Heroes of Ukraine

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

Wednesday, 24 May 05:35 (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 »
 

Macron Will Shift the Balance of Powers in the Normandy Format in Favor of Ukraine

For those of you who don’t know, the so-called Normandy format was created to resolve the difficult situation in the East of Ukraine. France is one of the participants. As you know, Emmanuel Macron has recently won the presidential election in France. This means that he is going to become the successor to Francois Hollande as President of France, participating in the Normandy format as the French representative.

 

 
Publication date: 17 May 08:48 AM

Stratfor Gave Prediction for the next 3 Months

The other day, Stratfor released another quarterly prediction for the global geopolitical situation.
 

 

According to the report, the USA will try to settle the nuclear dispute with North Korea. Europe will be waiting for the results of the presidential election in France. Russia will dive even deeper into the local problems. The OPEC will extend the Vienna Accord aimed at cutting oil production.
 
Publication date: 10 May 10:26 AM

The Price of Defeating North Korea May Be Too High

These days, more and more experts start talking about a possible war against North Korea. However, they also say that the price of defeating North Korea may be too high for the USA and its allies.

 

 
For now, North Korea seems to have made considerable progress in creating nuclear arms, which is something that worries the entire world, especially as North Korea keeps on making harsh statements and threatening the USA, South Korea and Japan. The recent test launch of ballistic missiles in North Korea are now treated as wake-up call and real threat. Theoretically, there is a threat that North Korea may hit American military facilities located in Japan and South Korea. As the US Navy is moving closer to the Korean peninsula, international observers are talking about the possibility of another armed conflict between North and South Korea, even though both of them are still at war with each other.
Publication date: 26 April 01:16 PM

Sixteen Structural Reforms Is the Cost of the Next IMF Tranche to Ukraine

Anders Aslund, a Swedish economist and a Senior Fellow at the Atlantic Council, commented on the current and future cooperation between the IMF and Ukraine. He claims that Kiev will have to implement at least 16 structural reforms in order to get another tranche from the International Monetary Fund. He also explained why the IMF is still cooperating with Ukraine.

Publication date: 26 April 11:01 AM

Putin Underestimated Ukrainians When Invading Ukraine, Atlantic Council

American private institution Atlantic Council assumes that Vladimir Putin underestimated the Ukrainians when invading Ukraine.
 

 

They say that the hybrid war started by Russia in Ukraine has been going on for the 4th year. There were times when nobody believed that Ukraine would hold on even for 4 weeks. The thing is, the Crimea was annexed without any fight, which made international experts believe that Ukraine was weak and completely dependent on Russia. This stand point used to be popular in Moscow as well. Some Russian politicians expected a complete victory in a couple of months, but back than Ukraine was vulnerable after the revolution, which lead to the end of Yanukovich’s regime, while the temporary government was lacking legitimacy to seriously resist Russia. Back then, Russia got a chance to occupy the rest of Ukraine. Vladimir Putin seemed to be encouraged by the success in the Crimea.
Publication date: 26 April 08:37 AM

Experts on Statements Made by Russian Officials about Russian Economic Recovery

International experts have commented on the recent statements made by several Russian officials about some economic recovery in Russia. They say that the weak economic growth isn’t backed by higher standards of living in the Russian Federation.

Publication date: 23 April 02:05 AM

USA Today Names the Reasons Why the USA Is Concerned about the Situation in Ukraine

USA Today has named the reasons why the United states should be concerned about the armed conflict in the East of Ukraine.

 

Previously, US Secretary of State Rex Tillerson asked his European colleagues why American taxpayers should be concerned about the situation in Ukraine. The answer came from his French colleague, who said that the United States should be interested in a strong Europe. On top of that, there are some other reasons why the USA shouldn’t stop thinking about Ukraine.

Publication date: 21 April 12:00 PM

Trump's Plan on Syria: Russia to Stay in Syria, Asad Has to Leave

At this point, several media sources, including Associated Press, report they know the details of the offer brought by Rex Tillerson to Moscow during his official visit. Now, everyone seems to be wondering what exactly Rex Tillerson and Sergey Lavrov discussed during their meeting in Moscow.
 

 

First of all, the sources claim that the USA is ready to unite forces with Russia to destroy the ISIS once and for all. Secondly, Bashar Asad has to quit anyway. He will be even allowed to go to Russia or Iran to avoid prosecution. Thirdly, a temporary government need to be established in Syria to back stabilization and holding a democratic election in Syria. Russia can stay in Syria to back security but they shouldn’t interfere with the local politics.
Publication date: 18 April 11:34 PM

Today's Russia-US Relations Are Worse Than During Obama’s Administration

At this point, the bilateral relations between Moscow and Washington are even worse than they used to be during Obama’s administration. This is what President Putin thinks on the matter.

 

 
Even though the Russian president thinks so, he hasn’t commented on the details of this degradation in the bilateral relations between the 2 superpowers. He assumes that the level of trust between the United States and the Russian Federation has dropped, especially on the military level.
 
Publication date: 18 April 11:05 PM

Will North Korea Become Another Syria for the USA?

The latest events in Syria made many international observers change their mind regarding President Trump. The current conditions also show that getting rid of North-Korean leader Kim Jong Un may also become a major goal for President Trump.

 

 
The news that U.S. aircraft carrier Carl Vinson suddenly reversed and moved to the Western part of the Pacific Ocean in the direction of the Korean Peninsula attracted the interest of the international community. Given the 59 missiles launched to hit a Syrian airbase a couple of weeks ago, this maneuver of the aircraft carrier does raise a lot of concerns.
Publication date: 18 April 03:29 AM