In a lot of ways the Euro is the zenith of fiat currencies, it really is pure politics. And yesterday was no different.
Lets see now, flesh on the bones of the Communique will take a few weeks? then the ratification process through the various Parliaments, a month or two? in the meantime, Greece can default (who and how, are the banks taking the hit btw?)
In September the elephant in the room is the German constitutional court, who are going to rule on the legality of bailouts.
Off course they are not going to throw spanners in the eurodream machine, but they will put down the markers so that Frau Merkel will know where the boundaries are, and this I imagine is what this latest summer special bailout is all about.
Seems Germanys judges are about on a par with our own...
A ruling is expected this year. Most analysts expect the court to rule the bailouts were legal but to attach strings to the deals. Last month, Vosskuhle, the chief judge hearing the case, seemed to hint at this, when said there were instances in which the European Union could violate the core of Germany's constitutional identity. Such a "sensitive constellation" was indeed conceivable, he said, adding that he believed that this would "not necessarily happen in the near future".
Fiscal union or not is the question. I fancy too Frau Merkel will be sitting on the seat on her pants in the Bundestag during Septemeber, Its still Germany's call.