So far only 3 of the 17 Eurozone nations haven't signed the ESM pact; Germany, Italy and Estonia. Germany's constitutional court is set to deliver it's ruling tomorrow on the legality of such a move. Will it block it?
Unlikely. It will probably make some minor restrictions that Merkel's government can overcome
Isn't the ESM just the ECB in another guise?
Yes. It's the evil Edward Hyde to the ECB's good Docter Jekyll, able to do stuff the ECB isn't allowed to under the treaties, like buy government bonds directly, lend to national governments without limit, and to bail out bust banks. When its 'own' €700bn runs out it can borrow more from, er, the ECB and other banks and capital markets
Where would the ECB get the money from? It's already holding an undisclosed liability of junk bonds (some say in contravention of article 123) and iffy Southern government securities against loans
Print it, silly. That's how the ECB's paying for the junk bonds anyway.
What if the ESM's national borrowers can't repay their loans? Who's liable?
All 17 members of the ESM are jointly and severally liable for losses. If some of the 17 are bankrupt, the others pick up the tab with additional contributions
Isn't this just a formula for moving wealth from Germany and the sound Northern nations to the bankrupt and improvident South?
Of course. German workers will be paying for Spanish social security payments; that's what economic union means, silly
Won't it be inflationary?
Yup. Particularly if the ECB prints more money. And the Euro will fall in value, making exports more competitive but making imports such as oil and gas much more expensive. So the poor Germans may end up shivering in Winter to keep the Algarve going.
Don't the German voters have a say in this?
Now you're being really silly.