Crisis

If we are smart enough to avoid armed conflicts, protectionism and the like, there are good reasons to believe that it will be a nice year for all of us,…

In Slovakia, the economic growth has been one of the strongest in the EU over the period 2004-2008 and it came with soaring tax revenues. This growth itself was the by-product of several important reforms, especially the tax reform. It was based on real investments, not on speculation on real estate markets or inflated construction sector. After the 2008 crisis, the relatively low Slovak debt of 35.4% GDP does not attract as much attention as countries around the Mediterranean Sea or Ireland.

Like in most European economies, public debt in Germany is characterized by a secular upward trend. There are reasons to believe that the current trend is not sustainable. The ratio of debt to GDP is expected to reach 76,5 percent this year (Deutsche Bundesbank 2010), which implies a ratio that is more than doubled since 1980. Looking at the time-series since the mid-1970s (e.g. Sachverständigenrat 2009, p. 373), one can infer that the responsibility for this long-term increase falls both to the federal and state governments, with the impact of the former being about three times as large as the impact of the latter. One can also infer that, after the Keynesian fiscal policy experiments in the 1970s, the debt-to-GDP ratio stagnated for much of the 1980s, and increased again in the early 1990s following the German re-unification. Following periods of stagnation are then punctuated by the end of the internet bubble at the beginning of the last decade, and by the recession following the most recent financial crisis.

This is the amount of increase of the French public debt from 2008 to 2009. It represents 10 GDP points. While making a lot of noise about the 22 billion…

Portugal has a long tradition of corporate tax evasion. Perception of high tax burden, social tolerance to fraud and evasion, high psychological fiscal pressure* , instability and insecurity of the tax codes and complex and slow fiscal system are the factors usually pointed as the ultimate causes for this phenomenon.

It is summertime and everyone is happy to take a brake from what has been a terribly tormented spring. Many of our European politicians and policy advisers (IMF) feel satisfied—or at least claim to be—that they have done the right thing and kept the boat afloat. Now, they say, we just have to consolidate the job to make sure that a new big financial crisis, spurred by disastrous public finance in many EU countries, will not blow in our faces.

This is the payroll tax paid on wages in Greece. 28% of it is born by employers and 16% by employees. It is not surprising that the unemployment rate in…

As a long-standing critic of the concept of a single European currency, I have not rejoiced at the current problems in the eurozone that threaten the very survival of the euro. Before discussing the events surrounding the Greek debt crisis further, I must provide at least a working definition of what the word “collapse” means. In the context of the euro, there are at least two interpretations that come to mind. The first one suggests that the eurozone project or the project establishing a common European currency has collapsed already by failing to bring about positive effects that had been expected of it.

This is a statement of the former minister of finances Thierry Breton. According to him, in 2013 France will exceed the amount of bonds emitted by Germany. The debt in the euro zone will become therefore mostly “latin”, with France, Italy, Spain and Portugal becoming the main debtor nations. They have, adds Thierry Breton, built their national (cheap) debt on the solidity of the German bonds but this era is coming to an end. Nowadays, the totality of the income tax revenues in France is going to the payment of the interest of the public debt.

As voices are heard everyday to “regulate” and “discipline” the finance industry, Lawrence H. White, Professor at George Mason University, Virginia and top scholar in money and banking, bring to our attention this very relevant quote from William Graham Sumner (1840-1910), Yale Professor, historian and sociologist.