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Can you give a link, or copy Münchau in full? and your first comment (to mine) link doesn't work.

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin
by Crazy Horse on Mon Sep 12th, 2011 at 06:40:53 AM EST
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It appears googling can no longer bypass Eurointelligence's firewall...

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Mon Sep 12th, 2011 at 06:47:27 AM EST
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FT.com: Stop rejoicing. This was no victory for the eurozone (Wolfgang Münchau, September 11, 2011)
As an advocate of eurozone bonds, I have to admit their prospect looks grim after last week's ruling of the German constitutional court. The court upheld the European financial adjustment facility, the crisis mechanism. This was, undoutedly, good news. But after I read the whole ruling, which ran to 29 tightly written pages, I realised that this judgement was not a victory for the eurozone at all. On the contrary, it categorically rules out any policy option beyond what has been agreed so far. I cannot see how it can be consistent with the survival of the eurozone, given the policies of member states and the ECB.

Much of the language in this document is opaque constitutional jargon. But on the issues that matter, the ruling is surprisingly, and depressingly, clear. It says the German government must not accept permanent mechanisms - as opposed to the EFSF, which is temporary - with the following criteria: if they involve a permanent liability to other countries; if these liabilities are very large or incalculable; and if foreign governments, through their actions, can trigger the payment of the guarantees. If I were a plaintiff in this case, I would regard that statement as an open invitation by the court to bring a new case against the European stability mechanism.

...

Moreover, you cannot get around this unfortunate fact with an ingenious combination of eurocratic trickery and financial engineering. The court, quite cleverly, did not mention eurobonds. It talked about liabilities. The Bundestag is not precluded from giving money to Greece, but it cannot empower a third party, such as the EFSF or ESM, let alone a hypothetical European Debt Agency, from usurping sovereign power. Sovereignty can be delegated in small slices, but not permanently.

(Google link)

It would appear that only existing permanent institutions should be able to issue Eurobonds. That probable means either the ECB or the European Investment Bank. Or are those ruled out, too?

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Mon Sep 12th, 2011 at 08:50:50 AM EST
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A couple of weeks ago Edward Harrison noted that the structure of all "bailout" agreements were collections of bilateral agreements between the country being rescued and the individual countries banding together to make the rescue. He maintained that this was due to insistence that all funds be traceable back to individual countries and suggested that this was so that the debts would survive even if the euro-zone did not. It would also be a mechanism to prevent the emergence of any super-national agency which could make commitments to which member states might individually object. This is clearly consistent with what we are seeing.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Sep 12th, 2011 at 09:41:07 AM EST
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See Varoufakis on Perfectly Separable Debts.

Economics is politics by other means
by Carrie (migeru at eurotrib dot com) on Mon Sep 12th, 2011 at 09:46:24 AM EST
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Harrison may have been citing Varoufakis, but I remember To The Finland Station -- one of my favorite works of historical analysis and historiography.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Sep 12th, 2011 at 11:33:16 AM EST
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