A fine in France. Celebrations in Greece. Coal in the EU stocking.
Europe has successfully got over another year. The EU, the euro, the ECB, and the banking system have got over it as well. However, the same thing has happened also to the recession, double-digit unemployment rate, and rapidly growing public debt.
To get you into a good mood, we are going to start the recapitulation of last week’s events from a bird’s eye view, for example, by looking down from the 170-meter-tall tower of the incomplete basilica of the Sagrada Familia in Barcelona. The official computer animation of the finished basilica (including incomplete parts) has been released. The building, based on Gaudí’s unique architecture, has been under construction since 1882 and the expected year of its completion is 2026. The church is interesting not just by its architecture and a huge capacity (15,000 people), but also by the fact that its construction has been financed only from private sources. Initially, the source of money was mostly composed of private donors, recently mostly by income from tourism – 2 million tourists per year spend as much as 25 million euros just on admission tickets.
This is a beautiful example of a private initiative and voluntary financing, and how they can generate epic projects which could live 100 years after the death of their initiators. The construction speed may be increased by more flexible employment contracts, which have been legalized by Spanish government in its attempt to decrease huge unemployment.
On the other hand, the private initiative was not profitable for one bar in France. A good-willed customer took some empty glasses to the bar on his way to the toilet. Unfortunately, a duo of inspectors saw him and accused the bar owner of employing illegal work. Explanations came to nothing and the bar owner spent some time at a police station and was fined 9,000 euros.
France was full of absurdities by the end of last year. In the country which has lobbying as the national sport taxi drivers have asserted a regulation on growing ride-sharing services like Uber. These services use mobile apps to pair drivers and passengers. In France, these services are allowed on one condition – passenger has to wait 15 minutes after ordering a service and only afterwards can he go and enter the ordered car. The idea of a passenger waiting in the rain and looking at the car waiting idle next to him is quite ridiculous.
French millionaires probably did not end the year in a very pleasant way. The 75% millionaire income tax – planned by Mr. Hollande’s government – has been approved by the constitutional court. Everybody with an annual income above 1 million euros (including football players) will have to give 3/4 of their income to the government. Frenchmen just want to keep their western world supremacy in public sector size (56.1% of French economy is controlled by governmental bureaucrats) should they have no bread to eat…
The government of Portugal tries to save some money from time to time, but the constitutional court ruins its attempts. The court has blocked the proposed reduction of retirement pensions by 10%, which was supposed to save 400 million euros per year. This reduction would not cause any famine – pensions of civil servants are on average 10% higher than pensions in the private sector. This is quite a paradox considering the fact that private employees pay not only for their own pensions, but also for pensions of civil servants.
New Year’s Eve celebrations were quite noisy in Greece. They began one day earlier, when unknown combatants shot 60 bullets using Kalashnikov rifles at the German embassy. Fortunately, at 3:30 AM even Germans usually sleep, thus nobody was hurt. In 1999, the very same building was hit by RPG so German ambassadors may have already got used to it.
Risk can get you some profit and the best form of risk is the one which can be passed to somebody else. Last year’s most profitable euro-bonds were the Irish ones. According to the iBoxx EUR Benchmark Index, the value difference between January and December 2013 was as high as 11.7%. Also Spanish bonds were not a bad investment – the profit was 11%. Obviously, the reason is that both countries were saved by taxpayers through the ESM and by ECB activities.
It is interesting to realize who owns most of these bonds. Banks, of course. But a significant number of the bonds are owned by the “bank of the banks” – the ECB, which distributes bond profits to member states (only profit from Greek bonds was sent to Athens completely). Financial perpetual motion machine, don’t you think? However, in the real world, every pseudo-perpetual motion machine is doomed to stop its movement one day.
A leak has revealed the Belgian strategy of escaping a 750-million-euro fine last May. After Belgium had broken the deficit limit, its leaders warned the Commission that if the country was fined, its citizens would become more Eurosceptic. And nobody wants this, do they? This can serve as advice also to the Slovak prime minister. He would definitely handle avoiding a fine – nobody has ever got it.
Germany has reported the highest absolute number of employees in its history. However, the EU as a whole behaved badly, therefore, Standard & Poor’s gave into its stocking only a piece of coal – rating decrease to AA+.
Also, Cubans have received a Christmas present. Raúl Castro has allowed them to buy new cars. But do not be afraid, the iconic 60-year-old US cars will disappear from the streets of Havana soon. Considering the average monthly income of $20, only a few chosen ones will be able to renew their car pool.
Also the researchers who sailed to monitor retreating glaciers in Antarctica, had generous Christmas. As it sometimes happens with pessimists, their calculations were wrong. They could monitor retreating ice for a couple of days while their ship was trapped in it.
May you never get stuck but sail ahead next year.
Translated by Roman Ujbányai 6/1/2014