Tag Archives: economics

German UBS clients raided on suspicion of tax evasion

The Guardian, November 12, 2012

German tax investigators on Monday carried out searches of hundreds of clients of Swiss bank UBS on suspicion of tax evasion. The raids, carried out by around 50 tax investigators across the country, were ordered by the state prosecutor’s office in the city of Bochum.

“There is an investigation into several hundred domestic customers of the Swiss bank UBS on suspicion of tax evasion,” spokesman Norbert Salamon said.

Prosecutors based their investigation on data contained on a computer disk purchased by the authorities in the state of North Rhine-Westphalia, where Bochum is situated. The finance ministry in the state, which is ruled by the Social Democrats (SPD) and Greens, has purchased a total of six CDs since 2010 in order to track down tax evaders. Continue reading

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Euro zone holds breath for German court decision

GlobalPost, September 11, 2012

BERLIN, Germany — As euro zone officials struggle to find a way out of the debt crisis, the fate of European Union unity on top of its common currency may come down to a decision by this country’s highest court.

The constitutional court’s eight red-robed judges are set to rule on Wednesday on a cornerstone of the effort to save the euro, the plan for a $630 billion permanent bailout fund called the European Stability Mechanism, or ESM.

Although most analysts predict the court will give the rescue fund a green light, a negative ruling could provoke panic on the markets and ultimately force the euro zone’s break up. Continue reading

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Did landmark labor reforms pave the way for Germany’s success?

GlobalPost, August 30, 2012

BERLIN, Germany — It’s often overlooked that this country’s churning economy was recently stalling. That was the topic of a presentation by Peter Hartz, personnel director of the Volkswagen Group, to the great and good of the German media in the capital’s opulent FrenchCathedral 10 years ago this month, when he unveiled a set of ideas to turn it around.

The work of a 15-member commission reporting to Gerhard Schroeder, the proposals envisioned a complete shake-up of the labor and welfare system.

The so-called Hartz reforms provided the heart of the chancellor’s ambitious program to modernize the economy. They divided public opinion and ended up costing Schroeder his job. But many believe they were central to transforming Germany’s economic fortunes.

Now Berlin is imploring the rest of Europe to liberalize its labor market along similar lines. However, evaluations are still mixed a decade on. Although some argue the reforms reinvigorated a sclerotic labor market and slashed unemployment, others believe their larger legacy is an explosion of low-paid work and growing social inequality. Continue reading

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Why Germans fear inflation

GlobalPost, August 16, 2012

BERLIN, Germany — Peggy Schmidt is worried. The economy may be booming, she says, but “everything” is becoming more expensive. That’s affecting sales at the family-owned bakery in the small town of Angersmuende, 50 miles north of Berlin where she works as a sales assistant.

“Everything we buy has increased in price, so we have to raise our prices,” she says. “People can’t afford as much, so they buy less than they did a few years ago.”

Schmidt, who says her own wages haven’t kept pace with rising prices, worries about “how we’ll be able to afford things in the future.”

She’s not alone. Last year, the rising cost of living was the top worry among Germans asked in an annual poll to name their greatest fears. Sixty-three percent said they were most concerned about inflation, as most have since 2000 — apart from 2003 and 2009, when worries about the worsening economic situation topped the list. Continue reading

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Merkel holds the line on austerity

GlobalPost, May 7, 2012

BERLIN, Germany — At times during the French election campaign, one would have been forgiven for thinking that Francois Hollande’s opponent was named Angela Merkel, not Nicolas Sarkozy.

Such was the importance of Germany, and of the Berlin-dictated policy of austerity, in the debate.

“Germany does not speak for Europe,” were his fighting words during the campaign to unseat one half of the duo known as Merkozy.

And you could say he was provoked. After all, Merkel had very publicly supported his opponent.

Sarkozy had become her dependable sidekick on EU matters, much to the infuriation of many of the two big countries’ EU partners. The German leader regarded the French conservative as the best guarantee that Berlin’s policy of reform and austerity would be pursued in dealing with the euro crisis.

But the French electorate had other ideas.

They voted for Hollande, one of whose central campaign pledges was a refusal to sign up to the Merkel-designed fiscal compact, unless there are elements of growth included.

In his campaign, he seemed to emerge as the champion for an alternative to the Merkel doctrine, which narrowly focused on belt-tightening and structural reform.

His victory puts Merkel in an awkward spot. Not only is she now going to have to deal with a French leader she very obviously snubbed — she refused to meet him during the campaign.

She is also going to be faced with a leader in Paris who has very different ideas about the best way to tackle the euro crisis. Continue reading

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Could German strikes help the euro zone?

GlobalPost, May 4, 2012

BERLIN — Germany’s engineering sector has been hit by an industrial action this week. That’s a sign of just what an island of prosperity Germany has become within the ocean of troubles that is the euro zone.

While workers in many other countries fear for their jobs as their economies tumble into recession, here newly confident labor unions are demanding massive pay rises — and going on strike to get them.

On Wednesday around 30,000 workers in Germany’s vital manufacturing sector downed tools in a coordinated action that affected over 100 companies, including Daimler and Bosch. The strikes continued on Thursday with an estimated 115,000 workers staging a walk out in around 400 companies, including Porsche and Audi, as part of industrial action to secure a hefty 6.5 percent pay rise forGermany’s 3.6 million metalworkers.

Yet, while some workers in troubled countries may look with envy at their German comrades’ brazenness, in fact the action taking place from Berlin to Bavaria could end up being to the benefit of workers in Madrid, Athens or Lisbon. Continue reading

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Berlin budges on boosting euro crisis firewall

GlobalPost, 29 March, 2012

BERLIN, Germany — The European debt crisis hasn’t gone away.

Despite something of a lull following the frenzied maneuvers to prevent a Greek default, the specter of contagion still looms.

As the 17 euro zone finance ministers prepare to meet in Copenhagen later this week, the focus has now shifted to exactly how much firepower is required to prevent the crisis from spreading to big economies like Italy and Spain.

Germany, the bloc’s paymaster, has long been reluctant to see the euro zone’s new permanent bailout fund increased beyond the agreed 500 billion euros.

This week, however, Chancellor Angela Merkel signaled that Berlin is open to boosting the firewall by allowing the temporary and permanent funds to run in parallel for a transitional period. Continue reading

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