German court backs unpopular EU bailouts

The German Constitutional Court has endorsed the country’s participation in bailouts for ailing EU economies. The move was supported by German Chancellor Angela Merkel, who said that the ruling “confirms” the actions of her government.

­The country’s Federal Constitutional Court has rejected lawsuits claiming that German participation in the EU bailout funds was violating parliament’s right to control how taxpayer money is spent.

Still, the court’s presiding judge, Andreas Vosskuhle, announced on Wednesday that in the future lawmakers should be more involved in making bailout decisions.

“The government is obligated in the cases of large expenditures to get the approval of the parliamentary budgetary committee,” he was quoted by AP news agency as saying.

The court ruling said that from now on, bailout decisions cannot be made automatically, when concrete measures are adopted by governments without lawmakers’ participation. The budgetary committee will be responsible for approving such measures.   

The lawsuits, which were filed by a group of prominent German lawyers and economists, said that bailouts to Greece came as a violation to the German constitution and of EU legislation.

According to the group, German participation in bailout process violated limits of acceptable integration within the EU, interfering in sovereign affairs of other member states.

German Chancellor Angela Merkel supported the court’s decision, saying that the ruling “absolutely confirms” the actions of her government, aimed at expressing solidarity with other EU nations. 

“The euro is the guarantor of a unified Europe,” she told the parliament on Wednesday. “If the euro collapses, Europe collapses.”

Germany’s parliament voted to participate in the May 2010 bailout for Greece and to support the $620 billion European Financial Stability Facility with some $207 billion in loan guarantees.

Despite Angela Merkel’s optimism over the German court ruling, its decision has little to do with saving the euro in the long term, Patrick Young, executive director for DV Advisors, told RT.

“What we are looking at today is the fact that yes, bailouts can go ahead, but at the same time it is still a very, very cloudy picture for the euro,” he said. “We know that the German people are deeply unhappy about what is going on. They do not see there being any benefit in suddenly giving a credit card and another bottle of vodka to a drowning drunken man in a department store and that is what we have got here. It is going to still be a terrible result once the market has had a bit of a relief rally which is going on as we speak.”


According to Roland Vaubel, economics professor from University of Mannheim, the German population in general is far from supportive of its government’s enthusiasm towards bailouts, particularly to Greece.

”We see that the Greeks are buying gold with the money they get from the bailout fund, very unpopular, and they are not really implementing the conditions which had been attached to the credits and it is well-known that tax morale is very poor in Greece,” he said.

“Germans are very upset about Greece, much more than about Portugal and Ireland,” Vaubel added.

According to the economist, the ongoing crisis is very different from that which started in the US back in 2008 with the collapse of Lehman Brothers. He said that compared to the trouble of 2008, there is more optimism that governments will be able to tackle the problems arising.  

”The Lehman Brothers’ panic was due to the fact that there was the medium-sized investment bank which collapsed and people did not know whether any further banks would also be allowed to collapse, and whether the money supply will contract, as happened in the Great Depression, so there was a lot of uncertainty,” he said.

”Since the financial crisis, however, we have funds to support failing banks,” Vaubel added. “We have the experience that the governments have supported the failing banks and the money supply has not contracted and monetary base has also not contracted. So we have had an experience that the governments are very well able to deal with the crisis.”


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