Good morning
The headlines:
- Congress might delay the automatic spending cuts to March.
Link: delaying again?
It would make sense.
The bills coming up from the Republican House of Representatives are being rejected by a Democrat Senate. The bills wanted by the Democrat Senate are being rejected by the Republican House of Representatives.
Fortunately, everyone can agree that they need more time. Which defeats the point of the automatic spending cuts – which was to force Congress to develop a solution.
Defer and deflect. That’s the rumoured plan.
Of course – it completely ignores the fact that this sends another sign to the general economy that the government is not going to resolve this issue. Which means…?
Most likely, it means that the economy will slide into recession in anticipation. Businesses will expect Congress to fail, so they will start to plan around that. Which means job cuts and not-investing and so on.
- Cyprus requests help.
Link: you can’t pick your family.
Cyprus has had its rating cut to junk, by all three ratings agencies. Despite the recent inability of the ratings agencies to generate any kind of market reaction whatsoever, the crux is that Cyprus has elected to seek aid.
The historic relationship between Greece and Cyprus* has left the Cypriot banks heavily exposed to the Greek story. It will be the fifth nation to seek a financial bailout.
It will also, ironically, take over the EU’s rotating presidency from July 1.
Cyprus has been pressed to take bailout packages for some time now, but has been resisting. I may be wrong – but this may have something to do with Cyprus’ near-tax-haven status. It relinquished its tax haven status as part of its entry requirements into the EU**, but still maintains low tax rates.
This makes it a bit of a EU threat. And as we know, financial aid comes with conditions…
- Merkel “hardens” joint-debt stance.
Link: how many times can she “harden” that stance?
Joint-debt sharing is “economically wrong and counterproductive” and “against the German constitution”.
And “liabilities and control” need to be in balance. Basically: “we can share debt when we are all in control of our finances”. And by that, she means “in control” like the Germans are in control of theirs.
Noble goal. But is it really possible?
Hardly.
- Greek finance minister resigns.
Link: that bad?
The first dropout, within days of appointment. He’s sick, apparently. Which may well be the oldest trick in the book.
Incidentally, Mr Samaras is also ill: hospitalised for a retinal issue. He’ll not be attending the Euro summit this week.
The cartoons that this will inspire… The Greek finances make you sick and leave you resigned. And the Greek leadership can’t see the way out.
- The States’ dilemma.
Link: to tax or not to tax, that is the question.
Or the question is irrelevant. States seeking to improve growth by cutting taxes should check out a study conducted by the non-partisan Institute on Taxation and Economic Policy.
Results: the nine states with the highest income taxes outperformed or kept pace with the nine states that don’t tax their residents’ income.
Which basically just points to the fact that, in the US split-structure of having a state tax system and a federal tax system, the state tax system is marginal when compared to the federal one. So cutting state taxes, or keeping them – whatevs.
- Microsoft buys Yammer.
Link: confirmed.
$1.2 billion for the corporate version of facebook. Except, I still have no idea what the difference is between Facebook, Linkedin and Yammer.
Or why Microsoft would pay $1.2 billion for it.
That’s all for now.
Have a good day.
*Within the Greek Communities abroad, there is almost no distinction. That said, I may be publicly-flaggelated for saying it. All I know is: as a child of a Greek Community, I remember being surprised to discover that Cyprus was not just another Greek Island. Much to the disappointment of my Cypriot grandmother.
**By enforcing tax rates at the lowest rate possible/acceptable to the EU partners.
