ESM Prime Time
ESM Action next? “…whatever it takes….”
From Spiegel. The court battle against the permanent euro bailout fund, the ESM, has become the largest in German legal history. Yet despite widespread concerns, fund head Klaus Regling is preparing for action. The most important question surrounding the fund, however, remains to be answered: Will it work?
Before that can happen, though, the ESM must still clear some legal hurdles. On Sept. 12, the German Constitutional Court will rule on lawsuits seeking to prevent the government of German Chancellor Angela Merkel from participating in the new bailout fund with its €700 billion ($880 billion) firewall.
Some 37,000 Germans have joined the complaint, making it the largest such case in the history of the court. Most prominently, however, the list of plaintiffs includes Peter Gauweiler, a politician with the Christian Social Union, the Bavarian sister party to Merkel’s Christian Democratic Union (CDU), former Justice Minister Herta Däubler-Gmelin of the center-left opposition Social Democrats (SPD), and a group of professors led by economist Wilhelm Hankel, a prominent critic of the euro. They all fear that joining the rescue fund necessarily means that Germany’s parliament would lose its constitutionally guaranteed right to oversee the budget.
And the bad bank aspect….
Yet despite all these efforts, the euro crisis has spread, making it necessary to follow up the temporary rescue fund with a permanent one.
But that’s far from enough for many critics, primarily those from the southern regions of the monetary union. Politicians such as Italian Prime Minister Mario Monti and his counterparts from Spain and France, backed by the IMF, regularly call for the rescue fund to be doubled. They would like to grant the ESM a banking license so it could borrow unlimited amounts of money from the European Central Bank.
Other critics, primarily in northern Europe, say that the ESM already has too much power. They see the rescue fund as a gigantic bad bank and yet another step toward a debt union.
Full reading here.