German Chancellor Angela Merkel no longer has enough coalition votes in the Bundestag to secure backing for Europe’s revamped rescue machinery, threatening a consitutional crisis in Germany and a fresh eruption of the euro debt saga.
Mrs Merkel has cancelled a high-profile trip to Russia on September 7, the crucial day when the package goes to the Bundestag and the country’s constitutional court rules on the legality of the EU’s bail-out machinery.
If the court rules that the €440bn rescue fund (EFSF) breaches Treaty law or undermines German fiscal sovereignty, it risks setting off an instant brushfire across monetary union.
The seething discontent in Germany over Europe’s debt crisis has spread to all the key institutions of the state. “Hysteria is sweeping Germany ” said Klaus Regling, the EFSF’s director.
[More]
See Also:
Britain can easily weather eurozone break up if officialdom is sensible
Market crash ‘could hit within weeks’, warn bankers
European bank stocks plunge as investors shun risk
What’s wrong with the European economy?
Stimulus spending: Two words that spell trouble
Bound by chains of EU contagion
Afternoon Updates:
1:08 pm EDT, August 29th, 2011 — Surowiecki: Europe’s Big Mistake