Ghost towns. Spanish minimum. Broken rules.
This week’s headlines from Europe are dominated by the wild situation in Ukraine. The man with a gold-plated toilet brush and a pirate ship is lost somewhere, and so there is green light for the European help (the practically bankrupt country needs $ 35 billion for the coming years). We can only hope that the situation will not turn out like the one in Egypt, where billion-worth European aid became (tear) gas.
But we will not worry about our eastern neighbour any longer; in this week’s issue, we will focus on our own yard. The ECB is sad. Despite the fact that it pumps as much money as possible into the European banks, lending to private enterprises decreased again. The ECB is therefore considering two options. One is to do more open quantitative easing, i.e. print money in American FED style. Such a policy is going to be extremely unpopular, especially among the Bundesbank representatives. That is why it considers a termination or attenuation of sterilization (via withdrawal from circulation) money that got onto the market through recent years’ government securities purchases program (SMP).
UK’s The Guardian reported that there are more than 11 million vacant dwelling units in the EU, which are the result of a euro-bubble of the first decade of this millennium. The majority of them (3.4 million plus half a million unfinished and abandoned) are located in Spain. However, after recalculation per citizen, the leaders of these statistics are Ireland and Portugal. A demolition of a number of these projects has already started (especially in Ireland). Their value is sometimes even negative, as they just occupy the land on which they stand. However, many owners still hesitate to destroy them. They are the banks which would have to admit considerable losses if they wrote off the mentioned projects.
Apart from the feeble banking system, Spain is also struggling with huge unemployment. The government, led by the Prime Minister Rajoy, is starting to lean more and more towards the policy of tax cuts. Their latest announcement has been about an increase in non-taxable minimum to 12,000 euros (in Slovakia it represents 4,000 euros) and the unification of the fixed charges to 100 euros per month, for the period of 2 years for new recruits.
Endless bickering with Greece continues too. The latest squabble stems from a disagreement between Greece and Troika about the recapitalization of Greek banks. While the hosts think that 6 billion will be enough, Troika would like to triple the sum. But they have reached at least one consensus already. German Finance Minister Wolfgang Schaeuble officially admitted for the first time that if Greece should need “additional, limited assistance, we are ready to provide it.” Supposedly, it may not be in the form of debt relief, however, this is just playing with words – the extension of repayment or further reduction of interest rates actually means debt relief. But there is nothing to wonder about – alluding to debt relief before the upcoming European elections would be extremely unpleasant. German Eurosceptic party AfD has been delighted this week, as the German court annulled the 3% quorum necessary to be elected in the European Parliament elections.
France will probably violate the rule of 3% deficit in 2014, and probably in 2015 too, and will reach 4% and 3.9% of GDP respectively – even though the original plan was to reach the amount less than 3% for both years. This news item has almost entirely escaped the media’s attention. The fact that the report did not surprise anyone just shows what everybody thinks of the fiscal rules. Neither this time are we “playing for real.”
Meanwhile, the number of the unemployed in France broke a new record again and reached 3.32 million. The government’s response to the deteriorating economic situation is charmingly French. They simply prohibit the firms from going bankrupt. More specifically, a firm that is viable (and of course, this status is assessed by an official who himself has never been in business) has to find a buyer in 3 months, otherwise it will get fined up to 30,000 euros per one dismissed employee.
The European Parliament approved the mandatory introduction of e-Call system to every new car after October 2015. This service locates the vehicle in case of an accident and automatically calls the emergency services. It should save around 2,500 lives. The question, however, remains how many people will actually go for such a new car, due to higher production costs (and also other vehicle regulations). On the other hand, the EU assures all of us who fear that the program could be misused to track cars that no such thing is possible. The only thing we can do now is trust it. After all, the NSA has promised not to bug Mrs Merkel (…instead it is bugging German ministers).
It must be amazing to be one of 50,000 Euro officials. I guess that nobody needs any further explanation. The latest advantage is the opportunity to get paid for a two-day trip to their former school. Once they are there, they should talk to students about all those wonderful things that Brussels does for them. Euro officials can also join the courses related to presentation to young people, just in case there was a Eurosceptic youngster in the class. And if the media were to appear too, there are local press officials, ready to help directly on the spot.
Oh, if only somebody had hinted us what to say when WE were students!
Translated by Stanislava Dovhunová