Let's make this quite clear: there is no need for the markets to get spooked by German Finance Minister Wolfgang Schaeuble's comments about "no carte blanche for ESFS bond buying". For a change, I might add.
Because we all know that German politicians of any party denomination or color are quite capable - and I use that expression loosely - to throw the markets into any sort of frenzy with some careless remark or another about such sensitive issues as the debt crisis.
But back to Schaeuble. Here is what he did point out in a letter to his own CDU MPs, in order to explain last Friday's decisions by the EU Summit and I dare say to allay their fears that he and Angela Merkel might have signed up to too many German taxpayers' freebees in the latest Greek rescue package:
- he reiterated that the experienced and independent experts from IMF and ECB expected Greece will be able from 2012 onwards to reach a primary budget surplus;
- that there was "the probability" that Greece, if it put into action its reforms, could economically get healthy again and come to grips with its debt;
- He also warned that "one cannot believe that this crisis can be ended with ONE summit";
- and reiterated that there was "no carte blanche" for bond buying by the ESFS, but that the ECB would decide when and if the ESFS starts buying bonds or recapitalizing critical banks.
For a change, it all sounds pretty clear to me. And in all fairness, if last Friday's decisions were clear on one matter, then it was on who decides when the ESFS can enter into the bond market or recapitalize a bank. No more emergency Eurogroup meetings on the phone or in the dead of night. No more crisis summits. But no "carte blanche" either.
It's the ECB that pulls the trigger. It's the ECB that monitors the debt markets and makes the judgment if and when a particular market is disjoint or disorderly mode. It's the ECB that then calls the ESFS and gives them the bond buying marching orders. The same is true for recapitalizing a bank out there in Euroland that might be considered in a critical condition and in need of recapitalization.
There are plenty of doubts and questions left in this rescue package. Not least of all the doubt about the firepower of the ESFS; i.e. whether the fund should not have been beefed up in total volume. But THAT was probably too much to swallow for one summit. Especially by the Germans.
But today, in all honesty, it wasn't Herr Schaeuble who spooked the markets. The markets really spooked themselves. Not for the first time, I might add.