Four German law profs are preparing to submit a challenge in the German constitutional court to the EU Greek rescue plan on the grounds it breaches the no bail out clauses in EU treaties. German sources are now putting the bail out bill at three times as high as thought pushing the EU share up to €90 bn. The Germans were badly burned in two currency melt downs in 1928 and 1945 and are still paying to sort out East Germany. They can see a bottomless money pit opening up in club Med PIGS. There is now open talk of Portugal having a bad dose of the Greek disease.
To put it in everyday terms hard working Germans retire at 67. Nobody seems to know what the Greek retirement age is! Best estimates put it at 58 to 61. So say the Germans why should we pay for idle Greeks to retire early? Quite. Its pure political suicide on the Ruhr for Merkel in the May 9th German elections.
The legal case will hinge on the hidden rate subsidy in the rescue. Also the breach by the ECB of its own rules on eligible collateral in its Repo operations so it can continue to lend against Greek bonds as security. J-C Trichet claimed the ECB decusion to accept bonds with a BBB- rating had nothing to do with Greece. Unfortunately the flying Dutchman ECB board member Wellink said yesterday 'of course the decision was linked to Greece'. I think Alastair Campbell is available for a fee to sort this sort of situation out.
The Profs will ask the aid package to be frozen pending the court decision. One of their leading economists Dr Hankel said it would be risky politically to transfer German funds to Greece. He then went on rference the German Court, "This is a political court that will look for a way out by shifting responsibility to the Bundesstag. Our purpose is to stir up public opinion and put the government in extreme difficulty. Aid for Greece requires an extra budget; that will be very unpopular". Just what the Dr Frau could do without, a shit stirring know all economist. The phrase hoist with her own petard comes to mind.