Hans-Werner Sinn, president of Germany’s Ifo Institute and the director of the Center for Economic Studies at the University of Munich, has taken to the pages of the NY Times to explain why Berlin is balking on a further bailout for Europe.  Amongst the points that Sinn makes against German sharing in the debt of the euro zone’s southern nations is a legal one: “For one thing, such a bailout is illegal under the Maastricht Treaty, which governs the euro zone. Because the treaty is law in each member state, a bailout would be rejected by Germany’s Constitutional Court.”

Sinn also argues that Germany’s counterparty credit exposure already exposes the country to immense credit risk: “Should Greece, Ireland, Italy, Portugal and Spain go bankrupt and repay nothing, while the euro survives, Germany would lose $899 billion. Should the euro fail, Germany would lose over $1.35 trillion, more than 40 percent of its G.D.P.”

Let’s leave aside Sinn’s broader rhetorical points (“Has the United States ever incurred a similar risk for helping other countries?”  Umm, yes, it did – there was that little matter of World War II). Levity aside, professor Sinn does raise a huge potential conundrum as far as Germany and its broader relationship to the Eurozone’s institutions go.  In fact, recent German Constitutional Court rulings on bailouts could well blow apart the European Monetary Union.  This is because the potential unlimited liabilities to which Germany is exposed under Target 2, the ELA, and various other lender of last resort facilities adopted by the European Central Bank do on the face of it run afoul of the court’s ruling, which argued that any future bailouts had to be limited and subject to the democratic consent of Germany’s Parliament.  What happens, for example, if someone in Germany were to challenge the very legality of Target 2 on those grounds?

This is not the first time in which Sinn has expressed concerns in regard to Germany’s exposure via “Target 2”; indeed, he was to our knowledge one of the first to raise this issue in a number of scholarly papers (see here).

So what exactly is “Target 2”?  Target 2 refers to Trans-European Automated Real-time Gross Settlement Express Transfer. It is the euro system’s operational tool through which the national central banks of member states provide payment and settlement services for intra/euro area transactions. Target 2 claims can arise from trade and current account transactions as well as from purely financial transactions. 

Recently financial transactions have become dominant. Funds have been taken out of banks on Europe’s periphery and have been deposited in banks in the north of Europe, principally in Germany. The bank receiving the deposit places those funds with the Bundesbank (or other recipient national central banks); in doing so it has its funds delivered through the Bundesbank (or other recipient national central banks), which in turn deposits with the ECB.  Via the ECB the funds then go to the bank on the periphery that has lost deposit funds. That is a Target 2 transaction. The so-called Target 2 outstanding balance is the net position of such claims between two European countries.  The ECB in effect acts as the hub through which these transactions are mediated.

Target 2 has taken on heightened relevance in the past year as a consequence of the Eurozone’s silent bank run.  As deposits have fled the periphery banks – Greece, Portugal, Ireland and Spain – these banks have become increasingly reliant on Target 2 to overcome funding problems.  

As an aside, it is also worth noting that banks can also borrow under the emergency liquidity assistance (ELA) program. Such assistance is extended by single national central banks to their banking systems. The risk is borne at the national level. The collateral requirements imposed upon a commercial bank for obtaining ELA funds is less than the collateral requirements needed for obtaining Target 2 funds. The national central bank in a country like Greece with commercial bank deposit runs ultimately funds its ELA financial assistance to its commercial banks from the ECB. That ECB funding for ELA is above and beyond Target 2 funding.

The ECB also conducts repo operations with banks in the system. Recently these repo operations (e.g., LTRO’s) have also been funding banks in the periphery that have been experiencing deposit runs. It has been widely believed that LTRO funds received by Italian and Spanish banks went entirely into purchases of their government’s bonds. Some of these funds did go into purchases of national government bonds, but only in part; some of those LTRO funds financed deposit losses.

So where is the money ultimately coming from?  To some extent there is a circular quality attendant with the banking crisis.  Money leaves, say, a Greek bank.  A wealthy Greek ship-owner is worried about the solvency of his country (or a concern that he might actually have to pay taxes), so he quickly withdraws the sums from a Greek bank and redeposits the money with a German bank.  The German bank now might find itself flush with billions of dollars which it can’t use, so it re-deposits the money with the Bundesbank, which in turn places it with the ECB.  The ECB then might turn around and extends funding (via Target 2, or the ELA) back to the Greek banks and in effect closes the financial circuit created in the Eurozone when a citizen of one country chooses to move his deposit from a domestic bank to a bank domiciled in another euro area nation.

Of course, some of this money goes outside the euro zone (Swiss banks, US banks, London property, gold, etc) and it is almost certainly the case (even though the ECB would never admit it) that some of this funding (perhaps most of it) comes the ECB actually creating new net financial assets.  To get a sense of how big the ECB’s exposure is, it is worthwhile looking at its “loans to other monetary financial institutions”, which is one of the line items buried in its balance sheet. That the ECB creates new euros in itself is hardly problematic from an operational standpoint:  as the sole issuer of the euro, the ECB is free to provide as many euros as is needed to keep the funding system in place.  It cannot go broke.

To reiterate, a private bank needs capital – clearly because there are prudential regulations requiring that – but because it can become insolvent. It has not currency-issuing capacity in its own right. While the ECB has an elaborate formula for determining how capital is from the national member banks, at an intrinsic level, it has no need for capital. It could operate forever with a balance sheet that if held by a private bank would signal insolvency.

The point is that there are no comparable concepts for a currency issuer and a currency user in terms of solvency. The latter is always at risk of insolvency, the former never, so there is no OPERATIONAL risk or limit per se implied in the ECB’s actions. 

Although it might well assert to the contrary, the ECB has massively expanded its lender of last resort facilities, in many cases in violation of the Maastricht Treaty.  As Professor Wilhem Buiter has argued in a recent paper (

“[T]he European Central Bank (ECB) has been acting as lender of last resort (LoLR) for the sovereigns of the Eurosystem since it first started its outright purchases of euro area (EA) periphery sovereign debt under the Securities Markets Programme (SMP) in May 2010 (see de Grauwe (2011b), Wyplosz
(2011, 2012) and Buiter and Rahbari (2012a)). The scale of its interventions as LoLR for sovereigns has grown steadily since then and its range of instruments has expanded. We interpret the longer-term refinancing operations (LTROs) of December 2011 and February 2012 as being as much about acting, indirectly, as LoLR for the Spanish and Italian sovereigns by facilitating the purchase of their debt by domestic banks in the primary issue markets, as about dealing with a liquidity crunch for EA banks. A future third LoLR instrument will be indirect lending by the Eurosystem to periphery sovereigns. This will be achieved through national Central Banks lending to the International Monetary Fund (IMF) and the IMF lending to the Spanish and Italian sovereigns, once these sovereigns have come under suitable troika (IMF, European Commission and ECB) programmes. If and when the European Stability Mechanism (ESM) gets a banking licence (becomes an eligible counterparty of the Eurosystem for the purpose of repos or other forms of collateralized borrowing), the ECB will have a fourth
mechanisms through which it can act as LoLR for sovereigns.”

Which gets us back to the issues raised by Sinn:  Reflecting mounting German concerns about the country’s growing counterparty exposure risks to the periphery, Sinn has proposed limiting Germany’s Target 2 exposures.  From a German legal perspective, Sinn is on very solid ground.  In May 2010, when Germany’s Parliament voted to provide financial aid to Greece to prevent it from insolvency and to approve the €440 billion ($620 billion) European Financial Stability Facility, with €147 billion in loan guarantees, this was challenged in Germany’s Constitutional Court.  At the time, Germany’s highest court ruled that the parliamentary criteria had been adhered to when the government agreed to those specific bailout measures.

At the same time, the court said the Bundestag had not ceded any of its authority in budget decision-making with its approval of the legislation. Furthermore, the judges ruled that future aid package resolutions could not be automatic and should not infringe on the future decision-making rights of Germany’s parliament. Aid packages, they argued, would have to be clearly defined, and members of parliament would have to be given the opportunity to review the aid and also stop it if needed.

Under the terms of the German court’s ruling, then, Target 2 itself would appear to be unconstitutional, even though Target 2 itself was one of the features incorporated in the Treaty of Maastricht.  But the problem with Target 2 is that it involves an open ended indeterminate exposure of the German people to losses involved in the bailout of the periphery. The German parliament has no say in the disbursements. That this is unconstitutional would appear to be very clear on the basis of Germany’s Constitutional Court rulings. Logically, it should extend to the other Lender of Last Resort financings that have been undertaken by the ECB, cited in the Buiter article above.

So consider the following:  imagine that there is a Constitutional Court challenge of the Target 2 and other ECB lender of last resort financings.  The day this occurs and becomes public the bank run will accelerate greatly.  To be sure, the court might well rule that ECB agreements amongst the member states take precedence over the earlier ruling expressed in the wake of the 2010 bailout for Greece.  But it would be hard to square that argument with the clear meaning expressed by the German court at that time. And if the Constitutional Court rules that ECB lender of last resort bailouts are unconstitutional the banks on the periphery will have to close and suspend payment on requests for withdrawals. So Germany’s court could well become the  instrument of the euro’s destruction by frustrating  the ECB’s capacity to operate as lender of last resort.


  • There is no conundrum; it’s all fabricated. These are the theatrical safety valves installed by Ayatollah Merkel and her Talibans to obstruct what eventually needs to be done.

    No one cares about the self-inflicted imperfections of the German constitution. If it is flawed then change it. This is part of a deliberate plan to fake inability and no one is buying it.

    • Dear Dean
      The Euro was introduced based on the Maastricht treaty. Part of that treaty is the no-bailout clause. It was the PRECONDITION to Germany accepting giving up the DM and starting the Euro. Whether this was wise or not is another matter – but a constitutional court is in place to…
      …ensure that the government does not break the constitution. This is not fake or part of a “deliberate plan” or anything.
      It just goes to show that the German constitutional court was stupid enough to trust the Germany government on its assumption that the Maastricht treaty’s rules would be followed.
      It is not the role of the German constitutional court to just give up and say: “well, this is against the constitution and we are the constitutional court. But -hey, that doesn’t matter! We just ignore the constitution, no problem”. Is this so hard to understand?

    • Martin:

      I am referring specifically to the part when Merkel while she was negotiating PSI II she specifically introduced legislation in the Bundestag which gave specific authority to the legislative body to opine on the constitutionality of the PSI II and future similar aid packages.

      In doing so (circa Feb-March of 2012) Merkel sought to put artificial brakes based on the constitutionality issue partly because she forsaw the collapse of the Merkozy alliance and partly because she was sensing other re-arrangements of political power in Europe not necessarily in favor of Germany (in fact all of them stacking up against Germany).

      This was a pure political calculation and as a result using it as a possible defense of German obstructionism is both contrived and insincere. It might be technically o.k. but morally and ethically wrong. And this is the essence of the Greco-German antithesis: It’s all about justice and fair play (what we Greeks call the “Corinthian spirit”).

      These are tactical moves by Merkel and as such they are not real defenders of German interest. They are cheap ploys of faking lack of action as the natural legal outcome. But if one understands why such safety valves were put there in the first place, the whole process is morally questionable and thus – after the appropriate argumentation – becomes illegal.

      You can’t introduce legislation for the express purpose of playing tactical games with obstructionist outcomes in mind. If you accept such tactics as legitime – and to play devil’s advocate – then you should allow Tsipras to nullify the memoranda by introducing a similar bill in the Greek parliament following his election in power. But if he does, I am sure all Germans will cry bloody foul. What’s good for the goose is good for the gander.

      As it turns out just about everything that is needed to pull Europe out of this crisis is practically illegal according to German Constitutional law; even the smallest things you could possibly imagine (now you either think that Germans are smarter than anybody esle or that the non-Germans are pretty dumb – you tell me which):

    • Martin, let me ask you something. Germany and its parrots make so much fuss about their oh-so-precious Constitution. What about other European countries’ Constitutions (with Greece being a prime example) whose Constitutions were blatantly violated, if not torn to shreds, in order to impose the “bailouts” and Germany’s schoolyard bully politics that have come straight from the external policy manual it followed in its dark past (for which it clearly shows considerable nostalgia)? Is it all about Germany’s Constitution and to hell with other countries’ Constitutions? And who exactly is Merkel to judge other countries and their people anyway? Germany has defaulted thrice in the 20th century alone and continues to avoid paying for the damages it caused when its people decided that they were the “superior race” (yeah, right; science has proven that the strongest humans are the blacks and the smartest ones are the Jews, so, if a Master Race could be created, its leader would be Lenny Kravitz and not that closeted Austrian homosexual sociopath with the silly moustache) and their place on Earth was to rule over everyone else.

      No German has any right to lecture ANY other European. Period. As for Germany’s Constitution, it’s of no greater value or importance than any other European country’s Constitution. Deal with it.

    • Airetiko: the great irony is that the German Constitution (Basic Law) was written by the Allied powers (primarily USA and UK) and imposed on Germany. Since the Germans themselves did not write it, perhaps they could consult the countries who did author it on its value and meaning in the current crisis. Apparently, they are so full of their self-importance, they have forgotten their modern history and why they actually have this constitution in the first place!

    • Dean & Ο Αιρετικός: Guys, I’m sure you are intelligent but your are completely missing the point in my opinion.

      Assuming everything you say about the EZ, about Merkel, about the ECB, about the EU, about the banks, about the German constitution is correct.

      So what? Why should it matter to Greece? Why is the future of Greece tied to other countries?

      This is the question you have to ask yourself.

      Take it one step further if you want. Ask yourself why Spain is not dependent on the Greek government for a bailout?

      You see what I am getting at? Why is Greece a dependent?

      Food for thought

    • “Take it one step further if you want. Ask yourself why Spain is not dependent on the Greek government for a bailout?”

      Hmmm…. Richard, Spain is dependent on who?

    • Richard:

      Why should it matter to Greece?

      Because Greece has been made a guinea pig of German minimalism, obstructionism in the amateurish experiment conducted under the pretext of legality afforded by the bogus German Constitution What’s why!

      As far as your independence comment is concerned don’t you know that what has been going on in Europe during the last 4 years is a badly designed experiment of pseudo-integration?

      And don’t you understand that the Greeks are precisely the wrong people for obedience experiments?

      Who is the genius who decided to use the unconquerables as an example in the “how to conquer” manual? Why not use the Welsh, Scottish, Latvians, Hungarians or others for such purpose? At least the chances of success would be much higher.

      Do the Germans have a death wish even looking at Greece the wrong way?

    • Richard


      Actually we have said all these things before and i like that a German posts such a link.
      You see everytime we would mention all the problems of Greece and all the hits from foreign and domestic powers ,the reaction was depended on the preconceived notion of media propaganda that Greeks say these things to avoid responsibility in general.

      This is ofcourse contradictory because as the article says it needs a lot of effort for a country like Greece to come to this point.
      The history of Greece is full of manipulation and hits of all kinds. This is nothing coming out of a science-fiction novel. Because of its location and the advantages she has ,she was and still is a target.

      Unfortunately ,human beings are ,well ,human. Education although at the same level with other countries ,is conventional. This for Greeks (and the rest of the world that thinks) means no education at all ,since everybody today is educated as part of a system that deliberately preserves manipulation.

      Education we have ,but not morphosis. Noone upon this world is actually free. Noone. It is not just a Greek problem. It just seems that the truth is revealed from Greece first.

      We all need to wake up and fight.

    • Airetiko

      I don’t get it. If the Greek constitution was violated, wouldn’t there be something like a ruling by a Greek constitutional court?

      Regarding people like von Hayek, I think that all readers would benefit If you didn’t use such crude and primitive language to denounce someone whose writings about liberty meant and still mean a lot to people who were/are not as fortunate as us who could grow up and live in free Europe.

    • @ Ο Αιρετικός

      “As for Germany’s Constitution, it’s of no greater value or importance than any other European country’s Constitution.”

      Well, no. For Germans, it is the only one of relevance.. As is the Greek constiution for Greeks, the French constitution for French…

    • Klaus Kastner, you are forgetting a not-so-small detail: when a country’s judges are appointed by the government, in cases where the stakes are high, they’ll do as they’re told by the government and its sponsors (see the various ridiculous copywrong trials in the USA, where judges do just what the RIAA – of which many current judges once were lobbyists and don’t tell me they’ve severed the bonds to their former bosses – wants them to do). So, when the government in Greece is doing exactly what Germany wants, one cannot realistically expect the judges (who are, for the most part, miserable persons that live in fear of losing their cushy jobs if they upset the ones that gave them their thrones in their first place – and I happen to know a few judges in person) to bite the hand that feeds them.

      Furthermore, Hayek’s rants about “liberty” are all about giving the rich people complete “liberty” to stomp on everyone else, thereby suppressing other people’s liberties. One’s liberties end where someone else’s liberties start. This is something Austrian school fundies simply cannot grasp. Not to mention the Austrian school’s aversion to notions like social justice and solidarity.

      And as for another sacred cow of neoliberalism, Ayn Rand, she who rambled on about how social security is for “parasites”, went on to grab whatever social security aid she could when she caused herself cancer by chain-smoking like a chimney. What a hypocrite.

    • And something else Klaus:

      You may find my language crude and primitive, but your ideology, which is easily summed up as “The Law of the Strongest Human” (which, in itself, is a vulgar version of “The Law of the Jungle”, a version produced by removing the original’s provision that the strongest animal only kills enough to satisfy its own hunger and doesn’t go on a killing spree/feeding frenzy), is the most primitive, crass and barbaric ideology. The only analogy I could find to it is by portraying it as a Neanderthal in a Hugo Boss suit (oh, by the way: I’m not forgetting which military this company designed and produced uniforms for).

      Mind you, humans are about solidarity and compassion. Even chimpanzees show compassion to each other. Austrian school fundies, libertarians and neoliberals? They’re just spiteful, spoilt brats with an impossible sense of entitlement and a hatred for their fellow humans.

    • @Klaus

      The Greek constitution is violated every day, and the Court does nothing. They actually refuse to implement the law when pressured by the government of the day.

      In the case of the German Constitutional Court, there is a serious problem. This is the only consitutional court in Europe that refuses to accept the primacy of EU law over national law; in other words, the Germans think that they can do as they like and justify it with “law”. As I mentioned above, the fact that the Basic Law was imposed on Germany because of the Nazi atrocities seems to have been forgotten.

      The other problem is that certain “constitutional” obligations of the Bundesbank and self-contradictory and open to interpretation; the same for the objectives of the ECB. It is not for judges to determine economic policy even for Germany, and certainly not for Europe.

      As far as Hayek’s reputation is concerned, I see your point, but… After decades of abusive political action by neoliberal politicians inspired by Hayek, you can hardly expect his reputation to survive untarnished. His name is hated by many people over the world; if he had reservations about the use of some of his ideas in politics, he should have spoken out against them when he had the chance. He failed to do so.

    • Dear Airetiko
      The German constitutional court is just doing what it is supposed to do.
      Maybe you like that, maybe you don’t.
      But it is there and supposed to stop behaviour that’s against the constitution.
      This has got nothing to do with “our constitution (or constitutional court) is better than yours.
      If you have a constitutional court (I’d imagine you do?) then I would expect it to probably have a similar role.
      So far, I’ve not heard that Greece was failing to deal with the crisis because that was declared to be against the constitution. Have I missed that?

    • Its funny that the German Constitutional Court prohibited the transfer of Christoforakos to Greece by claiming it was unconstitutional….Can you say Siemens ?

    • Dean let me just repaste your post, very funny

      Why should it matter to Greece?

      Because Greece has been made a guinea pig of German minimalism, obstructionism in the amateurish experiment conducted under the pretext of legality afforded by the bogus German Constitution What’s why!

      As far as your independence comment is concerned don’t you know that what has been going on in Europe during the last 4 years is a badly designed experiment of pseudo-integration?

      And don’t you understand that the Greeks are precisely the wrong people for obedience experiments?

      Who is the genius who decided to use the unconquerables as an example in the “how to conquer” manual? Why not use the Welsh, Scottish, Latvians, Hungarians or others for such purpose? At least the chances of success would be much higher.

      Do the Germans have a death wish even looking at Greece the wrong way?

      Unconquerables ROFL! I was trying to illustrate my point in the clearest possible way.

      Anyway, let me gather my thoughts.

      About integration, and your general dislike to Germany political policy.

      I must be living in the twilight zone.

      Merkel is fighting like a 2 year old toddler, not to give the Greek government money, if you believe the media hype of tax avoidance in Greece, you have to say she is on the exact say wavelength as Stavros (feel free to call me Hans or Gerhard those are my 2 favourites).

      And now you have another example of Merkel trying to get out of giving money to the Greek government by bringing the German constitution into the argument.

      Everything the woman does screams, “I’m a German politician, get me out of Greece! I don’t want to give money to the corrupt political system!”

      But for some bizarre reason, (must be the magnetic field from the parallel universe I’m in) everything is twisted and Greeks are making out like Merkel is trying to do something which they don’t agree with, ie Merkel wants to give the Greek gov the absolute bare minimum.

      The only explanation I can think of is that Greeks think they are only prosperous if the government has money, which is not the case because the only way the Greek government has money is because it extracted it from Greeks with the threat of physical violence.

      So no, government prosperity is not connected to personal prosperity.

      If Greeks want real change then they simply have to support Merkel, she wants to implode the bureaucracy and set the people free.

      She wants to destroy the corruption and the waste. If the Greek government stopped getting funding they would have no choice but to reform because they would not have the funds to maintain the regulations and the massive workforce.

      This can only be good for Greeks.

      And if you want the icing on the cake she wants the ESFS to be insurance not a slush fund. ie she is prepared to let the Greek government do pop and pick up the pieces after.

      i think she must have had a banger as a teenager, there comes a point when you have to stop spending money on it because it is never going to be right. You just have to say enough is a enough and get a new car, ie a new political system in Greece.

      Let me repeat myself. The welfare of the Greek government is independent to the welfare of the Greek people. The government failing will be good for Greeks not bad. Greeks will be better off with a new system. The only way to get a new system is to smash the old one.

      Greeks have a golden opportunity unfortunately the international media propaganda machine is telling Greeks their savior is actually the devil.

      Have you seen Casino? Sharon Stone has got her old pimp boyfriend who tells her he loves her but the only thing he wants is Ace’s money.

      This is what is going on in Greece. The pimp boyfriend is the Greek media, EU and politicians, Sharon Stone is the Greek people, Ace Rothstein is Merkel.

      The pimp is saying I love you, take Ace/Germany for all they have got when in fact Ace & Germany are the only good thing in Sharon’s life.

      Ace will help her set up a new life if she wants to leave but he doesn’t want Sharon to get shafted by her old pimp boyfriend he doesn’t want his money going to a degenerate.

      That’s the best way I can think of framing the situation. I hope you have seen Casino or I have just wasted 5 minutes of my life…

      I could go on but my keyboard is screaming mercy

      Rant over.

    • Richard

      Unfortunately you do not understand (or you do and propagandise against us on purpose) that the true bosses of this world are the banksters and Merkel is just a servant as any government.

      Get it to your head.

      When you give at once big loans ,not for investment even with the old system (so much supported by the Germans in the past for their own corruption) and at the same time you cut spending, what you effectively do is decrease the amount of money in the market. Less money going around ,bigger difficulty paying the on purpose larger loans. So accumulation of real wealth by the banksters.

      When you have succeeded you restart the cycle all over again by increasing the amount of money in the economy. All money is debt so again you do the same.

      The reforms are good. BUT NOW THEY ARE ONLY AN EXCUSE. An excuse to roll over the bad debt of the overleveraged banks to the sovereigns and accumulate wealth.

      Noone wants to help. Wake up man. You are just lucky that your country is the primary servant of the banksters.

    • Richard

      Merkel has the luxury of appearing as she likes to because things must get worse.

      The results in the end are the same. They want the power of all Europe. They couldn’t care less of helping Greece.

  • Good luck to Marshall with trying to explain to Germans and all other type of austrian school thinkers that a currency issuer cant face insolvency problems….

    • Good point here, but bear in mind that Chicago and Austrian school “thinkers” are not thinkers at all: they’re fundamentalists just like the Taliban and the American Bible-thumpers. Faith in the divinely inspired writings of their gurus (Milton Friedman, Friedrich von Hayek and, lest we forget, that utterly demented hypocrite Ayn Rand) makes them oblivious to any fact, impervious to reason and, of course, holier than thou.

    • Crossover: Okay, I agree with you, an issuer is immune to insolvency. Take it one step further though, what it the worst case scenario for the population given this situation?

    • Richard, im not sure i understand what you are talking about.Could you explain ?

    • Crossover, okay let me explain. You believe the fact that the ECB cannot go broke is a good thing right?

      But think about what that means. Your saying that no matter what happens the ECB can always print more cash so it will; never be insolvent.

      Okay, I agree with you, but imagine what would happen to the people using that currency if the ECB was to go down this route.

      As an example in living memory in Europe. Prices doubling in a day. You think your wages would keep up with the ECB?

      Unless I have completely misunderstood you and you actually see that the ECB not having solvency issues solves absolutely nothing and if anything has the potential to create massive problems for everyone , if so I apolgise.

    • Ο Αιρετικός, I have to copy and paste that which is a bit of a pain.

      Anyway, voodoo economics. Some might say Austrian economics should be called just “economics” and everything else is voodoo.

      I believe you can say Austrian Economics is voodoo because your are not able to define “money”. My opinion. That is the only explanation I can come up with.

    • Excuse me for the post “flood” but I seem unable to post the whole thing at once,so I will try posting in parts.

      First of all lets agree in one thing.
      Lets say that the ECB prints unlimited trillions of euros and puts them in a vault and never actually “buys” anything with it aka never injects this load of cash in the economy.Is this likely to cause inflation?
      If yes,please elaborate.If no, then similarly if the ECB sustains losses of xxx amount of euros and “recapitalises” itself by printing the same amount it isnt likely to affect the economy.

    • Moreover,ECB as any other central bank in the world is not capital constrained regarding its balance sheet expansion. Everytime it buys up assets as part of its normal everyday open market operations,it simply creates the money (reserves) by hitting a few keys on the keyboard.Its own capital does not play any role.

    • Last but not least,money printing is NOT by definition inflationary even when this money is being put in the economy.
      This false neoliberal – austrian idea derives from the quantity theory of money where MV=PY where M is money supply,V= velocity of money,P= price level Y=real output.When they say that money printing is inflationary they simply say that M increases while V and Y are constant so P has to increase.In reality V and Y are far from constant.In fact V tends to move opposite from M and Y has no reason not to increase as long as actual output is lower than potential output which is most definitely the case in a depressed european economy.

    • Putting Chicago and Austrian thinkers together in one post like that? AND adding Ayn Rand as if she were an economist? Please, don’t make me laugh.

  • προσπάθησα, ξαναπροσπάθησα αλλά…. τα αγγλικά μου δε με βοηθούν αν και φαίνεται πολύ ενδιαφέρον άρθρο. Ελπίζω Γιάνη να κάνεις μια μικρή σχετική αναφορά στο άρθρο σου στο protagon…

  • “This is not the first time in which Sinn has expressed concerns in regard to Germany’s exposure via “Target 2”; indeed, he was to our knowledge one of the first to raise this issue in a number of scholarly papers (see here).”

    Helmut Schlesinger former head of the Bundesbank gave him a hint.

  • Why don´t you mention that the US has solved the issue much smarter? In the equivalent system (Fedwire) the imbalances cannot become very high. They have to be settled in gold certificates every spring.

    • So now USA is a good example to compare with the eurozone…its no problem anymore that USA is a single country…?

      Nevertheless what you are missing is that US banks are not in danger of regional bank runs ie they cant have bank runs that result in deposits fleeing from Wyoming to New York because Wyoming banking system might collapse.For there is no Wyoming banking system.Its all unified.

      If eurozone worked like this nobody would have any reason to move his money from one part of the eurozone to another…thus TARGET2 liabilites would be much lower and they would only function as settlement mechanisms for normal day to day transactions.

  • bunch of baloney imo.

    Im rather astonished of how much europeans dont get it.

    Germany wants to leave euro thats all , it reaps huge benefits by doing so , its just needs some else to leave first for maximum benefits.

    There several reasons why Germany want this , the most obvious is that , they ve gather all the money from the south , thus the balance of payments problem , whom are essentially bankrupt in need of saving with Germany not having a single interest right now . since its exports towards will decline anyway.

    Germany has the potential to be the next switzerland , a safe heaven , it will keep issue zero coupons wheres lending with speculative high interest rates to the rest of the world.

    further more the most important aspect is the deutsche mark appreciation in the future and the benefits for Germany.

    ( Well i know that someone will say that they will loose exports but Germany international trades in 1-1 ratio with dollar anyway , all they want is zero like inflation to do that , which is the reason , why asking for inflation in Germany is a sin)

    What Germany really needs and craves for to be the next stellar power , is oil. Oil it doesnt have , Its the only premium power compare with the u.s , china or russia that doesnt have access to it and pays heavily for it.

    In fact Germany mainly imports raw materials terms of chemical products, machinery, oil and gas and terms of tech computers. Most if not all of those are in u.s dollars.

    I can go like this but u get the clue. If i was German why on earth would i wanted to stay in a broken Eurozone with bankrupt countries , having to recycle a portion of earning , loosing my zero coupons and so on , to gain what ? when i can expand in new financial heights

    Germany already won the rest will be history

    • Expand in new financial heights? What are you talking about?

      German exports are no better than they were in 2008 and coming down fast. By the end of 2012 German exports would be in 2006 levels. And that’s not counting inflation. In real terms Germany is going backwards.

      Note: click on the upper left corner for setting the duration.

    • Set the date selection to Jan 2006 until June 2012.

      The German exports today are about the same as in 2008. This is a picture of exports about to crash.

    • “Germany wants to leave euro thats all , it reaps huge benefits by doing so”
      Yes,once the deutchemark skyrockets and German products become expensive as hell,exports will collapse and so will employment….Yea huge benefits…for one that hates Germany they surely are benefits….

  • And for those of you neophytes, with an incomplete view of Greek politics, who come here to spin such incredibly ignorant propositions that somehow Berlin is in favor of ND and PASOK (Samaras and Venizelos) as the “pro-austerity parties”, nothing could be further from the truth.

    But of course Germans never had any clear view of Greek politics based on their lack of interest and their alien disposition (which is fully reciprocated by the Greeks by the way). Take it from the British; not only their intelligence is far superior to the Germans(they won the last war on it) but they have ruled an empire and know how crucial an exact understanding of politics is in this regard. And since you refuse to be educated by the Greeks on the correct view of their politics, pull out your pencils and start taking furious notes.

    Key points: Berlin has abandoned the Greek center, Samaras is hung out to dry and Germany’s main policy is to force Greece into an exit crisis.

    • This is all excellent reading, and surely many people, me included, wish they had studied economics more at university. Well, for many things it might not be too late even after university.

      But, dear Dean Plassaras, there is no “THE” germans. As there are no “the” greece people. That simply doesn’t exist. A lot of people who understand your anger very well do exist, yes, everywhere.

      Many people in Germany would, since years, be near to forget their maybe not too shabby education, if other people told them, for example, Hans Werner Sinn and themselves had very much in common.
      The list of debates where Sinn (called “boulevard professor” by the “Financial times” with some reason) caused a lot of irritation amongst his colleagues and in the media is long. I won’t touch upon that sometimes not too sublime subject here, as this post by Marshall Auerback deals with problems which I just like to understand.

      I won’t comment much about your personal style, and calling people you don’t know “neophytes”.
      People outside your country, as much as they talk to greece people, of course, can’t have – how would they – a “full” picture of greek politics. True. No need to shout. We don’t change the world in blogs; they just inform us as we couldn’t possibly study everything at university or elsewhere.

      That Merkel and the many other german politicians following her are – indeed – criticising Syriza very harsh, and are in favour of Nea Dimokratia and Pasok because they are nearer to her own wishes, is a fact. You can read about it.
      That Syriza won so many votes, came as a shock after the last elections. The german government would have loved Nea Dimokratia/Pasok to win..

      Mister Tsipras was very happy that Hollande won the elections – now, a few weeks later only, Hollande tells news that hardly distinguish him very much from Merkel and “warns” the greek people to vote “right” in the greek press. Like Merkel and Lagrande and more did. That does not mean, and nobody said so, Merkel was very much for Nea Dimokratia or Pasok as such. She just wants to follow her course, which we are happy to criticise, just like you are.
      What, do you think, do Merkel, Lagarde, Hollande mean, talking that way? What would they wish for as a result of the much-awaited votes? if you don’t believe me, read

      I continue reading the Minotaur-book and these excellent posts here, like from Marshall Auerback^^. That’s why I enjoy this great blog.

    • Why would Germany love PASOK or ND? They are the two parties that, over the last couple of decades got Greece to where it is today. They are also the ones who pathetically mismanaged Greece’s reaction in the financial crisis. Even the last two and a half years, when it’s been clear for everyone with eyes to see that Greece had got itself into an existential crisis, this was mismanaged by those two parties.
      The times of unlimited solidarity, patience and niceties are coming to an end. Germany is less and less interested in the reckless way you do politics and disgusted having to deal with openly lying or shamelessly treaty-breaking Greek politicians.
      It’s all the same.
      I’d say: you get your act together (and fast) putting in place a leadership that’s not a complete disgrace.
      Or you carry on the way you have and then you can try outside the Eurozone. Better for everyone.
      The Eurozone has wasted a lot of resources trying to help Greecr that is obviously unable and / or unwilling to help itself.
      Now, let’s focus on cases where there’s some hope (effectively everyone except Greece) and stop wasting time with Athenian nonsense.

    • dean:

      from your facebook cv, one can imagine that you’ve been through quite a few interviews

      what do you make of this one?

      [quick summary for english speakers]

      at 1:20, when challenged with the question –

      which organization have you successfully headed as a manager since you’ve been successively elected member of parliament i.e. a public servant perpetually fed by the tax payer from the age of 26,

      Samaras’ “enlightening” reply to a stunned audience is that up to that age, and while still in the U.S, he and his buddy ran a pizza parlour for 2 years “που έσκισε” – “that rocked!”

      I guess, pizza man to Prime Minister via years of “public service” is what makes the stuff of leaders, right Dean?

      doesn’t that remind you of an equally disastrous transition from B’ movie Hollywood star to head of state somewhere in the west back in the 80’s?

      or am i dreaming?

    • Router:

      Yes the “dynamite pizza” comment was hilarious. I have to admit.

      Klemperer and Martin:

      The underlying issues are much deeper than you think. The part I enjoy the most in this conversation is that it only takes a bit of “stylist abuse” on my part (calling you “The Germans” and such) and all of your bias against Greece comes right on top for everyone to see.

      Don’t you poor fellows understand that you are abused victims of your own propaganda? The desperate moralizers of Europe? What will you do now with Italy? What tales are you going to start spinning? That Berlusconi had a malfunction in his pants and Italy went down? or what?

  • And since this is shaping to be a fine “bash the morons” day, because you feeble minded Teutons have the nerve to exalt yourselves as virtuous and prudent, here is the class assignment for the day.

    Look at this graph and explain to us in your own words:

    1. How come the German public debt has gone up almost 400% since 1991, while
    2. your total interest debt payment has been halved?

    Because you are a bunch of shameless thieves and liars, that’s why. Stealing from the rest of Europe to have a party in Germany at Europe’s expense.

    • Back to the good old days where we always had an interest rate advanzage over the ClubMed!

    • Jesus wept, your whining becomes more and more grotesque, as impossible this may seem.

      How come you have so much time to write your endless stupid racist anti German rants – no job or what?

    • BTW, Very Serious Sam:

      You are expressly prohibited from ever setting foot to this blessed place (let me know what your Jesus have to say about it):

    • Your determination to blame Germany for everything that’s gone wrong in Greece is impressive!
      You are wondering why German government is much higher now than it was in 1991?
      The answer: Financing transfers to Germany’s formerly communist (economically run-down east) after the reunification lifted it from 40% of GDP to above 60%.
      then, 2001-2006, Germany underwent it’s own austerity phase which set the path for getting more competitive mid-to long-term. But it pushed the debt to GDP ratio a little higher because Germany undertook this in a phase of slow economic growth / recession (less grave than what we have today but still it wasn’t fun).
      German growth had just begun accelerating having adjusted to the austerity measures and the ECB-set interest rates (which were too high for Germany) in 2006/07 and the debt /GDP ratio had started to gently fall when the financial crisis hit in 2008/09.
      Since then, the debt has gone up to roughly 80% of GDP. Is that a reason for you to be upset with Germany, it’s terrible government or it’s disgusting population?

      I don’t set interest rates but in the early 90ies, interest rates were very high for Germany reflecting the fast increase of government debt due to the partly debt-financed transfers to Germany’s east (see above).
      The low interest rates today reflect the crazy state of the financial markets where Germany is seen as a relatively sound debtor. Therefore, lenders are happy to invest their money in Germany, demanding only a very low interest rate.
      Nothing magical / evil / unexplainable or big conspiracy behind that if you take in the facts, don’t you agree?

    • “ou are expressly prohibited from ever setting foot to this blessed place”

      By whom, a desperate Greek blog poster? Get real, I told you so already.

      BTW, I am much more interested in another souther european country. The spanish housing bubble (is there ANY GIPSIF w/o a bubble of one sort or the other, may it be an overblown public sector as in Greece, housing in Spain, banking in Ireland…?) looks like deflating into the end game, I assume about 25 or so percent more price reductions. Then I’ll buy a perfectly new, perfectly located condo close to some perfectly beautiful spanish coast. A perfect place for retirement.

      To buy real estate there is much cheaper thain in Greece, plus the Spaniards don’t insult Germans for their money transfers as nazis (while having elected nazis to their own parliament, as the Greeks recently did).

      You Greeks should finally get your new business model together, and rest assured: it is NOT to live on endless transfers from other nations.

    • Waht kind of an “ocean” is this. There are not even waves!

  • Essential reading for Yanis and Marshal: Target2 Q&A by Beate Reszat
    If, after reading, you still don’t grasp that Target2 is merely an electronic payment system that simply reflects fund transfers and double entry bookkeeping conventions within the Eurozone CB system, regardless of source (Willem Buiter quote) then this (Maths Lesson video) might help you to follow Hans-Werner Sinn’s assertions:

  • As for the Target2 imbalances, Kantoos wrote a very interesting remark:

    “Collateral is provided for almost all these transactions as they originate in money creation by the central banks. If Greece leaves, and wants to steal the collateral, the euros in German bank accounts of Greek citizens and companies will probably be converted by force into drachme, which makes the “losses” of the ECB go away. If Greece hands over the collateral, well, then we don’t know how much will be lost.”

    • “…If Greece leaves, and wants to steal the collateral…”

      If Greece is forced to leave. And is certainly not stealing. We weren’t the “smarties” designing this system.

  • We need to pour a little subjective oil on this troubled debate as there is another way around the problem.

    Earlier this week I attended a major banking conference in Amsterdam. (I am not a banker and my “free ticket” was presented to me by an unknown benefactor). I can only assume someone wants me to keep trying to get my own message across; which is that as things stand, all these vast flows of money, careening around the banking system, never provide any long term benefit; outside of the banking system. (They received me very gracefully and I was given the opportunity to very briefly present my case to the entire conference before the final closing statements on the first day).

    As I see it, we have two separate problems; a vast ocean of debt that has swamped every Western national economy; while at the same time, that debt has, in turn; drained away all the hidden prosperity, (savings and savings invested as equity capital, particularly into what one might describe as the small business community that employs by far the majority of any nation.

    What we need is a method to quickly replace all those lost savings; particularly those invested as equity capital to underpin the continuance of the employment of the people..

    Savings are the missing link. What the debt has done is wipe out the saver and the reason why everyone expects we are about to experience, at the least, a lost decade; a long period of deep economic depression, is that under normal rules, we might take at least a decade to replenish all those lost savings which in turn, replenishes the employment of the people.

    The banking system is loaded with dept that has questionable value and is being constantly underpinned with more debt in the form of government bailouts. My solution is to propose that as the debt held by the banking system has value; that that value can be transformed into equity capital via what I have described as a vanishing bond for onward investment, under free enterprise terms, into new small business job creation. Importantly, all the money invested as equity capital is immediately deposited into a small business bank account. And in which case, there is no need for central government to bank bailouts; the funds are there sitting in the banks now, they just need to be re-directed into new job creation.

    Some of you might remember that Yanis very kindly allowed me to debate this on an earlier thread here.

    We are all in difficulties; it makes no sense to fiercely argue the merits, (or otherwise), of any particular aspect of why we have arrived; when what we all need is a workable solution that will quickly alleviate the underlying problem.

  • I don’t think TARGET2 to be a real issue (see for a very useful Q&A by @rszbt and a bit of bibliography on the issue o my position is on the line of that by @WhelanKarl), but if the German Constitutional Court is invoked directly or indirectly (via some politicians) by German economists like Sinn and those at the Ifo Institute, well, they, the judges, can misunderstand TARGET2 too and rule out it, actually blocking the whole system. That would be an actual problem…

  • Very nice piece. The bottom line is this:

    The esteemed professor Sinn has not come to grips after all these years with the idea that Germany has the same currency as the rest of the Eurozone!

    This simple fact renders all his fears pointless since the imbalances he is worried about are only natural within a single currency economic space where there is free transfer of capital. Even if these imbalances grew recently due to the conditions we all know about, as long as the Eurozone remains intact there should not be any problem.

    Maybe the professor is worried about the Eurozone then? I think he is and I think he is right. He should voice his concerns then in the right context. There is zero chance of a deficit country like Greece, Portugal or Spain of leaving the Eurozone on its own. There is however a small chance of a surplus country like Germany or Finland of exiting. By the way Finland seems far more likely to leave as far as I am concerned than Germany.

    Finally I think that having a constitutional court that has a say over the economic policy of any country is plain wrong. This greatly reduces flexibility. There should be however a system of checks and balances within the Eurosystem and the Eurozone and a super-national authority like the ECB or even a new economic authority that supervises all member state budgets and interstate trade account deficits and surpluses. This authority should have power to act whenever imbalances are surfaced. Any imbalances! This means that it should acknowledge that a persistent trade surplus is as dangerous as a persistent trade deficit!

    Is Europe and especially the trade-surplus countries ready for something like that? Of course not, so this situation will drag on for a while.

    • So you are saying the likelyhood of the Eurozone breaking up is very small.

      I think you will be proved wrong pretty soon. All currency unions broke up in the first crisis. History has plenty examples.

    • @ Pedro
      I never wrote that the chance of Eurozone breaking up is small I wrote that it is very unlikely that a deficit country would cause the break up by leaving first. I would place my bet on Finland leading the way out if it would come to that.

      @ Klaus
      Of course constitutional courts are not a nuisance. Solid separation of powers is the foundation of any democracy. Having financial policy though depend on the rulling of a court does seem rigid, I think it is adequate for parliament to decide upon such matters. Its purpose after all is to control the government by passing judgment on all proposed laws.

    • “I think you will be proved wrong pretty soon. All currency unions broke up in the first crisis. History has plenty examples.”

      You should define what a currency union is first.SIngle countries are currency unions also.In this sense more currency unions have survived than broke up.

      This basically leads to the conclusion that people tend to believe that currency unions comprised by more than one country,could and should function different from currency unions that are comprised by just one country.And this is the reason for the break up…Its not the unions themselves that are the problem.

    • Crossvoer, yes I meant cross country currency unions.

      “people tend to believe that currency unions comprised by more than one country,could and should function different from currency unions that are comprised by just one country”

      Yes the latter work, the cross country ones break up.

      And in both cases the currencies need a reset from time to time if fractional reserve is an underlying principle.

    • No EU D

      Fractional reserve banking and the money multiplier is totally wrong.Thats not how the system works.Loans create deposits,not the other way around.Thats another myth of mainstream econ which unfortunately is taught everywhere.

    • Every EUR in circulation is debt. If you have interest >0%, you have an exponential increase in money over time. It´s pure math that (1+i)^n will explode after n years and the system collapses.

  • Tell you what.

    For starters, we just passed legislation (in our Greek Constitution that is) that no Germans are allowed to set foot in our precious assets.

    For all other Europeans please welcome and don’t forget to bring your friends and their friends….As to our American, Israeli, Russian, Chinese and Brazilian friends we have saved the best spots for you.

    • “that no Germans are allowed to set foot in our precious assets”

      No problem Brazil has more beautiful beaches (that are no crowded) anyways! And the food is better too!

    • Good luck then! I think it’d be a bit of a harsh reaction to ban German tourists – and not too smart given that tourists typically would contribute to the Greek economy.
      But since Germany is not simply handing over the money you request (with no conditions attached), the only adequate reaction is banning Germans, excellent.
      Good luck with the other tourists from America, Israel, Brazil and China then. By the way: why do you come up with exactly this list of countries? Lots of Brazilian tourists in Greece?
      Anyway, hopefully these countries will provide you with the billions of Euros Greece needs on a monthly basis.
      And if they don’t deliver, just ban tourists from those countries! They would have joined the German-dominated axis of evil then and deserve to be punished as Greece clearly deserves to be supported by everybody else, forever!

      I was in Israel in April and the people I talked to did not seem to be too willing to just throw money at Greece – but try!

  • While reading a text I found thanks to Mr. Violet’s link above – wordpress crashed here. So I just send the link again – Mr. Karl Whelan recommended this article by Olaf Storbeck.

    Just a little teaser, taken out of context of course:

    “In a German version of his thoughts, Sinn himself concedes that after the tractor purchase neither the monetary base in Ireland nor in Germany has changed.

    Does it economically matter if the central bank money which is used in Germany has been created in Germany? Is central bank money “made in Greece” of inferior quality?
    I don’t think so.”

    Whelan and Olaf Storbeck agree that Sinn is wrong. A tough read for non-economists, but highly interesting and full of information, “debunking Hans-Werner Sinn”..

    • Dear Demetri
      I can understand that from a Greek perspective, it may feel like you are a colony in that there are “orders” coming from outside.

      However, from a German perspective it looks like this:
      We don’t want Greece as a colony (the time of colonies is long gone)

      If Greece was a colony, it would be a lousy one as it doesn’t do as told and requires permanent transfers from the “mother country”

    • Dear Martin

      Page 699 of the memorandum II

      All pensions must be cut to total of 2,5% of GDP until 2060.
      That means either Greece becomes a superpower so that pensions remain normal or we accept a pension of 200 Euros.

      Martin ,i understand that you do not like racist comments by some in here and ofcourse you are right ,but it is not us that started this and it is certainly not us that do not look at the facts.

      I apologise for any insults but you have to understand that you support a government that does not really want to help.

      Helios project:

      German corporations “helping” Greece exploit the sun so that electricity is exported in Germany without a single euro staying in Greece. As in US the loans are too big to be able to be repaid and for Greece to gain.
      So Germany wants to become energy independent at the expence of us. And she made a good start with insults against the Greeks to gain legitimacy from other states.

      As in Nigeria were the IMF gave too big loans so that they can only repay the interest. Then the IMF goes there and says ,you have a hard time paying so let’s make a deal for your resources.

      As in Equador ,as in Argentina ,as in Cuba etc. etc.

      There are no commitments to respect Martin.

      And we do not require transfers. We require honest investment. But your own leaders want their partners in power here in Greece for their plans to work out.

      The Slovakian president or something said : Greece must respect her commitments if she wants to stay in the Euro and not vote for those that brought her here.
      What does HE KNOW?

      The truth is the exact opposite. They want us to vote for those that brought us here.

      If we knew all this before ,we wouldn’t have let it happen.

    • @Martin
      This is one of several Greek perspectives as I am sure there are several German perspectives. Most people that I know do not feel threatend by “German” domination. This is populist propaganda that unfortunately is spread by the right as well as the left! They are worried about German policies but that is another thing alltogether. Still, people feel very worried with a tiered EU like the one that it seems we are headed. People felt very worried when Merkel and Sarkozy met at Deauville to plan their moves ignoring everyone else and all EU institutions like the eurogroup. I think that Juncker voiced his concern then at the course we are headed and of course we had the fatefull result of the Greek PSI due to the decisions then taken by Merkel and Sarkozy and basicaly dictated to the rest of the eurozone. Nowdays we have meetings between several EU and Eurozone members all the time. The basic political principles of the eurozone were shattered in Deauville and the price may be the disintegration over time of the EU. All in the name of FrancoGerman banking interests and one Frenchman’s fear of not being re-elected. At least he paid for that mistake.

    • @Demetri and Tasos
      I think it is a tragedy that we are all in this mess that we are in.
      A lot of incompetence, everywhere.
      And it is a shame because the whole idea of the EU and the Euro was that it was a win-win for al participants and it was supposed to bring the peoples of Europe closer together.
      Since the Euro-crisis kicked in, things are developing the wrong way.

      I guess one problem we all face now that obviously, it is difficult for each country to govern itself.
      Greece did not manage to do that very well and now the situation is so bad that the others, understandingly from their perspective, insist on the classic, harsh measures that you take in a deparate situation like this (budget cuts, pension decreas, tax increase, etc).
      This all ultimately happened because Greece was governed so poorly.
      You can win your country back best if you install a reasonable, honest, competent and trustworthy government.This is not impossible. Other countreis (like in the formerly communist east of Europe) have managed to do it.
      You can do it too.
      As long as you have a ridiculously incompetent and kleptocratic government, the others lending you money wil only contiue to do so in connection with asking for measures that Greece won’t like (and that may not be the right measures for Greece).
      But first you need to prove, at least a bit, that you can install a government that can do better than what got you into this mess in the first place.

    • Martin

      That is what we are doing Martin. Do not expect it to happen overnight and especially when the banksters try to terrify the people to vote for the same politicians that made this. Because you like it or not ,IT IS NOT ABOUT GREECE ONLY.

      We have given a full analysis but you do not like it because it also involves your own corruption. That is your problem.

  • This is just speculation, not based on any facts. The German Constitutional Court has not given any indication that it might challenge a detail of the ECB’s inner workings.

    Don’t consider that court to be a bunch of hardliners disconnected from reality. They do know what is at stake and have never issued rules that would have had the potential to cause major economic or political issues.

    Also keep in mind that they rule on basis of the Constitution. The German Parliament has the power to change the Constitution should it be required and has done so repeatedly.

  • @ Very Serious Sam

    Jesus wept, your whining becomes more and more grotesque, as impossible this may seem. How come you have so much time to write your endless stupid racist anti German rants [..] ( e.q.)

    I’m not trying to “defend” Dean but let me tell you something about the German tourist grotesque and paradoxically “typology”, because no matter where I went on vacation – Tunisia, Greece, Austria, Spain, etc – the German tourists were the WORST! Why? Because they’re arrogant, extremely grobian, filthy and most of the time..DRUNK ! Could it be only a coincidence? NO! This year was not an exception – I just returned from my vacation to Costa Brava – and I’ve been called f*****g Brit by a bunch of German xenophobic idiots which heard me speaking in Shakespeare’s language. Obviously – and against my manners! – I told them to go f**k themselves because I’m ROMANIAN!

    N.B. I have many German friends, my best childhood friend is GERMAN and she’s the embodyment of common sense. My point here: you don’t have THE RIGHT to “spit” and put a “label” on the forehead of an ENTIRE European nation because “there’s no forest without dead dry branches” !

    • I am sorry that German tourists are not always the most inspiring ones.
      There certainly is a significant percentage of them who seem to be keen to confirm all the bad clichees about Germans.

      However, you can do something to minimise your exposure: don’t go to places where this type of beer-drinking, fat & loud type loves to go.
      …but make sure you don’t end up somewhere where the UK counterpart loves to stay.