Publications

Summer temperatures bring new wave of strikes to France (not that they’re seasonal…). Two concurrent current strikes involve nudity. Fiscally, though, they have very different implications. It does not depend on what you do with your clothes, it depends on who is your employer.

After many Occidental countries imposed sanctions on some Russian businesses, Russia has retaliated by restrictions on some Occidental ones. Trade wars rarely work. However, a new fiscal phenomenon has appeared: affected EU companies seek compensation from the state for loss of markets. Should they get it?

The media world calls Summer “the silly season”. When politics takes summer break, it is time to roll out the “silly stories” to fill the media. Not this year. Politics strikes back and rolls out silly taxes on media. Hungary’s ruling party introduced a new tax on advertising revenues of up to 40%. This is terrible economics, but economics cannot compete with terrible hatred…

Carrying keys on your person is dangerous if you are a Wimbledon champion, tax authorities will charge you heavily for such audacity. At least one EU government’s budget apparently relies on its citizens winning the Wimbledon. And it encourages envy. If successful sports-people representing their countries want to help their fellow citizens, they should stop being patriotic.

Portugal’s Constitutional court joined the ranks of those European courts that have halted crucial welfare reforms by governments. IREF reviews the evidence and concludes that fiscal policy must, for better or worse, remain the sovereign responsibility of the government held accountable at the next election. Being able to blame the courts would pave the way for governments to court misery, the opposite of what constitutions want to achieve.

BIS has doubts about monetary policy in the Euro area
Latest BIS Report says that present monetary policies risk permanently destabilizing the global economy. It calls for A New Policy Compass, focussing on the ‘Financial Cycle’, not the Business Cycle.

Banks remain fragile and imbalances persist
The BIS notes that banks have been recapitalising, but in some countries problems with asset quality and earnings persist. The recent issue of a convertible bond for TESLA is a prime example of the behaviour of the financial markets, perhaps akin to the boom in subprime mortgages only a few years ago.

Desperate times call for desperate measures. European governments cannot raise enough tax to cover their spending. Ireland has even been forced to adopt what economists generally consider the least distortive tax feasible. That is good (considering the alternatives), but its execution leaves much to be desired. Strange incentives remain, and punishment for success is built in.

Spanish government has just announced it will cut some taxes. The actual cut will not come until early next year, and just like a Spanish rodeo arenas, it has a sunny and a shady side to it. The sol is the riddance of tax breaks. The sombra, however, is ushered by the EU pressing for higher taxes.

Stalin said: No man – no problem.
EU governments’ tax policies are following suit. Shifting taxes onto a man who does not (yet) exist is one way of solving problems. Are governments also subtly changing existing taxes into less visible ones? Is this a more humane form of “No man protesting – no problem”? IREF investigates.

Central Banking
Confidence in the ECB wobbles as commentators on all sides question the effectiveness of supposedly growth stimulating new policies.

Markets and Investment
At least two big takeover deals are being negotiated in Europe now, both with heavy government involvement. The strategies adopted by the French and UK governments may appear to differ but at heart they are very similar.