Tuesday 23 September 2014

Currently browsing 'Euro & Finance'

In early 2010, fears of a sovereign debt crisis, the 2010 Euro Crisis developed concerning some European states. What should be the response? How should economic and financial policies be coordinated at the EU level?


France and the EU: there is no “exception française”

Posted by on 18/09/14
By Ernst Stetter In a speech earlier this week, French Prime Minister Manuel Valls said, “it is France and France alone that decides what the country has to do”, stipulating that there should be a serious talk with Germany, which has to assume its responsibilities for Europe. Helpful? Not so much...

Up or out. Business models and innovation

Posted by on 15/09/14
In the EU world we hear about “innovation” all the time, but what does that actually mean? I am currently re-reading “More Money Than God” by Sebastian Mallaby. It tells the stories of the pioneers in the hedge fund sector, explaining their methods and the workings of this secretive arena. It has made me realise [...]

Phenomenon of Crimean election

Posted by on 15/09/14

Russian President has signed a federal law about election to the Crimean State Council and to Sevastopol Legislative Assembly, which would take place on September 14. Ukraine has already called these election as illegal and warned coordinatiors to be under criminal prosecution. Due to high represive activity of russian law enforcement agencies agains those who didn’t recognize occupation especially Crimean tatars, this election is nothing other than a farce.

According to numerous testimonies of international observers, local activists and Crimean Tatars leaders , in the Crimea peninsula there is a systematic violation of human rights, particularly against Crimean Tatar population. Today we can observe the open opposition to the Mejlis legislative activity as a deprivation educate their children in their native language, muslims persecution, illegal searches in mosques, madrassas and houses, kidnapping of the Crimean Tatar, the ban on the holding of peaceful demonstrations and meetings, giving the status «non grata» for the Crimean tatars leader Mustafa Dzhemilev, Chairman of the Mejlis Refat Chubarov and his adviser Ismet Yuksel.

Local Police intentionally hushed up the investigation of killings and disappearances of the Crimean Tatars. Untill now we haven’t received any official explanations of the Akhmedov’s incident, who was detained with a large number of witnesses and taken to an unknown destination. We have no information about three civil activists: Leonid Korsch, Timur Shaimardanova and Seyran Znetdinove, disappeared in May 2014. Today the indigenous population of the Crimea is under policy of intimidation, particulary, activists are called for questioning to the Russia Federal Security Service and the Mejlis’ members homes are seached without cause.

Mejlis Chairman Refat Chubarov compared this policy of self-proclaimed authorities against activists and people with great prestige in society with the moral terror. How else could we consider their actions against the Crimean Tatar leader Mustafa Dzhemilev? Recently Mr. Dzhemilev has received the summons for questioning, despite acting ban on entry into the territory of Crimea. So, such a move could be called as the occupation authorities warning that during the election period it is better not to appear in the Crimea, otherwise he will be arrested.

Mustafa Dzhemilev has openly expressed his opinion that systematic violation of human rights and prosecution of crimean tatars won’t ean till Crimea is free of Russian occupation. The crimean tatars called not anly to crimean tatars but also to all conscious population of Crimea to ignore the election of September, 14.

The head of Majlis R.Chubarov supported him and mentioned that nowadays in Crimea ”every journalist or editor has been warned about extremist activity”. To his opinion Russian federal security service does its best to provoke mass leaving of the active representatives of crimean-tatar society for the continent ”to crush the crimean tatars’ Majlis as an organized power”. It is a well-known fact that Crimean self-declared authorities blackmail Crimean people end threaten them to deprive of their social benefits if they don’t take part in the election.

Taking into account the current situation we can say for sure that the serious pressure of the occupation authorities will make many people to vote against their will. Mr. Chubarov proposed to organize the international monitoring under the aegis of UNO or OSCE in orderto estimate the situation of human rights’ observance in occupated by Russia Crimea. According to the Majlis head, the September, 14 Crimean election is an immitation of the election process on the territory of Crimea. He is sure that the turn out and the results of the voting will be falsificated. Chubarov said – «There is no election in Crimea. There is an immitation and the results are already known».

Lord Hill is the EU’s new financial services Commissioner – but what is his remit and who does he report to?

Posted by on 10/09/14
With the future of the UK seemingly hanging by a thread it is understandable that events north of the border are dominating attention, but today's announcement of the new European Commission also has far-reaching consequences for the future of the UK's EU membership and the EU itself.

As we set out in our flash analysis, the appointment of Lord Hill to the key financial services portfolio (pending approval by MEPs) is a win for the UK, and the general reformist outlook of the Commission, with other crucial posts (Internal Market and Competition) held by liberal, pro-free trade, non-eurozone countries, provides grounds for cautious optimism.

What will Lord Hill's portfolio include?
  • Overseeing the creation of the banking union – a crucial policy for the eurozone but also one which threatens to split the EU into euro-ins and outs. In his new role, Lord Hill can ensure this does not happen. That being said, this is a very tricky role to manage (with numerous competing interests), especially for a non-eurozone country.
  • Power to review the role of the European supervisory authorities, institutions which have been controversial in the UK since their creation.
  • Responsibility for a 'Capital Markets Union'. While this remains vague it could be a good initiative for the UK since London is already the centre of European capital markets. Lord Hill can base the union around the single market rather than the eurozone.
As the charts below show, the Commission has also been re-organised with a series of policy clusters, with the UK being at the heart of all the major decisions relating to the single market, jobs and growth and the Eurozone. Each 'cluster' will be headed by a Vice-President, previously a largely meaningless role but now with additional agenda setting powers and the ability to stop legislative proposals from other Commissioners.

Lord Hill will 'report' to two Vice Presidents who will "steer and co-ordinate" depending on the issue at hand - the new "Jobs, Growth, Investment and Competitiveness" VP Jyrki Katainen and the "Euro and Social Dialogue" VP Valdis Dombrovskis (both of whom are former PMs). In terms of the two VPs, Dombrovskis is likely to supervise the banking union aspects of Lord Hill's post while Katainen will oversee the more single market aspects, although even here, there is plenty of scope for overlap.

Lord Hill's portfolio also has some overlap (and therefore potential conflict) with France's new Economic and Monetary Affairs Commissioner Pierre Moscovici .The potential for Anglo-French clashes within the Commission is relatively limited since Moscovici will be primarily tasked with macroeconomic eurozone policies rather than financial markets, but one potentially fraught area could the be Financial Transaction Tax or a Common Consolidated Corporate Tax Base. Juncker has asked Moscovici to finalise negotiations over both.

It remains to be seen how the relationship between VPs and different clusters will work in practice, especially as Juncker himself has insisted that "In the new Commission, there are no first or second-class Commissioners", and since decisions in the College of Commissioners have traditionally been taken by a majority of all Commissioners in a secret vote. However, Juncker also made clear that the Vice-Presidents “can stop any initiative, including legislative initiatives” of other commissioners – effectively acting as “a filter”.

Time will tell how potential disputes play out or are resolved and to what extent the VPs can truly veto proposals. What is clear is that the relationship between these four men could be crucially important.

With Tusk, Poland has reached a tipping point

Posted by on 09/09/14
By Adam Czyzewski As of this May, Poland has been a member of the European Union for 10 years. Our membership in the EU has already brought us tangible economic, social and political benefits. A clear testament to the latter is PM Donald Tusk’s appointment as the President of the European Council, which is not only a great personal success of the Prime Minister and of Poland’s economic policy, but also a tremendous diplomatic accomplishment.

Super Mario al rescate de una Europa estancada o buscando el milagro del “Draghinomics”

Posted by on 08/09/14

En esta especie de absurdo juego del laberinto en el que se encuentra la economía europea, el presidente del Banco Central Europeo, Mario Draghi, se ha enfrentado al Minotauro con todas las armas a su alcance. Nadie le puede negar a este italiano, amante de la ópera y de la tragedia griega, su arrojo al enfrentarse incluso al criterio inflexible del Bundesbank y de los designios del Ministro alemán de Finanzas, Wolfgang Schäuble y la mismísima canciller Ángela Merkel. Ha puesto encima de la mesa prácticamente todo el repertorio de medidas monetarias que desde un banco emisor se pueden poner hoy en día en marcha para tratar de reactivar la actividad económica. Pero a la vez que sorprendía al mundo con la bajada de tipos de interés hasta el 0.05%, él mismo reconocía melancólicamente que todo el esfuerzo del BCE no serviría de nada si no iban acompañadas de medidas incentivadoras y de reformas estructurales llevadas a cabo por los Estados miembros del euro.

Esperemos que Draghi no sea nuestro contemporáneo Ícaro en esta leyenda viva del laberinto de Creta, la de aquel hijo de Dédalo, arquitecto ateniense desterrado a la isla, constructor del laberinto donde el rey Minos hizo encerrar al monstruo Minotauro. Como esperamos que sus medidas no sean hoy como aquellas alas de cera que Dédalo construyó para huir su hijo y él, que les hicieron remontar los muros de su prisión y volar sobre el Mediterráneo, hasta que Ícaro desobedeciendo los consejos de su padre se acercó tanto al sol que derritió las alas y cayó al mar ahogándose. Más nos valdría acabar con la tiranía de la crisis con la habilidad con que Teseo mató al Minotauro, sirviéndose del amor de Ariadna, la hija de Minos que se enamoró de él y le enseñó el sencillo ardid de ir desenrollando un hilo a medida que avanzara por el laberinto para poder salir más tarde.


Será que los griegos clásicos nos lo dejaron todo escrito porque nuestro trágico devenir actual se asemeja peligrosamente a las interminables luchas de los dioses del Olimpo. La cruda realidad se ha acabado imponiendo a la cerrazón de los dogmáticos del ajuste y los recortes presupuestarios. Se empeñaron en que las economías periféricas, culpabilizadas por sus excesivos déficits, debían pagar el pato del endeudamiento privado causado por los bancos, en gran medida, alemanes y el resultado no podía ser otro que la recesión y el desempleo en cifras millonarias. La consecuencia inmediata no podía ser otra que el estancamiento del crecimiento en la zona euro y la caída drástica de las exportaciones germanas a los países empobrecidos de la UE. Ahora pudiera decirse que tenemos un problema minimizado de déficits, pero seguimos pagando por generaciones la deuda adquirida, no crece nuestra economía y no somos capaces de crear empleo. Todo un éxito digno de pasar a los anales de la estulticia de los manuales de economía.

¿Qué podemos esperar ahora de un espacio regado de dinero muy barato y de la compra de deuda privada a los bancos? Desde el rigor económico es evidente que ambas medidas producen una inyección de liquidez al sistema, jamás vivida en nuestro espacio común. Pero la clave está en saber si la medicina es la adecuada para el enfermo o lo que estamos haciendo es darle una aspirina a un enfermo de cáncer terminal. Nos empeñamos los europeos desde que la crisis nos invadió importada desde Estados Unidos, en arreglar los problemas a base de talonario para sanear el sistema financiero y, sin embargo, castigando duramente el tejido productivo sin obligar a que fluya el crédito a las empresas y con la práctica desaparición de la inversión pública. Hemos permitido que se fabrique la tormenta perfecta. Ahora ya nadie duda de que el problema es de estancamiento y de riesgo severo de estanflación. Pero seguimos incurriendo en el error de poner el énfasis en el dinero, en el vil metal, en la máquina de hacer billetes. Le estamos dando al pirómano la manguera, cuando lo único que sabe hacer es incendiarnos el bosque.

Nuestro problema se evidencia mes a mes, año a año. Se llama competitividad, no tiene otro apellido, simple y llanamente la globalización nos obliga a cambiar el modelo productivo y los procesos del mismo. Y la única receta que existe útil para mejorar la competencia de nuestras empresas y de nuestros productos y servicios, es la innovación, hermana pequeña de la investigación. Ser más eficientes, es ser más rentables y ello hace posible el ciclo de la riqueza y de su redistribución. Si no invertimos mucho más en I+D+i y lo que es más importante si no cambiamos la mentalidad de los europeos, uno a uno, de nada servirán cataplasmas monetarias. Debemos innovar y eso solo se hace en sociedades educadas y formadas bajo la calidad y la excelencia de un sistema educativo universal e igualitario. Y esto no son palabras bonitas, son realidades palpables avaladas por datos palmarios. Si no invertimos un 3% de nuestro PIB en I+D+i y no alcanzamos cuotas del 7% de ese PIB en Educación, es imposible que en las próximas décadas podamos mantener nuestro modélico sistema de protección y bienestar social.

Las cuentas son claras, se trata de marcar las prioridades. Queremos tener un sistema público de salud para todos y de alta calidad: su coste siempre estará en el 10%. Queremos mantener un sistema de pensiones y protección al desempleo digno y que no deje en el desamparo y la marginalidad a nadie: un 15%. Sumémosle Educación e I+D+i: estamos ya en el 40%. Y supongamos que nos tenemos que pagar una deuda abusiva que hoy nos cuesta cerca del 20% del PIB. Todo lo demás o debe ser mucho más eficiente o nos sobra. Si fuéramos capaces de hacer estos presupuestos con visión europea, sin que lo que cuente sea el egoísmo o el abuso de cada Estado miembro, la Unión Europea no solo sería viable, sino que se convertiría en el ejemplo a seguir por el mundo. “Super Mario” no es el culpable de nuestros males, aunque en el pecado lleva la penitencia, pues, ha vivido y muy bien de los excesos del mundo financiero especulativo. La responsabilidad del cambio está en cada uno de nosotros y en no caer en la demagogia fácil e infantil de aceptar el discurso maniqueo de banqueros malos y pueblo bueno. No es la sociedad la que se debe “empoderar”, es el individuo el que debe aprender a ser mayor y defender desde su propia actitud la nueva mentalidad de cambio que requiere Europa. Esa conciencia en el trabajo y en las empresas es la única que nos puede llevar a salir del laberinto y encontrar a nuestro propio Teseo capaz de matar por fin al Minotauro.


New book: Next Europe

Posted by on 01/09/14

Next Europe – How the EU can survive in a world of tectonic shifts

After many months of interviewing, research and writing, I am happy to announce the launch of my fourth book: Next Europe.

It is already downloadable from Amazon, the Apple StoreGoogle BooksKobo BooksBruna and Smashwords. Other ebook stores will follow soon. 

Next Europe cover


The EU is in deep trouble. As the eurozone crisis keeps raging on, the European dream lies shattered on the ground. Euroscepticism and nationalism are on the rise, tens of millions are unemployed, Great Britain is heading for the exit door, while Russia flexes its muscles and the Middle East burns.

Is there any hopeful future for the European Union? Are we going to lose the race with the BRICS? Will Europeans ever truly engage with the EU institutes in Brussels?

Next Europe gives some compelling answers to the big questions of our time. EU Watcher Joop Hazenberg, a young Dutch writer who has been based in Brussels since early 2013, takes the reader on a venture across the globe to gain insight into the position of Europe in the 21st century.

His findings are surprising. The old continent is stronger and richer than we are inclined to think. Though the EU is in a mess, so is the rest of the world. Many of the rising giants will stumble and may even fall before they can do Europe harm. But it is also true that we are no longer the coolest dudes on the planet and that new (and old) dangers threaten our security and well-being.

Based on extensive research and interviews with leading experts, Next Europe soothes the unease that looms over our future. Joop Hazenberg also formulates a bold and strong agenda for reform of the EU. If we want to survive the coming age of uncertainty and tectonic shifts, then the European Union needs a restart. Not only in Brussels, but also in the capillaries of our society.

By acting now, Europe could become, once again, a leading continent. Next Europe is the starting point for a better understanding of our world, whether you are a student, Commission bureaucrat, a voter for UKIP or a Chinese businessman.

Praise for Next Europe

‘A spirited and courageous work’ – Jonathan Holslag, Professor of International Politics at the Free University in Brussels

‘Joop Hazenberg is a young thinker with the wisdom to realise that Europe has taken a wrong turn and the courage to want to change things’ – Philippe Legrain, author of European Spring: Why Our Economies and Politics are in a Mess and How to Put Them Right

Launch details

The official launch is in Brussels on Monday 22 September. I will hand over the ‘first copy’ to Constantijn van Oranje-Nassau, Head of Cabinet of Commissioner Kroes.

If you want to know more about the programme of the presentation or attending, please contact me.

I am also available for (media) interviews, lectures and panels.


European Council defies Ombudsman over rigging of EU Fiscal Pact

Posted by on 28/08/14

The European Ombudsman has strongly condemned the European Council for unscrupulously rigging the Irish referendum and parliamentary votes around the EU on the Fiscal Compact that controls the European economy. By withholding crucial documents, the European Council has deceived both the public and parliaments in Member States who passed the Pact as law. The Fiscal Compact is in reality an undemocratic Con-Trick. It violates basic principles of national and European democracy and law.

  • How can parliaments judge whether the Pact is fair, if the European Council hides the facts?
  • How can a referendum decide, if the European Council rigs the evidence?
  • How can the public interrogate their parliamentary representatives if the flawed legal basis for taxation and expenditure is locked away in the Council’s safe?
  • Can European institutions such as the Community’s civil service be exploited as a skivvy for the politicians’ own non-Community Pact?
  • The euro violates rules for a Community monetary system. Dishonest book-keeping and fraud reduced the Euro’s real value by 75 percent. Politicians refused to follow the Founding Fathers’ supranational economic and monetary principles.

The Pact makes Council the supervisor of fraud! After the Ombudsman condemned the European Council’s maladministration, the same document was requested AGAIN. The European Council again defied the Ombudsman. It refused to provide the document. A further appeal was made to the Ombudsman, Emily O’Reilly, that the European Council should respect her judgements and basic democratic principles.  The Ombudsman metaphorically threw up her hands. She confessed that the Ombudsman could do nothing to make the European Council follow the rules except the European Court of Justice.

She replied to me on 26 August 2014 that

‘I believe that a new inquiry into the Council’s recent refusal of disclosure would be repetitive, since there is no new element that would distinguish the new case of the one which I already inquired into. Moreover, the follow-up mentioned above (where the European Council again reiterated its own position) shows that the Council has no intention to change its position in this regard. It follows that a new inquiry into the same matters would, in all likelihood, lead to a new critical remark, which would neither be helpful to you, nor would trigger any positive follow-up from the Council.’

What is this crucial document? The European Council produced an analysis on the Pact’s flaws in terms of EU law. For European citizens it covered whether within the Pact they could take the Council and Commission to Court for abuse and criminality associated with it. That is a fundamental democratic right of all citizens. This key analysis is vital for understanding the basis on which the European Council is attempting to control the lives of 500 million citizens and multiple trillions of euros.

The document analyzing the insecure legal basis of the Fiscal Pact was circulated secretively to some EU delegations. It was never rendered public, in spite of national parliamentary debates and a referendum. Yet it is crucial for Europeans to protect the nascent European democracy that has been so abused by the European Council fraud in the past.

In this Pact the European Council gave itself unprecedented powers over national budgets and imposed controls and reviews on government spending. The measures were forced through national Parliaments. Some national leaders refused to sign up to the Fiscal Pact. Thus the Pact cannot be regarded as EU or Community law. At best it is an international agreement masquerading as European law. Obfuscation.

The Fiscal Pact measures are so radical and further distort the Community method for European democracy that referendums in all Member States should have been mandatory. Only one country, however, was able to force a referendum about this measure. That was Ireland. Its constitution requires such matters with major democratic consequences be subject to a vote. Other Member States railroaded the measure through their parliamentary system. A bare majority sufficed. There was minimal or no public debate about it. In Cyprus, which was hit by a euro banking disaster that shook the rickety foundations of the euro, it was passed simply by governmental Decree thus bypassing parliament.

The European Council’s imposition of the Fiscal Compact bypassed all the usual democratic control of the European system such as the European Parliament, the Economic and Social Committee and proper public debate, The European Council has consistently blocked the legally required elections for these bodies. In this case they just ignored them.

Are the Pact’s measures legal? Have Europeans lost their democratic rights? The Court has yet to pronounce.

Robert Schuman, the initiator of the European Community, defined democracy by the goals the European peoples define for themselves, not politicians. He said that all measures must be ‘in the service of Europeans and acting in agreement with the European peoples.‘ In this Pact, the people were left out of the loop in one of the most important measures in recent European history.

A key issue of this Pact is whether Europeans will be able to take legal action against politicians’ abuse or criminality spawned by these ‘closed door’ measures. Were the people consulted? No. Did they call for it? No. Did they agree? Hardly.

The European Council is acting to prevent democratic control of its new powers. Specifically it has thumbed its nose at the Ombudsman in refusing to release documents of primary interest. It did the same to the citizen who pay their salaries and the cost of the legal document in question.

Who are these people who are refusing democratic control over taxpayers money?

The Fiscal Compact was brought in because of corruption of politicians who not only overspent their countries’ budget, but used national budgets in voter bribes to sections of the public while giving ‘tax breaks’ to party supporters. Then they cooked the books. The national statistics were bent, twisted and contorted to cover the fraudulent activity.

If this had happened in a commercial company the perpetrators would now be in prison.

But they are politicians. Now they have a Pact that puts them in the judge’s seat.


Will the economic sanctions of US and the EU against Russia fail?

Posted by on 26/08/14
By Tyszecki The harsh economic sanctions against Russia demonstrated the unity of the European Union and the United States on the issue of stopping the bloody war, unleashed and supported by Russia, as well as their full support for Ukraine. The stakes are high...

New payment system SEPA – Germans do not like it

Posted by on 28/07/14

It’s only two weeks until SEPA is starting officially. The start has been postponed from beginning of this year. At that time, many companies hadn’t been prepared for the new system. Now, the vast majority (89 percent) have taken it „into account“. By SEPA europewide transfer of money is much easier due to standardization. German companies do not like the system as it in first instant means conversion costs but in the long run it will most probably work out – in May, already 90 percent of remittances have been done by using the new system.

Vassilev-Peevski, CCB bank run: oligarchy in Bulgaria exposed

Posted by on 13/07/14

Credit dossiers for a total of 3.5 billion leva (1.78 billion euro) of Bulgaria’s Corporate Commercial Bank (CCB) have disappeared and a sum equivalent to 206 million leva (105 million euro) has been withdrawn in cash upon order by its president of the supervisory board and the majority shareholder Tzvetan Vassilev, the Bulgarian National Bank (BNB) announced on 11 July. Tzetan Vassilev is left on the photo.

BNB Governor Ivan Iskrov also said the license of CCB will be withdrawn, the bank will be declared bankrupt and all deposits and accounts of individuals and companies, with the exception of the accounts of Vassilev, will be transferred to CCB’s subsidiary bank “Crédit Agricole Bulgaria”, which will be nationalized.
Vassilev spoke from Vienna, denied any wrongdoing and basically said the developments were a conspiracy.
So much for the news. Now some comments.
Several media in Bulgaria titled “The robbery of the century”. It is assumed that CCB, one of the few Bulgarian-owned banks in the country, is the “bank of the power” – this is where most of the state assets used to be deposited.
In return for the favour, CCB contolled a media empire which paid lip service to the government – previously of Boyko Borissov, presently of the coalition between the mainly ethnic Turkish Movement for Rights and Freedoms (DPS) and the Socialists. The media empire also badly attacked political foes and critics, including in the media.
A key figure in the story is Delyan Peevski, a shady power broker and MEP from DPS. Deevski is right on the photo. As it is common knowledge, the biggest concentration of Bulgarian media ownership and distribution concerns primarily the New Bulgarian Media Group Holding, of which Peevski’s mother Irena Krasteva is the owner, and of which credible press investigative reports suggested long ago that Vassilev is the creditor. I wrote about it myself some time ago.
In fact, the European Commission’s latest monitoring report on Bulgaria’s deficient law-enforcement system largely focused on Peevski, without naming him.
CCB has also reportedly financed the expensive European election campaign of the party “Bulgaria without censorship” of former journalist Nikolay Barekov, who is now an MEP. Vassilev has made no secret he wanted to play a role in politics. Barekov denies having been financed by CCB.
Then, the relations between Vassilev and Peevski deteriorated greatly, for undisclosed reasons. The Bulgarian prosecution took seriously Peevski’s signal that Vassilev had hired three people to kill him and investigated Vassilev’s offices, which contributed to a bank run on CCB that accelerated the early elections.
According to media reports, DPS has largely taken control over the siphoning of Bulgaria’s state resource, in terms of public procurement, governmental decision-making and law-making. Also according to publications in the Bulgarian press, the Prosecutor General Sotir Tsatsarov often appears to act (or not to act) according to Peevski’s will.
Now the main topic in Bulgaria is “who will pay” over the salvaging of the bankrupt CCB. Some views support the conspiracy theory – unnamed big creditors created the bank run, so they will not have to pay.
In Bulgaria, huge wealth is visible (against the background of massive poverty), although few economic activities exist. It is assumed that much of the wealth has been created during a major previous bank crisis, in 1996.
Maybe we see a remake of the story. How was it possible that CCB and Peevski created such a powerful center of oligarchic power? Despite the fact that several media outlets in Bulgaria have warned against both against Vassilev and Peevski’s alleged foul play? How is it possible that the Bulgarian Central Bank did not notice for years the wrongdoings of CCB, before Iskov cried wolf a few days ago? Why major political forces were so largely silent, what was their interest to keep their eyes wide shut? Who are those people and companies who safely withdrew their millions just before the bank run became obvious?
Vassilev’s bank offered extremely generous interest rates for savers, and this is why most of the Bulgarian elite had put their money in his bank.
Many Bulgarian commentators today speak as if they were paid communicators by Vassilev. And nobody in the Bulgaria major TV stations asks those commentators before inviting them to comment: do you have put your money in CCB?
I don’t have any and will try to remain objective when returning to the matter.

Matteo Renzi’s rise: It’s Rome vs. Berlin now

Posted by on 07/07/14
By Bernhard Schinwald The European elections in May saw a number of winners. The biggest amongst them, however, can be found in Rome. The young Italian Prime Minister, Matteo Renzi, is set to become for the Socialists what Angela Merkel is for Christian Democrats.

Europe should enjoy its low inflation level

Posted by on 07/07/14

Europe is enjoying a level of price stability and low interest rates rarely seen since the end of World War II.

Wages, pensions, rents etc. do not require permanent adjustments to rising prices, an advantage we are not fully appreciating.

Citizens are no longer deceived by monetary illusions. The Euro has lost very little of its value during the past 10 years. Citizens can therefore keep their savings in liquidity without being afraid of a hidden depreciation, while house owners should no longer be deceived by inflationary rises in value.

The only ones not content with price stability are those who benefit from inflation, like heavily indebted governments and companies which see the relative weight of their debt shrink when prices rise, though they too benefit from price stability because of the low interest rates that go along with.

So why are the ECB and most monetary economists so afraid of low inflation? Why does the ECB keep reminding us of its medium-term inflation target below but close to 2%?

The answers are simple though not fully convincing:

  • Price stability might turn into deflation and lead to economic stagnation.
  • A moderate inflation may facilitate the consolidation of excessive public debt.
  • Investment may be more stimulated by expectations of inflation than of deflation.

There is no serious reason to fear deflation in Europe or in the world.

  • The prices of energy and other basic materials are bound to rise under the impact of growing scarcities, rising populations and demand.
  • In Europe wages are coming under upward pressure due to ageing population and increasing shortages of qualified labour.

Economic growth will remain weak in Europe for two basic reasons:

  • The labour force is stagnating;
  • It will become more and more difficult to raise productivity by more than 1% per year.

The meagre 1.7% economic growth projected for 2015 is in line with what will be ahead of us in the future. Considering our exceptional level of prosperity we should be more than happy with annual economic growth of 1% to 2% and focus our efforts on

  • absorbing the unacceptably high numbers of young unemployed by better training and schooling;
  • reducing regional income disparities;
  • making Europe fitter for global competition.

Eberhard Rhein, Brussels, 10/7/2014

Kadyrov could disclose Putin’s conversation with Abramovich

Posted by on 21/06/14

Recently, the media scene is excited by news about Russian President Putin’s intentions to conduct the manual rotation of the government. There was even a leak to the press concerning supposedly intercepted Putin’s private conversation with notorious Russian oligarch Roman Abramovich, owner of London Chelsea FC.

It is to be recalled that in mid-June, some Russian and European media published a fragment of a conversation between two Russian-speaking people whose voices journalists attributed to Putin and Abramovich.

If that fact is true, Putin offered the billionaire to take up a post of the Prime Minister of Russia, instead of Dmitry Medvedev, who, according to the Russian president, “lost confidence”.

Considering that it is technically impossible to establish the primary source of information leakage, authorship of radio intercept was mothered to Americans.

At the same time, the intelligence community of the UK seems to be more engaged in receiving information about the Abramovich covert activities, especially taking into account large British assets of the oligarch.

Having found such an argument a weighty one, we managed to communicate with known in the recent past senior NATO general who is considered an expert on Russia and has recently provided consulting services to MI6.

Generally, he was skeptical of the likelihood of Abramovich’s appointment to high office, primarily, because of the attitude of the billionaire who does not want to take responsibility for the unpredictable Putin’s policies, which in principle can be reduced to complete curtailment of business cooperation between Moscow and Western countries.

Commenting on the incident with the unveiling of a telephone conversation, the general emphasized that the recent scandals concerning wiretapping of the EU first persons made guide technical units of most secret services to abandon most of their activities.

Answering the question of who may be in advantage to make public the internal Kremlin “wrangles”, an expert on Russia pointed directly to the Chechen leader Kadyrov. The latter allegedly draws a bid on Abramovich’s assets since spent heavily on the participation of his militants in the Ukrainian campaign.

Taking into account that the Russian authorities, who previously fully met Kadyrov’s financial appetites, today are experiencing physical discomfort themselves due to Western sanctions, Kadyrov is forced to search other financial sources, which was the cause of playing this dangerous standalone game.

Besides illegal collection of compromising information on Putin sponsors, the head of Chechnya is actively working to convince Saudi Arabia to consider his candidacy as a possible Medvedev successor, and in exchange for gold and preferences, ensures every assistance in promoting the ideas of Islamic fundamentalism in Russia.

In this regard, the information leak about Abramovich, made by Kadyrov, was consciously aimed to discredit the oligarch and forestall his possible appointment.

Of course, today it is difficult to imagine that Putin at least hypothetically can conceive Kadyrov premiership, but in the Kremlin back rooms future shifts in the power block are already being discussed.

In particular, a fairly low profile of Defense Minister Sergey Shoygu concerning Ukraine can become a certain chance for Kadyrov. In support of this prediction says at least the role that is currently assigned to the Chechen at conflict escalation in eastern Ukraine.

However, the question is who helps Kadyrov act behind Putin and how he is able to lead an independent game in order to subsequently dictate his rules to the Kremlin.

Bitcoin: The Perfect Crime?

Posted by on 15/06/14
Over the last year or so I have read quite extensively about Bitcoin. The amateur economist in me is fascinated by it’s disruptive capabilities and supply and demand characteristics. However, something that has been evident over the months is the extent to which very smart people around the world have been able to hack less [...]