Commentaries

Now raising intellectual capital

Steinmeier’s recipe deceptively seductive

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merkel-steinmeierIt was about as scintillating as a discussion among accountants, but Social Democratic challenger Frank-Walter Steinmeier outshone conservative Chancellor Angela Merkel in Germany’s only general election television debate.

True, Steinmeier failed to land the knockout punch he needed to overcome a 12-point deficit in opinion polls two weeks before the Sept. 27 vote. But he did score a points win that makes Merkel’s preferred option of a centre-right pact with the pro-business Free Democrats slightly less likely, and another glacial Grand Coalition of the two major parties more likely.  And that is concerning.

The centre-left foreign minister’s platform of a national minimum wage, executive pay curbs and switching off nuclear power is hardly a recipe to pull Europe’s biggest economy out of its deepest post-war slump.

In the current anti-capitalist mood, both leaders felt obliged to support regulating bankers’ bonuses, although Merkel made clear that, absent an improbable international accord, she opposed tough national rules that would drive business abroad.

A dark hour for CMBS

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The last week has been a bit of a shocker for Europe’s already crumbling commercial mortgage-backed securities market (CMBS).
Investors have had to cope with steep declines in the value of their bonds and a wave of downgrades by rating agencies.

Now, to add insult to injury, there has been a jump in legal and structural issues. Bondholders are having their rights diluted over or taking on fresh liabilities they didn’t even realise they had.

Trichet points to possible double-dip recession in Europe

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In his cautious Franglais central-bank speak, Jean-Claude Trichet has pointed to the strong possibility that the euro zone may face a double-dip or W-shaped recession.

Of course, that’s not exactly what the European Central Bank president said. But how else are we to interpret his repeated references to a “bumpy road” ahead, and his comment that we are likely to see quarters with positive growth and other quarters with “less flattering” figures? All this was illustrated with a hand gesture that drew a W (or a corrugated iron washboard) rather than a V or a U.

Bon chance getting this deal done, Alcatel-Lucent

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It beggars belief that humbled telecom equipment supplier Alcatel-Lucent could be scooped up by a Chinese rival with nothing better to do. Huawei or ZTE seem credible candidates. The question is, why would they ever bother?

PLA soldiers perform during a rehearsal of a musical drama in Beijing

That didn’t stop shares of Alcatel-Lucent from rocketing up as much as 21 percent on Wednesday on rumors of an unnamed suitor. Momentum was helped by a rating upgrade on the depressed stock by French broker Natixis. The shares later settled back somewhat to trade at 2.75 euros, up 12 percent on the day in Paris.

Sarkozy walks the walk on bonuses

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Nicolas Sarkozy’s plans to reform bank bonuses are out, and for once there appears to be some substance to the French President’s flamboyant style:

Reuters reports:

President Nicolas Sarkozy unveiled new rules for French banks to limit traders’ bonuses on Tuesday and said he would fight to persuade other G20 leaders to adopt the same position.
He said on pay in French banks would now be more closely tied to results.
“From now on, the trader must wait three years to cash in all of their bonus and if in the two years following, their activity loses money, he will not have his bonus,” he said.
Sarkozy, who was speaking after meeting French bankers, said the state would not give mandates to banks who refused to follow the rules and that the head of BNP Paribas had already agreed to put them in place.

Tax-happy French eye carbon tax

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Cynics say the French never saw a market they didn’t want to regulate, or an economic activity they didn’t want to tax. Now this levy-happy nation, with one of the highest fiscal burdens in the world, is eying a new target for taxation: carbon. And in this case, they may just be right.

Former Prime Minister Michel Rocard, a moderate Socialist commissioned by conservative President Nicolas Sarkozy, will present a report on Friday calling for a carbon tax on fossil fuels used in transport and heating (hat tip Les Echos). Speaking on France Inter radio, Rocard confirmed the broad outlines of his complex proposal, which would return some of the proceeds of the “Climate Energy Contribution” in a “temporary and partial” payment to poor households, the elderly and people living in remote areas who are dependent on their cars. The goal would be to preserve the “price signal” needed to change consumer behaviour and reduce emissions of carbon dioxide, the greenhouse gas most blamed for global warming.

Polish EU vision breaks the mould

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At last — a Polish vision of the future of the European Union that does not involve refighting
World War Two or dying in a ditch for outsized voting rights.

In a thoughtful report entitled “Europe can do better”, a group of eminent Poles, including two former foreign ministers and a former central banker, offer a blueprint for Poland to partner EU heavyweight Germany in advancing European integration.  Even if some of the proposals look unrealistic, Berlin would do well to grasp the outstretched hand from Warsaw and explore common ground.

Blair for EU president? Don’t hold your breath

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The British government has chosen a strange time to announce its support for former Prime Minister Tony Blair for the not-yet-existent job of President of the European Council. French President Nicolas Sarkozy has publicly touted Blair as a good candidate, and his name is among a handful discussed among EU diplomats. But there was no obvious reason for Europe Minister Glynnis Kinnock to go public with a British candidacy now.

For one thing, the vacancy will only arise if Irish voters approve the Lisbon Treaty at the second time of asking on Oct. 2, and the Czech and Polish presidents then agree to sign it. Touting candidates now might seem to be taking the Irish for granted and may not go down well in Dublin.

from FaithWorld:

Sarkozy dons burqa to camouflage reform agenda

sarkozy-speechIn a column last week, I noted how Nicolas Sarkozy was a master at signalling left while turning right. Well, in his keynote address to both houses of parliament today, the conservative president went a step further. He summoned up the burqa to camouflage his real intention -- relaunching a drive to reform France's ossified social, education and tax system. (Photo: President Sarkozy delivers his speech, 22 June 2009/Pool)

By declaring war on the all-enveloping full-length veil worn by only a tiny minority of Muslim women in France, Sarkozy ensured that his secularist assault on religious fundamentalism would grab the headlines, and dominate intellectual debate. Here's what he said:

from Paul Taylor:

Sarkozy dons burqa to camouflage reform agenda

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