If you decided to take the weekend off and watch the Daytona 500 and the Oscars, you may have missed a few things that point out just how completely unfinished are the European Union’s efforts to come to terms with its monetary union Eurozone.
Reuters is reporting several events that will have a real impact on the Eurozone and the European banking system.
First, on Tuesday the European Central Bank (ECB) temporarily suspended the eligibility of Greek bonds for use as collateral in its funding operations and told national central banks that they would have to provide banks with liquidity using an emergency measure.
The move was in response to Standard & Poor's cut of Greece's long-term ratings to 'selective default' after Athens launched a bond swap to lighten its debt burden.
The ECB said national central banks could provide liquidity using "emergency liquidity assistance" (ELA) until a 35 Billion Euro collateral enhancement scheme is activated by the ECB in mid-March, at which point Greek bonds would again be eligible in principle to use the ECB-led liquidity mechanism.
"Via ELA, the Greek central bank is allowed to accept collateral that is not eligible in normal ECB operations," Reuters quotes Commerzbank economist Michael Schubert as saying.
The ELA is underwritten by the countries whose central banks extend it, so this latest move will put more pressure on the finances of Eurozone countries whose budgets are already strained. The ELA is critical because Greek and Cypriot banks would almost certainly face immediate bankruptcy if their central bank funding was withdrawn.
Other banks in countries like France also own large chunks of Greek debt, meaning they too would face major financing issues if the Greek bonds they hold suddenly become unusable as collateral at the ECB.
Reuters said that the Eurozone's deal makers and the ECB did not foresee the potential flaw in the collateral plan brought about by the 35-billion-euro support scheme not being activated in time.
The ECB estimates that there is roughly 40 billion euros of sovereign and other types of bonds underwritten by Greece being used as collateral to get ECB funding. Greek banks account for a large portion of that but those in Cyprus and other parts of the euro zone such as France also have sizeable Greek holdings meaning their governments will also have to use the ELA emergency liquidity assistance until mid-March.
While all this was going on, in Germany, the German top court said on Tuesday a parliamentary committee set up to approve urgent action by the Eurozone bailout fund was "in large part" unconstitutional because it circumvents the Bundestag’s right to decide on budgetary matters. This ruling may hamper Berlin's ability to tackle Europe's debt crisis.
The Constitutional Court verdict means that either a full session of the 620-strong Bundestag (lower house of parliament) or its 41-member budget committee will have to be convened every time a decision has to be made on the use of the bailout fund.
The specially named panel of nine MPs will only be allowed to approve the purchase of debt on the secondary bond market by the fund - a facility that has not been used as yet anyway. It will not be able to approve loans or preventative credit lines for troubled Euro member states like Greece or the capitalisation of banks.
The ruling can be seen as an indication that the German Bundestag, as well as the German public, are becoming more and more tired of having to foot a large share of the bill for bailing out the likes of Greece, Portugal and Ireland, and object to their powers over such budget-related issues being curtailed.
Notwithstanding the growing resistance among German voters to further bailout spending, pressure is also mounting on Berlin from the world's leading economies to free up funds for more international help.
Former German chancellor Helmut Kohl, one of the architects of the euro, warned in the popular daily Bild that Germany was in danger of "losing sight of the goal of a united Europe".
Are you ready for one last tidbit?
Ireland, the first bailout country in the Eurozone, will hold a referendum on Europe's new fiscal treaty, according to Prime Minister Enda Kenny, setting the stage for the first popular vote on the German-led plan for stricter budget discipline across the region.
After joining 24 other EU states last month in agreeing to the pact for stricter budget discipline, Kenny sought advice from the country's lawyer on whether a vote was necessary and told parliament that on balance, a referendum would be required.
"The Irish people will be asked for their authorization in a referendum to ratify the European stability treaty," Kenny told parliament.
Support for the European Union has dropped considerably in Ireland over the past three years of austerity measures forced on it by the EU as the price to pay for aid to prop up its collapsing banking sector, so the Irish vote will be key.
So, dear readers, as I and many others have been saying, it ain’t over yet and the fat lady hasn’t even started to warm up her voice.
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