...outlining the reluctance of the Germans to abdicate sovereignty. One of the major themes of this blog is the very concept of "sovereignty" and its changing definition given economic pressures.
By Ambrose Evans-PritchardEconomicsLast updated: September 30th, 2011
Judging by the commentary, there has been a colossal misunderstanding
around the world of what has just has happened in Germany. The
significance of yesterday’s vote by the Bundestag to make the EU’s
€440bn rescue fund (EFSF) more flexible is not that the outcome was a
This assent was a foregone conclusion, given the backing of the
opposition Social Democrats and Greens. In any case, the vote merely
ratifies the EU deal reached more than two months ago – itself too
little, too late, rendered largely worthless by very fast-moving
The significance is entirely the opposite. The furious debate over the
erosion of German fiscal sovereignty and democracy – as well as the
escalating costs of the EU rescue machinery – has made it absolutely
clear that the Bundestag will not prop up the ruins of monetary union
for much longer.
Horst Seehofer, the leader of Bavaria’s Social Christians, said his
party would go "this far, and no further".
There can be no question of beefing up the EFSF to €2 trillion or any
other sum, whether by leverage or other forms of structured trickery.
"The financial markets are beginning to ask whether Germans can afford
all this help. We must not risk the creditworthiness of the German
state," he said.
The best-read story in today’s Handelsblatt is the mounting rebellion
against the EFSF in the Bundesrat, the German senate representing the
interests of the regions. While this chamber does not have the power
to block budget deals, it has begun to express deep alarm about the
drift of events.