This morning’s key headlines from GenerationalDynamics.com
- Syria’s al-Nusra Front pledges allegiance to al-Qaeda
- EU warns Spain, Slovenia, France of economic risks
- Is Germany the poorest country in Europe?
- Europeans debate how much to tax bank deposits in bailouts
Syria’s al-Nusra Front pledges allegiance to al-Qaeda
A new development has confirmed that Islamists jihadists areinfiltrating the opposition to the Bashar al-Assad regime in Syria.The leaders of Jabhat al-Nusra (al-Nusra Front) in Syria have openlyannounced their allegiance to al-Qaeda chief Ayman al-Zawahiri.
Al-Qaeda links have been denied in the past, so this counts as a majoradmission, confirming accusations by the U.S. and others. However,the al-Nusra leaders were apparently forced into this admissionbecause of a tactical error by the leaders of al-Qaeda in Iraq, whoclaimed that al-Nusra was part of al-Qaeda in Iraq, and that the twoorganizations were going to merge.
The al-Nusra leaders say that theywere caught by surprise by this announcement, and that they had nointention of merging with al-Qaeda in Iraq but then felt it necessaryto pledge allegiance to al-Zawahiri.
The pledge is thought to be a tactical blunder, because it will reducesupport for al-Nusra among Syrians. Al-Qaeda in Iraq is unpopular inSyria because of its targeting of innocent civilians during the Iraqwar. Al-Nusra has been fairly popular with opposition Syrians, butthe admitted association with al-Qaeda will lead Syrians to fear thatal-Nusra will target civilians as well. Middle East Online and AFP
EU warns Spain, Slovenia, France of economic risks
Economic chaos continued in the eurozone on Wednesday on multiplefronts.
The European Commission warned Wednesday that Spain and Slovenia posethe biggest economic risks and must quickly tackle excessiveimbalances; at the same time, France’s growing debt was turning into the eurozone’s
We already know that Slovenia is spiraling out of control, since theprime minister said that no bailout will be needed. As we reportedyesterday, that’s a sure sign that a bailout is needed, and soon.
Spain’s banking system has already been bailed out but still hasMariano Rajoy is promising to announce reforms on April 26 that willsolve the problem.
Among the remaining eurozone countries, France stands out:
[France’s public debt] represents a vulnerability,not only for the country itself but also for the euro area as awhole.
France is a core country — in terms of its size and itsgeo-economic position. Its health has a very direct impact on theoverall health of the eurozone.
There may be some additional news this weekend, when eurozoneand EU finance ministers will meet in Dublin.
From the point of view of Generational Dynamics, there does not exista solution to Europe’s financial crisis since the credit and realestate bubbles of the mid-2000s decade are still collapsing, and willcontinue to collapse into the 2020s. Economic Times (India)
Is Germany the poorest country in Europe?
The European Central Bank (ECB) has published a new reportentitled “The Eurosystem Household Finance and Consumption Survey.”This report compares the different eurozone country on a widevariety of financial and economic measures. Buried in themiddle of the report is the following data:
Median net household wealth in thousands of eurosLuxembourg 397.8Cyprus 266.9Malta 215.9Belgium 206.2Spain 182.7Italy 173.5France 115.8Netherlands 103.6Greece 101.9Slovenia 100.7Finland 85.8Austria 76.4Portugal 75.2Slovakia 61.2Germany 51.4
This is causing a new controversy for the obvious reasons.Why is Germany, the poorest country in the eurozone, bailingout Cyprus, the second wealthiest? According to German news service MNI:
Cypriot citizens were on average more than three times wealthierthan their German counterparts before the crisis, according to aEuropean Central Bank study on household finance and consumptionreleased Tuesday.
The data may help to explain the Eurozone’s reluctance to offermore generous aid to Cyprus and political obstacles any furtherbailout loans may face in the parliaments of northern Europe.
The study showed that citizens in AAA-rated countries that bearthe largest share of the Eurozone’s bailout burdens enjoysignificantly less wealth than those in theperiphery.
Analysts have been scrambling to explain the controversial result. Itturns out that Germany has a low property ownership rate, while Cyprushas a high rate; property ownership is a big part of householdwealth. Furthermore, the figures are from 2010, when Cyprus’sproperty values were still at bubble levels. European Central Bank (ECB) and Market News International (Frankfurt)
Europeans debate how much to tax bank deposits in bailouts
The Cyprus bailout originally was going to tax small bank deposits(under 100,000 euros) by 7%, and larger bank deposits by just under10%. That was quickly changed, with the result that small bankdeposits were untaxed, but large bank deposits would be taxed by 60%.Now the European Parliament is debating who’s going to get hit in thenext bailout.
According to the current debate, insured deposits(under 100,000 euros) would be protected, but all uninsured deposits,including interbank deposits, would be subject to tax (confiscation),once debts owed to unsecured bondholders had been canceled.
There is a brand-new word floating around the European media: theto pay for a bailout. Thus, uninsured bank deposits would bebailed-in by the new rules, but insured bank deposits would not.Reuters and Bloomberg
KEYS: Generational Dynamics, Eurozone, Spain, Slovenia, France,Mariano Rajoy, Germany, European Central Bank, ECB,Cyprus, bail-in, Jabhat al-Nusra, al-Nusra Front,al-Qaeda in Iraq, Ayman al-Zawahiri