December 11, 2018

Dutch Negotiator Takes Blame for Cyprus Failure

The Dutch finance minister, who announced a tax on depositors in Cyprus, suggested as much on Thursday. Under a barrage of questions from puzzled and attention-seeking lawmakers in the European Parliament, he accepted blame for the agreement on the tax.

The decision to impose the levy on small depositors “was not stopped by me because it was a compromise which brought together the different interests and the different goals that we share,” said Jeroen Dijsselbloem, president of the group of finance ministers whose 17 countries use the euro. “As the Eurogroup president, I will take responsibility,” he said, but added that the levy was “a joint decision.”

“Whether we are incompetent or not, I’ll leave up to you to judge,” he told lawmakers at a scheduled hearing that turned into an accounting for the turmoil after the announcement, which frightened savers by proposing to tax their deposits and raised additional doubts about the viability of the euro currency.

Further complicating matters, Nicos Anastasiades, the newly elected Cypriot president, involved in negotiations last Friday night, blocked a proposal to lower the tax on small depositors, fearing that a higher tax on bigger depositors would cause them to flee and hollow out the island’s vital financial services sector.

Mr. Dijsselbloem said that he should have “communicated more right from the start” on why the levy — particularly on deposits of less than 100,000 euros, or $130,000 — should not be seen as a threat to savers across Europe. He insisted that there had not been “a huge loss of confidence” in a blocwide rule that guarantees deposits up to 100,000 euros.

As the Cypriot Parliament postponed until Friday a vote on fresh proposals, Mr. Dijsselbloem said that a levy on deposits was inevitable to help cover the cost of a bailout, but that a revised arrangement should put a greater burden on richer depositors.

Mr. Dijsselbloem, 46, was elected just two months ago as president of the euro zone group, succeeding Jean-Claude Juncker, the prime minister of Luxembourg and a seasoned participant of European politics, who had held the post since 2005. He cuts a youthful figure among the graying cadre that keeps the machinery of the European Union running.

Dutch officials characterize Mr. Dijsselbloem as a gutsy and gracious politician. He remained cool Thursday under a sustained attack. But he has had little experience at the top levels of government or European affairs, having assumed the finance portfolio, his first Dutch cabinet post, late last year.

Mr. Dijsselbloem, whose Eurogroup term lasts two and a half years, immediately quickened the metabolism to the group by announcing meetings on his Twitter account and calling ministers to Brussels earlier in the day with the goal of ending meetings earlier.

The initial results were mixed.

The decision on the levy was announced after what participants characterized as a rancorous and chaotic 10-hour meeting that also involved the European Central Bank and International Monetary Fund — two members of the so-called troika that includes the European Commission and helps set the terms of euro zone bailouts.

Sharon Bowles, a British member of the European Parliament who leads its Economic and Monetary Affairs Committee and introduced Mr. Dijsselbloem on Thursday, said she did not want to go “too much on a witch hunt,” but demanded to know how plans to tax small depositors had gotten so far.

“I know that you can get around it, calling it a wealth tax, or a levy or whatever,” Ms. Bowles said. But, she said, many citizens across the European Union had “a lot of concern” and wanted to know: “Is this a new tool in the toolbox? Are they safe? And what is to be expected?”

She suggested that Mr. Dijsselbloem’s presentation had been clumsy and should have included “more sensitivity” to concerns about whether the 100,000-euro deposit guarantee was still valid. She noted that he had waited two days to issue a second, clarifying statement.

Mr. Dijsselbloem conceded errors.

“Of course we should have spent more time, more wording, right from the start, on the distinction between a one-off wealth tax, a contribution, etc., which is a completely different thing” from the blocwide deposit rule, he said.

In seeking a solution for Cyprus, Mr. Dijsselbloem has faced the reluctance of Northern European nations, including his own, to give money to a divided island in the eastern Mediterranean and to save a banking system that has long benefited Russian investors. Many lawmakers, particularly in Germany, suspect those investors of involvement in money laundering.

The Cypriots have stoked concerns by seeking to protect a banking sector that José Manuel Barroso, the president of the European Commission, said Thursday was based on “an unsustainable financial system that is basically eight times bigger than” the island’s gross domestic product.

Derk Jan Eppink, a Dutchman elected to the European Parliament from Belgium, needled Mr. Dijsselbloem over allowing the Russians to help decide the fate of Cyprus.

Tens of thousands of Russian citizens live on Cyprus, and Moscow has a strategic interest in the island because of its proximity to its ally Syria and because of newly discovered offshore gas reserves.

The danger now is that “Putin is going to keep you dangling,” Mr. Eppink said, referring to the Russian president, who denounced the weekend bailout proposal. Now, Mr. Eppink warned, “Russia will exert influence over Cyprus.”

Article source: http://www.nytimes.com/2013/03/22/business/global/eurogroup-chief-takes-some-blame-for-cyprus-crisis.html?partner=rss&emc=rss

Eurogroup Chief Takes Some Blame for Cyprus Crisis

The Dutch finance minister, who announced a tax on Cypriot depositors, almost suggested as much on Thursday. Under a barrage of questions from puzzled and profile-seeking lawmakers in the European Parliament, he accepted blame for agreeing to the controversial tax.

The decision to impose the levy on small depositors “was not stopped by me because it was a compromise which brought together the different interests and the different goals that we share,” said Jeroen Dijsselbloem, president of the group of 17 euro zone finance ministers. “As the Eurogroup president, I will take responsibility.” But he added that the levy was the result of “a joint decision.”

“Whether we are incompetent or not, I’ll leave up to you to judge,” he told lawmakers in a scheduled hearing that turned into an accounting for the turmoil after the announcement last weekend, which spooked savers by taxing their deposits and ignited new doubts about the viability of the euro currency.

Mr. Dijsselbloem conceded that he should have “communicated more right from the start” on why the levy — particularly on deposits under €100,000, or $130,000 — should not be seen as a threat to savers across Europe, and he insisted that there had not been “a huge loss of confidence” in a Union-wide rule that guarantees deposits up to €100,000.

As the Cypriot Parliament, which rejected the weekend bailout package on Tuesday night, prepared to vote on fresh proposals Thursday, Mr. Dijsselbloem said that a levy on deposits was “inevitable” in order to help cover the costs of a bailout, but that a revised arrangement should put a far greater burden on wealthier depositors.

Mr. Dijsselbloem, 46, took over just two months ago as chair of the euro zone group from Jean-Claude Juncker, the Luxembourg prime minister and a seasoned player of European politics, who had held the post since 2005. He cuts a youthful figure among the graying cadres who keep the machinery of the European Union ticking over.

Dutch officials characterize Mr. Dijsselbloem as a gutsy and gracious politician, and he remained consistently cool under sustained attack on Thursday. But he has little experience at top levels of government or European affairs, having assumed the finance portfolio, his first Dutch cabinet post, late last year.

Mr. Dijsselbloem, whose Eurogroup term lasts two and a half years, immediately brought a speedier metabolism to the group by announcing meetings on his Twitter account and calling ministers to Brussels earlier in the day with the goal of ending meetings earlier.

So far, the results are mixed.

The decision on the levy was announced after what participants characterized as a rancorous and chaotic 10-hour meeting that also involved the European Central Bank and International Monetary Fund — two members of the so-called troika that includes the European Commission and helps determine the terms of euro zone bailouts.

Sharon Bowles, a Briton who leads the Economic and Monetary Committee at the European Parliament and introduced Mr. Dijsselbloem on Thursday, said she didn’t want to go “too much on a witch hunt,” but demanded to know how plans to sting small depositors had gotten so far.

“I know that you can get around it calling it a wealth tax or a levy or whatever,” said Ms. Bowles. But many citizens across the Union now had “a lot of concern” and wanted to know, “Is this a new tool in the tool box, are they safe, and what is to be expected?”

Ms. Bowles suggested that Mr. Dijsselbloem’s presentation had been ham-fisted and should have included “more sensitivity” to concerns about whether the €100,000 deposit guarantee was still valid. She noted that Mr. Dijsselbloem waited two days to issue a second, clarifying statement.

Mr. Dijsselbloem conceded errors.

“Of course we should have spent more time, more wording, right from the start, on the distinction between a one-off wealth tax, a contribution, etc., which is a completely different thing” from the Union-wide deposit guarantee system, he said.

Mr. Dijsselbloem’s first challenge has been one of the hardest imaginable.

In seeking a solution for Cyprus, he has butted up against the reluctance of North European nations, including his own, to fork out money to a divided island in the Eastern Mediterranean and to save a banking system that has long benefited Russian investors whom many lawmakers, particularly in Germany, suspect of involvement in money laundering.

The Cypriots have stoked concerns by seeking to protect a banking sector that José Manuel Barroso, head of the European Commission, noted on Thursday was based on “an unsustainable financial system that is basically eight times bigger than” the island’s G.D.P.

Further complicating matters, Nicos Anastasiades, the newly elected Cypriot president, involved in some negotiations on Friday night, flatly refused a proposal to lower the tax on ordinary Cypriot deposit holders, fearing that a higher tax on bigger depositors would see them flee and hollow out the island’s vital financial services sector.

Derk Jan Eppink, a Dutchman elected to the European Parliament from Belgium, needled Mr. Dijsselbloem over allowing the Russians to help decide Cyprus’s fate.

There are tens of thousands of Russian citizens living on Cyprus, and Moscow has a strategic interest in the island because of its proximity to its ally, Syria, and because of newly discovered offshore gas reserves.

The danger now is that “Putin is going to keep you dangling,” Mr. Eppink said, referring to the Russian president, who denounced the weekend bailout proposal. Now, the lawmaker warned, “Russia will exert influence over Cyprus.”

Article source: http://www.nytimes.com/2013/03/22/business/global/eurogroup-chief-takes-some-blame-for-cyprus-crisis.html?partner=rss&emc=rss

Disagreement Over Banking Regulation Marks Second Day of E.U. Talks

A plan to establish a single banking supervisor under the aegis of the European Central Bank to oversee the 6,000 lenders in the euro area was on the agenda for a second day of talks that had concentrated Monday on the Greek situation, which still threatens to derail the euro zone after dragging on for more than two years.

The creation of the single banking supervisor is seen as a key step to breaking the so-called doom loop between lenders and governments that has brought a number of economies in Europe, including Spain’s, to the brink.

Germany made the creation of the single supervisor a prerequisite for states to tap a newly created European bailout fund and use the money to bailout their banks directly.

But Luc Freiden, the finance minister for Luxembourg, said on Tuesday that the system still could be months away.

“We shouldn’t be fixed to dates,” said Mr. Freiden. “If it takes three months longer, it’s no problem.”

The European Commission has said a unified system of regulation could be up and running in the new year.

Germany is among countries that have urged caution, saying that rushing the system would risk creating new loopholes. Britain and Sweden say much work still needs to be done to ensure the new system does not discriminate against countries that remain outside of the euro area.

“We cannot see a compromise with only the current modalities on the table,” Anders Borg, the Swedish finance minister, said on Tuesday morning. “The E.C.B. could be the supervisor but then we need to consider a treaty change,” he said. “Either you must change the treaty so it’s clear that every member is treated equitably, or you need to move it outside of the E.C.B.”

Finance ministers were also expected to discuss increasing capital requirements for banks and how to more closely monitor the draft budgets of E.U. members and correct excessive deficits.

In a sign that fixing the Greek economy and the euro would continue to be a rancorous process even after three years of continuous crisis, Jean-Claude Juncker, the prime minister of Luxembourg, and Christine Lagarde, the managing director of the International Monetary Fund, drew strikingly different conclusions late on Monday about how long it should take to bring the towering Greek debt under control.

The disagreement is a hugely sensitive matter for Greece’s biggest creditors in the euro area and for Germany in particular. The government in Berlin wants to avoid the political fallout from paying higher costs associated with meeting a target set by the I.M.F. for cutting Greek debt to 120 percent of gross domestic product by 2020.

Wolfgang Schäuble, the German finance minister, told a news conference on Tuesday morning that meeting the I.M.F. target was “possibly a little too ambitious” given the worsening economy across Europe.

Mr. Schäuble also said Greek creditors would be able to find ways to help the country meet the higher costs of delaying some of its previously agreed targets to 2016, without handing over more money.

“There are no considerations to top up the program,” said Mr. Schäuble, referring to giving additional support for Greece. “In the end it will be all about guarantees, not transfer for Greece.”

Creditors could agree instead to “take some measures to reduce interest rates that will have an immediate effect on the budget” in Greece to ensure that “problems will be solved within the financial framework of the second program,” Mr. Schäuble said.

A draft copy of a report by the troika of international lenders — the European Commission, the European Central Bank and the International Monetary Fund — that was circulating at the meeting said the bill for allowing Greece the additional time would be €32.6 billion.

Helping Greece through 2014 would require €15 billion partly to make up for lower than expected proceeds from privatizations, according to the draft report.

Article source: http://www.nytimes.com/2012/11/14/business/global/disagreement-over-banking-regulation-marks-second-day-of-eu-talks.html?partner=rss&emc=rss

Bucks: Behavior Gap Book Excerpt: What Skis Taught Me About Money

Carl Richards

Carl Richards is a certified financial planner in Park City, Utah. His new book, “The Behavior Gap,” was published this week, and we’ll be running excerpts all week long. Meanwhile, his sketches are archived here on the Bucks blog.

I live in Park City, Utah, where some of us take skiing pretty seriously. One morning some years back, a friend swung by my house to pick me up to go backcountry skiing.

I ran into the garage to grab my skis. I stood there for a second looking at my four different pairs of skis, each designed for particular conditions, and suddenly, I was paralyzed. I just couldn’t choose.

My friend sat in the car honking the horn — Let’s go, Carl! Move it! The sun’s coming up! The snow’s getting soft! — while I stared at those skis. It was ridiculous. I’d spent all that money and time and energy collecting these skis so I would be ready to deal with any situation — and now I just felt powerless.

That day was a turning point for me. I got rid of three pairs of skis, and kept my favorite pair: the ones that would let me do what I really care about doing, which is to move light and fast through the backcountry.

Patricia Wall/The New York Times

The skis I kept aren’t perfect in every condition. They’re actually a pretty bad solution in heavy snow or in really steep terrain. So what? They’re a decent compromise in most situations, and they work beautifully in the conditions I like best.

Now I don’t have to think about which skis to bring on a trip. I just grab the ones I have and go. I trust my experience and my instincts and my luck to make it through situations when my equipment isn’t perfect.

Lots of people think that to make good money decisions you need to have a plan for every situation. You need insurance for every possible setback and investments for every market condition. All of your assumptions about the future need to be refined to perfection, so that you will never be surprised. You need to know and understand everything about the financial markets, and you need to budget your spending to the last dime.

But that kind of thinking is based on fear.

We fear (naturally enough) life’s uncertainty, its ups and downs. And so we make plans that we hope will give us the power to control our future. If I do this, that will not happen; if I sell now, I will avoid the coming downturn; if I pick the right investments, I will be financially safe; if I worry enough, I will be ready when bad news comes.

Trouble is, the real world is complicated. We don’t know what’s going to happen.

That means that most of our plans are useless. When I had four pairs of skis, I was always choosing the wrong ones anyway!

The point is, no plan will cover every situation — and that’s O.K. You don’t have to choose the perfect investment or save exactly the right amount or predict your rate of return or spend hours watching television shows about the stock market or surfing the Internet for stock picks.

You don’t need a plan for every contingency.

Excerpted from The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money. Published by Portfolio/Penguin. Copyright Carl Richards, 2012.

Article source: http://feeds.nytimes.com/click.phdo?i=8efa6d45c01e056a3945fb83f9b93ecc

Special Section: Wealth


SHORT-TERM PLANNING Robert Hassler, left, with his estate planning lawyer, Joseph Septimus. Mr. Hassler said it was important to create a flexible plan to deal with future tax law changes.


Certainty on Tax, but Just for Two Years

The compromise tax law that was enacted in December clarified the tax outlook for the immediate future, but that clarity will last for only two years.

Article source: http://feeds.nytimes.com/click.phdo?i=8dd742b43ea98fd3fdf088d828c792c7