A few weeks ago I made a comment about how a court ruling snag in Germany would prevent the Eurozone from using the EFSF or the future ESM to be able to buy Spanish and Italian bonds. The ECB comments last week appear to be false as they wait for court rulings due in Germany on September 12, 2012. In addition all 17 members of the Eurozone need to approve a change in the rules to allow sovereign bond purchases by the EFSF or ESM. Do not look for the ECB to act until all countries agree.
Investors will start to realize that not all countries in the Eurozone will agree to bail out weaker nations soon. Please read the interesting article from CNBC for further details.
http://www.cnbc.com/id/48456183
The main points are as follows: A final decision would follow after September 12, when Germany’s top court rules on the ratification of the ESM, which will replace the existing EFSF, the paper said. Analysts point out that there are significant obstacles to such a move. The ESM cannot come into force until Germany approves it. “This is all speculation which is completely unjustified at this stage,” Alistair Newton, political analyst at Nomura told CNBC.
In addition, all 17 euro zone members would need to agree to such a move, and the Dutch and Finns have already expressed their reluctance.
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