Financial Crisis Watch 23 July 2009

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<ul><li> 1. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 23/07/2009 To view full articles click on hyperlinks.CONTENTSFOREWORD BY CES HEAD OF RESEARCHFINANCIAL CRISIS: ACTIONS TAKEN BY EU MEMBER STATESFINANCIAL CRISIS: ACTIONS TAKEN WORLDWIDEOUR COMPETITORS VIEWSHIGHLIGHTSANNEX </li> <li> 2. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 23/07/2009 To view full articles click on hyperlinks. Foreword by CES Head of Research Watchtower Caritas in veritate: How Much Food for Thought for the Centre Right? The timing could not have been better: in the middle of the financial and economic crisis, a daybefore the G-8 summit in Rome, the Vatican on July 7 released a 144-page encyclical titled Charity inTruth, extensively dealing, among other things, with issues like globalisation, climate change, thefuture of the market economy, and global governance. Elaborate papal statements on all things social and economic are nothing new. In fact, ever sincethe industrial revolution, the Vatican has held strong views on wealth and poverty, work ethics and themarket, progress and the way we live with each other in the modern world. And most of the time inrecent decades, encyclicals have tended to criticize economic liberalism for encouraging greed, whileacknowledging the role of the market in promoting wealth and innovation. In the end, the messagetended to be that without faith in God and a solid ethical foundation for economic behavior, all effortsto enhance efficiency as well as justice and to make our world more liveable, would be in vain. In that sense, Caritas in veritate is no exception at all. And even in the perceived swipes at Anglo-Saxon liberalism, shareholder value and the focus on short term gains, Pope Benedict XVI has onlycontinued the habit of his predecessor (and mentor) John Paul II, to redirect his theological guns atsome of the perceived mistakes of the West, after the demise of Communism. But in the end, theencyclical also and specifically reflects the zeitgeist of the crisis we are in. Two areas, however, have received more attention than ever before in papal encyclicals: Worldclimate and global governance. The latter point also contains the most frequently quoted passage ofthe document: the call for more global authority, after some critique of the functioning of the U.N.system. This call however, is immediately mitigated by a reaffirmation of the subsidiarity principle (anintegral part of Catholic Social Teaching) and the rejection of a centralization of power. Above all, theencyclical repeatedly emphasises that it does not aim to propose concrete political concepts orinstitutional changes. </li> <li> 3. Centre For European Studies FINANCIAL CRISIS WATCH It is worth remembering at this point that one of the founding fathers of capitalism, Adam Smith,was a highly morally motivated person and that the overriding goal of his invisible hand of themarket was precisely to enable the poor to get richer by freeing themselves from the limitationsimposed upon them by premodern society which would have condemned them to abject poverty, ifunchanged. Keeping this in mind, and seeing that Caritas in veritate, when it does get political, is byno means anti-market while critical about aspects of global capitalism, Europes centre right can livewith this encyclical very well. There is no ground for leftist triumphalism contained in this document.The only thing one might wish for, appreciating that the Vatican uses more and more terms likeglobalisation, outsourcing and stakeholder value (which must be pretty hard to translate into Latin, bythe way) is that encyclicals might be a bit shorter in future. But that may be a Lutheran pipedream. </li> <li> 4. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 23/07/2009 To view full articles click on hyperlinks.FINANCIAL CRISIS: ACTIONS TAKEN BY EU MEMBER STATESAustriaThe European Commission said that it would take a miracle for it to rule on Lufthansas proposedtakeover for Austrian Airlines by the end of July, when the two companies merger agreement expires.The Commission in February announced a separate investigation into whether the terms of the dealare compatible with EU state-aid rules. It has said that it doubts that the price being paid by Lufthansato acquire the 41.56 per cent stake reflects the market price for what is being sold. Thatinvestigation is still ongoing. (10/07/2009)nnxxxxxnnnnnnnnnnnnnnnnnnnn,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,Lufthansa-Austrian Airline ruling needs miracle (European Voice)BelgiumBelgium has signed protocols to its tax conventions with Luxembourg, Singapore, San Marino, and theSeychelles as well as a tax convention with the Isle of Man and a tax information exchange agreementwith Monaco. These signings mean Belgium now has 12 agreements on exchange of information fortax purposes, crossing the threshold for being considered to have substantially implemented theinternationally agreed standard in this area. As a consequence, the Progress Report initially publishedby the OECD Secretariat on 2 April 2009 in conjunction with the G20 has been updated, and Belgiummoves into the category of "Jurisdictions that have substantially implemented the internationallyagreed tax standard." (16/07/2009)fffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffBelgium makes progress implementing OECD standards on tax information exchange (OECD)BulgariaKristofor Pavlov, a chief economist at UniCredit Bulbank, told that the bank expected a 6 per centdecline of Bulgarias GDP in 2009, and a 3 per cent decline in 2010. Thus, the Bulgarian economy isgoing to drop down to its 2007 level. According to Pavlov, it might reach its lowest point in the 3rdquarter of 2009, and to start growing again at the beginning of 2011. The UniCredit Bulbank team ingeneral believes that the worst effects of the global crisis on the Bulgarian are yet to come.(14/07/2009),,,,,,,,,,,,,UniCredit: Bulgaria economy to hit rock bottom in July-Sept 2009 (Sofia Novinite)Data of the National Statistical Institute shows that Bulgarias industrial output in May 2009 droppedby 22 per cent compared to May 2008, and by 1 per cent compared to April 2009. The total turnoverof the Bulgarian industrial plants also decreased by 1,6 per cent in May compared to April 2009, andby 24 per cent compared to May 2008. Bulgarias retail trade shrank by an average of 13 per cent,going as high as 40 per cent for the car sales sector, in May 2009 compared to May 2008.(10/07/2009)bbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbBulgarias industry, trade hit badly by economic crisis (Sofia Novinite) </li> <li> 5. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 23/07/2009 To view full articles click on hyperlinks.CyprusThese are very bad times for the Cyprus tourism industry. Arrivals are down, spending is down, hoteloccupancy rates are low and bars, cafes, clubs and restaurants are struggling. In the last couple ofweeks Cyprus has even witnessed bickering between the coastal resorts, with the mayor of Ayia Napaimplying on radio that Paphos was exploiting the cases of the swine flu in the Famagusta district toattract more local tourism. However, the Hoteliers Association chairman Haris Loizides does not loseoptimism and says that the crisis provides indeed a great opportunity to make improvements andperhaps to re-position Cyprus in the Mediterranean tourist market. (14/07/2009)Crisis in tourism could provide opportunity for a strategic rethink (Cyprus Mail)Cyprus small and medium-sized enterprises (SMEs) will shortly have access to a total of 456 millioneuros in cheap long-term loans as part of a European Investment Bank (EIB) initiative to supportEuropean SMEs. The loans will follow the signing of facility agreements by the EIB and Cyprus threebiggest banks - Bank of Cyprus, Marfin Popular Bank and Hellenic Bank. Finance Minister CharilaosStavrakis described signing as "a significant step forward", and said that, depending on the exactpricing fixed by each participating bank, SMEs in the sectors of industry, agriculture, commercialservices and tourism should be able to take out loans for up to 25 years for as little as 4 per cent perannum. (11/07/2009),,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,Cheap long-term loans available to SMEs (Cyprus Mail)Czech RepublicIn Strasbourg the Prime Minister of the Czech Republic, Jan Fischer, reported to MEPs on his countryssix-month presidency of the European Union, in which the main challenges had been "the three Es":economy, energy policy and the EUs role in the world. On the economy, he listed the measures takento confront the global economic crisis, including the economic recovery plan, support for the bankingsector and the IMF, a rejection of protectionism, lower VAT rates for local services and regulation offinancial markets. (15/07/2009)MEPs look back at the Czech Presidency of the EU: "the three Es" (European Parliament)The Vice-governor of the Czech National Bank (CNB), Miroslav Signer, has said that the economy maycontract by more than 3 per cent in 2009. The latest CNB forecast expects a 2.4 per cent drop in GDPwhich fell annually by 3.4 per cent in the first quarter of 2009. Singer has added that cutting the baseinterest rate below its current historic minimum of 1.5 per cent will be difficult as it would contradict apolicy of protecting households savings. (15/07/2009)bbbbbbbbbbbbbbbbbbbbbbbbbbbbbbbccccccccEconomy may shrink by more than 3 per cent in 2009 (Trend) </li> <li> 6. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 23/07/2009 To view full articles click on hyperlinks.EstoniaEstonias current account swung back into positive territory in May, posting a strong 627.6 millionkroons ($56US.1 million) surplus after a 103 million kroons deficit in April. This brings the combinedJanuary-May surplus to 523 million kroons, compared with a 14.3-billion-kroons deficit over the sameperiod last year. The value of exports has dropped 30 per cent year-on-year, with the value of importsplummeting 40 per cent. The financial account reverted to a positive balance of 455 million kroons asother large investments by credit institutions and non-financial companies offset increased directinvestment abroad by Estonia. (15/07/2009)ffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffff,,,,,,,,,,,,Estonian current account posts large surplus in May (World Markets Research Centre)FranceAs the US debates the merits of a second stimulus package, France and Germany appear determinedto resist a further large-scale discretionary boost to their economies. Although bracing itself for socialunrest this autumn, the French government believes it has done enough to support the economy. Its26 billion euro stimulus package, unveiled late last year, comes on top of one of the most generoussocial safety nets in the industrialised world. (21/07/2009)Berlin and Paris reluctant on further boosts (Financial Times)Workers at a failed French car parts supplier are threatening to blow up their factory unless thecompanys two biggest clients Renault and PSA Peugeot Citroen come up with extra compensation.Employees of the engine parts maker New Fabris have rigged up a series of gas canisters inside afactory workshop which they say will be detonated on 31st July if the two carmakers fail to pay 30,000euros to each of the 366 workers facing unemployment. (13/07/2009)nnnnnnnccccccccccccccccnnnnnFrench workers threaten to blow up plant (Financial Times)Job losses across the European Union continue to outnumber job gains, with the highest number ofannounced lay-offs recorded in June in France and Britain, a fresh EU report showed. The situation inthe labour market in the 27-member bloc keeps deteriorating, according to a monthly monitorconducted by the European Commission and published on 10th July. France with 19,625 announcedlay-offs and Britain with 11,528 jobs to go, topped the June list of EU countries with the highestnumber of restructuring cases in the labour market, followed by the Czech Republic (3,070), Poland(2,310) and Germany (1,960). (13/07/2009),,,,,,,,,,,,,,,,,,,,,,,,,....Britain and France record highest June job cuts (EU Observer) </li> <li> 7. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 23/07/2009 To view full articles click on hyperlinks.Peugeot has failed in a legal attempt to overturn a multi-million euro fine imposed for anti-competitive behaviour, but the European Court of First Instance did lower the penalty by 10 per cent.The European Commission fined Peugeot 49.5 million euros in 2005 for trying to prevent Dutch cardealers from selling to foreign customers. The Commission found that over a six-year period, from1997-2003, Peugeot refused to pay performance bonuses for cars sold by dealers in the Netherlandsto non-Dutch customers and threatened to reduce the number of cars supplied to some dealers. Atthis time car prices in the Netherlands were significantly lower than in neighbouring countries.(09/07/2009)mm,cccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccPeugeot fine upheld (European Voice)GermanyGerman...</li></ul>