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BackThe financial crisis caused by banks and major financial groups has cost European taxpayers billions. That is why the belt must now be firmly tightened. The consequence is tax increases for employees and cuts in public services. The only ones, who once again do not want to make any contributions to the costs of the crisis, are those, who triggered it: the financial institutes. With the strong support of Germany.
The political outcry in the middle of the crisis was huge. All the stops were supposed to be pulled out - both at European and international level - to make sure that such a crisis would never happen again. And the causers of the crisis - the financial groups - would be made to pay. Almost 2 years after the outbreak of the crisis, there is not much left of the international will to regulate the financial markets and to make the banks pay for the damage they have caused.
Germany plays questionable role
A questionable role in this context is played by Germany. Not only did Germany put national before European interests by preventing a European answer to the speculative attacks on Greece at the last European summit. Now the German banks, which significantly contributed to the creation of the financial crisis, are supposed to escape scot-free. There is no longer any question of them participating in the costs of the crisis. Only a short while ago, that sounded quite differently. Then, the German government had still paid lip service to the introduction of a so-called Financial Transaction Tax (FTT). Such a tax would be suitable to record and restrict in particular computer-controlled speculative transactions, which are no use to the real economy. It would not only make a contribution to limiting the risk, which is generated by the financial markets, but also bring significant funds to the budgets, which had received quite a battering as a result of the economic crisis. An intelligent, fair and simple idea - unfortunately not in the eyes of the lobbyists of the financial industry.
Now Germany wants nothing more to do with the Financial Transaction Tax. The German Finance Minister Wolfgang Schäuble commented: “We have to accept that what we would have liked to consider - namely to introduce a Financial Transaction Tax - is only possible, if it is agreed globally. And there is no realistic chance of this happening at the moment.” This is the end of the Europe-wide - and also the global - introduction of the FTT, just at the very moment when the idea started to gain more and more political supporters.
Idea that the banks have to pay for the damage they have caused has been shelved
And in any case, if Germany and some other EU Member States, such as Sweden for example, get their way, the banks will not contribute anything to the costs of the worst ever crisis in the post-war era. This original goal of the German Government had been “shelved” said the financial expert of the governing coalition partner FDP, Hermann Otto Solms, on Deutschlandfunk. "The banks are still suffering from the crisis", justifies Solms the radical change of direction. Furthermore, it would be very difficult to determine later, almost two years after the crisis, who had been responsible for what during the financial crisis and who had knowingly made mistakes.
Bank levy as bluff package
Instead, the German Government would like to please Europe with a “new” idea, which it has given the misleading title “Bank levy”. As a buffer for future crises, the banks shall now pay about a billion Euros per year into a crisis fund. If a new crisis occurs, the rescue costs would then no longer come from the taxpayer but would be paid for from this crisis fund. An idea, which goes back to a proposal, made by Deutsche Bank boss Josef Ackermann at the World Economic Summit in Davos. In view of the ca. 500 billion Euro, which Germany has made available for the banks during the course of the current crisis, it is easy to work out how long the banks would have to pay into such a fund. Should the next crisis, however, come sooner than expected, it will be the taxpayer once again who has to bail out the banks.
Germany now also wants to sell this model to the other EU countries. The French Finance Minister Christine Lagarde was already present when the German government announced the proposal this week. And the British Prime Minister Gordon Brown is next on the list to be persuaded this week. Afterwards, in April, the Europeans want to come to a global agreement with their G20 partners in Washington.
Political leadership in the EU is very different
Germany has to accept criticism that she has caused double political damage by presenting this model, which in reality is nothing more than a (underfinanced) insurance for future crises. On the hand, Germany, as the largest economic nation of the EU, has said goodbye to her political leadership role in Europe and quietly buried her previously promotionally effective support of a FTT. In doing so, she has torpedoed the introduction of the FTT in the EU and within the G20 in a critical moment. On the other hand, the name “Bank levy”, which has been given to the German insurance model in order to make belief that the banks would have to pay for the immense damage they caused, when in fact they did not pay a penny. This also massively undermines the efforts of those Member States such as Austria that want to introduce a genuine bank levy in form of a tax, which flows into the national budget.
Germany plays questionable role
A questionable role in this context is played by Germany. Not only did Germany put national before European interests by preventing a European answer to the speculative attacks on Greece at the last European summit. Now the German banks, which significantly contributed to the creation of the financial crisis, are supposed to escape scot-free. There is no longer any question of them participating in the costs of the crisis. Only a short while ago, that sounded quite differently. Then, the German government had still paid lip service to the introduction of a so-called Financial Transaction Tax (FTT). Such a tax would be suitable to record and restrict in particular computer-controlled speculative transactions, which are no use to the real economy. It would not only make a contribution to limiting the risk, which is generated by the financial markets, but also bring significant funds to the budgets, which had received quite a battering as a result of the economic crisis. An intelligent, fair and simple idea - unfortunately not in the eyes of the lobbyists of the financial industry.
Now Germany wants nothing more to do with the Financial Transaction Tax. The German Finance Minister Wolfgang Schäuble commented: “We have to accept that what we would have liked to consider - namely to introduce a Financial Transaction Tax - is only possible, if it is agreed globally. And there is no realistic chance of this happening at the moment.” This is the end of the Europe-wide - and also the global - introduction of the FTT, just at the very moment when the idea started to gain more and more political supporters.
Idea that the banks have to pay for the damage they have caused has been shelved
And in any case, if Germany and some other EU Member States, such as Sweden for example, get their way, the banks will not contribute anything to the costs of the worst ever crisis in the post-war era. This original goal of the German Government had been “shelved” said the financial expert of the governing coalition partner FDP, Hermann Otto Solms, on Deutschlandfunk. "The banks are still suffering from the crisis", justifies Solms the radical change of direction. Furthermore, it would be very difficult to determine later, almost two years after the crisis, who had been responsible for what during the financial crisis and who had knowingly made mistakes.
Bank levy as bluff package
Instead, the German Government would like to please Europe with a “new” idea, which it has given the misleading title “Bank levy”. As a buffer for future crises, the banks shall now pay about a billion Euros per year into a crisis fund. If a new crisis occurs, the rescue costs would then no longer come from the taxpayer but would be paid for from this crisis fund. An idea, which goes back to a proposal, made by Deutsche Bank boss Josef Ackermann at the World Economic Summit in Davos. In view of the ca. 500 billion Euro, which Germany has made available for the banks during the course of the current crisis, it is easy to work out how long the banks would have to pay into such a fund. Should the next crisis, however, come sooner than expected, it will be the taxpayer once again who has to bail out the banks.
Germany now also wants to sell this model to the other EU countries. The French Finance Minister Christine Lagarde was already present when the German government announced the proposal this week. And the British Prime Minister Gordon Brown is next on the list to be persuaded this week. Afterwards, in April, the Europeans want to come to a global agreement with their G20 partners in Washington.
Political leadership in the EU is very different
Germany has to accept criticism that she has caused double political damage by presenting this model, which in reality is nothing more than a (underfinanced) insurance for future crises. On the hand, Germany, as the largest economic nation of the EU, has said goodbye to her political leadership role in Europe and quietly buried her previously promotionally effective support of a FTT. In doing so, she has torpedoed the introduction of the FTT in the EU and within the G20 in a critical moment. On the other hand, the name “Bank levy”, which has been given to the German insurance model in order to make belief that the banks would have to pay for the immense damage they caused, when in fact they did not pay a penny. This also massively undermines the efforts of those Member States such as Austria that want to introduce a genuine bank levy in form of a tax, which flows into the national budget.