ECB Policy Keeps Afloat Economically Unviable Companies and Creates Market Bubbles - German Court Rules

valamhic

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This article from the Irish Energy Blog reports on a very important development in the EU in my opinion. I have read only part of the links so far and hope to read them all. Is there any poster here who would like to do the same and as we get to understand it, we can discuss it. I can answer some questions and hope to get to fully understand it all as I read on.

This is a serious thread and I hope there will be no smart Alex interventions. The EU have been thwarting the whole financial system of member states by shoveling money into lenders to promote inefficient companies. It could explain why loss making renewable energy projects are able to continue year in year out as they can borrow at nearly negative interest rates.

Any takers?

 

Olli Rehn

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I see you never give up lashing windfarms....
 

Clanrickard

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This article from the Irish Energy Blog reports on a very important development in the EU in my opinion. I have read only part of the links so far and hope to read them all. Is there any poster here who would like to do the same and as we get to understand it, we can discuss it. I can answer some questions and hope to get to fully understand it all as I read on.

This is a serious thread and I hope there will be no smart Alex interventions. The EU have been thwarting the whole financial system of member states by shoveling money into lenders to promote inefficient companies. It could explain why loss making renewable energy projects are able to continue year in year out as they can borrow at nearly negative interest rates.

Any takers?

Has zero effect. Zero. National courts cannot over rule the EU.
 

valamhic

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Has zero effect. Zero. National courts cannot over rule the EU.
You make a very good and valid point. I will develop that some more. I am reading the ruling
and its very long winded. I'll report back
 

valamhic

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Has zero effect. Zero. National courts cannot over rule the EU.
I have researched this more and read the judgement. The CJEU did not comply with the treaties which demand that they carry out an assessment and weigh all the pros and cons, direct and indirect impact of their bond buying programme.

Even if the German court is subordinate to the CJEU, the CJEU cannot force German banks to issue bonds for the ECB to buy. (The European Court cannot force German banks to borrow money it does not want)/

If it were to go to the wire and it were proved the CJEU can overrule the German decision, then Germany could politically block it as without Germany, the EU is finished. This proved the video channel was on the right track when it asked how loss making companies could keep going
 

valamhic

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I see you never give up lashing windfarms....
This ruling is particularly relevant to Irish wind farms. I could not understand how they could continue in business when they are losing an average of 65,000 Euros per year. Why would any bank lend to them when they can never repay the capital loan? I agree there was debt forgiveness by parent companies which simply increased their price for their core product to pay for renewables. This was not enough to explain how they could return to lenders year after year for more cash and how 100s of millions could be obtained to build even more wind farms which were guaranteed to loose money.?

This case provides the answer. The EU is printing money by the billion and billion and throwing as failing banks, failing businesses and failing governments. They wanted to keep at this and put off the evil day, (kick the debt can down the road). They wanted to rope in Holland and Germany to share the repayments but now this stops that. It wont be long now. AIB can't last much longer
 

Clanrickard

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This ruling is particularly relevant to Irish wind farms. I could not understand how they could continue in business when they are losing an average of 65,000 Euros per year. Why would any bank lend to them when they can never repay the capital loan? I agree there was debt forgiveness by parent companies which simply increased their price for their core product to pay for renewables. This was not enough to explain how they could return to lenders year after year for more cash and how 100s of millions could be obtained to build even more wind farms which were guaranteed to loose money.?

This case provides the answer. The EU is printing money by the billion and billion and throwing as failing banks, failing businesses and failing governments. They wanted to keep at this and put off the evil day, (kick the debt can down the road). They wanted to rope in Holland and Germany to share the repayments but now this stops that. It wont be long now. AIB can't last much longer
🤣🤣🤣🤣🤣🤣🤣🤣🤣
 

valamhic

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I should have posted 65,000 Euros per MW capacity. So multiply the capacity of each wind farm by 65,000 to get the total of about 240 million a year.
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I cannot get the FT here but yesterday's edition said the ruling could impact the position of the Euro and that it had caused bond spreads to widen. https://www.ft.com/content/45ae02ab-56d0-486e-bea5-53ba667198dc
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Again just the heading


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valamhic

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Clanrickard

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valamhic

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The EU always muddles through.
Agreed to date. What has happened here is that the EU makes it up as it goes along. It ignores the treaties grounding the whole thing and fails to take an in dept look at the situation before making the decision. It did it with Renewable Energy and now with finance. They tried to force Germany to take money so they could also call on them to repay it. This is mutualizing Europe's debt in the hope the bill can be handed to Germany. The Germans would be fools to accept it.
 

Clanrickard

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Agreed to date. What has happened here is that the EU makes it up as it goes along. It ignores the treaties grounding the whole thing and fails to take an in dept look at the situation before making the decision. It did it with Renewable Energy and now with finance. They tried to force Germany to take money so they could also call on them to repay it. This is mutualizing Europe's debt in the hope the bill can be handed to Germany. The Germans would be fools to accept it.
The Germans might not have a choice.
 

valamhic

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The Germans might not have a choice.
What happened here is that the group opposed to debt sharing in the EU took their case to the CJEU and pleaded that it must take into account the consequences of its monetary policy. The CJEU refused to include this argument in its considerations and ruled that the policy can continue. The group them went another way at it and applied to the German court to ban German banks from taking money from the ECB.

The German Court ruled that the Treaties on the Functioning on the EU demanded a cautious analytical approach to government. There must be proportionality in decision making. Note the difference in the CJEU and the German court ruling.

The CJEU takes precedence (and is wrong in my view), but the EU cannot operate without German good will. Its a constitutional crisis
 

Clanrickard

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What happened here is that the group opposed to debt sharing in the EU took their case to the CJEU and pleaded that it must take into account the consequences of its monetary policy. The CJEU refused to include this argument in its considerations and ruled that the policy can continue. The group them went another way at it and applied to the German court to ban German banks from taking money from the ECB.

The German Court ruled that the Treaties on the Functioning on the EU demanded a cautious analytical approach to government. There must be proportionality in decision making. Note the difference in the CJEU and the German court ruling.

The CJEU takes precedence (and is wrong in my view), but the EU cannot operate without German good will. Its a constitutional crisis
And German politicians remain pro-EU. As long as that continues so will the ECB policy.
 

ruserious

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And German politicians remain pro-EU. As long as that continues so will the ECB policy.
Germany is the biggest State in the EU by far. Ireland needs to build alliances with more likeminded states to wield leverage.
 

Clanrickard

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Germany is the biggest State in the EU by far. Ireland needs to build alliances with more likeminded states to wield leverage.
Yes it does and we are opening new consulates in Germany and putting more effort into buttering up the Germans.
 

valamhic

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I cannot believe the ignorance displayed by Clan here and elsewhere in the site. The German Supreme Court has the power to order German banks not to participate in the scheme. The court action is not related to Conora crisis and predates it by 5 years. If the CJEU wants to force the German Banks to accept the cash, it has to find a mechanism to do it and it can only fine Germany.

A example of this is Ireland never introduced the VRT internal market policy on car registration in the internal market. It is doubtful if the CJEU can fine Germany.
 

Olli Rehn

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What happened here is that the group opposed to debt sharing in the EU took their case to the CJEU and pleaded that it must take into account the consequences of its monetary policy. The CJEU refused to include this argument in its considerations and ruled that the policy can continue. The group them went another way at it and applied to the German court to ban German banks from taking money from the ECB.

The German Court ruled that the Treaties on the Functioning on the EU demanded a cautious analytical approach to government. There must be proportionality in decision making. Note the difference in the CJEU and the German court ruling.

The CJEU takes precedence (and is wrong in my view), but the EU cannot operate without German good will. Its a constitutional crisis
Just FYI:
The German High Court did not forbid anything at all.
In fact the Court left a door open for the EZB and all banks involved. If the EZB can come up with a reasonable written explanation for their past actions within 3 months, they can continue as before.
I bet that Lagarde will be coming up with a brilliant reply. And - et voilà- the games will continue!
 

valamhic

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Just FYI:
The German High Court did not forbid anything at all.
In fact the Court left a door open for the EZB and all banks involved. If the EZB can come up with a reasonable written explanation for their past actions within 3 months, they can continue as before.
I bet that Lagarde will be coming up with a brilliant reply. And - et voilà- the games will continue!
Correct, I am currently reading the judgement, the problem is that the ECB cannot justify the scheme on Proportionality grounds. The treaty demands they must, but I know they cannot
 
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