https://www.bundesverfassungsgericht.de/SharedDocs/Entscheidungen/DE/2020/05/rs20200505_2bvr085915.html
Am I correct in the interpretation that your Federal Constitutional Court has ruled the European Central Bank/Court of Justice of the European Union overstepped it's mandate significantly in regards to quantitative easing/bond purchasing?
If so, that would be a very serious under-reported story that could pose a serious problem for the cohesion of the European Union.
I am
a) not a native German speaker - just fluent
b) not about to wade through that extremely long document. If you want to, click on the word ENGLISH in the top line.
From what I read elsewhere, they said the ECB's practice violates the German constitution and needs some modifications. This discussion predates Corona by a few years. It does have some implications for the EU but I am not an expert who can interpret this, for that you need a lawyer with the correct speciality.
It's already "resolved" in that the European Court of Justice stated that they are the only ones who can rule on European organizations like the ECB. They essentially stated that the German Constitutional Court ruling was unlawful.
They didn't address the GCC directly, they pointed out the regular EU court rulings although the fact that they responded at all was unusual. The ECC further stated "not to comment any further on this subject".
I don't think the last is said about this, you can almost taste the disdain the ECC showed in their short comment. That's not something the Germans will forget very soon and rightfully so.
ETA
I found an article in English, no idea how colored it is.
https://www.dw.com/en/european-court-of-justice-slams-top-german-courts-ecb-ruling/a-53371145
Given the degree to which the German economy back stopped much of the ECB monetary policies, it appears to me to be a foolish thing to do for the ECC to antagonize Germany.
Given the degree to which the German economy back stopped much of the ECB monetary policies, it appears to me to be a foolish thing to do for the ECC to antagonize Germany.
Exactly my thought.
I found an article in English, no idea how colored it is.
https://www.dw.com/en/european-court-of-justice-slams-top-german-courts-ecb-ruling/a-53371145
Had to do some research on that site before commenting. On the surface, they appear heavily colored towards the liberal/socialist spectrum. That was confirmed in my eyes after reading past articles from the same source. Aside from the derisive way nationalism is mentioned, there was this in the article;
There are also fears the decision could help raise objections to a new bond-buying scheme meant to support Italy, Spain and others from economic ruin due to the coronavirus pandemic.
What they do not say is that the mentioned countries were already well on their way to economic trouble 'before' covid19 ever escaped China. To wordsmith it in such a manner as to imply covid19 was the only reason, is to attempt a blatant historical revision shifting all blame.
The more notable fallouts from the 08/09 banking/debt crisis carried forward into 2011-current.
https://www.cyprusprofile.com/en/articles/cyprus-banking-crisis-causes-and-consequences-bailout/
https://www.thebalance.com/eurozone-debt-crisis-causes-cures-and-consequences-3305524
That second article once again attempts to rewrite history. Trump was not President between 2008 and 2013 when the worst of that crisis happened. The weaknesses were already there.
What those articles have in common is Germany, specifically Merkel. Merkel's plan implemented the model used for reintegration of Eastern and Western Germany. Like her or hate her, it worked. It also set the stage for BREXIT. The French pushed back hard on that, but in the end, it was in my opinion, Merkel's plan that held the EU block together at the time.
Now, in 2020, the EU courts have apparently forgotten what saved their collective arses less than a decade ago. I cannot imagine a German people who would forgive and forget such a slight.
Merkel's plan implemented the model used for reintegration of Eastern and Western Germany. Like her or hate her, it worked.
It also made Germany too strong a power within the EU, creating an ongoing millstone to the process of unification. For example, the introduction of the Euro.
AJ
https://www.xe.com/currency/eur-euro
The Euro was introduced in 1999. It was based on a basket of currencies. It was not based upon German currency. Eastern Europe was taking the brunt of the damage from a unified Euro currency, and as such, were finding it more difficult to compete in the Eurozone economy.
Maybe you can explain why you feel it is an " ongoing millstone." I don't see how?
Maybe you can explain why you feel it is an " ongoing millstone." I don't see how?
Ignoring the rhetoric and looking at the practicalities;
The Euro forced a single currency upon all its member states. In practise the wages in Germany (for example) are far higher than those in the Eastern European countries. Thus the influx of eastern European workers into Germany etc, where they could earn vastly more money than back home. Whilst working they send as much money back home as possible.
A lot of Polish workers travelled to the UK, many had attended university but went to the UK because they could earn more working in the fields than back home with their degree. They also sent most of their money home. Several years on those people have families, some stayed, some went back to Poland. What changed is that they and subsequent workers no longer wanted to work in the fields, they looked and found 'better' jobs. So now the farm workers are from further east, the 'stans, and slowly, from Russia.
The nett effect of a single currency means no exchange rate. Those 'migrant' workers are bleeding money from the countries in which they work by sending it home.
A young German couple need to work hard for many years to afford to buy a house in Germany. A young eastern European couple need only work for five years in Germany to have enough to build a house back home.
Is the currency at fault? Not exactly, though the lack of an exchange rate does not help. The fact is that the EU tries to force unity on a collection of countries with vastly different GDP's, etc.
Then there is the fact that the EU itself is so corrupt that its accountants have, since its creation, not once been able to sign off on the yearly accounts.
Add to that the EU legislation that supposedly allows travel and trade between countries so long as the EU regulations are adhered to. In practise that isn't the case. Germany implemented rules and regulations that apply within Germany and ignore the EU regs in favour of their own. Germany is not alone in this, France, Spain, the UK etc all do the same.
Then of course there are the Tax rates that vary from country to country.
"Ongoing millstone" is a very mild way to phrase it.
I can see and agree with what you stated. My statement was in response to this;
It also made Germany too strong a power within the EU, creating an ongoing millstone to the process of unification. For example, the introduction of the Euro.
It was not all Germany's fault as that comment implied. The Euro is tilted in favor of the larger European economies. I don't know too many people who would dispute that.
The nett effect of a single currency means no exchange rate. Those 'migrant' workers are bleeding money from the countries in which they work by sending it home.
In substantive manner, the US and Canada has a similar problem with foreign workers. The chief difference between them being the unified currency between nations in Europe.
It is not Germany that is the millstone, it is the Euro itself. The diaspora in Europe was inevitable when trying integrate much weaker economies with stronger ones. To fault a single country with that is what I dispute.
The diaspora in Europe was inevitable when trying integrate much weaker economies with stronger ones.
That in essence is the whole problem of the current EU.
It is not Germany that is the millstone, it is the Euro itself. The diaspora in Europe was inevitable when trying integrate much weaker economies with stronger ones. To fault a single country with that is what I dispute.
Many people in Europe see the EU as Germany's third attempt to rule Europe. The steps taken to enforce their own regulations within Germany despite having signed the EU regulations did not help their case. Before stepping down Merkel proposed that the EU should form it's own Army, then was caught by a reporter suggesting that the EU Army would of course be led by a German...
WWI was 'the war to end all wars'.
That though didn't last twenty years so we got WWII
Isn't there something about 'fool me once, shame on you, twice, shame on me, a third time... No, thanks.
Can all the blame be laid at Germany's door? No. The fact is that europeans didn't want the EU, the politicians craved it, but for their own aggrandisement. However, given the history between Germany and the rest of Europe, they chose to set a path that many many europeans see as yet another takeover bid.
Many people in Europe see the EU as Germany's third attempt to rule Europe.
Many people within Europe think Corona is a hoax and 5G is to blame. So what?
"Ongoing millstone" is a very mild way to phrase it.
Indeed mild. Back then they should have stayed with the EEC and build upon that. But no, that was not enough power for the politicians, because that's what it has become: a corrupt, money sucking, power play field for politicians. Sure, some good things have come from it but that could have just as easily be achieved by the EEC without all the political and financial interference. Both the high and low GDP countries would have been better of.
Can I assume from your rant that you think Poland has the Euro? https://www.xe.com/currency/pln-polish-zloty
Other EU countries which have their own currencies include Czech Republic, Hungary, Croatia (they use animal pelts), Romania, Bulgaria, Denmark, Sweden.
All of those countries are supposed to be working towards joining the "Zone" but in reality it is up to them.
Animal pelts? That is where the name comes from.
Can I assume from your rant that you think Poland has the Euro?
Assume away. I also mentioned the 'stans and Russia, they don't have the Euro either, but assume if you like.
:)
The process of forging Europe into a single nation would be much smoother if the balance of power between its constituent nations was much more even. German economic supremacy plus their enhanced voting rights as a founder member means that the unification process so far has taken part largely by its timetable, including the adoption of the Euro before most of the other constituent countries were ready for it. The result is a feeling of resentment and a 'them and us' attitude: Germany hates bankrolling the rest of the EU, and many other countries hate having been coerced into a situation where they need to be bailed out.
Yes, the Euro was introduced in 1999, but with a decade's delay and more tax reform and harmonisation in the meantime, the economic repercussions on Greece, for example, would have been far less deleterious.
Apart from tinkering round the edges, unification seems to have ground to a halt since 2009 when the rejected EU Constitution was waved through by sleight of hand as the Lisbon Agreement.
AJ
many other countries hate having been coerced into a situation where they need to be bailed out.
There was a simple answer to that. Don't spend what you don't have. The U.S., if it keeps to its current path, is setting itself up for that same problem.
They would not be in the position of needing a bailout to begin with, if they had maintained fiscally responsible policies earlier in their history. If I took out loans in excess of my ability to service those loans, I would eventually be in the position of being bankrupt. Cause and effect.
There was a simple answer to that. Don't spend what you don't have.
I don't think it's that simple. Greece was between a rock and a hard place - damned if they joined the Euro, damned if they didn't.
As the principal driver of unification, Germany should have accepted the responsibility that came with its power dominance, and made sure that the Euro would benefit every country that adopted it without penalising those that didn't.
With Germany having less power, the introduction of the Euro would surely have been more considered.
AJ
As the principal driver of unification, Germany should have accepted the responsibility that came with its power dominance, and made sure that the Euro would benefit every country that adopted it without penalising those that didn't.
So none of the other Euro countries had anything to do with it according to you... got it.
BTW, Greece joined in 2002. History tells a different story of corruption, malfeasance, and greed.
https://www.bbc.com/news/business-13856580
Greece joined in 2002. History tells a different story of corruption, malfeasance, and greed.
Everybody knew that. So German (and, to a lesser extent, French) enthusiasm for Greece to join the Euro means it bears some moral responsibility for what followed.
AJ
There was a simple answer to that. Don't spend what you don't have. The U.S., if it keeps to its current path, is setting itself up for that same problem.
No.
The US is not 'setting itself up' it has long past that point.
Current US national debt is in excess of $24.95 trillion, so as you stated, if you took out loans in excess of your ability to service those loans, you would eventually go bankrupt, just like the US.
Given the crutch provided by oil being sold in $US and the current price of oil... Actually, all it would take to tip the US into bankruptcy would be for every or even most non US oil producers to start selling oil in their own currency.
The US is not 'setting itself up' it has long past that point.
As a function of GDP/Debt ratio, the US was still solvent prior to this last year, barely so, but still afloat.
The recent bailouts pushing another four trillion or so debt has very likely overcome that.
Divorcing the petrodollar/Bretton Woods/SWIFT setup would not just hurt the US, it would hurt the countries that attempted it. Clear evidence of that can be found in the attempt by BRICS. In fact, China was initially the main driver of that effort. But they forgot the basic premise of trade. To trade, one must have someone to trade with.
When China began transitioning to an internal economy instead of an exporting economy, their economy began slowing in a big way.
Russia and Brazil were hurt significantly in that effort as well. Russia not as much as Brazil though as they hedged their bets by building up reserves before taking the plunge. Something they learned in the 90's into the early 2k.
South Africa was in the mix due to their gold holdings. They learned it wasn't enough. Of the BRICS, only India came out relatively unscathed. That because they bailed early on the premise.
The only current potential contender for a replacement of the petrodollar is the IMF SDR. Even that is problematic due to the prominent role played by the dollar in the SDR basket of currencies.
Given the crutch provided by oil being sold in $US and the current price of oil... Actually, all it would take to tip the US into bankruptcy would be for every or even most non US oil producers to start selling oil in their own currency.
It's not going to happen with the memory of the recent economic pain fresh in the minds of those that recently tried it. Not to mention it would require more than just the oil producers to do it.
That's not to say it won't happen. The only constant in human history is change. On the US side, there are many situationally/cognitively dissonant blind people. They cannot see what's coming at them.
The fall of the petrodollar is inevitable. What I dispute is the timing and means.
Divorcing the petrodollar/Bretton Woods/SWIFT setup would not just hurt the US, it would hurt the countries that attempted it. Clear evidence of that can be found in the attempt by BRICS. In fact, China was initially the main driver of that effort. But they forgot the basic premise of trade. To trade, one must have someone to trade with.
The US has become a big oil producer themselves and is less dependent on foreign oil. This means there's less to sell to the US so what if the middle east switched to the Euro? They would still sell what they do now more or less. The biggie is that if oil really switched to the Euro (or something else) the dollar instantly is worth less than toilet paper. Seeing that the current 'president' is real easy with antagonizing anything not American the rest of the world just might come close to a reaction like "Ok, have it your way, we'll ditch the dollar and switch to xxx". Scary thought. not?
Several of the OPEC members are heavily vested in the current system. Saudi Arabia for instance. To ditch it would require a great amount of pain on their part as a result.
The US President has a firm cap on the time in office they can serve. Eight years is the legally mandated term(s) limit. For other countries, part of their calculus is that term limit. Would the pain to them and the rest of the world be worth it? The current answer is no.
I don't personally have a problem with nationalism. In my opinion, if you're not going to take care of your own people, you shouldn't be in a position of power over them.
The left/socialist/liberals have been diligently working to demonize the term nationalism. Every PC term is rolled out to silence opposition. Racist, bigot, hitler, etc. If you don't agree with them, then you are any and all of those terms. I find that strange since the National Socialist German Workers party aka Nazis were socialist. Stranger still that revisionist history now brands them as part of the far right.
In my opinion, attempting to form one government from countries with a long standing sense of nationalist pride/history is/was doomed to fail. You cannot be a Spanaird, Greek, German, etc if you are an EU citizen. It is the same choice forced upon Native Americans. We can choose to be part of the US, or we can bury our collective heads on the reservation. To date, that hasn't worked out very well for us.
As for the dollar eventually losing all value, as stated before, it's inevitable. The longest standing contiguous currency in the world today is the British Pound. Even it has undergone many changes over the last couple of hundred years. Every other currency has changed in all but name. It too will eventually die off.
Regarding the US dollar, I've taken many lessons learned from countries that have fallen and risen economically in the last fifty years. Brazil, Argentina, Ukraine and every other former Soviet state, all have lessons to teach regarding how to survive and thrive in such a collapse. I've planned for myself and family accordingly so:
Scary thought. not?
My answer is not so much.
The fall of the dollar in the long term is inevitable seeing as alternative energy will lessen the dependency on oil a lot. Eventually oil is only used for plastics and even for that there are alternatives in the make that are more environment friendly.
I agree that a certain amount of nationalism is good but personally I think the Americans take it a little to far, just my opinion.
I think you hit the point with differences in the amount of nationalist pride that don't mix very well. We Dutch? We only have national pride if you care about soccer, otherwise none at all, unfortunately.
We only have national pride if you care about soccer, otherwise none at all, unfortunately.
I think you are being unfair. For instance, one of your national heroes is a brave young man who stuck his finger in a dyke...
:)
For instance, one of your national heroes is a brave young man who stuck his finger in a dyke...
I thought that was our president... :)
I thought that was our president... :)
Better a finger in the dyke than a cigar in the dyke, or something like that :D
I thought that was our president... :)
Will his autobiography be titled 'Wuhan Flu Over the Cuckoo's Nest'?
AJ
Alternative energy is a whole other kettle of fish. Some groups want it NOW, and are ready to burn the world down to get it. I liken to an opioid addiction. At some point the world needs to give up fossils to be healthy. However, quitting cold turkey could very easily kill them. What point is there in a cure that kills the patient?
In my estimation, short of a massive scientific breakthrough, it will take 35-50 years to get into majority alternative energy for the world. That comes with the caveat of nuclear being a transitional source of power. Otherwise, it will be the turn of the century.
Last year we used 221 gallons of fossil fuels. We also used another 30 or so gallons worth in the form of oils, grease, etc. We used zero power from the grid, zero water from utilities, and zero food from mass market (except for restaurant visits).
The unknown elements are the energy cost associated with things like out ISP energy used by them, recycling energy cost, the energy etc associated with going out to a restaurant, and the energy cost associated with the production of solar arrays, batteries, ad nauseam. All of those things are out of our control.
The recycling is going to be much better this year as we further limit outside resources.
That said, we are doing our part as best we can. Not because some idiot is convinced five times is a charm for rising sea levels, but because it's a better use of resources. Our next effort is geothermal generation even though we produce 143% of what we use for electricity currently. That extra is sold back to the grid.
Individuals doing that sort of thing will eventually and significantly reduce the need for fossils. But even that is not the panacea the leftist environmental crowd thinks it is.
The Euro - including the name - dates back to Helmut Kohl's time. He had been voted out by the time the currency was actually introduced but the exchange rates, participating currencies and the name (ECU was the alternative) date back to him.
I'm too lazy to look up when Merkel replaced Schröder but it was around 2004 or 2005.