I know, the EU’s bureaucratic hive mind says, let’s add another broke country to see how that doesn’t work then either.
Concerns Rise as Bulgaria Prepares to Join the Euro – Bulgaria has significant problems with corruption and money laundering. Nevertheless, the European Union is prepared to accept the country as the next member of the eurozone. Many fear that might be a bad idea.
In Germany too.
The govenment might not directly admit it but the days when they at least strove to reach a balanced budget (black zero) are over.
Germany’s spending to counter the coronavirus crisis and modernize its economy means the country shouldn’t return to a balanced budget anytime soon, according to a senior Finance Ministry official…
Chancellor Angela Merkel’s government abandoned its balanced-budget policy this year and is set to borrow about 218 billion euros ($258 billion). A deficit of more than 80 billion euros is set for next year to fight the fallout from the pandemic, people familiar with the matter have said…
Germany’s constitutional debt brake obliges the government to keep debt under control. In good times, the rule allows for a structural deficit of 0.35% of gross domestic product. In times of recession, new borrowing can go up in proportion with the economic decline.
“A balanced budget isn’t obligatory.”
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.
That means “punitive interest rate” and refers to a rates below zero.
It’s an accurate word invention. The ECB has cut rates again and those who save are punished.
The German term “Strafzins”, or “punishment rate” is widely used in the country’s media to refer to interest rates below zero. And a day after the ECB cut rates for the first time since the spring of 2016, it is back in the news.
This is despite the fact there is an alternative German word for negative rates: negativzins (as Michael Steen, formerly of the FT and ECB global media chief, pointed out on Twitter).
Admittedly negativ also has . . . negative connotations. But the use of “straf”, or “punitive”, reflects a widespread perception across Germany that the ECB is penalising savers through its monetary policy.
“They want to pump us up with the credit drug.”
That means Count Draghila.
You know, as in Mario Draghi, the European Central Bank President?
Mass-selling German newspaper Bild on Friday accused European Central Bank President Mario Draghi of “sucking dry” the bank accounts of Germany’s savers, a day after the ECB cut interest rates deeper into negative territory.
Next to a photomontage of Draghi with fangs and dressed as a vampire, Bild’s headline read: “Count Draghila is sucking our accounts dry.”
Hoping to kick-start economic activity nearly a decade after the euro zone’s debt crisis, the ECB on Thursday cut interest rates deeper into negative territory and promised bond purchases with no end-date to push borrowing costs even lower.
“The horror for German savers goes on and on.”
Germany hides the awkward truth about the euro.
Mr Kohl’s offence — the original sin, I would say, at the launch of the single currency — was to shy away from spelling out to German voters the inescapable meaning of the bargain. It still goes unsaid. In short, Germany is the biggest beneficiary of European integration. The EU supplies the democratic stability and economic certainty on which its prosperity has been built. No country has more to lose from a break-up.
These benefits, understandably, carry a price tag. As the EU’s most powerful economy, Germany bears a proportionate responsibility for the stability of the enterprise.
The mantra in Berlin continues to obfuscate. Germany, it says, will never accept a “transfer union”. In real life, of course, that horse has already bolted. The true choice is between the shadow transfer union represented by the mountain of national central bank liabilities that have built up at the ECB — so-called Target balances — and the creation of an economic union that admits the role of fiscal policy in managing economic demand.
The present catch-22 is that those with room to operate the fiscal levers — Germany and its northern neighbours — refuse to do so. Those pressing for a more expansionary stance — led by France — lack the budgetary headroom.
Grossly overvalued? The main thing is, gross.
When it comes to the advantage that Germany has taken of the euro, Navarro is right about effect, if not motive.
The euro has been bad for German democracy and for German savers and may well ultimately prove to be a disaster for its taxpayers too, but it has been a boon for the country’s exporters. The euro is far weaker than the Deutsche Mark would have been (as was always likely to have been the case). This means that Germany’s decision to abandon its old currency in favor of the euro has acted as a disguised devaluation, a devaluation that has only deepened as the structural imbalances within the common currency have dragged the euro down still further.
Navarro sagte der “Financial Times”, Deutschland profitiere in seinen Handelsbeziehungen von einer “extrem unterbewerteten ‘impliziten Deutschen Mark'”.
In order for the EU to work properly, I mean. Take deficit spending (please). The infamous Maastricht “deficit criterion” from 1992 is one of my personal favorites. It’s limited to 3 (three) percent.
The euro convergence criteria (also known as the Maastricht criteria) are the criteria which European Union member states are required to meet to enter the third stage of the Economic and Monetary Union (EMU) and adopt the euro as their currency…
2. Government budget deficit: The ratio of the annual general government deficit relative to gross domestic product (GDP) at market prices, must not exceed 3% at the end of the preceding fiscal year (based on notified measured data) and neither for any of the two subsequent years (based on the European Commission’s published forecast data). Deficits being “slightly above the limit” (previously outlined by the evaluation practice to mean deficits in the range from 3.0–3.5%[9]), will as a standard rule not be accepted, unless it can be established that either: “1) The deficit ratio has declined substantially and continuously before reaching the level close to the 3% limit” or “2) The small deficit ratio excess above the 3% limit has been caused by exceptional circumstances and has a temporary nature (i.e. expenditure one-offs triggered by a significant economic downturn, or expenditure one-offs triggered by the implementation of economic reforms with a positive mid/long-term effect)”.[5][6][10] If a state is found by the Commission to have breached the deficit criteria, they will recommend the Council of the European Union to open up a deficit-breached EDP against the state in accordance with Article 126(6), which only will be abrogated again when the state simultaneously comply with both the deficit and debt criteria.
I don’t understand everything there under item 2, of course, but apparently neither did most of the countries that signed the treaty (at least I get the 3 percent part). See the graph above about the EU’s top “deficit offenders.” It’s been going on like this for years and years, too. Any questions?
In Italien droht ein Bankenkollaps, in Spanien, Portugal und Frankreich herrscht der Schuldenstaat: Die Eurozone driftet auseinander, Regeln werden kaum noch eingehalten.
So like what force in the universe could possibly stand in its way? Or even want to. Honey, where’s our white flag?
British Brexit campaigners have been boosted with news from Berlin that Germany is once more pushing for an EU army encompassing all 28 member states with a joint HQ and shared military planning.
Along with judicial, tax and immigration issues, a Euro army has for long been one of the main irritants of anti-EU campaigners.
“German security policy has relevance — also for beyond our country. Germany is willing to join early, decisively and substantially as a driving force in international debates … to take responsibility and assume leadership.”
Observing Hermann 