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Eurointelligence Daily Briefing: Bundestag to torpedo a key element of the ESM deal
Budget committee says automatic capital rule of the ESM both unacceptable and unconstitutional; wants to subject each capital increase to a vote in the Bundestag (which would probably impair the AAA-rating of the ESM; statement comes after German Court of Auditors handed out a ruling saying that Merkel understated the amounted of capital Germany is likely to provide, as it underestimates the possibility that other guarantors might not pay up; S&P says ESM is not going to impair the creditworthiness of its guarantors; Portuguese banks reduce ECB borrowings; polls suggest a close outcome of Finnish elections; AIB considers debt forgiveness for Irish mortgage holders; Troika frustrated about Greek authorities' failures on taxes and customs; 30 NGOs create a "Finance Watch" lobby group to counter the lobbying strength of the financial sector; the Netherlands threatens to block Iceland's bid to join the EU; Wolfgang Münchau argues that the lack of  bond purchasing powers of the EFSF/ESM makes any voluntary debt restructuring options impossible; Lorenzo Bini-Smaghi, meanwhile, argues that it is fair for Irish taxpayers to shoulder the burden, as they created a financial centre based on lax financial regulation and low corporate taxes.
(Google link)

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Apr 13th, 2011 at 04:52:32 AM EST
That would be a serious rebellion against the leadership (Merkel/Rösler) and I don't think the political situation is as serious yet.
by IM on Wed Apr 13th, 2011 at 09:02:32 AM EST
[ Parent ]
From two months ago: A surprise from the Bundestag: Merkel will need two-thirds majority for ESM (Eurointelligence, 14.02.2011)
According to a news report in Der Spiegel this morning, Angela Merkel may require a two-thirds majority to approve any agreement on the European Stability Mechanism, the long-term replacement of the EFSF. This came from an opinion expressed by the Bundestag legal department. This is the same hurdle as required for a full blown change in the German constitution, but in this case the high voting threshold is required because the decision has implications for the Bundestag's administrative sovereignty (we presume it might require the Bundestag to sign checks against its will). This means that Merkel will need the support of the SPD and/or the Greens to push her package through, and this in turn means that her degrees of freedom during the negotiations on the competitiveness pact will be even more constrained.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Apr 13th, 2011 at 09:07:37 AM EST
[ Parent ]
Eurointelligence: Bundestag wants to reduce Merkel's room for manoeuvre (23.02.2011)
(Here is very short overview to keep track of where the various actors are standing: The Bundesbank opposes pretty much anything, stress tests, extension of the EFSF's ceiling and mandate; the German government would be open to a wider ceiling, but would find it hard to sell it to the Bundestag, unless Portugal agrees to come under the EFSF. Generally the finance ministry is more open on matters such as the mandate of the EFSF than the chancellor's office; but the big gap is not between Schäuble and Merkel, but between the government and the Bundestag. The Bundestag is hostile to any mandate extension of the EFSF, and cautious about the ESM, including bond purchases, as this would invariably put pressure on the ceiling. Everybody wants to avoid a situation where the government keeps coming back to the Bundesbank for more money every so often)

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Wed Apr 13th, 2011 at 09:09:56 AM EST
[ Parent ]
Even if a two/third majority is needed - I doubt that and the Wissenschaftliche Dienst is not the constitutional court after all - SPD and Greens will support the government on this question. There won't be a rebellion on this side, either.

The unhappiness is real, but there will be no consequences yet.

by IM on Wed Apr 13th, 2011 at 09:26:36 AM EST
[ Parent ]
Finland may block Portugal aid
Bundestag's revolt gains support

The Bundestag's revolt against the ESM procedures also gathered pace (see our morning briefing yesterday), after the publication of the court of auditor's report warning that the liabilities for the German taxpayers may be higher than foreseen so far. MPs are angry at Wolfgang Schäuble for informing only the Bundestag's budgetary committee on negotiations around the EMS and not the entire parliament. "The whole parliament has to be involved", Gunther Kirchbaum, the chairman of the European affairs committee, told Handelsblatt. So far it is unclear how the parliament will be involved. There are tricky issues to be solved. There is for example the five-year period in which the participating states contribute the paid in capital with a total volume of €80bn. In case of a big rescue operation the states may have to top up their participation. It is unclear what the parliament's influence would be. The parliamentarians of the three coalition parties CDU, CSU and FDP want to work closely together to get a maximum of Bundestag involvement.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu Apr 14th, 2011 at 04:03:29 AM EST
[ Parent ]
How many divisions has Gunther Kirchbaum?

I doubt anything serious will happen.

by IM on Thu Apr 14th, 2011 at 12:25:36 PM EST
[ Parent ]
In the afternoon I tried to find some German media reaction (I started in taz), but it was practically nil: one short Spiegel Online reproduction of the news, nothing in any of the other major media outlets.

Over the past few years, in spite of his position, Krichbaum himself doesn't seem to be high on the media radar.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Thu Apr 14th, 2011 at 01:50:28 PM EST
[ Parent ]


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