European politicians paralyzed by terror

It was four days after the Paris attacks that a friendly soccer match between Germany and Holland was to be played. Chancellor Angela Merkel and some members of her government had announced their presence. It was to be a show of strength and a message to the masterminds of the (future) attacks: we have not been browbeaten, we continue to live the way we have up to now. An hour and a half before the game started, it was canceled and the venue with a large neighboring area evacuated. It is alleged the police was tipped off on a planned terrorist attack; it was alleged an unattended object had been found on the stadium premises.

Germany’s Interior Minister Thomas de Maiziere held a press conference¹. He had a hard time explaining the situation. Everything was done for the sake of security, how otherwise. Yet there remain questions that weren’t asked and weren’t answered. Is it true that the German state cannot seal off a sports venue? How come is the whole state paralyzed by a misleading tip? Why did the government so self-assuredly call on the citizens to turn up at the match in defiance of the terrorists without regard for such an outcome? Is not Germany kept at bay by a handful of underground fighters who do not even need to resort to the use of arms? Continue reading →

Multiculturalism or assimilation? A plea for considering refugees as ‘Europeans in the making’

The refugees have arrived by the score. And there will be more. According to the figures of the UNHCR, 60 million people worldwide have fled their home country. Of those, some millions will manage to migrate into the European Union. As we have written in an earlier article, the policy of building the “fortress Europe” has utterly failed. We need a total reshaping of our refugee policy with a view to fight the flight causes in the countries of origin. But that will only improve the situation in – at the best – the midterm future.

The prevailing issue now is: what will be our attitude in relation to the people that are already on European soil? Considering the situation in their home countries, it would be totally illusory to believe that their stay will only be temporary and that they will eventually return home. We have to provide them with a prospect of permanent residence within the European Union. But that permanent residence can take quite different forms according to the degree of integration we (and the refugees) consider to be desirable. The spectrum of refugee integration is actually enormous: from their mere presence, living segregated, barely if at all speaking the language, working in jobs that only require the minimum of qualification, a new “reserve army of unemployed,” to their becoming fully-fledged members of our societies, with their children speaking perfectly the language, acquiring the best education according to their talent and ambition, and turning into ‘normal’ Europeans with the mere difference to other Europeans that their parents have arrived more recently.

Continue reading →

Lifted sanctions, Ukraine left alone: Putin the big winner of the Paris attacks

Vladimir Putin is resuming the play. A year ago he was spurned on the international political scene only to become a key player nowadays. As he had a face-to-face talk with Barack Obama during the G-20 Summit in Turkey, he must have been complacent about his plan coming to fruition. Making use of the terror victims, of whom 224 were his compatriots, the Russian president is slowly but surely re-establishing his position, gradually fulfilling his aims. Europe needs Putin in her struggle against Jihadists. It will, however, have its price: Europe will have to lift the sanctions imposed on Russia and give up on plans of integrating Ukraine within the Union.

Continue reading →

How devastating is the collapse of tourism for France?

The World Travel & Tourism Council regards commodities such as accomodation, transportation, entertainment, as well as food and beverage services or cultural services as a direct contribution to GDP. But tourism has also an indirect impact on the economy, like investment spending. To make the picture complete, also the expenditure of direct and indirect employees of the tourism industry, or the so called induced contribution, ought to be added. As a result, tourism altogether contributes almost 9% to France’s GDP and up to 10% to France’s employment. But still, it is less than in Greece, Portugal or Spain.

Negative interest rates: The ECB desperate attempt to fix the broken system

As the economic data for Europe look less and less optimistic, the negative interest rate, a concept that has been in circulation for a time now, is looming large. It is still uncertain whether the introduction of the negative interest rate is slated for December; it is assumed, however, that the European Central Bank is likely to make use of the example set by Sweden and Switzerland.

The low economic growth is of prime concern on the continent, since it entails a smaller number of jobs, especially for the young. This low growth co-occurs with deflation, which as bad as it can be, may at first glance appear beneficial for the customer due to the lowering of prices. The current deflation has resulted from the low prices of oil and other raw materials. Inflation is important to lower the debt burden. As prices and incomes increase, debt becomes relatively less valuable. Inflation is also used to adjust wages: since it is impossible to lower nominal wages without sparking off labor unrest, inflation does the dirty job. Freezing wages while prices increase results in their lower purchasing power and a relative lower real income. The Eurozone needs inflation to lower real wages in countries like Spain, Portugal and Ireland while wages in Germany and the Netherlands can be increased. The central banks are making attempts to reach the target of bringing the inflation back to the level that was assumed to be the optimal one, and they are resorting to ever more unusual steps. Continue reading →

Polish banks have to pay for losses on Swiss Franc mortgages

Though the exchange rate of the Swiss franc was floated by the Swiss National Bank in January 2015, yet in Poland the problem that arose in connection with it regarding housing loans taken out in Swiss francs is far from being solved. The deadline for the final decision in this respect has again been extended, which further heightens the tension both on the part of some half a million of the borrowers and on the part of the lending banks. The chances are that the banks may sustain a cost of up to 50 bn PLN or approximately 12 bn euros, which is equivalent to three times as much as the whole profit made by the banks for the year 2014.

On 15 of January 2015 the Swiss floated the exchange rate of the Franc: prior to this day the exchange rate was PLN 3,57 to CHF 1, thereafter it rose to PLN 4,33 to CHF 1. During the following months the rate settled at PLN 3,92 to CHF 1. What does that mean for 560 thousand families that pay the Swiss franc loans back? Taking into consideration that the average exchange rate when the loans were taken out stood at PLN 2,4 to CHF 1, it means for an average debtor a loss of PLN 1,5 for each Swiss franc borrowed¹. Continue reading →

Portugal’s anti austerity government

Portugal is one of the European countries that was the most affected by the financial and Euro crisis. In 2012 interest rates on Portuguese bonds reached more than 17% and public debt reached 124% GDP. The Portuguese financial crisis led to an international rescue plan agreed upon by the Portuguese government on the one hand and the European Union, the European Central Bank and the IMF on the other. Portugal is a Euro-Zone member which is why the country cannot devalue its currency. With fiscal devaluation, tax cuts on labor that is compensated for by an increase in VAT, Portugal and European authorities try to improve Portuguese competitiveness. The troika pushed for labor market reforms such as lower wages and the reduction in unemployment benefits. The reforms were carried out by the Partido Social Democrata PSD and the Centro Democratico Social CDS (both members of EPP), a coalition government headed by Passos Coelho, who took over from the Socialists in 2011.
Continue reading →