Tag: Barroso

Slovakian PM Radicova listens to the leader of the Freedom and Solidarity Party Sulik. Credit: Petr Josek/Reuters Welcome to our continuing coverage of the eurozone crisis. All times are London time. By Esther Bintliff and John Aglionby on the world news desk in London, with contributions from FT correspondents around the world.

Today’s main events are in Greece – where the troika published a long-anticipated statement, and in Bratislava, where the Slovakian parliament is voting on whether to back the expanded eurozone rescue fund, the EFSF.

21.38: As we close up for the day, a markets update. The S&P 500 closed flat at 1,195.54 as investors remained cautious after the delay in the vote to expand the rescue package. The euro surrendered all gains and changed little against the dollar at $1.3642. That’s all from us.

21.30: Here is the latest FT story and Alphaville blog post.

21.20: Slovakia’s government has lost a confidence vote on a plan to bolster the EFSF rescue fund, toppling the government. But it is expected that the package will go through in a later vote with help from the opposition. Smer, the largest opposition party, said it would support the changes in a second vote. A total of 55 lawmakers of the 124 present backed the motion, falling short of the required majority of 76.

19.30: We’re going to take a little break on the blog now – but we’ll be sure to update you when (if?) the Slovak deputies vote. In the meantime, thanks for reading, and for all your comments! You can follow our coverage at ft.com and of course on twitter, @ftworldnews

19.20: European authorities plan to set a higher-than-expected capital threshold for the region’s banks and give them six to nine months to achieve that level or face government recapitalisations under the auspices of the eurozone’s €440bn rescue fund, senior regulators have told the FT. Patrick Jenkins in London, Ralph Atkins in Frankfurt and Peter Spiegel in Brussels report:

The European Banking Authority’s board of supervisors has approved in principle the idea that banks should be made to raise their core tier one capital ratios – the key measure of financial strength – to 9 per cent, well beyond the current expections of banks and analysts, even after absorbing writedowns on the value of their sovereign debt holdings.

Officials cautioned, however, that the 9 per cent threshold – which could see dozens of banks forced to raise a combined €275bn, according to Morgan Stanley estimates – is still being debated in national capitals and in Brussels.

Some senior officials at the European Commission, which is due to unveil its own plan for bank recapitalisations, support the higher levels and could announce their backing as early as on Wednesday.

Full story.

The answer is “not Tobin”, no matter what this might seem. The Tobin tax is specifically a tax on foreign exchange transactions, originally designed to damp down movements in a notoriously volatile market rather than to raise money. Campaigners for a Financial Transactions Tax(FTT) have sensibly switched attention from said currency tax – which, given the lack of regulation of FX trading, is susceptible to traders simply switching jurisdictions – to levies on bonds and equities sales. Bill Gates, who was asked to look into this issue for the G20, sounds like he will be in favour of something similar, together with eminently sensible ideas such as raising tobacco taxes in developing countries and levies on shipping and airline fuel.

That said, the EU FTT doesn’t look particularly workable – and I’ve even heard rumours it was made deliberately so by sceptical Commission officials trying to sabotage it from within. A tax on transactions in a particular exchange, if it can’t be bypassed, makes perfect sense at least as a money-raising device. The UK, despite its continual whingeing and mewling about an FTT, has taxed British stock transactions through Stamp Duty for a very long time – and added a new version to cope with sales of uncertificated stock. A levy based on the tax residency of the investor looks more difficult to implement, as it is subject to the usual shifting of registration offshore.

In any case, perhaps the Commission should be spending more of its time on putting out the raging house fire that is Greece rather than making minor adjustments to the architecture. It isn’t excessive volatility in financial market trading that is causing the eurozone to go up in flames but boneheaded currency, fiscal and debt policy. First things first.

When the European Union works well, the co-operation of three crucial partners is vital: France, Germany and the European Commission. It was the alliance of the Franco-German couple, allied to a powerful commission president in the shape of Jacques Delors, that led to the creation of a single European currency.

So it is a sign of the huge disarray at the heart of the European Union that the current president of the commission, José Manuel Barroso, is feuding openly with the German government. Even a few years ago, this would have been unthinkable. But now Barroso is calling German plans to re-open the Lisbon Treaty “naive”, criticising Germany for being too slow to act on the Greek bail-out, and pointedly reminding the Germans that the euro was all their idea in the first place. German ministers, meanwhile, have responded with even more aggressive language – openly calling Barroso’s charges “absurd”. Privately, top officials in Berlin have been cruelly dismissive of the commission president for months, accusing him of grovelling to secure his re-appointment.

The World

with Gideon Rachman

About this blog About Gideon Blog guide
Gideon Rachman and his FT colleagues debate international affairs. Read more on the authors.

Gideon became chief foreign affairs columnist for the Financial Times in July 2006. He joined the FT after a 15-year career at The Economist, which included spells as a foreign correspondent in Brussels, Washington and Bangkok. He also edited The Economist’s business and Asia sections.

His particular interests include American foreign policy, the European Union and globalisation
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