Eurointelligence Daily Briefing: Weidmann ascends to the throne (03.05.2011)

New Bundesbank president Jens Weidman was official enthroned yesterday; indicates his main focus would be to watch over, and comment on, German government's fiscal policy; says price stability must take precedence over financial stability

Oh, dear. And this a day after we're told "Merkel's quid-pro-quo on Draghi" (being the next President of the ECB) is to put a German in charge of the European Financial Stability Board.

Merkel's quid pro quo for Draghi

Der Spiegel has the story that Angela Merkel's silence on Mario Draghi's candidacy for the ECB presidency is explained by heavy horsetrading behind the scenes. The German chancellor wants to extract substantive concessions for supporting the Italian central bank governor. First she would like Jörg Asmussen, Wolfgang Schäuble's influential state secretary at the finance ministry to head the Economic and Finance Committee (EFC), the powerful steering committee for the Eurogroup and Ecofin meetings. Secondly she wants Jens Weidmann, who is officially inaugurated as the Bundesbank president today, to succeed to Draghi as the chairman of the Financial Stability Board (FSB). Thirdly she wants to impose a very restrictive line in the ongoing technical discussion surrounding practical matters at the ESM such as what majorities are required to take what kind of decisions and whether the ESM can create new rescue instruments for troubled Euro states in its own authority.

Jean-Claude  Trichet took a swipe at Axel Weber at the ceremony, saying that the ECB  followed Weber's advice to bail out the German Pfandbrief market;

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the True Finns changed their mind again: they are now categorically ruling out the Portuguese rescue package; Vitor  Constancio says Portugal may be able to push back its targets for  deficit reduction, but EU officials say no deal has been reached on this  issue yet; Nout Wellink says he is open to a rescheduling, but not restructuring, of Greek debt; criticises ESM for moral hazard; the Greeks are asking once again for a cut on the interest rate on their EU/IMF loan; inflation expectations jump back to close to 2.5%; Jean-Marc Vittori, meanwhile, describes the decision to curtail the Schengen agreement as a "great leap backward".

Economics is politics by other means