The austerity package the government

by admin

80 billion the federal government wants to save up to 2014. It comes to the constitutional guarantees and debt limit, which can be met. The austerity package the government is on the table. 80 billion will be saved over the next four years. In terms of volume, indeed, in some areas, reversals have been made, such as with the military reform. Overall, the austerity package is not very innovative.

Instead of creating a fuel tax, an auction of the lifetime extension of nuclear power plants would have to contribute about 50 billion euros, which would not need to be cut elsewhere. Apparently has not even thought about it, from what areas of the economy could withdraw the state. The transport division of Deutsche Bahn Schenker Logistics such as might have been sold to private investors. The revenue side has remained largely structurally intact. Abolish the reduced VAT rate would have simplified the tax system.

As compensation could leave untouched the social budget or relieve the lower income in return. Still cannot predict whether the austerity package creates enough room to manoeuvre. Of course, remains to be seen whether all the proposals are implemented. The coalition agreement also provides for many things that have not been implemented yet.

The consolidation of public finances

Financial markets must be brought under control. That is what the planned introduction of a financial market tax and a national point adopted ban on short selling. What problem is solved exactly by these measures, it remains in the dark. The market signalling that the government itself does not believe the 750 billion euro rescue package would stabilize the market. This creates additional uncertainty.

In addition, what can be achieved by banning naked short selling? Short sales, which show increasing studies, market liquidity and dampen price swings. Apparently, the policy aims to distract from the real problem this activism – the horrendous national debt. In order to calm the markets and stabilize the euro helps one thing and it is a credible consolidation strategy.