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A German force to admire: Kerber of the constitutional court

Well, that was an unexpected delight. Last night I ended up having dinner with Prof Markus

Kerber, the Berlin university economist and constitutional lawyer who led the legal challenge to the eurozone bailouts in the German constitutional court in Karlsruhe.

The professor was in Brussels to speak to a packed house -- and I mean packed: even a heavy from the German industrial giant ThyssenKrupp was forced out of the room by the crowd -- at a meeting organised by New Direction, a free-market think tank established here in Brussels last year. (New Direction have Margaret Thatcher as patron and Geoffrey Van Orden, a Tory MEP, as president, Down in the fine print they say they receive a grant from the European Parliament. Their goal is to 'help steer the European Union on a different course.' Good luck with that one, mate.)

Still, the think-tank was smart enough to invite Kerber to Brussels, and Kerber did not disappoint -- though he did surprise, and from the start. After all the coverage I've read of his work, I expected him to be a tweed-jacketed academic type (come on, what kind of appearance do you expect from someone at the Technische Universitat Berlin?).

Instead he looks like a Prussian merchant banker: turns out he was in the financial markets for years before he became an academic and started torturing the European Central Bank's plans to turn the eurozone into a fiscal transfer union. No wonder the 50 people who joined in his challenge at the constitutional court included leaders of German industry and top academics: he is one of them.

Kerber spoke about the future of the euro (short version: it hasn't got a future, not in its present form) for an hour, without notes and in perfect English. He even threw in a small joke about Jean ClaudeTrichet speaking at the European Parliament, mimicking the ECB chief's French-accented English: a German speaking English pretending to be French. Only in Brussels.

Of course, the Kerber-led constitutional court challenge to the eurozone bail-outs failed, but it did force the court (the court building is seen here on the left, looking like a stained 1970s library at a provincial university: it seems there is no taste for bling among the German jurists) to rule that any further bail-outs must have the German democratic sanction of being agreed by the finance committee at the Bundestag. That will at least slow down the ECB's clearly-illegal activities in the bond markets. See yesterday's post about attempts by Jens Weidmann, head of the German central bank, to stop these bond purchases by the ECB.

But Kerber's argument stands -- that the bailouts are against European treaty law and against the German constitution because they endanger the monetary stability of the country. More, the bailouts endanger German sovereignty because they leave the German taxpayer at the mercy of decisions taken by the EU insitutions, instead of by the German government and parliament.

The German people are becoming more and more aware of this truth: that continued German government agreement to bail-outs will leave them with no power, but with an unlimited liability. The Germans will not let this go on.

'The euro experiment is effectively over.' said Kerber. 'Now it must be brought to a close.'

The Bundesbank president joins the eurozone Resistance

Thanks to Eurointelligence for the translation of this important story in this morning's Frankfurter Allgemeine Zeitung: Jens Weidmann, the Bundesbank president (and therefore member of the Governing Council of the European Central Bank) has invited potential allies among other eurozone central bank governors to plan how to stand against the ECB's Security Markets Policy (SMP).

That's the politically-motivated policy of buying up (let's face it, rubbish) debt from on-the-road-to-hell eurozone states such as Italy.

Under the euro-true believer French president of the ECB, Jean-Claude Trichet, the bank

has been turning itself into an instrument of eurozone fiscal policy, rather than just as the monetary guardian it was established to be by treaty law. (Trichet, seen here, also wants to see a single Finance Ministry imposed across all the eurozone countries. You don't get European gongs like that one for being a democrat.)

That sounds technical. What it means is that the ECB has been turned into a mechanism for intervening in the spending and taxation plans of all eurozone member states, and endangering the balance sheet of the ECB at the same time. Land enough junk on the books -- want to stock up on Greek sovereign debt, anyone? -- and at some point this so-called lender of last resort is going to have to be recapitalised itself, and by member states who in many cases are already crippled by sovereign debt and bank debt. Road to hell, yes indeed, road to hell.

This is the policy against which the German central bank chief Weidmann has been speaking. Now it seems he is willing to go beyond mere debate inside the ECB: what he could be forming is a Resistance Movement -- and this inside one of the EU institutions, where there is no Official Opposition ever.

According to the Eurointelligence account of the FAZ story, 'Weidmann invited potentially like-minded members of the ECB governing council to the beautiful Reingau village of Eltville to discuss an alliance within the ECB against the controversial bond buying programme.'

'Among the invitees are Yves Mesch, Luxemburg's central bank governor and apprarently the only central banker who has consistently voted with Weidmann and ECB chief economist Jurgen Stark against reactiviating the SMP. Another guest is the Dutch central bank president Klaas Knot.'

What all this means is that Weidmann has the gumption to take action against a measure he believes to be wrong instead of just 'dramatically slamming the door.'

Of course, this group cannot form a blocking majority at the ECB, but is a 'quite dangerous precedent for the central bankers of the AAA-rated countries to united against t

he SMP.'

In other words, the governor of the German central bank and member of the ECB Governing Council is leading a revolt against the leading policy of the ECB.

As Eurointelligence says, 'This is a development whose significance can hardly be overstated.'

Or as I say, give that man Weidmann a black beret and a Bren gun, and tell him 'Welcome to the new Maquis.'

20 September 2011 11:32 AM

The Greek people: proving yet again why 'hero' is a Greek word

Splendid, the lot of them, every one of those striking, demonstrating, roaring, resisting

Greeks. They are going to stop this euro monstrosity. It won't be pretty, but by heavens it will be heroic.

Unlike anything that is likely to happen in Britain under Cameron and Clegg. Gutless: an old English word.

Even the leftwing EU-loving Greek prime minister looks more heroic, and certainly more democratic (another word we have from ancient Greece) than our own Government. Perhaps what is happening on the streets of Athens an example of ancient gene pools being forced to the surface by crisis -- krisis being another Greek word.

Because here is what may happen next among the heroic Greeks: according to a report last night on the Greek news website Ekathimerini, 'Prime Minister George Papandreou is considering calling for a referendum on whether Greece should continue to tackle its debt crisis within the eurozone or by exiting the single currency...A bill submitted in Parliament, paving the way for a referendum to be carried out, is to be discussed in coming days.'

Of course the empire-building elite in the EU institutions have long claimed that there is no way a country could leave the eurozone: membership is forever. Others say if a country did get out of the single currency, it would have to leave the EU as well.

I'd say that at this point, if the EU imperialists tried to 'warn' the Greeks that a referendum vote to leave the eurozone would mean a vote to leave the EU, the heroic Greek people would say: bring it on.

So let the Greek crisis roll: at this point, worse is better. Though worse is getting worse beyond my wildest dreams. Heroes will be needed.