The Merkel and Sarkozy meeting in Paris yesterday resulted in a wish list for new taxes, rules and regulations. The morning an article in The Telegraph summarized some of these proposals.
European leaders said they had agreed to:
- Create "a real economic government" of the eurozone. Comprising heads of member states the new board would meet at least twice a year. Herman Van Rompuy has been proposed as the first president - the position will be subject to election every two and a half years. The move is designed to address criticism the response to the crisis has been hampered by a gap between the Finance Ministers Group and the European Council.
- Common tax policies for Germany and France, including a joint corporate tax rate by 2013.
- Ensure all European countries balance their books - and introduce deficit limiting laws by next summer.
- Introduce a financial transaction tax. Mr Sarkozy said: "The French and German finance ministers will table a joint proposal at the EU level next September for a tax on financial transactions. This is a priority for us."
- Avoid issuing eurobonds immediately. The leaders insisted that both countries were opposed to underwriting European debt. Mr. Sarkzoy said such a move could only work if fiscal integration is complete. Ms Merkel said: "What we are proposing here is the means with which we can solve the crisis right now and win back trust, step by step ... I do not think euro bonds will help us in this."
We in the Forex markets are going to be a target for new taxes and regulations. The big spenders in Europe are hungry for new tax revenue. The old format, spend and borrow, is likely going to be more difficult in the future.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.