A little more than a week the German government proposed “Budget Commissioner” of the euro area to exercise direct control over the budget of Greece. With this proposal, Berlin, Athens asked to give up its sovereignty in the name of financial assistance, to prevent the bankruptcy of our southern neighbor. Although the European Commission (EC) rejected the proposal, it is not sunk into oblivion. Greece can not settle with its creditors, which leads to two outcomes for the country: either declare bankruptcy or to continue negotiations with the private sector, the European Union (EU) and International Monetary Fund (IMF), says the CEO of American company Stratfor Strategic Analysis and reputed political scientist George Friedman. In his agreement with its creditors Greece will consist of three parts: the forgiveness of the debt, additional financial assistance from the EU and IMF agreement to limit government spending and raise taxes so as to avoid future sovereign crises or at least to be paid to the Greek debt. The Germans certainly do not believe the Greeks, as the latter have not met already made commitments to creditors. That lack of confidence led to the proposal for budget control, but it would be okay, if it is a corporation or a private person, says Friedman. Such a request from a nation state, however, is unacceptable according to the analyst. State is based on two premises. The first is that the nation state is unique legitimate community whose members share a common range of values ​​and interests. The second condition is related to the occurrence of the state. Friedman points out that this happens in people’s will and only has the right to determine state action.
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The confidence of European investors has risen for the first time in four months, after oil prices retreated and the economy gained momentum. The index measuring sentiment in the 17-nation euro area rose to 5.3 from 3.5 points in June, the study of Sentix, which is one of the leaders in Germany and Europe. The indicator of current business conditions rose from 18.50 19.25, and that the expected – advanced from -10.50 to -7.75 points. In the monthly study involved 922 investors. It was conducted between June 30-July 2, and results are revised.
In the first quarter euro area recorded the strongest growth for almost a year, helped by unexpectedly strong economic growth in Germany, compensating austerity in other countries in the region. The crude oil prices fell by around 4% last month, EU finance ministers approved a loan to Greece amounted to 8.7 billion, increase confidence.
“It seems that the correction in commodity prices, especially oil, is considered as a cushion,” it said in a statement Sentix. “Improved estimates of the investors are definitely influenced the vote and support for Greece.”
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The business climate in Germany is estimated to be extremely good and beneficial to the local companies in the industry and commerce in March. This monthly survey of the Munich research institute Ifo, confirmed that the upswing in the German economy continue. The results of this is that the German companies assess conditions for doing business in the country is still as extremely favorable. This indicates the Ifo index of business climate in Germany, which decreased to 111.1 points, but remains near its record high value of 111.3 points recorded in February. A fall in the Ifo index in March was due entirely to the expectations of companies’ business environment over the next six months worsened slightly. The index rose significantly last year, when the German economy achieved record for the past 20 years growth rates of 3.5 percent and went up over the past nine months. The economists expected the index to drop more then 110.6 points in March. He is among the most important benchmarks for prospects before the German economy, which generates about 19% of the GDP of the EU. Ifo institute indicated that a slight worsening expectations of German companies this month due to severe earthquake in Japan on 11 March and disaster in Fukushima.
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The French Government announced on Friday a new tax increase amounted to 3.5 billion in 2011, reported Financial Times. The total increase in tax revenue next year will reach 13.2 billion, ahead of Germany’s program to reduce the budget deficit amounting to 11 billion euros in 2011. Revenue from the increase, however, retreated to the increase in VAT by 2,5 percentage points in Britain next year, which is expected to bring 12.1 billion pounds (14.7 billion). The series of tax increases to reduce budget deficit expected for this year’s 8 percent of GDP to 6% in 2011 as promised to the European Union (EU). The plans are based on forecast economic growth of 2.5 percent next year, the International Monetary Fund (IMF), the EU and many economists are optimistic about. The last tax increase should reassure the financial markets, but not cause panic in society. Earlier in the month the French government announced increased taxes on business and the rich worth 3.7 billion euros to help fill the deficit in the pension system. Paris still hopes to collect 1 billion in 2011 from the new bank tax.
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Germany is considering to extend the ban on uncovered short sales of shares of ten banks in the country, so that it applies to all listed shares in Germany, Air Force forward. During the last week, Germany surprised its European partners, such as bans unilaterally uncovered short sales of shares of the ten leading banks in the country, government bonds and swaps related to the protection of non-performing debt for the period ending March 31, 2011. The current proposal from the Treasury is the prohibition to apply for shares and derivatives of all companies. The proposal is likely to be discussed by the country’s Cabinet next week, includes the creation of new “system transparency” for short sales, which include control over some of the financial regulator BaFin. Germany is making high reductions of costs and needs to reduce expenses in case to prevent the strong European economy from the financial and debt crisis. Germany approved high support for Greece last days, which will be returned from the European banks during next years.
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The decision of the authorities in Germany to limit speculation in certain financial instruments by banning the trade of short “with them cause strong movements in financial and currency markets in recent hours. As a result, the euro sank again, gold and oil retreated positions. By decision of regulatory authorities in Germany were banned short sales of shares of the ten leading banks in the country, government bonds and related swaps for protection against non-performing debt for the period ending March 31st, 2011. This decision was taken to the disapproval of the markets because it is alone and does not comply with Germany’s partners in the European Union. According to some estimates, such a unilateral act could have a more negative effect than is likely to calm the situation. Some experts indicate that action as a sign of desperation and a signal of major weakness in Germany, transmits Reuters. The explanation of the regulators in a country that action be taken “because of unusual volatility in the price of government bonds in the euro area. After Germany, similar measures can be introduced, and Austria, which, however, said it would seek discussions at EU level. “We intend to put this issue on the agenda of the meeting of finance ministers on Friday, the goal is a ban on short selling in the EU”, said yesterday the representative of the Austrian Finance Ministry for FT.
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Germany’s Economy Minister Rainer Bruderle warned that companies are about to turn themselves in credit crisis, if banks do not start to lend. “Banks should not grant more loans. If they do not, the government can take regulatory action, “warned Bruderle in a television interview suggests. One of the steps it has taken economic minister, was to appoint a “credit mediator. This post was placed Joachim Metternich, whose task will be to ensure dialogue between banks and businesses. According to the government that will lead to easier lending to companies. The main task of the mediation process will be to collect requests from companies seeking funding and to seek a constructive solution by credit institutions. Such a position has already been in France and he wore a big success, believe in Germany.
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