Some issues become tedious to discuss but importance is not diminished by the tedium. While the issue of OMT is extremely important for global financial markets, its significance is understated in the U.S.-centric financial press. The European press had two important pieces on the issue of the ECB and possible violation of German law. First, the Telegraph had a piece by Ambrose Evans-Pritchard, “Germany’s Brother Gladiators Battle Over Euro Destiny in Constitutional Court.” The title of the article reveals the importance of the issue as it will draw lines in Germany behind the two key issues represented by ECB Vice Chairman Jorg Asmussen and ECB Executive Board Member and Bundesbank President Jens Weidmann. The Weidmann argument is that the OMT PROGRAM “blurs the line between fiscal and monetary policy.” It is not the mandate of the ECB to bail out insolvent states. The argument for the Asmussen group is that the OMT program saved the breakup of the EU and safeguarded the monetary union. But that of course raises the question of what institution provides the financial backstop for safeguarding the EU?
Posts Tagged ‘Jorg Asmussen’
Notes From Underground: Judgement Day is Tomorrow as Supplicants Approach the Bench
June 10, 2013The German Constitutional Court is scheduled to hear the arguments in the issue of the constitutionality of the ECB providing unconditional funding for the bailouts of European sovereigns plagued with financial problems. The main issue really becomes this: Can the ECB consign German citizens to be the paymasters for the entire European project without their DIRECT CONSENT–or what the highly regarded Otmar Issing rightly called “taxation without representation” in an FT op-ed piece several months ago? Germany’s Constitutional Court sits in Karlsruhe and decides major issues of law impinging on the legality of the BASIC LAW. Previously, the court has held that the sovereignty of the people resides in the Bundestag but has warned that the transfer of German wealth and property to an outside foreign body has its limits without direct consent of the people. Where does the demands of the European Union conflict with the sovereignty of the citizens in determination of German rights?
Notes From Underground: WHO’S IT GOING TO BE, HIM OR ME?
August 20, 2012This seems to be the question of the day as the markets awoke to the RUMORS of the ECB CAPPING RATES. As I wrote last night, the rumors were running wild about the ECB using different strategies to put a ceiling on short-term debt (90 days to 3 years for Spain and Italy). No genuine plan was offered just several possibilities as it seemed that President DRAGHI was floating trial balloons about ECB intervention via an unlimited ECB/ESM buying of “misaligned” sovereign debt. The EUROPEAN SOVEREIGN DEBT MARKETS responded to the weekend stories by initially rallying the ITALIAN DEBT FUTURES AND SELLING GERMAN BUNDS IN A MAJOR RELIEF RALLY.