Europe is bracing for a day that could rewrite its future. September 12 - tomorrow - will be a decisive day that could make or break the euro zone and the global financial system.
Four major watershed events are occurring on this day of reckoning. At 10am, the Federal Constitutional Court of Germany is scheduled to rule whether or not it is constitutional for the country to take part in bail-outs of weak member states of the European Union.
Meanwhile, The European Central Bank will submit proposals to bring European banks under one umbrella in a banking union. An election will be held to determine the Netherlands' future in Europe. And in the United States, the Federal Open Market Committee will meet to decide whether it will launch another buying programme for asset-backed securities, known as quantitative easing, third round (QE3).
Dr Sutapha Amornwiwat, the chief economist of Siam Commercial Bank, told The Nation that all eyes were focusing on the German Constitutional Court's ruling tomorrow. But she said that if Germany ended its participation in the bail-out fund, it would not significantly hurt the prospects of the European Financial Stability Mechanism.
"Already the ECB's announcement of the bond-buying programme has pushed down the yields of the Spanish and Italian bonds," she said.
With the disparity between the economic structures of northern and southern Europe, the only way to save Europe is to embrace a full-fledged integration, leading to the end of nation-states. This would allow a transfer of wealth from the stronger states to the weaker states, he said.
Axel Merk of Merk Funds said a United States of Europe was in the making with the tactical move of the ECB's bond-buying programme and other conditionalities attached.
"A fiscal union, a banking union, a United States of Europe has arrived! Don't believe it? Just like many newborns, this one has its share of wrinkles, but what you see is what you get," he said.
The prospects of money-printing programmes by both the ECB and the Fed have raised concerns over higher asset prices and inflation.
The Asian Development Bank (ADB) warns that increased capital flow from the West as central banks embark on easing measures could lead to a surge in volatility and create asset bubbles.
Read more: Europe faces make-or-break day - The Nation
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