Saturday, April 27, 2013

The "Political Crash" Ahead

Mediapart sees a "political crash" ahead. This has been a decisive week in the euro crisis, according to the paper. The dam has cracked, and a torrent of criticism of austerity has come pouring forth from all sides, as I've reported in previous posts. Distrust in the EU has reached alarming proportions:

It's all quite sobering. What is more, the Bundesbank drafted a report for the German Constitutional Court questioning the legality of the ECB's Outright Monetary Transaction policy, which is the only thing holding the euro together. Yanis Varoufakis sees this report, which has now been published, as either a huge error by the Bundesbank or else a deliberate strategy to sabotage the ECB and precipitate a euro crisis. "It is not within the purview of the ECB to ensure the irreversibility of the single currency," wrote the Bundesbank. As if it wished to see Germany out of the Eurozone. Here is Varoufakis:

Three statements make this is bombshell of a deposition. The first openly questions whether the ECB has a mandate to preserve the integrity of the euro; that is, to prevent the currency’s collapse. The second, in reality, questions the joint decision of Mrs Merkel and Mr Draghi to keep Greece in the Eurozone. And the third challenges Mr Draghi’s oft-stated conviction that the ECB’s broken monetary transmission mechanism should be mended as quickly as possible. Taken together, these three passages constitute an act of war against the euro as a coherent currency; especially in view of the fact that they are official depositions by the Bundesbank to the German Constitutional Court for the purpose of invoking a constitutional ban on Mr Draghi’s monetary stance.

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