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ECB President Jean Claude Trichet in conversation with Irish Minister of Finance Brian Lenihan, at the Eurogroup meeting in Luxembourg, Monday June 07, 2010
Switzerland's lower house of parliament today rejected a bill aimed at bringing the country closer to handing over the names of thousands of alleged American tax dodgers to US authorities.
The new law was meant to allow the Swiss to fulfill its obligations under last year's settlement of a tax case with the US In that case, US authorities accused Swiss bank UBS AG of having helped thousands of US taxpayers avoid paying taxes at home by setting up secret offshore accounts. The lower house rejected the agreement with 104 voting against it, and 76 supporting it - - irrespective of the morality or lack of it in living on the fruits of tax evasion, long-held privileges are not easily surrendered.
Euro: Eurogroup finance ministers on Monday night finalised agreement on the support regime for Eurozone countries which may encounter difficulty in raising borrowings. Ministers from the 16 countries agreed on the arrangements for a Special Purpose Vehicle (SPV) to raise up to €440bn to lend to Eurozone countries.
"There is no uncertainty left about the Eurozone's capacity to provide conditional aid to countries in fiscal trouble," European Economic and Monetary Affairs Commissioner Olli Rehn told a news conference after talks in Luxembourg. Jean-Claude Juncker, who chaired the meeting, said the SPV would be operational this month.
A statement issued by the ministers said governments would make bigger commitments than first planned to ensure smooth operation and to justify a top credit rating.
The SPV is a company that will be able to raise money on markets by issuing bonds thanks to loan guarantees provided by governments of the Eurozone. Member states hope it will never be used but that its existence will convince markets that default fears are unfounded.
Juncker and Rehn also welcomed additional austerity measures announced in mid-May by Spain and Portugal, which markets see as potential troublespots after Greece, the first country in the Eurozone's 11-year history to require a financial rescue.
Economies trying to reduce deficits are taking action way to soon and economies need to be on a stronger footing first, Hugh Johnson from Johnson Illington Advisors told CNBC Tuesday. Johnson also said that oil prices will increase over time:
International Monetary Fund chief Dominique Strauss-Kahn, who joined the ministers, said the anti-contagion plan - - - a safety net worth up to €750bn once an IMF commitment of €250 billion is included - - was a "good step forward."
The Spanish Minister of Economy and Finance, Elena Salgado, highlighted the support obtained from the Eurozone countries for measures taken by Spain and Portugal, at the Ecofin meeting of EU finance ministers held on Tuesday in Luxembourg.
The Second Vice-President of the Spanish Government said upon entering the Ecofin meeting that "we have presented an austerity plan until 2013 in which, obviously, all the data that is sent annually to the European Union has to be updated every year under the Stability and Convergence Pact".
"But there are no more specific measures," added Salgado, who said that "what there is, is a commitment by the Spanish Government that if there are variations in the budget implementation, to solve these variations so that in any event the deficit in 2011 is 6%, which is the commitment we have made and the commitment which the Commission says is correct".
Salgado stressed that in Monday's Eurogroup meeting she said that "we will reach a 6% deficit in 2011. We will have to reach 3% in 2013. So, obviously in 2012 and 2013 we will have to continue working towards this. But no one demanded anything. What there was yesterday was support for Spain's and Portugal's measures”.
On Tuesday, Elena Salgado expressed her commitment to take any additional measures "that are necessary" to reduce the deficit, but she confirmed that no other specific measures are being prepared, as she believes that the adjustment announced so far will be sufficient.
"We will adopt the necessary measures for the deficit to reach 6% at the end of 2011, to which we have committed. But there are no additional measures because, according to our forecasts, what we have put on the table is sufficient to meet that goal", said Salgado.
The Spanish Minister made her statements after the President of the Eurogroup, Jean-Claude Juncker, opened the door on Monday to the European Union requesting greater measures from Spain and Portugal after 2011, as well as reforms in the labour market and the pension system.
Checking the pulse of the American consumer, with Greg Dougherty, Consumer Reports:
US Markets
In New York Tuesday, the Dow added 43 points or 0.44% to 9,860.
The S&P 500 has risen 0.22% and the Nasdaq has dipped 0.60%.
On the New York Mercantile Exchange, oil for July 2010 delivery is trading at $71.76 up 32 cents from Monday's close. In London, Brent crude for July delivery is trading at $71.89 a barrel.
Currencies
The euro is trading at $1.1956 and at £0.8328.
For live currency updates, check the right-hand column of the Finfacts home page.The dollar traded at a record low $1.6038 per euro on July 15, 2008.
