Courtesy of Mish.
The German Constitutional Court in Karlsruhe, heard arguments on Tuesday on whether ECB measures to contain the eurozone crisis violate German law.
The court does not have the power to block the ECB, but it does have the power to restrict German participation in various funding schemes.
The New York Times dramatically states German Court Debates Fate of Euro.
Karl Albrecht Schachtschneider, a retired law professor and well-known euro opponent, told the court he hoped that “the euro adventure will be brought to an end for the good of Germany and the good of Europe.”
On the opposite side, Wolfgang Schäuble, the German finance minister, warned that the cost to Germany would be incalculable if the country left the currency union. And he pointed out that under the European Central Bank, inflation has been lower than it was with the deutsche mark. “The E.C.B. is acting within its mandate,” he told the court.
Mr. Schäuble said the central bank could be put into an impossible position if it were faced with conflicting rulings by courts in different euro zone countries.
The hearing, in a fenced-off court and police complex in a wooded area outside Karlsruhe, a city in southwest Germany near the border with France, drew an eclectic group of Germans on both the left and right who deride the euro as a travesty and long to bring back the deutsche mark. Outside a security checkpoint, several dozen anti-euro protesters chanted and waved signs. One sign called for Jörg Asmussen, a German arguing on behalf of the E.C.B. in the hearings, to be thrown in jail, an indication of the emotion that some Germans attach to the issue.
Mr. Asmussen, a member of the E.C.B.’s Executive Board, and Jens Weidmann, president of the Bundesbank, were expected to argue opposite sides of the question later in the hearings, which continue through Wednesday.
Mr. Weidmann is expected to repeat his counterposition, often expressed in speeches and interviews, that buying such bonds would violate a prohibition against using the euro zone’s central bank to finance governments.
The objections raised by the opponents of European Central Bank action tended to follow a similar set of themes. The central bank’s policies, they said, will evolve into a means to transfer German wealth to Greece, Italy and other European Union countries against the will of the German people. E.C.B. policies will save banks at the expense of ordinary citizens, complainants argued.
Irrelevant Arguments and Outright Lies
- Schäuble said “the central bank could be put into an impossible position if it were faced with conflicting rulings by courts in different euro zone countries.” So what? That is not the problem of the court.
- Schäuble said inflation was lower under ECB mandate. Once again that has nothing to do with the legality of the issues at hand.
- Schäuble warned that the cost to Germany would be incalculable if the country left the currency union. That comment is disingenuous at best. It ignores the huge potential costs to Germany if Germany stays in the eurozone. Regardless, the argument about costs of a breakup are irrelevant.
There is only one issue in this case that is relevant: Do any ECB actions or proposals violate a German constitutional prohibition against using the euro zone’s central bank to finance governments?
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