Unfortunately, the next federal election in Schleu-land is two years away. Grand Coalition (SDP-CDU - preferably without CSU, preferably with Greens) would be an interim solution, it would break the stranglehold of the FDP/Bundesbank dictatorship.

_{It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II}

We (along with everyone else) may have fallen for the punditocracy's tendentious reading of the court's ruling. However, if their interpretations are correct, no new institutions can be created which don't require the Bundestag to get involved in approving every action. This includes Eurobonds.

For Reinhard Müller the court prohibits the Bundestag to disempower itself

Frankfurter Allgemeine Zeitung's legal correspondent Reinhard Müller lauds the fact that the constitutional court's ruling makes it clear that a disempowerment of Bundestag is unconstitutional. "The German legislator must not accept durable mechanisms in international law that would end in guaranteeing the decisions of other states", Müller writes. Each help that generates costs within the EU and on an international level "must from now on be voted on by Bundestag in each individual case", he concludes.

For Heribert Prantl the limits of EU integration in the Grundgesetz have been reached

For Süddeutsche Zeitung's deputy editor Heribert Prantl the Karlsruhe ruling has defined the limits of European integration as long as the Grundgesetz is in place. "The power of the Grundgesetz ends when the European confederation becomes a federal state", he explains underlining that the European possibilities of the Grundgesetz have been exhausted.  "If more Europe becomes necessary, a European government shall be created - whether you call it an economic government or otherwise. It would then no longer be sufficient to involve the parliament, and a new constitutional basis would needed. This would supplant the Grundgesetz, and would have to be decided by the people".

For Nikolaus Blome Germany has drawn its red lines

After Angela Merkel's speech in Bundestag and the court ruling, Bild's deputy editor Nikolaus Blome explains the chancellor's design for tomorrow's eurozone. "At the moment the euro states are like car drivers who do not respect the traffic rules, who are not afraid of police tickets, who get into accidents and endanger each other", he writes. "That is bad enough. But it is no reason to take the steering wheels out of all cars, the accelerator and brakes. Instead we need more traffic lights, tougher penalties and quick penalties for all breaches, perhaps even taking away the driver's licence." In any way, Blome concludes, Merkel has drawn her "red line" and made it clear that there is "no need for a debt union with euro bonds where Brussels is dictating national budgets and where each individual state guarantees everybody else".  

I haven't tried to read the actual ruling but I would not dare to interpret it myself either because I am not familiar with German constitutional convention...

Economics is politics by other means

(In Britain, effectively only the government can put forward something to be voted on.)

Firstly, Merkel is on record as saying a new EU Treaty is required to address the issues raised by this crisis.  International Treaties, once ratified, by definition, override national constitutions, courts and Parliaments.  German Sovereignty has already been significantly eroded/pooled by the development of the EU.  

The question is, therefore, whether Eurobonds exceed the powers currently transferred to EU institutions under current treaties. That question is ultimately a matter for the European Court, should some EU institution break the current political consensus and issue them.  It is not for the German Constitutional Court to tell the EU what it can or cannot do under existing devolved sovereign powers.

If, as conventional wisdom seems to suggest, Eurobonds are beyond the scope of existing Treaties, then we are down to pragmatic temporary solutions, (as approved by the National constitutional Courts) or a new EU Treaty.  So far, only Merkel seems to be serious about proposing a new EU Treaty, so we cannot blame her for not recognising the limitations of existing Euro institutions.

It all depends on the content of any new Treaty, of course, but right now the political climate for a new Treaty couldn't be worse in many countries, particularly in countries like Ireland where a popular referendum is required.  Unless any such new Treaty explicitly prohibited ordinary people from becoming liable for the losses of TBTF banks, I couldn't see any such Treaty having a chance of being passed.

Basically we need a new Treaty to explicitly provide for the re-structuring of insolvent banks and sovereigns within the Eurozone according to some agreed rules.  Cue Austrian Apoplexy.  We need an ECB with a wider remit (full employment) and broader powers to act as market maker of last resort. Cue exit of all Stark raving mad central bankers.

But the debate on what any new Treaty should contain hasn't even begun because CW doesn't have a clue as to how this crisis can be resolved and new crises prevented. We can blame the entire conservative establishment for that, but at least Merkel has had the foresight to point out that existing EU institutions and legal powers are inadequate.

Indeed I wouldn't be surprised if a new German leader from the Centre-Left will ultimately take the lead on all this.  But first we need a Greek default, and probably a partial Italian one as well before the CW is fully exposed for the bankrupt ideology that it is.

Index of Frank's Diaries

b) The opposition is pro eurobonds

c) I don't know how to interpret the ruling of the constitutional court yet. I think it does prohibits a fiscal union. We have to remember though that on matters of european integration the court has habit of giving sanction to the integration step of the moment but also to draw a line in the sand. And then a few years alter the line is crossed and they draw a new line.