Heroes of Ukraine

«Market Leader» - news and previews making you rich.

Monday, 21 August 11:50 (GMT -05:00)



Business And Politics News

European Budgetary Union: Illusion or Way Out Of Debt Crisis?

European Budgetary Union: Illusion or Way Out Of Debt Crisis?

 

 

EU leaders held another summit in Brussels on Jan 30th. It was attended by mixed sentiments and forecasts. Luckily, the EU and the eurozone managed to avoid disintegration. However, they didn’t find the cure for all the economic problems in the union either.
 
Germany and France, 2 economic locomotives of the debt-ridden eurozone, didn’t quit the currency union despite expectations but made another (the last) warning to the other eurozone members, thus reminding them to maintain budgetary discipline and forcing them to sing a “fiscal plan”.

 

 

 

 

 

 

December’s EU Summit
 
There was another EU summit held in December. The goals were the same – to save the eurozone and the EU from the escalating debt crisis. As a result, the participants approved several budgetary and tax reforms within the union.
 
The essence of these reforms: The EU’s new budget and tax policies should correspond to the French –German plan, according to which:
 
·         All the eurozone members should accept and never violate the budget deficit limit.  
·         The Euro Commission gets the right to introduce tough sanctions against violators.
·         All the 17 eurozone countries should have common corporate and other tax rates.
·         In future, no eurozone country can accept private financial support (as it was done by Greece).
 
The “split’ of the EU: The plan offered by Germany and France was supported by all the 17 eurozone members. However, David Cameron, the UK’s Prime Minister, blocked the idea of spreading the plan over the entire EU. Therefore, a demarcation line between the eurozone and non-eurozone members of the EU started to emerge. The latter are dissatisfied that the former want to make decisions for them.
 
 
January’s emergency summit
The EU entered 2012 without a new financial charter even though during December’s summit it was agreed to prepare a new version of the Lisbon Treaty (including the budgetary changes) by March 2012. So far, those changes have been accepted only by eurozone members.
During the January summit Angela Merkel offered all the 27 EU members to sign a financial pact, which suggested:
·         Fines for violating the budget deficit limit.
·         These fines will contribute to the European Stability Mechanism (ESM).
·         The only exception is a force-majeure like natural disasters or sharp economic decline.
As the result, 17 eurozone and 8 non-eurozone members signed the budgetary pact offered by Germany, even though it was sufficient to get 12 votes. Therefore, 25 of 27 EU countries approved the introduction of new fiscal and budgetary rules. Only the UK and Czech Republic denied them. Poland, Hungary and Sweden hesitated for some time.
 
Results
 
A couple of days ago Angela Merkel expressed confidence that the EU would manage to overcome the crisis and to restore the confidence of financial markets.
On Jan 31st, after the EU summit, European stock indexes rallied after a 2-days decline. Stoxx Europe 600 increased by 0,5% up to 253,68. Dow Jones Euro Stoxx 50 gained 0,53%, thus reaching 2417,30. The UK’s FTSE 100 rallied 0,68% up to 5709,75. France’s CAC 40 increased by 28,59 (+0,88%), thus reaching 3294,23. Germany’s DAX gained 26,18 (+0,41%) thus hitting 6470,63. However, later on, the markets got disappointed by the fact that the EU authorities decided to postpone the Greek issue till March. The rally stopped.
 
Investors realize that the new fiscal pact aimed at strengthening the budgetary disciple within the EU is good, but the results will be visible only in long-term perspective. The legal mechanism of fining is not specified yet. There is no guarantee that weak eurozone economies will maintain the budgetary discipline. Now there is one more union within the EU: the fiscal union of 25 countries, apart from the EU itself (27 members) and the eurozone (17 EU members). This complicated structure may scare away numerous foreign investors.
 
What can inspire investors?
 
The very fact that Europe supported Germany’s initiative hints that it unofficially accepted its leadership in the union. The German authorities definitely like this fact and will probably allocate some funds to support Greece, Portugal and Ireland because now they probably assume that European borrowers will be more disciplined.
The supporters of the new fiscal union are sure that the Czech Republic will soon join it while David Cameron’s successor will probably be more complaisant.    
 
 
EURUSD: Forecast
 
According to the Department of Masterforex-V Trading System , EURUSD is flattish in mid-term perspective. A break above the local high 1.3217 will trigger sub-wave C(C ).  The closest levels of resistance are 1.3233, 1.3242, 1.3375, 1.3434. A break below 1.3031 will probably complete the rally, this initiating a downswing – wave A/B.
 

 

 

 

 
Market Leader and Masterforex-V Academy would appreciate if you could participate in a survey. Please, visit the Academy’s forum for traders and investors and answer the following question:
Will the new budgetary agreement be efficient enough to help the eurozone come out the debt crisis?

 

 

 

You are free to discuss this article here:   forum for traders and investors

 

Add to blog
Got a question? – Ask it here »
 

Trump’s Policies Make USA Lose Their Leading Position in the West

More and more international experts are concerned about Donald Trump’s policies. Some of them are concerned that because of him and his actions, the USA may lose their leading role in the Western world.  

 

 

According to Fareed Zakaria, political expert, CNN host and columnist for The Washington Post, Trump’s recent political decisions have made the European Union so united that Putin could never have dreamed of. Even though he is not going to make the Western world collapse, the USA may still lose the number-one status in the Western world.

Publication date: 31 July 12:09 PM

Does China Oust Russia From Central Asia?

As the situation in Afghanistan is getting worse, this is raising a lot of concerns in the international expert community. The Islamic terrorist threat may spread from there to Russian and China, they say.

 

 
According to a Norwegian observer for Dagbladet, there exist 5 countries in Central Asia that can be seen as potential threats to Russia and China. The thing is, the Islamic terrorism may well spread from those countries to their neighbors. They say that Afghanistan is now the biggest potential threat since the amount of armed conflicts in the country are getting more and more frequent and tough. As Taliban (the local terrorist organization) is said to be sponsored and suppled with arm and ammo, the USA seems to be putting the blame for this on Russia.
Publication date: 29 July 11:53 AM

China Invests Heavily In Africa

You probably know that has been investing in a number of countries of strategical importance. There is a lot of African countries on the list. According to several observers, Chinese banks have given such countries over 77 billion euros since 2000.

 

 
Not so long ago, there was a documentary broadcast on the national TV. The documentary is about a railway line in Kenya built by China Road and Bridge Corporation. It praises Chinese engineers and tells the viewer that the Chinese government is ready to support African countries on their way to economic growth.
Publication date: 24 July 11:46 PM

Chinese Economy Is Way Stronger Than Trump Thinks

The Chinese economy has got much stronger. It can now even be compared to the American one, which is viewed to be the world’s strongest economy. Washington clearly underestimates Beijing when saying that the China has been flourishing in the international markets exclusively at the expense of unfair trade.

 

 
Publication date: 23 July 10:48 AM

British Start Getting Disappointed with Brexit, Soros Says

Last year’s Brexit referendum has become a major challenge for the British government, George Soros says. He says that more and more British citizens start getting disappointed with the Brexit.

 

 
The world-famous financier and CEO of Soros Fund Management assumes that now the economic reality starts revealing the real state of affairs and debunk their delusions related to the happy living outside of the European Union. More than 12 months ago, the advocates of the Brexit scenario were trying to persuade people that this choice won’t affect people’s standards of living. Well, since then, the government has been trying to implement this promise at the expense of increasing the internal debt.
Publication date: 14 July 02:40 AM

Two Reasons Why Russia Keeps Losing Influence Over Post-Soviet States

After the USSR ceased to exist, the Kremlin was counting on retaining their influence in the region. However, the truth is that Russia as the major successor to the USSR has been losing its influence over the remaining post-soviet states. There are 2 reasons for that.

 

 
According to the related report recently published by private American analytic company Stratfor, there is a range of new tendencies making it difficult for Russia to stay influential in the post-soviet region, especially when it comes to Ukraine. The two major reasons for that are believed to be the declining role of the Russian language in the region as well as the existing threats of mass protest inside Russia itself.
Publication date: 06 July 01:42 PM

Business with China: New Reality after Blocking Yandex and VK in Ukraine

Ukrainian President Petr Poroshenko has expanded the list of sanctions against individuals and legal entities from Russia. To be more specific, Ukraine imposed sanctions on several Russian online companies, including Yandex, which is Russia’s biggest IT company, as well as some other popular web services like VK, Odnoklassniki, and Mail.ru Group. According to the presidential decree, Ukrainian Internet providers are forbidden to grant access to those blacklisted websites.

Publication date: 06 July 01:13 AM

China Doesn’t Need Russian Gas and Pipelines

Don’t you remember how a couple of years ago Gazprom cut natural gas supplies to Ukraine a number of times. By the way, Ukraine alone used to buy 55 billion cubic meters of natural gas back then. Now Ukraine buys no natural gas form Russia at all. Apparently, Moscow keeps on looking for other outlets. There has been a lot of buzz about China as a new big outlet for Russian natural gas and crude oil. It turns out that two new pipelines should have transferred to China some 38 billion cubic meters of natural gas every year. Yet, this was the maximum amount, and it couldn’t clearly make up for the export of natural gas to Ukraine.

Publication date: 05 July 11:15 AM

Mass Media on Forthcoming Trump-Putin Meeting

For those of you who don’t know, the first official meeting between Donald trump and Vladimir Putin has been confirmed. It’s planned for July 7, during the G20 summit in Hamburg, Germany.

 

 
Some observers say that the White House did the Kremlin a favor by being the first one confirming the official meeting during the G20 summit. This announcement helped the sided to get of the rumors around the situation and helped Moscow to save face in the Russian media space.
Publication date: 05 July 06:24 AM

Putin and Trump Part Ways

According to The Daily Telegraph observer Con Coughlin, even if Donald Trump used to seek ways to improve the relations with Russia, today he is probably going to really abandon this idea. The thing is that not so long ago, the U.S. hit a Syrian fight jet, the one belonging to Bashar Asad’s troop. Since Putin and Asad are allies, this fact is definitely going to affect the process of improving the U.S.-Russia relations, and probably suspend this process for the near future.
 
Publication date: 29 June 11:50 PM