Germany’s top central banker has criticised the decisions of last week’s summit to help debt-laden eurozone members, warning that the bloc was “constantly mutualising risks and weakening the agreed rules”.Third Front
“Fiscal aid should be the last resort of crisis management,” said Jens Weidmann, president of the Bundesbank. “This position has by now been recognisably weakened.”
In a speech that looks set to increase political pressure on Angela Merkel, the chancellor, Mr Weidmann said strict conditions that had come with emergency aid at the start of the crisis had been “clearly eroded” since then – and possibly again at last week’s European summit.
In remarks apparently meant as a warning shot to Berlin, Mr Weidmann signalled any further steps to loosen aid conditions had to come together with eurozone commitments to pool fiscal decision-making. If mutual liability was to be the only path, then “those taking on liability should get the opportunity to exercise oversight.”
He lamented that the results of last week’s summit allowed for “a broad spectrum of interpretation” – especially over whether the eurozone wanted to stick to Maastricht principles or move towards fiscal integration.
This pressure from the central bank represents a third front against Merkel.
The ESM is already on hold waiting challenges from Germany's constitutional court. (see German Supreme Court Delays ESM; Another Setback for Merkel; Creeping Bailouts; Reflections on German Expectations for details)
Moreover, Merkel's Coalition About to Splinter Over Creation of "European Monster State". Simply put, the CSU (Merkel's coalition partner), has threatened to sink the Coalition if Merkel gives any more ground.
In all likelihood, this is close to if not the absolute end of the line for further Merkel concessions.
The irony regarding the latest wave of attacks is Merkel gave nothing to France and next to nothing to Italy and Spain in the 19th eurozone summit. For details, please see EU Summit Winner Was Merkel.
Mike "Mish" Shedlock
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