ESM Leveraging Plans Expose Weakness of German Court Ruling
September 25, 2012 • 11:34AM

(EIRNS)—Leaks in the media over the Sept. 22-23 weekend spoke about plans to have the ESM leverage its base capital of EU700 billion four times over, so that over EU2 trillion would be made available for the next round of bank mega-bailouts. Insiders have pointed to that already before, adding that this would naturally only be the beginning. More such mega bailouts would follow—as would massive money-printing.

The Eurozone governments seem committed to not even ask their national parliaments for approval or disapproval, but to march ahead with these plans regardless, which particularly in Germany poses the question once again, of whether the government respects the Constitutional Court at all—the court which just ruled on Sept. 12 that the Bundestag has to give its okay to any plans above the EU700 billion capacity of the ESM,— otherwise the government cannot go along with new bailouts. The weak point of this ruling is, however, that the court failed to block the ESM from the start, ruling against injunctions, thereby giving a green light for the bailouts. No surprise that the government does not really take this court seriously.

But what about the Bundestag: The opposition there, notably the always loudmouthed, but spineless Social Democrats, complains that the government has to ask the parliament, and have a debate. But what will the Bundestag do? Vote for the bailout again, as many times before, and be content with a debate that does not last too long and might pose certain challenges? Or will the Bundestag finally stand up and stop this monster before it begins spreading its hyperinflationary poison? A "no" by the Bundestag would strangle the leverage monster in the cradle, and the government should be told unmistakably too, that it must convey a similarly unmistakable message to the rest of the Eurozone: Either scrap the leveraging plans, or Germany will quit! That is just what the Constitutional Court in its Sept. 12 ruling did recommend as a caveat to be written into the German ESM ratification document.