German High Court Blows Up Euro, Says ‘Oh Wait,’ Abdicates

If you're interested in financial meltdowns, currency collapses, too big to fail banks and institutions and those who enable them look no farther than the European Union (specifically Germany this time) and European Central Bank (ECB.) Not counting Cyprus, Greece or Italy we don't often look into just how things are with EU/ECB financials so let's take a look.

At first glance the ECB is more limited than the Federal Reserve when it come to massive money printing. The main reason is that if they mess things up they directly effect 18 separate countries and not just one. Fair enough. So when they exceed their legal parameters as defined by EU treaties (and German constitution) they can end up in court, which just happened. The plaintiff's complaints against the ECB were then upheld by the German Constitutional Court. What followed was depressingly, one might even say extremely depressing. Bottom line, "Too Big To Fail" is alive and well in the EU.

German High Court Blows Up Euro, Says ‘Oh Wait,’ Abdicates

By a vote of six to two, the Court demolished OMT (ECB's version of QE) as violating both, the German Constitution and European treaties that governed the ECB.

After ruling that the ECB exceeds its monetary policy mandate, “infringes the powers of the Member States,” and “violates the prohibition of monetary financing of the budget," what did the Court do? It abdicated.

Fearing the collapse of the markets, fearing that the trillions of dollars and euros that this guarantee had created out of nothing would revert to nothing, fearing even more the consequences of becoming the eight Germans who blew up the euro, they shuffled the mess to the European Court of Justice for guidance (thereby) kicking the can down the road till 2015.

Welcome to European Central Banking and the German Constitutional Court. We all know who's going to foot the the bill for ECB bad debts and it sure isn't the bondholders. Just ask Cyprus, Greece or Italy.

reply to post by Bassago

See what they get? I vaguely remember something about gold repatriation. Oops!!

Too bad the EU circled the wagons. Too bad everyone is now realizing they're on the same sinking ship. Too bad they're trying to put out the fires with cans of water so clearly marked "Gasoline" (as if they could read English in an emergency).

I kinda feel bad for 'em ... kinda don't.

reply to post by Snarl


I guess the main thing to remember is the ECB completely violated the EU treaties and the German constitution and completely got away with it even after being told they were completely in the wrong. The Fed is actually in the same position of power here and god help us they do not care about average citizens.

reply to post by Bassago

We can certainly agree on that!! I can't understand why this thread isn't getting the play it deserves. I know ATS has an astute membership and I'm watching this thread like a hawk right now.

reply to post by Snarl


To be fair central banking, any banking for that matter is pretty boring. At least until it comes up and bites you on the butt.

Then it's like "Arrghh!!Why didn't we see this coming!"

Wasnt there some recent news of the fed not giving germany back their gold reserve held in the US? Understanding a secondary issue, but reserves gives real value to currency, but like us, they will print until the paper runs out...

teslahowitzer
Wasnt there some recent news of the fed not giving germany back their gold reserve held in the US? Understanding a secondary issue, but reserves gives real value to currency, but like us, they will print until the paper runs out...

Supposedly we'll give it back in seven years but we're a little behind schedule on that as they only got 5% so far. Good luck with that, eh?

By EU treaty and German constitution they aren't allowed to do what they did. But as they did anyway it paints a pretty bleak picture of how central banks view things like sovereign countries.

reply to post by Bassago


so, as one domino falls..........

I didn't think about how this might play (hope I'm not drifting too far into OT land) ... but what about that little dust-up over Ukraine? They aren't inside the circle of wagons at the moment. I'll bet we see a bit of third order effect (in the form of temporary relief) if the EU changes its posture.

prophesies & predictions anyone?

reply to post by Bassago


I wish you had your own prime-time news hour on CNN.

On the other hand, the way you consistently post great threads like this is starting to give me an inferiority complex. I feel like a D student and you keep blowing the grading curve. So, I do resent you for that. S&f anyway.

reply to post by VictorVonDoom


Thank you, very much appreciated. I doubt the CNN would let me near a microphone though.

I'm a firm believer in group effort on these topics because we all need all the help we can get. Some of the financial articles I see just leave me shaking my head in confusion. Had to read this particular article a couple times to get a decent grip on it.

Snarl
reply to post by Bassago

 

We can certainly agree on that!! I can't understand why this thread isn't getting the play it deserves. I know ATS has an astute membership and I'm watching this thread like a hawk right now.

getting the play it deserves?...what the hell are ATS members suppose to do, buy all of our members airplane tickets to Germany and protest violently outside government buildings? overthrow the ECB? we are a powerless bunch of keyboard cowboys, who sit alone, staring angrily at written words on a flatscreen....

jimmyx

what the hell are ATS members suppose to do,

Spread the word to people who care.

reply to post by jimmyx

what the hell are ATS members suppose to do, buy all of our members airplane tickets to Germany and protest violently outside government buildings?

I'd really be interested to hear what our members from Germany and the EU think about this as they took it right on the nose. Perhaps they have more accurate perspectives or more information.

Every time stuff like this occurs, and the reason stuff like this occurs, is linked to some people making a lot of money ya? Like an amount of people benefited grossly from the events that led up to this event? And are now continuing to benefit from the result?

ImaFungi
Every time stuff like this occurs, and the reason stuff like this occurs, is linked to some people making a lot of money ya? Like an amount of people benefited grossly from the events that led up to this event? And are now continuing to benefit from the result?

In this case making money was part of it and they certainly did. However the ECB was directly buying sovereign bonds from countries like Spain to keep Spain propped up. They are supposedly not allowed to do that or the exceeded their mandate at the least. Can't have sovereign countries defaulting though or the EU will fall apart. So this may be more about keeping the EU from falling apart than just making money.

reply to post by Bassago

Bassago
reply to post by jimmyx
I'd really be interested to hear what our members from Germany and the EU think about this as they took it right on the nose. Perhaps they have more accurate perspectives or more information.

This issue is all about jurisdiction and clear definition.

The GCC has indicated that the OMT (which legaly doesn't even exist because it has no legal documentation whatsoever) could indeed violate German law (because it might go beyond the ECB mandate / against EU treaties) but the GCC cannot rule on issues of EU law, which are outside of its own jurisdiction (let alone outside of reality).

Now the ECJ has to look into whether the OMT is compatible with German law or not... and therefore the OMT has to be clearly defined (written) first. Only then will the GCC be able to rule if the OMT is in accordance with German law.

Does this help?

ImaFungi
Every time stuff like this occurs, and the reason stuff like this occurs, is linked to some people making a lot of money ya? Like an amount of people benefited grossly from the events that led up to this event? And are now continuing to benefit from the result?

Actually, when stuff like this occurs, the people behind it can print all the money they need. It's more about the people that print the money having more control of people than the governments they think they elect.

reply to post by ColCurious

Now the ECJ has to look into whether the OMT is compatible with German law or not... and therefore the OMT has to be clearly defined first. Only then will the GCC be able to rule if the OMT is in accordance with German law.

Thanks, it helps.

Guess to me as an outsider it looks like the GCC was clear saying the ECB was out of line on this and then didn't want to follow through with their decision whatever that would entail. Still I get the part where things are bigger than just the GCC when any ruling can impact all countries within the union.

You know what i think, i honestly feel as if investors should be the first
to foot the bill, you see, by participating in this casino that they call an
economy they have made things 1000's of times worse, they have helped
to grow this unrealistic expectation of being able to sit at home and earn
money they don't want to actually work for..... so when its time to pay
the piper i think they should be second in line behind the big banks that
many times loan those investors money to gamble away.

Everyone wants easy money, no one wants to get stuck with the bill.