As I looked at the photos from the G-8 conference, this caption became obvious. The German Chancellor is the belle of the ball as her Germany has what the World is crying for: surplus wealth in a debt-laden world. The pressure was on Chancellor Merkel to provide enough EUROS for short-term triage on the European nations hemorrhaging wealth from the huge amount of debt owed to many global creditors. As the communique revealed, there were few concrete proposals provided by the G-8 “brain trust” except that Germany “ought” to provide the financial backstop for all of Europe and, thus, the rest of the world. President Obama is well aware that any financial collapse in Europe will weigh heavily upon his reelection potential.
The FED has its hands tied with an enormous balance sheet and Mr. Bernanke is on record of warning about the FISCAL CLIFF. As China slows and Brazil looks to devalue its way to economic growth, the financial world is in a very difficult situation and yet the G-8 can only propose that Germany support a full EUROBOND and surrender to the desires of the VOICES OF GROWTH AT ALL COSTS. The only proposal is EUROBONDS … SERIOUSLY??
The major problems with any EUROBOND are the legal obstacles that will have to be overcome. First, all European treaties and agreements on the EU have been lacking any type of bailout of sovereign nations. A EUROBOND would be mean that the EU was accepting the debt of a bankrupt sovereign would mean a bailout. Second and most importantly, the Federal Constitutional Court of Germany has previously maintained that a EUROBOND would be a violation of what the German nation had agreed to and would circumvent the Bundestag. In a September 7, 2011 opinion, the COURT ruled that any debt relief that would impact the German budget must be presented to the Parliament.
Thus, all the pressure building on Chancellor Merkel by the G-8 and others can be easily defrayed by the German general will. The desire for the Germans to write a giant check to transfer German wealth to the DEBT-PLAGUED is not a given. President Hollande and President Obama may have their desires for economic progress by the COURT IN KARLSRUHE. It is back to the drawing board, or maybe to the G-20 when the real money shows up in force.
***As for all the discussion about a bank run in Europe: It began long ago and can be found in a SCHATZ that yields 4 basis points. Nothing new here. Intelligent Europeans have been moving money out of the GIIPS for quite a while. The problem will be how Brussels moves to react against Greek citizens holding EURO deposits in German banks. Will there be a move to prevent the movement of the funds and the imposition of some type of exchange controls? The ECB is presently financing the run through the use of the EMERGENCY LENDING AUTHORITY (ELA), which backstops the national banks of all the individual nations. The ECB may move to legally attach itself to deposits of EU citizens in banks outside of their country of origin. What a tangled web we weave when we attempt to deceive.