Ambrose Evans-Pritchard reminds us how the current effort in the German courts to freeze an EU-bailout for Greece could be the beginning of something far larger than many imagine.
How a few rowdy German intellectuals could end the Eurozone experiment as we know it:
My point is that this court challenge over the Greece may bring long-bubbling, long-suppressed tensions into the open.
It clearly poses risks that the media, markets, and South Europeans have failed to understand. Most appear to think that Chancellor Angela Merkel is being truculent because of the North Rhine-Westphalia elections on May 9. This presumption reveals more about them, and the legal-political cultures they come from, than it does about German affairs.
The German passion for sound money is not just the result of hyper-inflation in 1947-1948 and 1923. It stems from the deeper intuition that sound money and democratic freedom are inter-linked. Monetary disorder bled Weimar of legitimacy.
Much depends on this point, says Hans Redeker, currency chief at BNP Paribas. If the professors go for the jugular, they may force the Verfassungsgericht to pull the plug on the entire EMU Project.
“This court hearing is going to be very dangerous. It could lead to Germany itself being catapulted out of the currency union. Once investors begin to fear this, there will not be a single euro in further financing for the EMU periphery.”
He sees a 10pc chance that this ruling will lead to German exit from monetary union.
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