Are the previous court decisions ruling that the European Court of Justice can have primacy over national law in Germany. It’s also “incomprehensible” that it took so long for everybody to figure this out. I sure hope that this latest ruling won’t be ruled out as “meaningless” later but I’ve had my hopes dashed before.
Germany’s constitutional court sent shockwaves through Europe last week by ruling that the German government and the EU’s top judges failed to properly scrutinise the European Central Bank’s bond-buying programme.
The judgment threatens to turn the European Commission against Germany, the EU’s biggest member state. It raises doubts over the primacy of the European Court of Justice over national law. It also risks driving a wedge between the ECB and its biggest shareholder, the Bundesbank.
Germany’s highest court dismissed an earlier ECJ ruling in ECB’s favour as “incomprehensible” and “meaningless”. That bombshell decision opened the door to potential legal challenges against the EU from other countries, such as Poland and Hungary, whose authoritarian governments are already at odds with Brussels.
Imagine that. A nation state (member state) ought to have a say in how its money is spent. What a radical new concept.
Germany’s top court has ruled that the European Central Bank’s mass bond-buying to stabilise the eurozone partly violates the German constitution.
The ruling relates to government debt worth €2.1 trillion (£2tn; $2.3tn) bought by the ECB since 2015, but not purchases in the coronavirus crisis.
The Constitutional Court in Karlsruhe says there is not enough German political oversight in the purchases…
The plaintiffs are a group of German academics, including a former leader of the far-right Alternative for Germany (AfD), Bernd Lucke. They argue that the purchases violate the EU ban on one eurozone member subsidising the debts of another.
It is now up to the ECB to explain how its mass bond-buying programme is “proportionate”. The Bundesbank could pull out if it is not satisfied, in three months’ time – which would be a big blow to the eurozone.
And zero is what you get if you purchase the world’s first 30-year bond featuring – zero income. Not much of an outcome there. What a steal. In more ways than one.
Germany Regrets Size of Bond That Pays Nothing as Auction Flops – The world’s first 30-year bond featuring zero income struggled to find buyers, prompting Germany’s debt agency to admit the sale may have been “too large.”
The nation failed to meet a 2-billion-euro target ($2.2 billion) for the auction of notes maturing in 2050, signaling that negative yields across Europe may finally be taking their toll on demand. It’s another sign that the global bond rally may be coming to a halt now that more than $16 trillion of securities have negative yields.
“The broader conclusion is that this is an ominous sign for cash bonds.”
Speaking of debt… Here’s the state of the state today, folks. If you’re not one of us, if you’re the German government, for example, you can actually make money with your debt.
The German state profited from incurring more debt in the first half of this year, a newspaper report showed on Monday.
State bonds issued with negative interest rates flushed around 1.5 billion euros ($1.68 billion) into federal coffers, as total interest spending dropped from 9.7 to seven billion, the “Bild” daily reported.
German government bonds with a maturity of up to 10 years currently carry a negative interest rate, which means investors, who would traditionally expect a return on their investment, actually pay to own them.
For the first time in 40 years US-Amerika has now surpassed France as Germany’s most important trading partner.
Of course now everybody is trying to figure out who to blame for this and how to fix it.
One theory goes that the policy of low interest rates and the government bonds buyback program by European Central Bank president Mario Draghi has devalued the euro and made selling in other parts of the world a whole lot easier. I’ll “buy” that. Hardy, har, har.
Erstmals seit vier Jahrzehnten haben die USA Frankreich als wichtigsten Handelspartner Deutschlands abgelöst. 2015 seien Waren im Wert von 173,2 Milliarden Euro zwischen Deutschland und den Vereinigten Staaten gehandelt worden.
More than half of all German government debt with more than one year maturity is now trading negative.
Investors have been warned of dangers of holding German government debt, as unprecedented central bank easing sends the country’s 10-year borrowing costs towards zero.
“If you look at bunds in anything other than the shortest possible timescale, the risk becomes very clear.”
Money is like water (or maybe like beer). It has to go somewhere. And 40 billion euros just made its way to Germany.
While fear has driven money away from Greece and Spain and co, making the government cost of repaying debt in these countries seem prohibitive, in Germany it has been quite different. Fear has boosted Germany coffers…
One thing is for sure, putting it in Greek bonds is risky. Spanish, Italian and Portuguese bonds don’t seem much safer either. But German bonds, in contrast, feel as safe as a safe house in a land with no crime. In fact so safe are German government bonds or bunds, perceived to be, that there have been times when the yields on some of them have been negative.
So actually, Germany has done rather well out of fear created by the euro crisis – or should that be the other way around – a euro crisis created by fear?
Observing Hermann 