Crunch Time For the Euro?

Germany’s highest constitutional court, the Karlsruhe, is due to rule on the legality of the bail-outs of various eurozone members, although The Telegraph reports a decision is unlikely to be made before September. The potential implications are huge, even if the judgment is one of  “yes, the legality is questionable, but…”.

Of course the European Union could well attempt to carry on its present course regardless – it has shown little regard for extant law, and as the ever lucid Daniel Hannan puts it,

It is precisely because the bailouts are illicit that the the Treaty is being changed: rather than amending its behaviour to comply with the law, the EU proposes to amend the law to comply with its behaviour.

Whatever the eventual outcome, it will definitely be a story to follow with interest.

Edit: Also on the euro, The Economist has this excellent graph and article on the seemingly inexorable rise of Greek bond interest rates and the ever-decreasing effectiveness of the steps Eurozone leaders are taking to avoid default, although some commentators have argued it already has given the rollover of its sovereign debt.

Finally, why a Greek default might not mean the end of the euro – the risk of default is already priced into the currency by the markets, according to Brad McFadden.


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