¹ Blyth, Mark, Austerity: The History of a Dangerous Idea 247 (2013).Google Scholar

² Jakoby, Nicolas, The Elusive Economic Governance and the Forgotten Fiscal Union, in The Future of the Euro 82 (Matthias Matthijs & Mark Blyth eds., 2015).Google Scholar

³ See Gerner-Beuerle, C. & Schuster, E., Law Meets Economics in the German Federal Constitutional Court: Outright Monetary Transactions on Trial, 15 German L.J. 281, 282 (2014).Google Scholar

⁴ Jones, Erik, The Forgotten Financial Union: How You Can Have a Euro Crisis Without A Euro, in The Future of the Euro 63 (Matthias Matthijs & Mark Blyth eds., 2015). The subsequent lowering of Spanish, Italian, and Greece yields was directly attributed to the ECB's program, without it ever having to be triggered in practice, and in the case of Spain and Italy, without ever entering a structural adjustment program through participation in EFSF or ESM (an apparently trivial fact that needs to be kept in mind, as it later resurfaces).Google Scholar

⁵ Bundesverfassungsgericht [BVerfG] [Federal Constitutional Court], Jan. 14, 2014, Case No. 2 BvR 2728/13, https://www.bundesverfassungsgericht.de/SharedDocs/Entscheidungen/DE/2014/01/rs20140114_2bvr272813.html.Google Scholar

⁶ In short, judicial guarantees of limited purchasing, no debt restructuring and avoidance of market interference.Google Scholar

⁷ See, e.g., Gerner-Beuerle & Schuster, , supra note 3; and which were anyway “untestable” according to Kristen Schneider, Questions and Answers: Karlsruhe's Request for a Preliminary Ruling to the Court of Justice of the European Union, 15 German L.J. 231 (2014).Google Scholar

⁸ Case C-62/14, Peter Gauweiler and Others v. Deutscher Bundestag (June 16, 2015), http://curia.europa.eu/.Google Scholar

⁹ Long perceived to have an integrationist agenda, the ECJ was unlikely either to query the authority of what is currently the region's most powerful institution, taking the lead since the Euro crisis through its part in the “Troika,” or to allow its own authority to be blatantly usurped by the German Constitutional Court, with which it has long had a ‘complicated’ relationship.Google Scholar

¹⁰ As the Advocate General noted, unilateral reservations of authority such as that demanded by Karlsruhe would soon lead to constitutional disintegration of the EU's quasi-federal judicial structure. See Gauweiler, Case C-62/14 at para. 59.Google Scholar

¹¹ See Gauweiler, Case C-62/14 at para. 14. Every first year student of EU law knows that EU law takes primacy over domestic law and that only the ECJ has the authority to determine the legality of EU acts—at least from the perspective of the ECJ.Google Scholar

¹² Given the ambiguous nature of the measure complained of (a press release), its speculative nature (it was never actually used), and the fact that the German Court seemed to have made its mind up already, the ECJ could have avoided direct conflict by ruling the reference inadmissible (as argued by a number of states, see Gauweiler, Case C-62/14 at para. 18). But because of the possibility in German Constitutional Law of ordering preemptive action against it, as well as the significance of the subject matter, the ECJ probably felt obliged to give an answer.Google Scholar

¹³ See, e.g., Neil MacCormick, Questioning Sovereignty (1999). This metaphor seems to have been replaced with another, the game of “chicken,” lowering the metaphorical stakes, see Mattias Kumm, Rebel Without a Good Cause: Karlsruhe's Misguided Attempt to Draw the CJEU into a Game of “Chicken” and What the CJEU Might Do About It, 15 German L. J. 210 (2014).Google Scholar

¹⁴ This was understood by at least two dissenting German Justices, the reference made against the advice of Gerhard and Lübbe-Wolff, who thought the very idea of a constitutional challenge in this case to be unwise and even unconstitutional. Others concurred: “[T]he actual surprise is the FCC's willingness to experiment with untested components of the ultra-vires pattern just when the currency Union seems to be at stake.” See Gerner-Beuerle & Schuster, supra note 3, at 239. For a compelling critique of the Court's granting of standing to individuals to pursue ultra vires in a case such as this, based indirectly on a violation of their right to vote, see Garditz, Klaus, Beyond Symbolism: Towards a Constitutional Actio Popularis in EU affairs? A Commentary on the OMT Decision of the Federal Constitutional Court, 15 German L. J., 189, 196 (2014).Google Scholar

¹⁵ See generally Wren-Lewis, Simon, “The Ideologues of the Eurozone,” Mainly Marco: Comment on Macroeconomic Issues (July 3, 2015), http://mainlymacro.blogspot.sg/2015/07/the-ideologues-of-eurozone.html?spref=tw; see also Olivier Blanchard & Daniel Leigh, Growth Forecast Errors and Fiscal Multipliers, (Int'l Monetary Fund, Working Paper WP/13/1).Google Scholar

¹⁶ See, e.g., Merkel warns of Europe's Collapse: If the Euro Fails, So Will the Idea of European Union, Der Speigel, May 13, 2010.Google Scholar

¹⁷ I will not deal here with the complaint from the perspective of German constitutional identity.Google Scholar

¹⁸ See Menendez, Agustin, Existential Crisis of the European Union, 14 German L.J. 453, 453–526 (2013).Google Scholar

¹⁹ Case C-27/04, Comm'n v. Council (July 13, 2004), http://curia.europa.eu/.Google Scholar

²⁰ The Future of the Euro 71–72 (Matthias Matthijs & Mark Blyth eds., 2015). Financial market dynamics would also require bank recapitalization in Spain as well as political change in Italy, contributing to the removal of Silvio Berlusconi from office.Google Scholar

²¹ Speech by Mario Draghi, President of the European Central Bank, Global Investment Conference in London, (July 26, 2012), available at http://www.ecb.europa.eu/press/key/date/2012/html/sp120726.en.html.Google Scholar

²² Jones, , supra note 4, on the difference between these two instruments.Google Scholar

²³ Release, Press, Eur. Cent. Bank (Sep. 6, 2012).Google Scholar

²⁴ This had already raised concerns in Germany and was challenged by the German Constitutional Court, which insisted on important concessions regarding the protection of the prerogatives of the Bundestag in its ESM (temporary injunction) decision. Bundesverfassungsgericht [BVerfG] [Federal Constitutional Court], Sept. 12, 2012, Case No. 2 BvR 1390/12, http://www.bundesverfassungsgericht.de/SharedDocs/Entscheidungen/EN/2012/09/rs20120912_2bvr139012en.html.Google Scholar

²⁵ See Craig, Paul, Pringle: Legal Reasoning, Text, Purpose and Teleology, 20 Maastricht J. of Eur. & Comp. L. 1 (2013); cf. Michelle Everson, An Exercise in Legal Honesty: Rewriting the Court of Justice and the Bundesverfassungsgerricht, Eur. L. J. 474, 474–99 (2015).Google Scholar

²⁶ Cf. Kilpatrick, Claire, Are the EU Bail-Outs Immune to Social Challenge because they are not EU Law?, 10 Eur. Const. L.R. 393, 393–421 (2014).Google Scholar

²⁷ According to Meyer,Google Scholar

As Franz Mayer puts it, as the Constitutional Court increasingly “over-reaches,” “politicians increasingly try to anticipate” its “sensitivities.” Franz Mayer, Rebels without a Cause? A Critical Analysis of the German Constitutional Court's OMT Reference, 15 German L. J. 111, 135 (2014).Google Scholar

²⁸ Jacoby, Wade, Europe's New German Problem: The Timing of Politics and the Politics of Timing, in The Future of the Euro 209 (Matthias Matthijs & Mark Blyth eds., 2015).Google Scholar

²⁹ Opinion of Advocate General Cruz Villalón at paras. 143–50, Case C-62/14, Peter Gauweiler and Others v. Deutscher Bundestag (Jan. 14, 2015), http://curia.europa.eu/juris/document/document.jsf;jsessionid=9ea7d2dc30dd72f89a6f42cd4794a189fb6b352beeb2.e34KaxiLc3qMb40Rch0SaxuRaxb0?text=&docid=161370&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=129342.Google Scholar

³⁰ Id. at para. 75.Google Scholar

³¹ Id. at para. 104 (“The ESCB's intervention could, in practice, have an effect equivalent to that of a direct purchase of government bonds from public authorities and bodies of the Member States if the potential purchasers of government bonds on the primary market knew for certain that the ESCB was going to purchase those bonds within a certain period and under conditions allowing those market operators to act, de facto, as intermediaries for the ESCB for the direct purchase of those bonds from the public authorities and bodies of the Member State concerned.”).Google Scholar

³² Although the ECB has the possibility to hold the bonds to maturity, a Member State “cannot be certain” that will happen.Google Scholar

³³ See, e.g., Hopkin, Jonathan, The Troubled Souther Periphery: The Euro Experience in Italy and Spain, in The Future of the Euro 161 (Matthias Matthijs & Mark Blyth eds., 2015).Google Scholar

³⁴ Jones, , supra note 4, at 63–64.Google Scholar

³⁵ Blyth, , supra note 1, at 251.Google Scholar

³⁶ Id. at 247.Google Scholar

³⁷ Id. at 249.Google Scholar

³⁸ This has proved to be the case outside the Eurozone too, e.g. in the UK. See Wren-Lewis, Simon, The Austerity Con, London Review of Books (Feb. 19, 2015), http://www.lrb.co.uk/v37/n04/simon-wren-lewis/the-austerity-con.Google Scholar

³⁹ Cf. on the irrationality of the sovereign bond market as a whole, see Gerner-Beuerle & Schuster, supra note 3.Google Scholar

⁴⁰ Gauweiler, Case C-62/14 at para. 76.Google Scholar

⁴¹ The German Court had been keen to add that it found more “convincing” the expertise of the Bundesbank than the OMT Decision, BVerfG, Case No. 2 BvR 2728/13 at paras 71.Google Scholar

⁴² Id. at para 98 (describing as “meaningless” the idea that a portion of the debt was irrationally priced).Google Scholar

⁴³ And, it is important to note, not through productivity gains, but through wage repression, see Newman, Abraham, The Reluctant Leader: Germany's Euro Experiment and the Long Shadow of Reunification, in The Future of the Euro 117–36 (Matthias Matthijs & Mark Blyth eds., 2015).Google Scholar

⁴⁴ See Menendez, , supra note 18m at 494–97.Google Scholar

⁴⁵ See Jakoby, , supra note 2, at 73 (noting that even Reinhart and Rogoff argue that in eighty percent of cases a banking crisis is followed by a sovereign debt crisis. This is supposedly why a government should never let a bank go bust, a point Bagehot emphasized more than a hundred years ago).Google Scholar

⁴⁶ Jones, , supra note 4, at 54.Google Scholar

⁴⁷ European banks, not least those in the core in German and France “were attracted to the margin of interest that could be procured on peripheral euro-zone state bonds and concluded that the risk that the margin represented—massively underpriced as it was by the markets—would ultimately have to be borne by the European Central Bank (ECB) in the interests of the systemic stability of the currency union, not themselves.”' Helen Thompson, Austerity as Ideology: The Bait and Switch of the Banking Crisis, 1 Comp. Eur. Pols. 729, 730 (2013).Google Scholar

⁴⁸ Soros, See George, The Tragedy of the European Union and How to Solve It, New York Review of Books (Sep. 27, 2012), http://www.nybooks.com/articles/archives/2012/sep/27/tragedy-european-union-and-how-resolve-it/.Google Scholar

⁴⁹ The story of course begins pre-Greek bailout. The “European rescue of the Washington Consensus” begins with the financial assistance granted to Hungary, Latvia and Romania in 2008. On the link between the mutation of Hungary and the Debt Crisis, see Kilpatrick, Claire, Constitutions, social rights and sovereign debt states in Europe: a challenging new area of constitutional inquiry (EUI Law, Working Papers 2015/34).Google Scholar

⁵⁰ See Most Aid to Athens Circles Back to Europe, N. Y. Times (May 30, 2012).Google Scholar

⁵¹ See Blyth, , supra note 1, at 249.Google Scholar

⁵² Id. Google Scholar

⁵³ Id. at para. 78 (“It is undisputed that interest rates for the government bonds of a given State play a decisive role in the setting of the interest rates applicable to the various economic actors in that State, in the value of the portfolios of financial institutions holding such bonds and in the ability of those institutions to obtain liquidity.”).Google Scholar

⁵⁴ QE Will Lower Living Standards in Long Term: Prospect of improvement in Growth is Largely A Monetary Illusion, Financial Times, March 25, 2015.Google Scholar

⁵⁵ Streeck, Wolfgang, Buying Time: The Delayed Crisis of Democratic Capitalism 161 (2014); for the long view, see David Graber, Debt, The First 5,000 years (2012).Google Scholar

⁵⁶ Kaldor, See Mary, Sabine Selchow, Sean Deel & Tamsin Murray-Leach, The Bubbling up of Subterranean Politics in Europe (2012).Google Scholar

⁵⁷ Beck, Ulrich, German Europe (2013).Google Scholar

⁵⁸ Jakoby, , supra note 2, at 82–83.Google Scholar

⁵⁹ On the way this played out prior to Syriza's election in January 2015, see Featherstone, Kevin, Le Choc de la Nouvelle, Maastricht, déjà vu, and EMU Reform, (LEQS, Working Paper 52/2012).Google Scholar

⁶⁰ The IMF has played a more ambiguous role.Google Scholar

⁶¹ The extent to which the constitution of EMU is (or is still) truly ordoliberal is disputed. See, e.g., Christian Joerges, Europe's Economic Constitution in Crisis and the Emergence of a New Constitutional Constellation (Zentra, Working Paper, 06/2012), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2179595.Google Scholar

⁶² The point is not to deny that this might well be the reaction of other electorates; but it remains speculation. If the leaders thought it was the right thing to do, if only they had a free hand, they could have attempted to persuade their electorate that is was in their interests.Google Scholar

⁶³ As an aside, it is telling how far the project has travelled that so much attention has been devoted to crushing a Greek government with moderate social democratic aims, and so little to a Hungarian government that recently announced the desire to return the death penalty – amongst other things.Google Scholar

⁶⁴ See The Donald Tusk interview, Financial Times (July 16, 2015), http://blogs.ft.com/brusselsblog/2015/07/16/donald-tusk-interview-the-annotated-transcript/Reference. On contextualizing the German lead on austerity, see Newman, supra note 43.Google Scholar

⁶⁵ Smith, See Helena, Tsipras Favour Greek Jobless over Creditors in Defiant Policy Speech, The Guardian (Feb. 8, 2015), http://www.theguardian.com/world/2015/feb/08/greece-prime-minister-alexis-tsipras-unveil-anti-austerity-plan-parliament.Google Scholar

⁶⁶ Including e.g. Joseph Stiglitz, Paul Krugmann, Jeffrey Sachs, Thomas Picketty, Jurgen Habermas.Google Scholar

⁶⁷ As Hopkins notes, “in the southern democracies euro membership was an unquestioned national objective, with only peripheral and mostly extremist political forces offering an alternative view.” Jakoby, supra note 2, at 162–63.Google Scholar

⁶⁸ Aglietta, Michel, A European Vortex, 75 New Left Rev. 15, 15–36 (2012).Google Scholar

⁶⁹ Id. Google Scholar

⁷⁰ See, e.g., Majone, Giandomenico, Rethinking the Union of Europe Post-Crisis (2014).Google Scholar

⁷¹ See How Germany Prevailed in the Greek Bail-Out, N. Y. Times (July 29, 2015), http://www.nytimes.com/2015/07/30/world/europe/how-germany-prevailed-in-the-greek-bailout.html. According to the article, the plan originated from Slovenia.Google Scholar

⁷² Streeck, , supra note 55, at 149.Google Scholar

⁷³ See Interview with Jürgen Habermas (July 16, 2015), available at http://www.theguardian.com/commentisfree/2015/jul/16/jurgen-habermas-eu-greece-debt-deal. This aspect of Eurozone politics is not often addressed. Conditionality (austerity) is what Blyth calls a “class-specific put-option.” It protects the top seventy percent who have assets and hurts the bottom thirty percent who most depend on public services.Google Scholar

⁷⁴ See generally Ramraj, Victor, No Doctrine More Pernicious? Emergencies and the Limits of Legality, in Emergencies and the Limits of Legality 3–29 (Ramraj ed., 2008).Google Scholar

⁷⁵ See White, Jonathan, Emergency Europe, Political Studies (2015).Google Scholar

⁷⁶ See Fabio, Udo di, Karlsruhe Makes a Referral, 15 German L.J. 107, 107–10 (2014). For Di Fabio, oddly, the crisis was caused not by financial problems accumulated over years of neo-liberal excesses (as even many of its architects concede) but “massive violations of the law,” without explaining the chain of causation. He also appears to query the independence of the ECJ because it has a Greek president.Google Scholar