Everything You Need To Know About The September 12 German Court Decision That Could Rock The Entire World !

• Everything You Need To Know About The September 12 German Court Decision That Could Rock The Entire World ! 
  by Matthew Boesler | Business Insider
  The eurozone is running out of bailout cash, and the German Constitutional Court now holds the fate of Europe in its hands. The European Financial Stability Facility, the original euro area bailout fund established in the summer of 2010, is down to about €248 billion of lending capacity left after existing bailouts for Greece, Portugal, and Ireland are accounted for.
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  Spain and Italy – the next two countries expected to be in line for a bailout – could have combined financing needs as large as €703bn over the next two years, according to Citi estimates, dwarfing the existing capacity of the EFSF.
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  Those huge numbers underscore the need for the additional firepower of the European Stability Mechanism, the new bailout fund expected to replace the EFSF and make available hundreds of billions of euros in additional lending capacity to struggling member states.
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  However, the ESM has still yet to be ratified, which has many counting chickens before the eggs have hatched, so to speak. The 16 judges that sit on the Federal Constitutional Court of Germany need to sign off on the fund’s constitutionality in order to make the fund operational – and the Court is widely expected to do just that when they deliver a ruling on ESM ratification on September 12.
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  Here are some views from Wall Street:
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  – “The Court will not rule against the ESM allowing it to become operational, but any conditions could have implications on further integration and debate in Germany.” – SocGen economist Anatoli Annenkov, August 24
  – “However, the court may also require additional information, particularly on the ECB’s bond purchase plans under existing ESM programmes, before making a final ruling.” Citi economist Jürgen Michels, August 23
  – “Needless to say, a surprising rejection (not our assumption) would hurt risk sentiment massively.” – SocGen fixed income strategist Vincent Chaigneau, August 23
  – “There is a chance that things could go wrong and if they do they might go terribly wrong. Hence, caution is warranted.” – Morgan Stanley FX strategist Hans Redeker, August 16
  – “Our central scenario is a positive ruling from the German court, but there is a slight chance that the ruling makes the ESM implementation delayed or more complex.” – BofA Merrill Lynch economist Laurence Boone, August 10
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  So, even though the Court is widely expected to approve ESM ratification – and the German Bundestag parliamentary body already approved it by a 3/4 majority – what is behind murmurs of caution among analysts and investors?The constitutionality of the ESM treaty – which is what the Court is set to rule on – is a matter of question in Germany. Several complaints regarding constitutionality have already been lodged against the ESM to the Court.
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  Philine Schuseil at the European think tank Bruegel has penned a good breakdown of the debate over the ESM in Germany. The upshot is that the ESM, governed by eurozone finance ministers, would have full control over disbursement of ESM funds to struggling countries, even though such decisions would affect the German government budget.
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