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German Court Case Has Potential To Force Euro Exit

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Last summer to avert the euro crisis, Mario Draghi announced Outright Monetary Transactions (OMT) to support the Spanish and Italian bonds. Now finally the German constitutional court is to hold hearings this week on the legality of the ECB using OMT as a tool to finance deficits in bankrupt states. Already Bundesbank’s Jens Weidmann has submitted a report to the court objecting to OMT but the panel looks split and the ruling could go either way. This has the potential to possibly force a German euro exit or at very least throw the eurozone back into a full blown crisis.

Udo di Fabio, the constitutional court’s euro expert until last year, said the explosive case on the legality of the European Monetary Union rescue machinery could provoke a showdown between Germany and the European Central Bank (ECB) and ultimately cause the collapse of monetary union.

“In so far as the ECB is acting ‘ultra vires’, and these violations are deemed prolonged and serious, the court must decide whether Germany can remain a member of monetary union on constitutional grounds,” he wrote in a report for the German Foundation for Family Businesses.

“His arguments are dynamite,” said Mats Persson from Open Europe, which is issuing its own legal survey on the case on Monday.

Dr Di Fabio wrote the court’s provisional ruling last year on the European Stability Mechanism (ESM), the €500bn (£425bn) bail-out fund. His comments offer a rare window into thinking on the eight-strong panel in Karlsruhe, loosely split 4:4 on European Union issues.

The court is holding two days of hearings, though it may not issue a ruling for several weeks. The key bone of contention is the ECB’s back-stop support for the Spanish and Italian bond markets or Outright Monetary Transactions (OMT), the “game-changer” plan that stopped the Spanish debt crisis spiralling out of control last July and vastly reduced the risk of a euro break-up.

germanThe case stems from legal complaints by 37,000 citizens, including the Left Party, the More Democracy movement, and a core of eurosceptic professors, most arguing that the ECB has overstepped its mandate by financing the deficits of bankrupt states.

Berenberg Bank said the case was now “the most important event risk” looming over the eurozone, with concerns mounting over an “awkward verdict” that may constrain or even block ECB action.

Dr Di Fabio said the court, or Verfassungsgericht, does not have “procedural leverage” to force the ECB to change policy but it can issue a “declaratory” ultimatum. If the ECB carries on with bond purchases regardless, the court can and should then prohibit the Bundesbank from taking part.

The Bundesbank’s Jens Weidmann needs no encouragement, say experts. He submitted a report to the court in December attacking the ECB head Mario Draghi’s pledge on debt as highly risky, a breach of both ECB independence and fundamental principles. The ECB does not have a legal mandate to uphold the “current composition of monetary union”, he wrote.

Dr Di Fabio said it was hard to imagine that an “integration-friendly court” would push the EMU “exit button”, but it can force a halt to bond purchases. This may amount to the same thing, reviving the eurozone crisis instantly.

“It would pull the rug from under the whole project. It is the OMT alone that has calmed markets and saved the periphery,” said Andrew Roberts from Royal Bank of Scotland. Mr Draghi said last week that the OMT was the “most successful monetary policy in recent times”.

The court dates back to the Reichskammergericht of the Holy Roman Empire created in 1490, but it was revived after the Second World War along the lines of the US Supreme Court.

It has emerged as the chief defender of the sovereign nation state in the EU system, asserting the supremacy of the German Grundgesetz over EU law, hence the German term “Verfassungspatriotismus”, or constitution patriotism.

The court backed the Lisbon Treaty but also ruled that Europe’s states are “Masters of the Treaties” and not the other way round, and reminded Europe that national parliaments are the only legitimate form of democracy. It said Germany must “refuse further participation in the EU” if it ever threatens the powers of the elected Bundestag.

It issued another “yes, but” ruling last September. It threw out an injunction intended to freeze the ESM, but it also tied Berlin’s hands by capping Germany’s ESM share at €190bn, and blocked an ESM bank licence. It killed off hope of eurobonds, debt-pooling, or fiscal union by prohibiting the Bundestag from “accepting liability for decisions by other states”.

Crucially, the court said the Bundestag may not lawfully alienate its tax and spending powers to EU bodies, even if it wants to, for this would undermine German democracy.

Chief Justice Andreas Vosskuhle said at the time that Germany had reached the limits of EU integration. Any further steps would require a “new constitution”, and that in turn would require a referendum.

 

Source: The Telegraph

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Christine Lagarde Due To Be Charged In Connection With £270million Fraud and Embezzlement Scam

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IMF head Christine Lagarde is to appear in court to hear whether she is to face charges into fraud and embezzlement in relation to allegations that she interfered with a trail. Not just any trail,  Bernard Tapie benefited to the tune of €400millon and the taxpayers had to fork out. Now we know why she is qualified to lead the IMF 😉

A French government  minister last night called on Christine Lagarde, the head of the International Monetary Fund, to resign if she is charged with fraud and embezzlement.

She was questioned by magistrates in Paris yesterday over a £340million payout of public money five years ago to convicted conman Bernard Tapie.

As she appeared in court, there were calls for her to stand down from  her high-profile £305,000-a-year job if she is charged.

Najat Vallaud-Belkacem, the Minister for Women’s Rights, said: ‘Knowing the IMF and the way this type of institution works, I tend to think that if she was placed under investigation, she would without doubt be asked to quit her post.’

Last night the court adjourned after 13 hours sitting but it was widely predicted Mrs Lagarde, 57, would be placed under investigation by the Court of Justice of the Republic, equivalent to a suspect being charged in the UK.

She faces allegations that she stepped in to settle a long- running legal battle in which Tapie claimed he was cheated out of millions by Credit Lyonnais bank over the 1993 sale of his sportswear company Adidas.

Mrs Lagarde ordered a panel of judges to arbitrate and they awarded Tapie 400million euros (£340million) in damages paid from taxpayers’ money. Prosecutors suspect Tapie received favourable treatment in return for supporting ex-president  Nicolas Sarkozy in the 2007 presidential elections.

They have suggested that Mrs Lagarde – who was France’s Finance Minister at the time and the first woman ever to hold the post – was partly responsible for ‘numerous anomalies and irregularities’ which could amount to complicity in fraud and misappropriation of public funds.

There is no suggestion Mrs Lagarde profited personally in any way from the final settlement.
The affair has become a huge embarrassment to France and the IMF.

Dominique Strauss-Kahn was forced to quit the IMF two years ago after being accused of trying to rape a hotel chambermaid in New York, charges which were later dropped.

Her grilling by prosecutors comes after police raided her £1million Paris apartment in March.
Mrs Lagarde’s lawyer, Yves  Repiquet, said the inquiry was ‘in no way incompatible’ with her new job, adding that he expected the case to be dismissed.

She has denied any wrongdoing, saying: ‘If it’s decided to continue with this inquiry it won’t be particularly surprising. Personally, it doesn’t worry me at all – I didn’t benefit personally.’

But it has been widely reported in the French media that investigators intend to charge her with fraud  and embezzlement.

Le Monde reported that magistrates had already written to Mrs Lagarde to tell her not to expect any special treatment because of her high-profile international job.

Tapie was jailed for six months in 1997 for corruption and match- fixing while he was the owner of  Marseilles football club.

Source: Daily Mail

Bundesbank’s Report To German Court Could Torpedo Draghi’s OMT

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Draghi’s great plan to buy bonds of struggling eurozone countries through Outright Monetary Transactions (OMT) has taken a massive knock. A report issued by the Bundesbank on friday, to the German court which has yet to give its consent to OMT,  is damning to say the least.  The following line from the report says it best “It is not the duty of the ECB to rescue states in crisis”.

The hardline central bank – known as the temple of monetary orthodoxy – told Germany’s top court that the ECB’s pledge to shore up Italian and Spanish debt entails huge risks and violates fundamental principles. “It is not the duty of the ECB to rescue states in crisis,” it wrote in a 29-page document leaked to Handelsblatt.

  The Bundesbank unleashed a point by point assault on every claim made by ECB chief Mario Draghi to justify emergency rescue policies – or Outright Monetary Transactions (OMT) – unveiled last summer to stop Spain’s debt crisis spiralling out of control.

The Draghi plan mobilized the ECB as lender of last resort and led to a spectacular fall in borrowing costs across the EMU periphery, buying nine months of financial calm. The credibility of the pledge rests entirely on German consent. Analysts say the crisis could erupt again at any moment if that is called into question.

“The report borders on economic warfare,” said Harvinder Sian from RBS. “We think there is going to be fear and dread in the market that the court will reject OMT.”

The document said OMT entails the purchase of “bad bonds”, violates ECB independence and entails a high risk of heavy losses in the “not unlikely” event that debtor states are forced out of EMU.

 

It said Greek debacle had shown that conditions cannot be enforced, and, in any case, is “very questionable” whether it is desirable to drive down the borrowing costs of profligate states.

To cap it all, the Bundesbank said the ECB has no mandate to uphold the “current composition of monetary union”. Its task is to uphold price stability and let the chips fall where they may.

While the Bundesbank’s president, Jens Weidmann, has openly criticised the Draghi plan before, the aggressive language in the report shocked economists. The document was submitted in December but was not revealed until Friday.

Germany’s constitutional court will rule on the legality of the bond rescue plan on June 12. It gave a provisional go-ahead last September for other parts of the EMU rescue machinery, but limited Germany’s bail-out share to €190bn (£160bn). Crucially, it warned that the Bundestag may not alienate its tax and spending powers to any supra-national body or be exposed to “unlimited” liabilities.

“If the court rules against OMT, it means the end of the euro. The stakes are so high that I don’t see how they could just pull the trigger,” said Mats Persson from Open Europe.

He said the Draghi plan is a legal hot potato because it is, by definition, unlimited. “The previous rulings by the court have all been predicated on this point.”

German historian Michael Stürmer said the tough report is a bid by the Bundesbank to “reassert its primacy”. “They have told the ECB in no uncertain terms that it is exceeding its mandate. Angela Merkel may be smiling because this helps her set limits in Europe.”

Prof Sturmer said the forthcoming ruling – wider than just the Draghi plan – is “much more serious” than last September’s judgment, limited to an injunction brought by eurosceptic groups. “This is about issues of sovereignty. I don’t think the Court will dare to issue a ruling before the elections in September. They will procrastinate,” he said.

The court has some jurisdiction over ECB policy because it intrudes on the German Grundgesetz, or Basic Law. “Once the ECB starts bailing out states it is moving into dangerous waters,” he said.

The court made a glancing reference to OMT in September, stating that ECB bond purchases “aimed at financing the members budgets is prohibited, as it would circumvent the ban on monetary financing”.

The bond markets ignored the leaked report on Friday, confident that the court will once again find some formula to avert a crisis. It could cite a clause in the Lisbon Treaty stating that the ECB has a duty to “support the general economic policies in the Union”, which would include saving the euro.

“They might refer the case to the European Court but that would leave the Sword of Damocles hanging over the market for another two years,” said David Marsh, author of books on the Bundesbank and EMU. “I think use of OMT is practically impossible until this is resolved.”

Sovereign bond strategist Nicholas Spiro said markets are “sick and tired” of the eurozone debt crisis and have stopped paying attention to the detail. “There is this ravenous hunt for yield and they think there is all this money coming from Japan. But it has long been unclear whether OMT is real or just a myth, and the eurozone’s underlying economic crisis is still getting worse. The window of opportunity created by Draghi has been wasted.

“If the court sides with the Bundesbank in any way the whole house of cards could come crashing down.”

Source: The Telegraph

Irishman Takes Government To Court Over Illegal Tax

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The Irish Minister for the Environment is being taken to court along with other government minister and civil servants over the illegal LOCAL GOVERNMENT (HOUSEHOLD CHARGE) ACT 2011. The man in question has refused to pay the charge and is assisted in his case by Fitzpatrick Financial Solutions of Portlaoise  and the Common Law Society. Apparently the “Act” is against the Irish Constitution and the link to the summons which outlines the legal argument is below.

For the Irish Government to lose the case would have huge ramifications and this case could be used by many to avoid paying a multitude of taxes. A case of this magnitude you would expect to be reported by the MSM but as usual the Irish “presstitutes” are silent on the matter.

by Gabriel Donohoe  (Fools Crow)

The hard-pressed people of Ireland have had enough! They will no longer tolerate corrupt politicians working for vested interests and against the interests of the majority of the Irish people. They will no longer tolerate venal politicians working to feather their own nests by subserving a powerful moneyed elite. And they will no longer lie down like good little croppies and take what their lords and masters care to dish out.

In an unprecedented move, one Irishman has asserted his sovereign rights by standing up to the tyrannical forces of the State, a bought and paid for government that would unlawfully impose its will upon him. A gentleman from the west of Ireland (unnamed for reasons of privacy), after receiving a summons from Mayo County Council for failing to register for the infamous Household Tax, decided to fight back by summonsing three government ministers to the High Court, Hogan, Shatter, and Noonan, along with certain others, to answer for their fraud and deceit.

In a welcome reversal of roles, this courageous Irishman is now the Plaintiff and the ministers, et al, are the defendants. The Plaintiff charges that the defendants…

“…did and are wilfully conspiring to unlawfully, illegally, unconstitutionally and immorally coerce and force me, against my will, to make a declaration, that which is precluded by Bunreacht na hÉireann and by LAW.”

The Plaintiff further charges that…

“The herein named Defendants are in breach and contempt of the European Convention of Human Rights, the Universal declaration of Human Rights, and their collective and individual acts and actions constitute an offence under “the Non-Fatal Offences Against the Person Act 1997”.

He goes on…

” The Household Charge Bureau in and of itself, is nothing more than a front for an illegal and highly organised criminal gang. Whose aim is to willfully mislead, misinform and misdirect ME and the People of the Island into making “self-declarations” that are NOT MANDATORY, solely for the purpose of fraudulently and illegally coercing People into paying money to them, under the guise of the aforementioned Act.”

This is in truth a dynamite legal action which will have repercussions for years to come. It is long overdue. Is this the beginning of the fightback by the People against a gang of tyrants who have sold us all out for their own selfish interests?

Congratulations are due to Fitzpatrick Financial Solutions of Portlaoise for assisting this particular gentleman in putting his case together and to the Common Law Society for the marvellous work they are doing in helping to educate and inform the people of their sovereign rights and how injustices are being perpetuated against them.

This case was discussed at the Lay Litigation Day in Moate last Saturday which was presented by the Common Law Society of Ireland (not even remotely related to the discredited Law Society of Ireland). One of the salient messages of the day was that anyone who has received a summons from their county council for non-registering or non-payment of the Household Charge can now advise the court that it would be unwise to proceed with the case because of the above-mentioned Constitutional challenge in the High Court to this illegal Act.

A text of the summons:  Phil Hogan Summons 051212.

See also:

http://thecls.blog.com/2012/12/11/hogans-last-stand/

Source: foolscrow

Argentina Won’t Repay Bondholders From Default 10 Years Ago Despite US Court Ruling

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Despite US courts ruling that Argentina must pay bondholders who own defaulted bonds (related to $100 billion default 10 years ago), the Argentinian Finance Minister has announced this won’t happen as debt payments are immnue to US laws.

BUENOS AIRES, Nov 18 (Reuters) – Argentina will not pay creditors who own defaulted bonds despite a U.S. federal appeals court ruling in favor of the holdout creditors, the economy minister was quoted as saying in an interview published on Sunday.

The 2nd U.S. Circuit Court of Appeals in New York last month ruled that Argentina discriminated against bondholders who refused to take part in two debt restructurings as the nation tried to recover from a $100 billion default a decade ago. The decision upheld a ruling by U.S. District Judge Thomas Griesa.

The South American country appealed that ruling, and on Friday told Griesa that sovereign debt repayments made outside the United States are immune to U.S. law and seizures by holdout bondholders.

“Argentina is responsible and will fulfill all commitment it has made to its creditors. … Our creditors are all those who participated in the two restructuring proposals in 2005 and 2010,” economy minister Hernan Lorenzino told newspaper Pagina 12.

“We’re going to continue to oppose any alternative that goes beyond that. We’re going to continue presenting and defending our position to each legal entity.”

The judge is expected to give a speedy response, given that Argentina is due to start making $3.3 billion worth of payments to exchange bondholders starting Dec. 2.

Argentina and holdout bondholders that refused to join massive debt swaps in 2005 and 2010 are in a long-running battle over payment, an outgrowth of the country’s roughly $100 billion default nearly 11 years ago.

“Argentina reiterated to judge Griesa that the decision taken about pari passu (equal treatment) cannot prejudice creditors who entered the debt swaps,” Lorenzino was quoted as saying.

Last month’s ruling sparked fears that U.S. courts could ultimately inhibit debt payments to creditors who accepted terms of the restructuring, out of consideration for investors who rejected Argentina’s terms at the time.

“We’re going to continue our legal defense in all areas possible, including in the United States’ Supreme Court,” Lorenzino added.

 

Source: Reuters

German Court Orders Bundesbank To Audit Gold Holdings As Germany Looks To Repatriate Gold From NY Fed

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Fascinating story of Germany looking to repatriate its gold from the New York Fed in response to the German Constitutional Court, which order a full audit of Germany’s gold holdings. Sounds like they are getting worried.

In perhaps the biggest story in gold since Hugo Chavez sent shockwaves throughout the gold market in mid 2011 (and propelled gold up $300 to a record $1915), the German Constitutional Court has ruled that the Bundesbank must conduct an audit on German Central Bank gold holdings, and in anticipation, has begun the repatriation of German gold from the NY Fed.   The Bundesbank will request the NY Fed ship 50 tones of German gold back to the motherland a year for the next 3 years!

It appears de Germans are about to receive a crash course in the lesson He who owns the gold makes the rules (aka possession is 999/1000ths of the law).

Assuming that the NY Fed does decide to comply with the Bundesbank’s request to keep up appearances for the other central banks, we wish the cartel luck in finding 150 tons of TUNGSTEN FREE PHYZZ over the next 3 years as the Bundesbank reportedly will PHYSICALLY VERIFY THE GOLD.

Source: Silverdoctors, Der Speigel

Celente: German Court Ruling on ESM Could Be Bullish For Gold

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Gerald Celente gave an interview with King World News on the German Supreme court ruling whether the Germans can participate in the ESM. The decision on 12th September, if it goes against the ESM, this  could result in the euro collapsing shortly afterwards. Celente outlines his bullish opinion on gold and points to the recent signs that the insiders know whats coming.

“The German Supreme Court is going to rule upon whether or not Germany can continue to put funds into the stability pacts and bailout program, and whether or not there is going to be a euro bond program at all.  Bigger than that, whether or not the Bundestag is going to lose control of their own government and take some of the financial decision-making out of their hands and move it into Brussels.”

“This is a huge day.  Everybody will remember September 12th.  It’s a really easy day to remember because it’s right after September 11th.  I recommend everyone tune in because what the German court decides on that day will affect the future of the euro almost immediately because Germany is what’s holding this whole thing together.

 If Germany doesn’t keep pumping in money to bailout these failing economies in Greece, Spain, Italy, into the European Central Bank so they can keep buying up these worthless bonds, and keep giving money to the banks that have failed in Spain and Greece and that are going under in Italy, without Germany there is no euro….

 You could see the euro start to unravel, if they decide it’s unconstitutional, within weeks, if not days.  So what I’m saying to people, this is a warning, but I would want to know where my money is, and for me my money is in gold.

 

They are not going to be able to solve the European debt crisis, but, again, if the German courts don’t rule that this is unconstitutional, they could keep this thing afloat for another several months by dumping more money into it and making it appear everything is okay, (in order) to keep the Ponzi scheme going.”

 Celente also added: “Why wouldn’t anybody believe in gold?   Look at the people that are now investing in gold, the central banks around the world.  Look at the George Soros’s that are investing in gold, and the Paulson’s.  I guess they don’t know either?

Why would anyone put their faith in digital money?  Why would people put faith in a euro, when after only ten years the whole eurozone is threatening to collapse.  Why wouldn’t anyone pay attention to the Finnish Finance Minister, who says that they are ‘making plans in case the euro collapses.’

Why wouldn’t they believe that?  So I’m continuing to buy gold.”

Source: KingWorldNews

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