I guess the European Union politicians did not learn anything from the political ramifications of TARP in the United States. First there was TARP. Then there was the Stimulus package. Then there was high unemployment and a stagnant economy. Once you start down the bailout path there are few options available. One option is always available, the politicians can retire. This says a lot about the people who want to server our country.
It increasingly looks like Germany is simply being out-voted and out-maneuvered, thus forced into effectively bailing out the Eurozone as the largest and strongest Eurozone economy.
In regards to the latest European plan:
It is clear, however, that the two German members of the ECB’s council voted against the move, a revelation that may cause a catastrophic political backlash in Germany.
Axel Weber, ultra-hawkish head of the Bundesbank, told Boersen-Zeitung that the emergency move over the weekend had been a mistake. "The purchase of government bonds poses significant stability risks and that’s why I’m critical of this part of the ECB’s council’s decision, even in this extraordinary situation," he said. The rebuke is devastating. The ECB draws it authority from the legacy and aura of the Bundesbank.
The European Commission made matters worse by announcing the decision in the small hours of Monday morning before the ECB had spoken, fueling suspicions that monetary policy is being dictated by the political authorities. French President Nicolas Sarkozy further enraged Berlin by claiming that 95pc of the $1 trillion "shock and awe" rescue package was based on French proposals.
There even doing regulatory back-flips to avoid German opposition:
The eurozone will create a Special Purpose Vehicle able to marshal a further â‚¬440bn. This is to be a outside the EU institutions on German insistence in order to circumvent the EU’s "no bail-out" law. The hope is to head off trouble at Germany’s constitutional court, though it is certain to be challenged anyway.
Germany Was Out-Voted And Forced To Bail Out Europe
Vincent Fernando, CFA
Tue, 11 May 2010 07:25:00 GMT