"Apparently the German Constitutional Court will make a finding on various issues affecting Germany concerning the bailout issue.

"Would it be possible to throw some light on the question and the possible outcomes for the Euro. Thanks"

Eoin Treacy's view Thank you for this question which I'm sure will be of interest to other subscribers. Erwin Grandinger, who will be familiar to veteran subscribers and is an expert on Germany's political machinations sent through two emails which David posted in Comment of the Day on August 24th. You may find them instructive.

The German constitutional court is unlikely to stand in the way of the legislation required to enact the European Financial Stability Facility (EFSF) agreed to by the various EU governments in July. Despite German voter recalcitrance, German institutions are still very much in favour of the European project. However, as discussed above, the supply of bailouts funds remains contingent on peripheral country cooperation in implementing the terms of the bailout.

If the court were to declare the EFSF unlawful, we could expect a significant deepening of the crisis. At least some banks would need to be capitalised, the Euro would decline and sovereign spreads would widen even further. One German politician has already suggested a new treaty. Such has been the deterioration of sentiment over the last few weeks that these potential outcomes are even now more probabilities than possibilities. An unfavourable judgement at the constitutional court would accelerate the process.