Men in Black Return to Spain; ECB Complains of Too Much Leeway; Alarm Bells Ring “More Tax Hikes Coming”
“Alarm Bells Ring “More Tax Hikes Coming”
ECB complaints of laxity, coupled with missed budget targets means one thing… more tax hikes are on the way.
Via translation, El Economista reports alarm bells ring for tax increases to meet deficit targets. “
Data through July triggered an alarm in the government and international agencies, especially the downturn in revenue due to the contraction of social contributions and income tax, which will force Treasury to increase the tax burden to meet the revised deficit target of 6.5% of GDP in 2013 committed to Brussels.
Given this situation the government has already prepared a package of tax increases for 2014 that would help meet the deficit of 5.8 percent committed for next year. A VAT increase would raise health additional 1 billion euros and a 21% VAT tax on notaries would raise 100 million more.
Authgorities also ponder more “green taxes” on businesses.
“Tax hikes will doom whatever slim chance Spain had for an economic recovery (which was not much chance in the first place).”
“Much has been made of the survey-based self-referential PMI improvements in the Euro-Area in recent months. However, as we discussed in detail here, top-down GDP hardly resonates with this ‘confidence inspiring’ expansion data and global import improvements remain sadly lacking. It seems there is little apart from hope (and Draghi’s imaginary OMT that ECB’s Coeure explained this morning was ‘very real’) holding these manufacturing prints above the 50 level (based on the business outlook sub-indices). There is, however, one indicator of economic health that has consistently represented the reality of life on the ground on Europe… and, as we discussed here, it is getting worse not better. As the following map shows, unemployment rates are rising in almost every European nation with Cyprus (+5.1 percentage points in the last year) and Greece (+3.8 percentage points) the hardest hit and not expected to get better any time soon. So be careful what cleanest dirty shirt one bets on next.”
Via Zero Hedgde
“Did you actually believe that they were not going to use the precedent that they set in Cyprus? On Thursday, EU finance ministers agreed to a shocking new plan that will make every bank account in Europe vulnerable to Cyprus-style bail-ins. In other words, the wealth confiscation that we just witnessed in Cyprus will now be used as a template for future bank failures all over Europe. That means that if you have a bank account in Europe, you could wake up some morning and every penny in that account over 100,000 euros could be gone. That is exactly what happened in Cyprus, and now EU officials plan to do the same thing all over Europe. For quite a while EU officials insisted that Cyprus was a “special case”, but now we see that was a lie. International outrage over what happened in Cyprus has died down, and now they are pushing forward with what they probably had planned all along. But why have they chosen this specific moment to implement such a plan? Are they anticipating that we will see a wave of bank failures soon? Do they know something that they aren’t telling us?”
“This is no time to be complacent. Massive economic problems are erupting all over the globe, but most people seem to believe that everything is going to be just fine. In fact, a whole bunch of recent polls and surveys show that the American people are starting to feel much better about how the U.S. economy is performing. Unfortunately, the false prosperity that we are currently enjoying is not going to last much longer. Just look at what is happening in Europe. The eurozone is now in the midst of the longest recession that it has ever experienced. Just look at what is happening over in Asia. Economic growth in India is the lowest that it has been in a decade and the Japanese financial system is beginning to spin wildly out of control. One of the only places on the entire planet where serious economic problems have not already erupted is in the United States, and that is only because we have “kicked the can down the road” by recklessly printing money and by borrowing money at an unprecedented rate. Unfortunately, the “sugar high” produced by those foolish measures is starting to wear off. We are going to experience a massive amount of economic pain along with the rest of the world – it is just a matter of time.”
“Unemployment has reached a new high in the euro zone and inflation remains well below the European Central Bank’s target, underscoring just how severe a challenge EU leaders face to revive the bloc’s sickly economy.
Joblessness in the 17-nation currency area rose to 12.2 percent in April, statistics agency Eurostat said on Friday, marking a new record since the data series began in 1995.
With the euro zone also in its longest recession since its creation in 1999, consumer price inflation was far below the ECB’s target of just below 2 percent, coming in at 1.4 percent in May, slightly above April’s 1.2 percent rate.”
“The last thing a country in recession should do is raise taxes. Well, Spain is in a depression, not a recession yet the EU requires Spain to raise the VAT and lower pension benefits within a year. “
One year. That is the time that the government has to undertake major reforms. The European Commission has published today the document with recommendations to the European Council on the National Reform Plan. Includes advice on pensions, taxes, government spending, administrative reform, etc.. There is virtually nothing that Brussels (and the governments of EU members) does not create the need to change, accelerate or deepen.
On Wednesday Brussels gave Spain more time to reach a budget deficit of 3%, but warns that to achieve this, it is still necessary to continue with the fiscal effort.
Brussels calls for “a systematic review of the tax system by March 2014.” Normally, these words have meant raising taxes on consumption (VAT or special) to relax the pressure on other that penalize wealth creation, such as income tax or social contributions. But in the current document there are only requests to raise taxes.
Simmering Feud Between France and Germany Erupts Into Verbal Warfare; France Tells Brussels to Shove It
“The simmering feud between France and Germany erupted into a heated political exchange following Pressure on Hollande to take bold action to revive the French economy, calling for new pension and labour market reforms.
“The commission’s list of recommendations for Paris, which it expects to be delivered in return for allowing France two extra years to meet its budget deficit targets, covered all the hard issues the socialist government faces: cutting public spending; restoring badly diminished competitiveness, opening up restricted markets, reforming the tax regime and loosening tight labour market regulations.”"
“As more and more countries within the European Union struggle economically, the euro – the union’s common currency – becomes more embattled, with its founder now even predicting its demise.
German Finance Minister Oskar Lafontaine, who was responsible the euro’s development and launch, is now calling for the end of the single currency in order to let southern Europe recover. He says if not, the current fiscal course is “leading to disaster.”
“The economic situation is worsening from month to month, and unemployment has reached a level that puts democratic structures ever more in doubt,” he said, according to the Telegraph, one of Britain’s largest dailies.
“The Germans have not yet realized that southern Europe, including France, will be forced by their current misery to fight back against German hegemony sooner or later,” he said, adding that much of the current fiscal crisis has come in large part from Germany’s squeeze on wages, in order to gain export share.”
Via Natural News
“The Greek economic depressionary catastrophe continues to merrily chug along. Hours ago, Greek Elstat reported that February unemployment rose to a new record high of 27.0%, with the January number revised from 27.2% to 26.7%, up from 21.9% in February 2012, and almost as if unlike the Greek BLS is not even trying to fudge numbers anymore and wants to show a deteriorating situation (or, as it was called in the Old Normal – “reality”). “
Via Zero Hedge