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German constitutional court needs 3 months to decide about the injunction

Yesterday we explained the German constitutional court injunction in easy words.

Update July 11th:

The court says that it needs three months to discuss the injunction.

As opposed to the finance minister Schäuble, who wants to protect financial markets, the Bundesbank president Weidmann thinks that markets have already partially priced in a delay in the ESM. For Weidmann, the ESM cannot guarantee that the euro crisis will be stopped. Here the full Weidmann critic on the ESM. Weidmann makes it also clear that Germany will have losses in Target2, once the Euro breaks up.

How high is the German liability ?

The Sueddeutsche talks about the court discussion on how big the German responsibility will ultimately be, when all sources (EFSF, ESM, EFSM, greek bailout, Target2, German IMF part) are taken together.  The lawyer of the right-wing plaintiffs claims that the sum is 900 bln. € and not only the 190 bln.€ ESM responsibility. Furthermore the ESM could be easily extended and increase this sum. They were not controllable by the parliament. The lawyers of the left-wing plaintiffs declare to the court that saving the euro will cost Germany 2 trillion €.

Where is the point of no return ?

The plaintiffs are complaining that very soon the ESM will become a system-relevant bank which German tax payers will continue finance without stop for many many years. If things in the periphery do not get better, then Germany should force the southern countries out of the euro. More details in the very interesting page of the German Verfassungsblog, the blog on the constitutional court.

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George Dorgan
George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.
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