The tax war

Beneath the surface of all EU regulations, under the shadows of many thousands of different laws there’s a war, a stark conflict inside the borders of European Union. It’s an economic war, fought year after year in Bruxelles and in all the EU capitals, no matter what government is actually in power.

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The Cyprus bailout

At the very last moment a plan has been approved in order to save Cyprus from bankrupcy. Why am I not surprised? A few days ago I write another about this situation, the basic idea was to stigmatize that ten billion Euro are small money if we consider the hundreds of billions (or maybe the thousands) Euro already used to save other countries and/or their major banks.

cyprus-map

Cyprus is not the real problem about Eurozone, nor it’s the worst place to consider when it comes to bad finance all aroud Europe. What is Cyprus today? A symbol. It’s a slap in the face of russian oligarchs, who used for years this small island to practice money laundering on a massive scale. It’s a slap in the face of a number of financial operators who used the fiscal laws of Cyprus to pay the lowest tax cut possible in Europe. It’s a warning, a strong one, to Malta (and thru Malta to the UK).

What Cyprus is today it’s a warning to all of us european citizens. The decision to drag a percentile of bank deposits, no matter how much, it’s not only a financial measure made by a scared government but the demonstration that under the combinate pressure of ECB, IMF and WB there are very few chances to escape their decisions. In Italy we already experienced such a fate, back in the ’90s. In order to get enough money to pay the interests on our national debt the government got a small cut, 6 part on one thousand, from every bank account.

So, what about tomorrow? What France will do later this year when the pressure of foreign investors will try to crush its economy? What Slovenia will do next month to lift the pressure of a compromised economy?

The wind against austerity

The whole mechanism of austerity, enforced in Europe in the last two years, shows now its many cracks. Last Friday (March, 1st) the Bundesrat in Germany blocks the application of the Fiscal Compact due to its economic weight, demanding 3.5 Euro billions in compensation from the federal state. The Bundesrat, that’s under control of SPD-Grunen, opposes PM Merkel and finance minister Schauble decision to put national economy under constriction to reach budget targets for 2013.

This year will be held general elections in Germany and the fiscal issues are one of the major battlefields for the campaign to come. CDU-CSU, Merkel’s party, loses most part of the local elections in 2012 and the leaders of the party are expecting the worst in the months to come. Economics will be the leading argument almost everywhere this year and new formations like “Alternative for Germany” are already speaking aloud about to set a stop to any form of debt financing from Germany and to reset the borders of Eurozone.

In the meantime there are very important demonstrations thru Europe. That’s from Slovenia, a country that’s on the brink of a major political crisis.

slovenia-demonstration

This one is from Bulgaria, where demonstrations topped national government a few days ago.

bulgaria protest

Finally we got Greece, a country that’s on the edge of a full-out revolution any time soon.

greece-protest

Got the pictures? Add to the list Serbia, Spain and Italy. Keep an eye on Hungary, another country that’s ready to blow under its right-wing government. Think about Romania and Moldova too, their financial problems are getting worse day by day.

Austerity is not an answer, not even a little one, in the face of a crisis like this one. Time to set back the clock and rethink the whole situation, before it’s too late.

The Ourobos in the State

ouroboros

For the few who doesn’t already know it, the Ourobos is an ancient image tied to many religions and to the concept of infinity. It’s a snake or a dragon that eats its tail, a full circle where start and end follow each other endlessy. It’s also a good rethoric figure, mostly used to describe cycles that are hard to break. Are there such cycles in a modern State? In my opinion, yes.  Last Thursday I was reading about how much is difficult in Japan to find day care for the children and how it’s still a cultural matter in that country, somewaht hard to believe in 2013 that women have to be eyed in a different way when it comes to work.

Italy got the same problem, in our country we are well under the number of day care position needed. This part of welfare is supplied by other members of the same family, usually grandparents, often with a lot of small and big issues about the safety of our children.  Once again the mother have to decide what to do about kids. Does she have to work to better support them and the whole family? Is it better to use all of her time and resources to directly take care of them? Does she have to share this burden with the grandparents, if any around, or trade a lot of her money to get hired help?

Maybe you can see it as a little problem. Maybe you don’t a family of your own, or you got enough money to get every service you may need. But if the focus of this problem is related to the State you may find another cycle, a depressing one. Investments in welfare are declining in most western countries, that means that less money is equivalent to a lower level of service, including the day care. So you have less women in the job market, less people that works in the day care centers, a growing social problem focused in the families area  and in the job area. With less workers you lose taxes too. That means less money to invest and more cuts…

Needless to say that this vicious cycles have to be breaked. How to find the money that a good welfare system needs? More cuts in other areas of the State spending? That could be good but could lead to another depressing cycle elsewhere. No, the answer is more and more complex. We need to rethink the basic of the State. Set back the clock to a time where the State exists in order to help its citizens, not to serve only global economic issues. We are the State. Not the corporations, not the international business players. We.