The total debt will increase

Anyone who has read in recent months, a British newspaper, could easily get the impression that the British government was busy with its own abolition. Whenever the government austerity package was mentioned, it was full of dramatic and bloody metaphors formulations. 70% believe that the debt would fall significantly in 2015. us-debt1That would be nice.

Government expenditure will fall in real terms by 0.7% per year, which the government’s share will drop back to 2015 to the 2007 level. The total debt will increase while still around £ 350 billion. The Institute of Economic Affairs has in London now published an anthology, in which eleven authors show would look like a thorough renovation program of public finances.

The authors’ approach is not the “brush approach”, because in this state spending programs remain untouched in their structure, and are only slightly trimmed. It expenditure areas are identified where ratio of expenses to earnings of governance is particularly abysmal. Based on strategies for an orderly withdrawal of the state from many areas of life are developed. With this program, the government’s share would be reduced within a single legislative session to below 30%.

The exempt amount of income tax could more than doubled, and the tax rate is reduced to 15%. Several types of taxes could be abolished completely. The annual growth rate of the UK economy would grow in the next three-quarters of a percentage point.

The fight against the debt crisis

The fight against the debt crisis happening today in Brussels is in the next round. The new uncertainties in Italy, the debt crisis reached a new quality. There are solutions on the table now. In the beginning, there must be a more honest result. Greece’s problems are different from those of Portugal, Spain, Italy and Ireland. Spain and Italy do not have solvency problems.bubble-debt-crisis-500x354

Here seem especially political uncertainty, but the fundamentals suggest that fiscal sustainability can be restored. Ireland and Portugal have transient structural problems. Some banks, there are enough economic opportunities. Since 1975, there was no surplus in the current account more. Despite consolidation efforts, there is still a solvency problem. A restructuring of the public debt seems inevitable. The question remains: how and when?

An open rescheduling seems irresponsible in the face of global risks. Careful market would be buying up distressed government bonds by the debtor. The capital necessary to the EFSF could provide a relatively low interest rate. The purchases would involve the creditor equal to the difference between face value and market value. provides Connecticut Limo Service CT to LGA, JFK, EWR, Philadelphia, LaGuardia and Newark Airport. NYC Airports Limo also offers Limousines in Connecticut to New York City, Queens, Brooklyn, Bronx, Manhattan and Staten Island. Limo Service CT and Connecticut Limousine Service are available 24 hours in all major towns in Connecticut. NYCairportsLimo is specialize in providing a profession service for cars, limos, CT Airport shuttle, CT Airport Transportation and CT Wedding Limo Service. Limo Service CT and Car Service CT are provided by CTairlink to JFK, LaGuardia, EWR, LGA, Hartford Bradley, Boston Logan, BDL, Westchester County and Newark Airport including Manhattan Cruise Terminal and Atlantic City Casinos. We use Sedans for CT Airlink Limousine, Livery and Car Service in Connecticut towns Bridgeport, Danbury, Norwalk, Shelton, Stamford, Bethel, Brookfield, Darien, Easton, Fairfield, Greenwich, Monroe, New Canaan, New Fairfield, Newtown, Redding, Ridgefield, Sherman, Stratford, Trumbull, Weston, Westport, Wilton, Ansonia CT.

A new rescue package

The euro commemorative summit agreed on a new rescue package for Greece. Schaeffler-540x304To those already granted 110 billion euros from last year Greece would receive additional 109 billion euros for overdue loans and debt from the EFSF. It comes to run times of 7.5 extended to 15 years and reduce the interest on the loans to 3.5 percent. In the same time, the private sector is contributing € 37 billion by the year 2014 the Fund.

There are additional 12.6 billion euros by buying back Greek bonds at a discount. Here is what the FDP financial expert and economist Blog Author Frank Schaeffler told Spiegel Online: “Without an exit option from the euro does not cut the debt, Greece will depend permanent from donor countries.“

According to the head of the economic experts, Professor Wolfgang Franz holds the agreed restructuring of Greek debt and it is not enough. “Any further debt would be 50 percent for Greece have been better,” he told. Professor Peter Bofinger is agrees. “The debt should have been reduced by 50 percent for the country to get on theirpeter feet and be able to return to the capital markets “.

That is the crucial point. If there are public and private creditors Greece, the loans for interest are only 3.5 percent, which is a big step forward. The Association of Taxpayers exerts considerable criticism. It defines this as negligence because to taxpayers are imposed additional liability risks for Greece amounting to € 109 billion with the involvement of the International Monetary Fund. The bank must balance and we all to work together. In Germany have € 3.3 trillion money savings, it must be somewhere in the world and people or companies that have € 3.3 trillion debt. In a book, Professor Bofinger explains the logical relationships of savings and profits. A low savings rate means high profits.

What about the 1950, from the beginning of the economic miracle? Savings rate of households because of the high monetary expenditure ratio decreased from 96.8% to 3.2%. The result is gross investment rate of 27%, net investment rate of 17%, after depreciation of 10% points.

Tax reduction is not a gift

Most politicians, policy advisers and economists say that the state needs every euro Fiscal Consolidation. Citizens have to forgot gifts, tighten their belts more closely and contribute to healthier public finances. The truth is that the German citizens have made this post a long time ago. In just three years (2005-2008) were the federal government, states and municipalities to increase their tax revenues of 452 to 561 billion euros.

European and German flagResults were in the years 2007 and 2008 after a long time over Germany surpluses in public finances, caused mainly by economic growth and the increase in VAT from 16 to 19 percentage points, mind you: a tax on final consumption of all German citizens! Only then came the global financial crisis, and with it a fall in tax revenue by 37 billion euros in 2009. Already in 2010, there was a slight recovery of € 7 billion.

The tax estimate of May 2011 and expects the following years until 2015 with strong growth averaging 4.2 percent per year, in absolute numbers: 121 billion euros. There is thus in the ten years 2005 to 2015 an expected tax increase of exactly 200 billion euros. By increasing public poverty can therefore be no question at all. Quite the contrary: middle of this decade could meet the criteria of the debt limit of the revenue side to be within reach.

Where is the main reason for this positive development? The state has not saved, but the German economy is growing, and is much faster and more robust than in the mid of the last decade. The result is the tax revenue increases, and indeed in virtually all types of taxes. The German economy has just been highly competitive, and that is thanks to its power output, thus ultimately especially their employees. They are become much more productive in the past decade, but they received it only very moderate wage increases. Real wages declined even in the trend, as well as the labour costs. A tax cut today is anything but a gift. Moreover, it is a perfectly sensible instrument to widely desired strengthening of domestic demand.