Furious Merkel

Does Europe remains focused on austerity and structural changes as its preferred strategy to deal with crisis? Most likely not. Why? The European Union statistics office on Wednesday noted that nine of 17 euro-zone member states are now in recession, with France being the newest significant member of that club. The only country with growth is Germany which could not save the whole euro area because it grew by a meager 0.1 percent in the past three months. And recession means fewer funds for social programs and welfare states which is definitely not popular by politicians driven by the voice of hungry public. So anti-austerity voices supported by the ECB ability to buy any toxic asset and bond within Eurozone are getting stronger. And who exactly is in recession?



In the meantime the European Commission wants to tighten tax loopholes on savings of EU citizens who hold accounts in Switzerland, Andorra, San Marino, Monaco and Lichtenstein. United approach against any tax havens is very important according to the Commission. It means in translation that the EU will foster legislation which enables cross-border exchange of information for tax authorities.

Economics crisis hit also rural areas of Spain. The farmers in Albelda region have gotten so worried about thieves that they have taken to patrolling their fields at night. Elsewhere in Spain is similar situation. For example in coastal regions like Valencia villagers are organizing themselves into patrols, too. Police says that the criminals belong to two categories: local people who are out of work and more organized bands of Romanians and Moroccans, who once worked in these areas and know them well.

German Chancellor Angela Merkel got allegedly furious. A new party the Alternative for Germany – anti European party is gaining attention also among her conservatives who claim that it is time to change strategy towards the EU as they are concerned about the election outcome. Their worries are understandable. The Alternative for Germany has quickly grown and just a few weeks after its official founding has more than 10,000 members and it has attracted widespread interest among the German electorate.

The British Conservative Party has suggested legislation that would guarantee an EU in/out referendum before the end of 2017. The bill, released on Tuesday (14 May), will not be tabled as a government bill because of the coalition agreement with the pro-European Liberal Democrats. The question to appear on the ballot papers is “Do you think that the United Kingdom should remain a member of the European Union?” You can start to guess the outcome.

Premier Li Keqiang stated that China has limited room to use government spending and policy stimulus to boost its economy. This was a reaction to unpleasant economic data which showed some problems to the world’s No. 2 economy. And you can be more than sure that China is manipulating its economic data. So the picture is much worse. Why? China’s monthly power consumption (the most accurate proxy for underlying economic strength) growth slowed from 5.5% YoY in Jan-Feb 2013 to 1.9% YoY in March, the slowest growth rate since May 2009. The data also showed that growth in factory output and investment was softer than expected last month.

The Dow Jones Industrial closed Tuesday at a new all-time high. Yes once again within a few last weeks. It’s the 18th straight Tuesday that the industrials have finished the day higher than where they began. Do you know why? No? Do not worry. Investors have the same problem; for example Bespoke’s co-founder Paul Hickey had this refreshingly candid response: “I have no idea why Tuesdays have been so strong. It’s pretty crazy.” Does the US Government begin BitCoin crackdown? It is not possible to crackdown Bitcoin but only to make its life more difficult. BitCoin starts to be considered as “online form of money laundering” in the U.S and federal agencies took action against Mt. Gox, the world’s leading Bitcoin exchange. Government agencies had frozen Mt. Gox’s account at payment system Dwolla. It’s the first federal action against the currency. And do not forget. Debt ceiling is back in the US. What does it happen? Because of politics very probably nothing till July. It is presupposed that the Treasury would be able to use the same extraordinary measures as last time which means halting some investments in government worker retiree funds and drawing down some accounts. Actual federal debt of the US is $ 16.734 trillion and rising.

Matúš Pošvanc

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