the eu.

[shiny!]

Re: Another one to watch

A European Union as a free trade, free travel bloc seems like a good idea, but the economies of the member states are so different, I don't know why they insisted on sharing a currency to begin with. But then currencies (like so many things) are terribly confusing to me. What else is new.