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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What women really want: income equality

GlobalPost, March 23, 2012

BERLIN, Germany — On average, it will take a German woman until March 23 to earn as much money as a male counterpart earned last year.

That is the extent of Germany’s alarming gender pay gap.

Women’s organizations will be marking the date, dubbed Equal Pay Day, with some 150 events, including podium discussions, film screenings and flash mobs, to try to highlight the fact that, on average, German women earn about a fifth less than men.

They got some heavyweight backing for their cause earlier this month, when the Organization for Economic Cooperation and Development berated the country for having a 21.6 percent wage gap, the highest in Europe.

In fact Germany’s own figures put the disparity higher — at 23 percent.

“In no other European country is the wage gap between men and women so strong as in Germany,” the OECD wrote in its report.

It also pointed out that women occupy only 4 percent of top corporate jobs in Europe’s economic powerhouse. In Sweden and France the proportion of women serving on company boards is between 15 and 20 percent, and in Norway, which has introduced a mandatory gender quota, it is close to 40 percent. Continue reading

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The debt brake: Germany’s most dangerous export?

GlobalPost, Feb. 13, 2012

BERLIN, Germany — In recent months, German Chancellor Angela Merkel has been using the urgency posed by the euro zone’s debt crisis to reshape Europe’s economies, largely to conform with a particular quirk of German economists: disdain for government debt.

For now, Merkel appears to be getting her way. Late last month, 25 of 27 EU states obediently signed up to play by her rules when they agreed to pan-European fiscal union. If the pact is ratified by national governments, the entire EU — apart from the British and the Czechs, who opted out — will have to strive to reduce their deficits to close to zero, or face the consequences.

The plan is as controversial as it is bold. For some countries, meeting the debt goals will be a gargantuan task. And there are fears the austerity drive will choke off any hope of growth in many places. Yet it is the price to pay, it seems, to maintain Germany as Europe’s paymaster, providing the bulk of the funds for the euro zone’s bailout packages.

And at the heart of the German-designed fiscal pact is a concept known as a debt brake. Instead of the 3 percent ratio of deficit to GDP that the Maastricht Treaty rules had laid down, most of Europe has agreed to a structural debt strait-jacket of just 0.5 percent of GDP.
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Germany’s jobs miracle

GlobalPost, Jan. 24, 2012

BERLIN, Germany — Unemployment is rising in most European Union countries, as the effects of crippling sovereign debt crisis, and the austerity measures prescribed to tackle it, take their toll.

Yet the bloc’s biggest and richest member has seemed almost immune to the effects of the crisis, particularly when it comes to its labor market. While dole queues lengthen in Spain, France and Greece, in Germany they are rapidly dwindling.

In fact Germany has seen the number out of work decrease to its lowest level since 1991. It’s a remarkable turnaround.

While many other countries were booming before the crisis hit, Germany was dubbed the “Sick Man of Europe,” as it struggled to cope with the ongoing economic effects of reunification. In 2005 unemployment reached a peak of 12.5 percent, crucially exceeding the 5 million mark. Since then it has been almost halved, with a rate of just 6.6 percent in December 2011.

So how have German workers been left relatively unscathed by the crisis?

Experts point out that one of the most important factors is that Germany deployed a number of instruments to keep people in their jobs even during the most trying days of the financial crisis. Continue reading

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