German Court Defers to Draghi as Euro’s Judge and Jury
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Germany’s supreme judges have decided to let Mario Draghi be the euro’s monetary judge, at least for now.
While doubting the legality of the European Central Bank bond-buying plan that has defused the euro crisis, the top German court conceded that it is powerless to impose a veto. It bowed to a future judgment by the European Union’s high court, leaving Draghi’s pledge to do “whatever it takes” to save the euro unquestioned for a year or more.
“This German court, which everyone’s so frightened of, turns out to be a bit of a toothless tiger,” Charles Dumas, chairman of Lombard Street Research, a London-based consulting firm, said in a Bloomberg Television interview. “They’re copping out.”
The ruling captured the contradictory forces driving Germany’s response to the European economic crisis: a reluctance to provide handouts to debt-swamped governments, coupled with the realization that a refusal to do so would imperil the currency, at an even greater cost for Germany.
Questions about Chancellor Angela Merkel’s credibility as a crisis manager, Germany’s domestic battles over aid for fiscal sinners like Greece, and the wrangling between Berlin and Brussels over who rules the European economy were all telescoped into today’s announcement by the court in Karlsruhe.
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