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 A good friend of mine, Dr Anthony Coughlan has a letter in today's Irish Times, he concludes :
"Irish people are finding out the hard way these days that we cannot restore our lost economic competitiveness by devaluing our national currency, as we have no currency to devalue, so we can only restore it by cutting pay, profits and pensions instead, for possibly years on end.
This experience will surely lead future historians of our times to conclude that abolishing the Irish pound was the worst decision ever taken by an Irish government.
The unwillingness of a surplus country like Germany to increase its home demand to counter deflation in the deficit-running “Club Med” countries and Ireland, shows the limits of solidarity in the euro zone at present. Some fear, others hope, the resulting tensions will blow the euro currency apart."
I had a similar comment article on the Euro in Irish Mail on Sunday some years back.
AIFM Directive rapporteur proposes compromise on non-EU based managers and funds
The FT reports that the rapporteur for the EU's AIFM Directive to regulate hedge funds and private equity firms, Jean-Paul Gauzes, has proposed a new solution to try and resolve disagreement over the treatment of non EU-based fund managers, suggesting a "two-tier" approach. The EP's Economic Committee is set to vote on the legislation on 27 April.
Under his plan, non-EU managers wanting to market products in the EU would be able to obtain a "passport" to do so if they agreed to comply with the provisions in the Directive. This would have to be backed by an agreement with their home country market regulator to oversee that compliance.
A second aspect to the proposal would allow non-EU funds to gain passport rights if the jurisdiction in which they were housed met four conditions: concerning fiscal standards, rules on information exchange between supervisors, reciprocity and anti-money laundering rules.
Handelsblatt quotes German liberal MEP Wolf Klinz saying "this is a step in the right direction, because full equivalence among European and third country rules cannot be reached".
Dow Jones reports that Gauzes envisions three levels of classification for countries: a top level for countries with strong rules and enforcement, with funds in these countries allowed to accept money from EU investors. A second classification would apply for countries lacking some aspects of financial regulation or enforcement. For funds in these countries, European national rules for placing money with alternative investment funds would continue to apply, but these funds wouldn't be able to receive EU-wide authorisation or a 'passport' to accept investments. He said he thought the Cayman Islands would be in the second category. Countries with the worst financial regulation would be placed on a 'black list', and European investors would be prohibited from investing in funds located in these countries.
Meanwhile Reuters reports that EU Internal Market Commissioner Michel Barnier has asked the French government to soften its stance on the Directive. A source close to Barnier is quoted saying that the Commissioner "is in contact with the Elysee...He has visited Xavier Musca (Sarkozy's economic advisor)." Barnier wants Paris to accept that non-EU funds should be able to obtain a passport to do business on the condition they abide by new EU rules.
FT Reuters Dow Jones WSJ: Dalton blog OE research
Commission to launch investigation into EU pension reform with eye on retirement ages
FTD reports that EU Economic Affairs Commissioner Olli Rehn has announced that the Commission wants to specify a framework for pension systems in EU member states. While the EU is only supposed to play a limited role in social policy, Rehn is planning, in conjunction with the Commissioners for the Internal Market and Social Affairs, for a Green Paper in June on the situation of the pension schemes in all EU countries. The stated goal is "to encourage the members to help initiate substantial pension reforms." The article notes that the Commission said that it is important to have common parameters, such as the length of a career and that "Without the pension reforms, we will not achieve sustainable public finances."
Finance Ministers to discuss tightening EU rules on member state budget deficits
Business Week reports that EU finance ministers will this week debate proposals to tighten surveillance over government budget deficits to prevent a repeat of Greece's fiscal crisis. EU Economic and Monetary Affairs Commissioner Olli Rehn will tomorrow outline the proposals, which may include more frequent warnings to governments with budget gaps above the EU limit. Rehn's spokesman Amadeu Altafaj said in a telephone interview. The "problem is lack of enforcement of the budget rules," Altafaj said. "We are talking about re-enforcing medium-term budgetary surveillance."
FTD quotes Rehn saying that there will be a "coordination of the extent and development of the total expenses of the budgets". He added, "But if we take our common destiny in the Economic and Monetary Union seriously, then all members must observe the rules which they have given themselves." The article notes that article 136 of the EU Treaty allows for such close economic policy coordination and that on 12 May, the Commission should propose the new supervision mechanism."
Business Week FTD DPA Die Zeit
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