Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

German Court Wields Huge Economic Power

Politics / Financial Markets 2011 Aug 25, 2011 - 09:02 AM GMT

By: John_Browne

Politics

With investors now emerging from a state of panic after the harrowing losses of late July and August, stock markets are now rising and gold is finally falling after a record run that pushed its price north of $1,900 per ounce. The buoyant mood is largely undergirded by the hope that on this Friday, August 26th, Fed Chairman Ben Bernanke will announce another round of stimulus to stop the U.S. economy from slipping back into another recession.


In contrast to this American expectation for more monetary manna from the heavens, many Eurozone governments have instituted harsh austerity programs. But behind the scenes the European Central Bank (ECB), in direct contradiction to the EU formation treaty, continues to enact a rescue package that purchases billions of dollars of subpar Eurozone sovereign debt. But at present, few governments or large financial players care much for legality.

As just about everyone knows, the lion's share of the bailout funds used by the ECB comes from Germany. However, the assumption that Germany will continue to provide these rescue funds depends not on German politicians and public opinion, as most investors think, but on the crucial judicial review of Germany's Federal Constitutional Court.

Unlike the U.S. Supreme Court, the German high court is not an appeals court. It conducts detailed proactive judicial review of all German Government actions. In its field, it is supremely powerful. The citizens of many countries, including those of the US, UK and EU may wish they had such an effective curb on the abuse of constitutional power by national governments. Indeed, it could be argued that had such a court existed in the US, UK, and EU, most of our current political, economic and financial woes would not exist.

In addition to its prodigious power, the Federal Constitutional Court of Germany is physically sited in Karlsruhe, well away from any 'persuasion' in the political center of Berlin or the financial center of Frankfurt. The Court is truly independent and has ruled quietly, often against government actions. Quite recently, it ruled that the EU had a serious "democratic deficiency." As a result, it ruled that many EU rulings would have no effect in Germany until they had been debated fully by the German Parliament. Unlike the courts of many nations, this one is no political pushover.

German bailouts have been central to all proposed "solutions" to the European sovereign debt problem. Defaults from even small Eurozone states would be a threat to many huge international banks that either hold significant amounts of Euro sovereign debt or have exposure to it by way of credit default swaps or interbank relationships. Still more important, continued German bailouts are of singular importance to the survival of the euro-the world's second currency, which forms much of the exchange reserves of major central banks and corporations worldwide.

In short, if the salvage of many Eurozone nations is not led by German bailout money, the euro may well collapse, threatening the world's major banks and many governments.

The Federal Constitutional Court of Germany is due to issue a judicial ruling on September 15 regarding the Constitutional legitimacy of the German Government's spending of citizens' money to bailout foreign nations. The future of the euro, the international banking system, and even of the entire socialist European Union experiment, can hang on the Court's decision.

Given the importance of such a ruling, it is surprising that the proceedings have been largely ignored by the mainstream media. However, if more market participants were aware of how an adverse ruling from the Court would throw a monkey wrench into the entire bail-out apparatus, the mood would be quite different in stock markets on both sides of the Atlantic. If German bailout spigots are tightened, financial stocks should plummet and the euro could fall sharply. In contrast, Swiss francs, Yen, Sterling and even for a short time the US dollar, may rise. But the biggest impact could be in the precious metals market.

So keep your eye on German legal news. It may make more impact on your portfolio than you ever could have imagined.

Subscribe to Euro Pacific's Weekly Digest: Receive all commentaries by Peter Schiff, Michael Pento, and John Browne delivered to your inbox every Monday.

Click here for free access to Euro Pacific's new special report: What's Ahead for Canadian Energy Trusts?

Be sure to pick up a copy of Peter Schiff's hit economic fable, How an Economy Grows and Why It Crashes.

By John Browne
Euro Pacific Capital
http://www.europac.net/

More importantly make sure to protect your wealth and preserve your purchasing power before it's too late. Discover the best way to buy gold at www.goldyoucanfold.com , download my free research report on the powerful case for investing in foreign equities available at www.researchreportone.com , and subscribe to my free, on-line investment newsletter at http://www.europac.net/newsletter/newsletter.asp

John Browne is the Senior Market Strategist for Euro Pacific Capital, Inc.  Mr. Brown is a distinguished former member of Britain's Parliament who served on the Treasury Select Committee, as Chairman of the Conservative Small Business Committee, and as a close associate of then-Prime Minister Margaret Thatcher. Among his many notable assignments, John served as a principal advisor to Mrs. Thatcher's government on issues related to the Soviet Union, and was the first to convince Thatcher of the growing stature of then Agriculture Minister Mikhail Gorbachev. As a partial result of Brown's advocacy, Thatcher famously pronounced that Gorbachev was a man the West "could do business with."  A graduate of the Royal Military Academy Sandhurst, Britain's version of West Point and retired British army major, John served as a pilot, parachutist, and communications specialist in the elite Grenadiers of the Royal Guard.

John_Browne Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

peter
25 Aug 11, 16:09
excellent

thanks for that article...i didn't know about that. And thank goodness the Germans have such a constitutional court. We should all have one...


Onc' Scrooge
26 Aug 11, 04:04
Wrong date!

Hi,

last week the date of the court's decision has been changed - why ?

It is not the 15.9.2011 as you write but the 7.9.2011 now see

http://www.bundesverfassungsgericht.de/pressemitteilungen/bvg11-054.html

Greetings Onc' Scrooge


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules