Italy has put some sanctions in place in the form of a 2% rise in the VAT, a one-time 1.5% tax of funds repatriated, a rise in the retirement age for women in the private sector from 60 to 66 – so they will be the same as men, and 2 billion euro in tax breaks for companies who boost hiring. This will save them about 30 billion euros. Their debt is 1.9 trillion euros.
Then there is the healthy Netherlands, or so we thought. They borrow for houses at the rate of 125% of the market value so they can add closing costs, cars, renovations into the mortgage. They are paying their mortgages, but that is one big housing bubble ready to burst. The for sale signs are beginning to appear everywhere without much movement.
This information is available in today’s WSJ.
Greece recently took another $7 billion from the Eu entitlement fund. They aren’t making a great deal of progress.
Merkel and Sarkozy are determined to come up with a new treaty. Sarkozy said he and Merkel would prefer that the treaty be agreed to by all 27 members of the European Union, but he left the door open to one that just covers the eurozone and anyone else “who wants to join us.”
Sarkozy and Merkel made several proposals, some of which could be enshrined in a new treaty, which would do the following –
– automatic punishment for any government that allows its deficit to exceed 3 percent of GDP. Governments are supposed to follow this rule already, but many, including France, have flouted it;
– requiring countries to enshrine in law a promise to balance their budgets;
– never again asking private investors to take losses, as a bailout of Greece did;
– making Europe’s bailout fund permanent by the end of next year, rather than mid-2013;
– and holding monthly European summits until the crisis is over.
This information is available on optimumonline.com
It’s hard to imagine that this will be enforceable when one recalls the rioting in Greece and Italy over any and all austerity measures. The “promise” and the “summits” portions of the treaty are useless.
The bailout fund, to which we contribute one-fifth, will be permanent. I don’t doubt we will also contribute to the ECB since they are short funds as well and we have so much money here in the United States – just ask Michael Moore and Paul Krugman.
The goal, once this treaty is finalized, is to possibly offer eurobonds. Who the hell is going to buy these losers???
Merkel is still opposed because it will not solve the problem. She is the voice of reason.
The S & P has all 17 Euro Zone countries on watch for a downgrade in credit ratings. They have been warned.
Geithner will be meeting with them this week. There is no question we will be involved in the bailout for more of an “investment” than we already are, and that should trouble everyone.