From USA TODAY:
…Investors breathed a sigh of relief that Germany’s highest court was not putting up a roadblock in a central part of Europe’s efforts to contain its near three year debt crisis. Stocks across Europe rallied strongly, the euro spiked to a four-month high of $1.2897 and the borrowing rates of troubled economies, such as Spain and Italy, eased further too.
Opponents had challenged Germany’s ratification of the European Stability Mechanism — a new, permanent €500 billion ($638.8 billion) bailout fund for the 17 countries that use the euro — arguing that it violated the country’s constitution. They had sought an injunction preventing the country’s president from signing the legislation into law…
The taxpayer-backed fund is crucial to the eurozone’s debt crisis resolution efforts because it can loan money to governments that can’t borrow otherwise, and markets had been nervously awaiting the ruling…
Click here to read the full article.
EDITOR: The German authorities recognize that they either have to underwrite the fiscal soundness of Greece, Spain and Portugal or face the alternative of Greece or possibly Germany abandoning the Euro. They blinked. The innate problems of this strange half marriage (currency but not treasury) have now been kicked down the road for several years…or so it is hoped.
