Europe or Democracy? What German Court Ruling Means for the Euro

Der Spiegel ^ | February 10, 2014 | SPIEGEL Staff

[managusta]

Germany's Constitutional Court ruling last Friday marks a significant escalation in efforts to rein in the European Central Bank. The ruling's message? Either the European Court of Justice has to stop bond purchases or German justices will.

It is also a clear indication that Germany's highest court is extremely skeptical of the ECB. Draghi's 2012 announcement that the ECB would embark on unlimited sovereign bond purchases from ailing euro-zone member states, the court found, is incompatible with European law.

The ruling notes that OMT "exceeds the mandate" of the ECB and "encroaches on the responsibility of the member states for economic policy." Furthermore, it finds that the purchasing of sovereign bonds on secondary markets represents a "circumvention" of the prohibition against direct state financing.

[managusta]

The Karlsruhe justices feel stronger than ever. For the first time, they dared to do what they had been threatening to do for years:

They branded a European decision as ultra vires and thus found it to be inconsistent with the German constitution.

The German courts have found some cojones,this will result in a confrontation twixt the Luxemburg courts and the German Supremes. The Euro is in serious trouble,unload.

[Lurkina.n.Learnin]

The Swiss just voted against the Eurozone open borders too.

[Olog-hai]

The German courts have always been this strong. They wouldn’t let the Treaty of Lisbon pass unless Brussels agreed to let Germany’s government review every law they were considering. (They wouldn’t let any other country in the EU do this, though.)

[wiggen]

Hadn’t seen this. No reaction in European markets that i noticed. It would seem to be of some consequence.
A quick guess would be markets feel the usefulness has passed in this instance so no effect. While it removes a bullet from the belt for future crises they demonstrated others.
My other guess would be they’re quite wrong about this time around.

[managusta]

Der Spiegel states”the country does plan to reintroduce quotas on the number of immigrants that can come to the country. Under the referendum, the government now has three years to implement the provisions.”

This will thrust the European Court vs Switzerland to the fore.With Britain looking forward to a referendum on Eu membership in 2017,Greece going belly up,Spain with a 23% unemployment rate,Italy water logged and bankrupt,France wilting under the adulterous socialist Presidency of Hollande.Things are looking up.

[ScaniaBoy]

One reason the markets haven't reacted may be that initially the decision of the German Constitutional Court was described as giving in to the EU. It is only since the beginning of this week that articles in leading (europhile) European newspapers have appeared that provide a different (in my opinion) correct analysis.

[wiggen]

thank you. you’ve been following closely. i just saw this for the 1st time.

[867V309]

Germany pulls the strings on its puppet EU “states”, what a show/

[SunkenCiv]

The ruling's message? Either the European Court of Justice has to stop bond purchases or German justices will. It is also a clear indication that Germany's highest court is extremely skeptical of the ECB... The ruling notes that OMT "exceeds the mandate" of the ECB and "encroaches on the responsibility of the member states for economic policy."

thanks managusta.