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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (73787)	6/4/2010 9:59:59 AM
From: Haim R. Branisteanu	Respond to of 74559

As anticipated - Germany To Stick To Austerity Plan Despite Lower Deficit By Andrea Thomas Of DOW JONES NEWSWIRES BERLIN (Dow Jones)--The German government will go ahead with planned austerity measures, despite there being less need for budget consolidation in the coming years thanks to an improved labor market and extra revenue, a finance ministry spokesman said Friday. "The finance minister has said he won't use any possible additional leeway to ease consolidation efforts," finance ministry spokesman Martin Kreienbaum told reporters. "The structural deficit for 2010 will probably be lower than the 2010 budget plan assumes." The comments were made ahead of a two-day closed-door cabinet meeting on the government's budget plans for the coming years, including key points of the 2011 budget. Germany's constitution requires the government to reduce its structural deficit, which excludes cyclical factors, to 0.35% of gross domestic product by 2016, compared with around 3% at present. The government had said in the past it has to cut spending or raise extra revenue by around EUR10 billion annually from 2011 to 2016 to meet this requirement. Finance Minister Wolfgang Schaeuble said Wednesday that the government's net new borrowing in 2010 will be clearly below the EUR80.2 billion penciled into the 2010 budget, while the Deutsche Bundesbank--Germany' central bank--recently said the government's budget deficit would be clearly below EUR70 billion this year. Chancellor Angela Merkel, Schaeuble and Vice Chancellor Guido Westerwelle will brief the press ahead of the cabinet meeting Sunday around 1200 GMT. Various options are expected to be discussed, including cuts in social welfare and long-term unemployment benefits as well as raising extra revenue for the costly public healthcare sector. German media has also reported that the cabinet will discuss an increase in reduced value-added tax rates for some products, a higher tobacco tax and a levy on plane tickets. In addition, it has been reported that the finance ministry has proposed an increase in the solidarity tax--proceeds of which are used to rebuild the former East Germany--to 8% from 5.5% of gross income. A tax on fuel elements for utilities in exchange for the planned extension of Germany's 17 nuclear power plants' lifespan could also be discussed, they said. -By Andrea Thomas, Dow Jones Newswires; +49 30 2888 4126; andrea.thomas@dowjones.com

To: Haim R. Branisteanu who wrote (73787)	6/4/2010 10:03:59 AM
From: Haim R. Branisteanu	1 Recommendation Read Replies (2) \| Respond to of 74559

The EUR is dead - Long Live the Clown Buck All the tea leaves reader proclaim that the EUR is dead, even the newspapers in the US published that the EUR is fading – which historically is a perfect longer term contrary indicator, about everything in the financial markets the US newspapers are predicting. For those interested a closer look at relative statistics reveals a complete different picture In the US the formal unemployment rate is around 9.8 to 10% this is great contrast to; Holland 4% with GDP of 795 B Austria below 5% with GDP 380 B Denmark 7% with GDP 310 B Germany around 7.7% with GDP $3.35 T Belgium 8% with GDP 470 B France has unemployment similar to the US of 9.8% with GDP 2.675 T Italy 9% with GDP of 2.12 T Another way of interpreting the employment numbers is the cost of lost jobs assuming that 4% unemployment as full employment is US 14.2 T x 6% or $850B Holland 0 Austria $3.8B Denmark $9B Germany $124B Belgium $18B France $155B Italy $106B. and by this achieving a total of 416 B or about ½ of the US rate. Adding Spain would increase the number by 16%x1.464T or 234B for a total of $650B still well below the US rate The manufacturing PMI in all those countries is more or less at 2005 to 2006 level which is an indication of a fast growing economy which is also validated by Germany Ifo index of 101% If one would take into account the average of the EU industrialized nations multiplied by GDP we will arrive to some interesting results, as shown above. More so as the wages and productivity are more or less similar to the US the average income tax receipt of the general population in industrialized EU are substantially higher than in the US and therefore their budget deficit of those countries is lower than the US more so that the retirement age is being harmonized in all countries which represents the main drag on states budget deficits. The fascination with Greece whose total debt equals to less than 3 months of US budget deficits is taken out of ALL proportion, and same would apply to Portugal whose economy at $220 B is 2/3 of Greece. For example California with 12% unemployment and an economy with a 1.8 trillion GDP has a budget deficit of 2 to 3%, add to this the US Federal budget deficit the combined budget deficit ratio is between 13.5% to 14.5% which is worse than Greece a $330B economy. Nevada, Michigan, ILL, NJ, NY FL, NY are in similar situation which if compared to the EU situation will reveal how blindsided the market is. The export markets of the EU are aside from the US, mainly the BRIC countries with a total GDP of 4.9T+1.58T+1.24T+1.23T or close to $9 trillion one should not forget S. Korea and Indonesia with a combined GDP of 1.37 trillion which is not in a recession similar to the US or EU. With the EUR around 9% lower from my anticipated balance v the USD the EU manufacturing enterprises almost doubled their income tax payouts from increased profitability which will take care of the budget deficit that he speculators so much fret about it, and any restructuring of Greece debt will be barely noticeable from an economic point of view even that the news will be all over the news channels. Due to the prosperity of the core EU industrialized countries and BRIC there will be a renewed flow of tourists and summer homes acquisitions which in turn will bail out the countries now PIGS from their problems after all where all those earning will be spend? For sure not in the US toward which there is a great resentment. This process will take a while to be noticed and then the herd will turn its attention on the US with the EUR rising again to unprofitable levels for EU manufacturing industry