Open Europe's evening seminar yesterday featured Prof. Dr. Wilhelm Hankel, one of the five German Professors who have challenged the legality of the eurozone bailout at the German Federal Constitutional Court. Please click here to read a more detailed summary and access the audio.
It had all gone a bit quiet on the 'eurozone crisis' front during the summer but this week we have been reminded that it has not gone away. New fears over various banks' exposure to bad debts have led to the ECB again buying Greek, Irish and Portuguese bonds, according to a trader involved in the transactions. Today’s purchases were reportedly for about €10 million ($12.7 million) each. (One of the three grounds on which the five German professors consider the bailout illegal is the ECB’s decision to intervene directly in the crisis by buying government bonds from weaker eurozone countries.)
One of the many interesting remarks made by Professor Hankel last night was that the “ammunition” of the multi-billion eurozone rescue packages “may not be sufficient” to bail out the eurozone in the long-term. These bailuots are essentially a political sticking plaster to paper the cracks in the economic architecture of monetary union. “Economic laws will always triumph over political power, at least in the long term”, he added, quoting Eugen von Böhm-Bawerk – one of the founding fathers of the Austrian school of economics.
It seems pretty difficult to argue with that statement.