Politics

Trump supporters storm U.S. Capitol

The images in the news yesterday of the formal certification of the US election result by US politicians were terrifying. Trump’s supporters stormed the US Capitol and thereby the seat of the US Congress, the US legislature. The situation quickly escalated. US President Trump, who is still in office, appealed to protesters to act peacefully. However, he did not clearly ask them to leave or criticise them. He still maintains that he did not lose the election. By contrast, his Vice President, Mike Pence, publically demanded that Trump supporters leave the Capitol peacefully. US President-elect Joe Biden has called on Trump to officially accept the election results. Police and security forces were able to secure the building. The session in Congress continued. There is obviously a (probably small) proportion of the population that will not stop at anything, including violent and armed protests. This is without doubt certainly not true…

The reconstruction fund is not a gamechanger

After tough wrangling, Poland and Hungary have given up their opposition to the EU reconstruction fund. If the EU Parliament also agrees, the fund can probably be launched in the first half of 2021, later than originally hoped. Southern Europe in particular is eagerly awaiting the billions in payments. Hopes are high that the funds will not only mitigate the economic damage caused by Corona, but also that there will now be financial leeway for creative economic policy. Rightly so? The EU funds will certainly help selectively, but they are probably not a „gamechanger“ for the core problem of growing economic divergence within the EU. A look at where the funds will mainly go and where the problems lie makes this clear. In order to ensure that the funds are used as efficiently as possible, the states cannot dispose of the funds as they wish; they must submit plans for…

A dispute rarely comes alone

The political dispute within the tripartite alliance in Italy threatens to escalate. For days now there has been disagreement between the government and the Five-Star Movement (M5S), which is part of the government, about the reform of the ESM. However, cracks are now opening up within the government as well. The dispute revolves around the procedure regarding the use of the money that Italy is expected to receive from the EU reconstruction fund. Specifically, Prime Minister Conte plans that the use of the funds will be coordinated primarily by him and Finance Minister Gualtieri, and both will be supported by managers with comprehensive powers. The remaining members of the cabinet, especially those from Italia Viva and the PD, view this as an affront and also take their criticism to the public.The strongest criticism currently comes from the small government partner Italia Viva. Former Prime Minister Renzi is demanding that Conte…

Ultimatum with consequences

Brussels seems to be losing patience in the dispute with Poland and Hungary over EU finances, including the EU Reconstruction Fund (NGEU). Instead of using the summit of heads of state and government on 10 and 11 December for negotiations, Budapest and Warsaw are supposed to give up their blockade attitude beforehand. As a means of exerting pressure, the Reconstruction Fund is being discussed as a multilateral construct without Poland and Hungary, if necessary. Both Central European states would then go away empty-handed for the time being. Up to now, they have mainly resisted the idea that both payments from the NGEU fund and regular EU budget funds should be tied to principles of the rule of law. While the principle of unanimity within the EU applies to financial issues, the remaining EU states could tie EU payments to conditions of the rule of law even against the will of…

Central Bank of Turkey: Trust takes time

At its first meeting under new leadership, the Central Bank of Turkey raised its key interest rate from 10.25% to 15.00% and promised more transparency. This means that it has fulfilled the expectations currently prevailing on the market. However, it should be clear to the guardians of the currency that confidence cannot be regained overnight. This requires an appropriate monetary policy over a longer period of time. And it is certainly not without reason that the guardians of the currency emphasize in their statement that they want to maintain a restrictive monetary policy until a permanent decline in the inflation rate has been achieved. They also stress the need for transparency, predictability and reliability of monetary policy measures in order to achieve and maintain the goal of price level stability. It is not only for the central bank that the latest statements now need to be filled with life. Further…

USA: Price pressure eases again

The most recent inflation report from the Bureau of Labor Statistics provides one piece of news above all: The ongoing ultra-loose monetary policy in the USA is still not leading to high price pressure, and the economic problems do not allow this to happen. In October, prices for goods and services remained unchanged on average compared to the previous month. Although food prices did rise and prices were also raised in individual service and goods categories, there was still no sign of a recovery. However, this was offset elsewhere. For example, gasoline became cheaper, and higher discounts were again granted for clothing and car insurance. The main reason for this is probably the fact that the economy is losing momentum again: As a result, the world market price for crude oil (WTI) in the fall was temporarily somewhat lower than in the summer, and companies were probably confronted with weaker…

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