Angela-Nicolas should have known: No one likes taxes

If you cannot do anything right sometimes is better to leave things the way they are. This is how I feel after the announcement of Angela-Nicolas meeting.
The solution from the German-French meeting is not what will solve this crisis. As I said before there are two outcomes out of this mess: either get rid of the problem countries or create a European Ministry of Finance.
The no Eurobond, keep EFSF the same and taxes on financial transactions solution will not do it. In fact I think it will do more harm and we would have been better off without this meeting. I do think that the banking sector has to own up to its losses but taxing them will not do that. In fact higher taxes on financial transactions might push away from the market companies that need hedging, investment or saving products.

Financial Markets will not like the solution. In fact nobody will like this solution. I keep my view that Euro is headed for more trouble, spread for troubled countries in Europe will widen, US yields will fall further emerging markets will lose momentum due to lower demand from developed economies.


3 thoughts on “Angela-Nicolas should have known: No one likes taxes

  1. I was actually expecting your reaction 🙂 It’s amazing how such decisions are taken over a beer, no? Don’t you feel like politics at top level are done pretty much in the same way as we do it in Romania? One cannot but wonder if they even consulted a specialist, someone in the financial sector, how they feel about that, is it the right step to take in order to resolve this complicated situation?

    It is also true that when all this mess started nobody asked politicians if they are willing to save the day and the private banks from a disaster they entered on their own and out of which they should probably get in the same way: on their own.

    It’s a pity, like you said, that companies which understand and use derivatives in a responsible manner, for clear business purposes, in order to protect themselves from volatility, will probably decide not to do it anymore. Will this be the cause of future troubles for the private sector, the one that should get us out of crisis? Time will tell.

    1. It is true, and I said it before, politicians are not from this planet. I am sure that plenty of smart people give them advice but they have their own agenda. One extreme here would be that France and Germany have a “secret” agenda. If they solve the crisis too soon then they cannot impose their way. Remember that when times were good the voices of Germany or France, the “old” members, were covered by the voices of new members, Poland, Hungary, Czech Republic etc. This is the chance for “old” Europe to take control of the situation. They will solve this crisis, but when they can take all the credit for it and use it. Only then we will have a Ministry of Finance but with a head from an old country. It is just politics ( and it does look like the scene at home). The sad thing is that real GDP gets wasted in the meantime.

      1. Real GDP was never the issue for them, I’m sure you agree. And I agree with everything else you said.

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