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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (26078)	3/21/2005 10:55:02 AM
From: RealMuLan	Respond to of 116555

"Since Germany spends 4 per cent of its GDP on transfers to the former communist east, the concession could help Gerhard Schröder, German chancellor, to avoid further reprimands under the pact before next year's general election. In exchange, Mr Schröder will be asked to give up his campaign to curtail the role of the European Commission in policing the pact. Hardline defenders of the stability pact, including the Netherlands and Austria, won assurances that Germany would only be able to invoke the get-out clause if its deficit was "slightly and temporarily" above 3 per cent." news.ft.com =============== "Commission sources told The Times that member states rejected Germany's long-standing demand that its massive German unification payments be seen as a valid reason to violate the stability pact's austerity rules. The sources, however, added that "there is an agreement by the finance ministers to consider 'European unification' costs as a credible reason to overshoot the three per cent deficit target." In that case a government may post a budget gap of 3.25 per cent of GDP, but only "temporarily," the sources said. The sources added that key to the agreed amendments is the so-called "excessive deficit procedure," triggered when a country's deficit exceeds three per cent of GDP, allowing a series of warnings and ultimately the threat of huge fines. The deal includes the possibility that, depending on a particular assesment, the Commission may grant a further year to a member state in order to get in line with the pact's rules. Until now, a member state had three years to get in line that can now be extended to four. The Prime Minister told The Times that the fourth year is not automatic and will only be granted after a recomendation by the Commission." timesofmalta.com