Weekend Economists Revelations and Reviews April 26-28, 2013

[Demeter]

15. THE EUROMESS COMPENDIUM

IT'S LITERALLY TOO STUPID TO POST AS IF THERE WAS SOME SIGNIFICANCE TO IT ALL....

Germany Signals Austerity Leeway in Budget-Rule Flexibility

http://www.bloomberg.com/news/2013-04-24/germany-signals-leeway-in-austerity-with-budget-rule-flexibility.html

A German Finance Ministry official said that budget-cutting rules must allow for flexibility, opening a chink in Chancellor Angela Merkel’s austerity-first policy as the only course to rescue Europe from its debt crisis.

Rules governing how the euro area’s 17 members scale back deficits are not absolute and must respond to a shifting economic outlook, Deputy Finance Minister Steffen Kampeter said. He was responding to comments by European Commission President Jose Barroso that the path of austerity had reached its limits...

EU Nations Seek Transaction Tax Answers on Repurchase Agreements

http://www.bloomberg.com/news/2013-04-24/eu-nations-seek-transaction-tax-answers-on-repurchase-agreements.html

Eleven European Union nations that plan to introduce a common financial-transaction tax are seeking assurances from the European Commission that the levy won’t drive up their borrowing costs.

The Brussels-based commission should provide data about the impact of the tax on the market for so-called repurchase agreements, and by extension “on the funding cost of the central government and the real economy,” according to an April 16 working document prepared by the 11 states.

The EU estimates the tax could raise 30 billion euros ($39 billion) to 35 billion euros a year. To become law, it has to be approved by the participating nations: Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia. All 27 EU nations can sit in on the talks and have the option to join.

The 11 states are trying to address concerns that the plan could lead to the “extinction” of repo operations that keep government borrowing costs down by allowing traders to hedge their risks, according to the document. The commission has not been “fully clear” on whether revenue from the tax would offset potentially higher borrowing costs, the nations said...

Divisions hamper bid for trading tax in Europe

http://www.reuters.com/article/2013/04/24/us-eu-tax-idUSBRE93N0UK20130424

...The idea has already opened a rift in Europe after Britain last week mounted a legal challenge to the plan, which would hit trades involving banks in London even though Britain has no intention of signing up to the scheme.

Now doubts are also emerging within the group of 11 countries that want to pioneer the tax, designed to collect money from an industry blamed for causing the global financial crisis, according to a document prepared by EU officials and seen by Reuters.

In the document, officials flag concerns about who will be liable for the tax and which country's authorities will have to bear the cost of collecting the levy.

They raise fears recently voiced by Italian officials about the impact on the cost of government debt when the charge is levied on bond deals. They express worries about hurting pension funds and companies, paving the way for possible exemptions....