German finance minister Schäuble sits in his little Wolfschanze this morning, a less than happy wolf-cub. Earlier this year, his boss Angela Merkel did the Grand Tour of European capitals and delivered what they both thought was a done deal: for Herr Schäuble to be the Obersturmbannführer of all things money in the new Fiskalunion being created by Berlin-am-Brussels.
He is still going to get the leadership role, but the chances are it will be diluted by two things. One, the chances are we will never get to FU, hurrah. And two, even if we do, the banking control will lie in the hands of the European Central Bank, aka Mario Draghi. Having spotted this one coming down the road, Schäuble has spent much of the last 72 hours explaining why ECB control is both misguided and hasty. Well he would, wouldn’t he?
As is Wolfie’s way, he didn’t utter a peep during the formal FinMin session. But immediately afterwards, he was all over the media like a rash. Leading the criticism of the ezone’s “rush” toward central monitoring, he of course found France, Spain, Italy and the European Commission pressing for speedy action. The German finance boss had pre-lobbied his Nord-Europa neighbours, and so they fell in behind his line…which was that:
“…it will take time to build the sizeable apparatus required…We plead very much that stress tests be conducted before systemically-relevant banks get transferred from the national supervisor to the European,” he told reporters yesterday in Nicosia, Cyprus.
No stress tests were mentioned to his Member-State colleagues in the negotiating room. But then, he is renowned in Germany for telling the media first, and his allies second.
Ah yes, another of those hugely reliable stress-tests. Should take ooooh um, at least two months to organise. By which time his forces may well have regrouped. Or not. You see, I stick to my view expressed a couple of months ago: the balance of power has changed in the EU.
All this hands, potentially, far more influence to Lens Weidmann, and those Bankfurters of similar mind to the Slog’s Maulwurf. Effectively, they can now persuade a wider audience that what they foresaw is coming true. But it also puts Merkel on the spot. Or back on the pot, depending on your viewpoint. I really cannot see Weidmann allowing Draghi to order his banks around directly. It may well be wise, in fact, to expect his resignation sooner rather than later.
Unless Berlin launches a counter-attack – and fast – these events will add fuel to the argument that sees Germany leaving the euro before Greece. Either way, if the ECB plan goes through, the eunatics will have created an innately divisive control system whereby the banks are run by one tendency, and the Exchequers by another. So we’ll get a sort of strictly austere pauperisation of populaces and welfare budgets alongside a never-ending stream of banks bailed out by printing the money used by the paupers.
Somewhere, a neocon is laughing ’til he wets his pants.
Footnote: The Brussels bureaucrats have awarded themselves a 6% pay rise.