Public finances: The fairy tale of the rich federal government and the poor countries

BThe German Association of Towns and Municipalities is already looking forward to the vote in the Bundestag. “We welcome the planned aid from the federal government to maintain the communal ability to act in the Corona crisis,” said Deputy Managing Director Uwe Zimmermann. Right now, the municipal ability to act should be secured at a high level, and savings should not be made against the economic crisis.

On Thursday, the members of the Bundestag will vote on rapid financial aid for Germany’s municipalities in the billions. The federal government is to take over half of the municipalities’ trade tax losses this year. In addition, he will in future contribute to a greater extent than before to the costs of accommodation with the basic security, also known as Hartz IV.

The parties in the governing coalition agreed on this at the beginning of June. According to the latest tax estimate, however, the question arises more than ever why the federal government has to spend part of its income on helping the municipalities. The one-off compensation of trade tax income, which is solely about one-off additional expenditure of 6.1 billion euros for the federal government, is controversial.

Actually, the federal states are responsible for funding the municipalities. If you look at the estimates, which are only a few days old, it becomes clear that the states will have more money at their disposal than the federal government in the coming years.

Source: WORLD infographic

For the first time ever, the 16 federal states will record higher tax revenues than the federal government this year – according to tax estimates, they will earn 30 billion euros more. By 2024, the annual difference between federal and state revenues is even expected to add up to 100 billion euros. It was the other way around until 2019: Most recently, the federal government received five billion euros more than the federal states.

Dennis Rohde, budgetary spokesman for the SPD, defends the support that his party has promoted: “In the midst of the crisis, it has to be about quick solutions and not about tactical financial games in federalism,” he said.

The municipalities’ investment activities in particular must not cease now – the compensation of the trade tax losses is therefore an important part of the package to stabilize the economy. “By assuming additional accommodation costs, we are also making the municipalities more crisis-proof and particularly relieving cities and communities with high unemployment,” said Rohde.

Source: WORLD infographic

Finance Minister Olaf Scholz (SPD) originally wanted the federal government not only to participate in the trade tax losses, but also to take over half of the old debts of particularly tight municipalities, which would have been around 20 billion euros more. But he was unable to assert himself with the coalition partner.

The result was the compromise that is now being voted on: a one-off 6.1 billion euros for the tax shortfalls, the other half comes from the federal states, around 3.4 billion euros per year for the federal contribution to the costs for accommodation and heating.

In the case of the Union faction, reference is made primarily to the second part of the change in the law. “We are structurally strengthening the municipal finances, because the federal government takes a significantly higher share of the costs of accommodation in the Hartz IV system,” said Eckhardt Rehberg, the top steward of the CDU / CSU parliamentary group.

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Rehberg, on the other hand, rejected demands by the Association of Towns and Municipalities that its members must also receive corona-related compensation payments for tax losses from the state in 2021 and 2022. “I reject an outbid competition, which the federal government should continue to do for the municipalities beyond 2020.”

The demands ignored the constitutional order and would fail to recognize the extent of the aid already provided. “According to the Basic Law, the federal states are responsible for municipal finances,” Rehberg reminded everyone involved. North Rhine-Westphalia, Bavaria and Baden-Württemberg are among the greatest beneficiaries of federal support.

The direct aid from the federal government is one of the extraordinary among the many Corona aid packages due to the necessary amendment to the Basic Law. Since the government factions CDU / CSU and SPD cannot change the Basic Law on their own, they have to rely on the votes of the opposition. Both parties made it clear that the FDP and the Greens will agree.

Source: WORLD infographic

Not every MP will vote in favor with full conviction. If you ask around, various sources point out that the pressure from cities and municipalities on the federal government was very high, and that no one wanted to mess with them a year before the general election. After all, every MP is also an election campaigner on the ground.

At the last moment, a few more sentences were written in the legal text so that the money really gets where it should. For example, the federal states must report both the federal and state funds to the municipalities “by the end of March 2021 at the latest on the transfer that has taken place”.

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In addition, the households of the Bundestag dictated the sentence that the compensation payments only serve to “compensate for trade tax income and are not subject to any earmarking by the state”. In addition, the Federal Audit Office is to be commissioned to retrospectively review the distribution of the funds by the states.

The mistrust between the federal government and the federal states has not diminished through many tough negotiations about the distribution of tax revenues. The scarce resources will tend to exacerbate this conflict in the future.

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Boeing 747 and Airbus A380: The last giant jets in the sky

TA lot of onlookers were standing at Narita Airport near Tokyo when a huge airplane from Europe floated in for the first time in spring 2019, painted in a funny turtle design. When the Japanese All Nippon Airlines (ANA) offered its first scheduled flight with this jet shortly afterwards, it was sold out in no time. The airline called its new A380 “Flying Honu”, named after an endangered sea turtle in Hawaii. The fans stood upside down, had themselves photographed in front of the giant plane before the first flight with A380 models or with turtle actors in kitschy costumes.

The Airbus A380, the largest airliner in the world, has always sparked enthusiasm among passengers and airplane fans, since its first flight with paying guests in 2007 with Singapore Airlines. ANA was the last of 15 airlines to get their A380 – that was just over a year ago.


Short vs. Merkel: The sudden return of the migration duel

PSuddenly the television viewers see a young man on the screen, whom at that time hardly anyone in Germany knows. It’s Sebastian Kurz, 30 years old and Austrian Foreign Minister for almost four years. “I will certainly not interfere in the German debate,” says the politician, who was tuned into the “heute-journal” on this January evening in 2016. And then immediately interferes. In the years that followed, Kurz became Angela Merkel’s central European opponent when it came to migration. With the fires in the Moria refugee camp, the old conflict between Kurz and Merkel has become topical again.


WHO warns of an increase in the number of corona deaths in Europe

Dhe World Health Organization expects an increase in daily corona deaths in Europe in October and November. “It will be tougher,” said WHO Regional Director for Europe, Hans Kluge, the AFP news agency on Monday. The number of new infections with the virus in Europe is currently increasing, but the number of daily deaths has remained relatively stable so far.

The world does not want to hear such bad news at the moment, “and I understand that,” said Kluge. But the number of new COVID-19 cases will continue to increase in October and November, which is why there will be more deaths again. The Copenhagen-based WHO official warned against placing too high expectations on vaccines. “I keep hearing: ‘The vaccine will be the end of the pandemic’. Of course not! ”Said the Belgian.

So far it is unclear whether a vaccine could help all population groups. There is evidence that a vaccine can help some groups but not others. “If we then also have to order different vaccines, what a logistical nightmare!” Said Kluge.

The number of corona infections in Europe has risen sharply in the past few weeks, especially in Spain and France. On Friday alone, more than 51,000 new cases were reported in the 55 countries of the WHO in Europe – more than at the previous high of the infection numbers in April.

The Robert Koch Institute (RKI) in Berlin stated the number of people infected with the coronavirus in Germany on Monday at 260,355 – an increase of 927 since the previous day. The Johns Hopkins University (JHU), based in the American city of Baltimore, reported 261,737 infected people. The RKI, which only takes into account the electronically transmitted figures from the federal states and updates its list once a day, registered 9350 deaths, one more than the previous day. The JHU counted 9,354 dead. According to the RKI, the number of people recovered was around 233,300.


Neymar sees red at PSG’s Ligue 1 game with Thomas Tuchel

Turbulent return of Neymar to the team of Champions League finalist Paris Saint-Germain: The Brazilian star was thrown off the pitch after his break due to a corona infection with a red card for assaulting his opponent Alvaro Gonzalez. He then raised allegations of racism against the Spaniard.

According to the AFP news agency, he had already complained to the referee about Gonzalez during the game of coach Thomas Tuchel’s team against Olympique Marseille. Several times he said “Racism, no” and pointed to Gonzalez.

“That’s why I hit him”

At the end of the game, Neymar was one of five players who had to leave the field prematurely because of a tangible argument. Neymar hit the Spaniard on the back of the head. As he stepped off the field, he said, “Look at the racism. That’s why I hit him. “

He then tweeted after the game, he regrets that he did not hit the “idiot” in the face. It is easy for the cameras to “show my aggressions. But now I want to show the picture of this racist who called me the “monkey son of a bitch”, ”wrote an angry Neymar.

“There is no place for racism,” wrote Gonzalez on social media about a photo that shows him in the company of his teammates – and teased Neymar: “Sometimes you have to learn to lose.” The Brazilian commented: “I respect you Not! You have no character! Be a man! Racist! ”He raised his fist to his angry contribution.

Paris also lost the second game of the French championship – 0-1. The last time the capital club had started so badly in Ligue 1 in 1984/1985. Neymar (28) only returned to PSG training on Friday. Like other teammates, he was infected with the corona virus. Tuchel also had to do without Kylian Mbappé, Marquinhos and Mauro Icardi, who had also been quarantined after positive tests.


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Merz reprimands: Finance Minister knocks out money as if there was no tomorrow

The CDU politician, Friedrich Merz, who is running for party chairmanship, reprimands Finance Minister Olaf Scholz (SPD) for financing the state’s Corona aid through historically high debts. “The finance minister is currently pulling out the money as if there was no tomorrow. Our children will have to pay for all of this, ”said Merz of“ Bild am Sonntag ”. It is imperative to be careful with taxpayers’ money even in the corona crisis. Admittedly, it was correct to release the debt brake of the Basic Law this year. “But releasing a brake doesn’t have to mean rushing down the mountain at full throttle.”

In the first half of the year, according to preliminary data from the Federal Statistical Office, the federal, state, municipal and social security funds spent 51.6 billion euros more than they received. According to forecasts, economic output is likely to plummet by 5.8 percent this year. This not only causes trade and sales tax to collapse, but also income tax because of the drastic short-time work.

Merz is also critical of the federal government’s decision to extend short-time allowance until the end of 2021. “Short-time work allowance is there to overcome a crisis in the short term. If it is paid too long, there is a risk of blocking the job market, ”said Merz. “Then employees who are urgently needed in other companies will be held in their old companies with short-time work.”

With a view to protests against the state corona measures, Merz demanded more willingness to talk from the federal government: “Above all, politics must take the existential fears of many people seriously. Many protest against the restrictions on their freedoms, that is a legitimate concern that politicians have to grapple with. “The limit is always reached when violence, trespassing and attacks on police officers are added.

About the demonstrators who protested against the Corona measures, the CDU politician said: “There are conspiracy theorists, left-wing radicals and right-wing radicals, a colorful people, of whom one can probably reach very few. But there are at least as many among them who can and should be won over for a serious discussion. “


Belarusian opposition politician calls for further protests

Dhe Belarusian opposition politician Svetlana Tichanovskaya has called on the supporters of the democracy movement in her country not to let up in their protests against the controversial head of state Alexander Lukashenka. It is “really important to continue now united in the fight for the law,” said Tichanovskaya on Saturday the AFP news agency. She is “proud of the Belarusians because after 26 years of fear they are ready to defend their rights”.

The previous political leadership of the country must understand that the masses on the streets are not just a protest movement: “We are the people of Belarus and we are a majority and we will not back down. We are no longer afraid of them, ”said Tichanovskaya, who continues to hope for a change of power in the former Soviet republic. “I’m sure he’ll have to go sooner or later.” Lukashenka’s opponents again called for mass protests on Sunday. Numerous people took to the streets again on Saturday. Corresponding pictures and video recordings can be seen on Twitter.

The 37-year-old teacher again spoke out in favor of a dialogue between Lukashenka and his opponents: “I think he has no choice.” The dialogue must begin as soon as possible so as not to exacerbate the crisis.

Lukashenka called on the army on Saturday to strengthen border security in order to protect the country’s “territorial integrity”. With such statements, the head of state only wanted to divert attention from the country’s internal problems, said Tichanovskaya. According to the RIA, Lukashenka also threatened to close factories whose workers had participated in the protests. He also indicated a possible dismissal of workers. “If a factory is not working, let’s put a lock on its gate from Monday,” he said during a visit to Grodno near the border with Poland. “People will calm down.” And you can decide who will be invited back to work.

The politically inexperienced English teacher Tichanowskaja ran against Lukashenka in the presidential election two weeks ago after her husband was excluded from the election and imprisoned. According to the official election results, the authoritarian ruling incumbent won with 80 percent of the vote, Tichanovskaya only got around ten percent. The opposition, the EU and the United States speak of massive electoral fraud and do not recognize the official result.

Since the election there have been mass protests and strikes in the country. The protest movement demands Lukashenka’s resignation and free and fair new elections. Tichanovskaya, who fled into exile in Lithuania, does not see herself as a politician, but rather as a symbol of change and wants to help get a new election, but no longer run for president. “I understand that I am safe here, but all the people who voted for me in Belarus … need me as a symbol. They need the person they voted for. I could not betray my people, “she told Reuters. You have regularly tried with video calls to keep the momentum of the protests. She also received calls from leading politicians from abroad. She named the United States, Great Britain, Germany, Poland and Canada, among others. Next Monday she wants to speak to the American Deputy Foreign Minister Stephen Biegun in Lithuania about the crisis in Belarus, as her team announced.


How China is looking for a vaccine against the coronavirus

Dhe employees of the Chinese mining company MCC were apparently already on the plane on the way to Papua New Guinea. But the authorities of the Pacific state denied them entry. The reason for this is a letter that the company is said to have sent to the health authority of Papua New Guinea. According to the AFP news agency, 48 of the MCC employees were vaccinated against Sars-CoV-2 on August 10. It could therefore be that antibodies would be found in their blood in any tests for the novel coronavirus. The letter was apparently intended to release these employees from the obligation to test and quarantine upon entry. But it achieved the opposite.

Epidemiology chief David Manning said Friday in the capital, Port Moresby: “Due to the lack of information about these tests and the possible risks and dangers they could pose to our citizens, I canceled the flight yesterday.” Manning wrote to request additional information from the Chinese embassy. He also made it clear that it was forbidden to import vaccines into Papua New Guinea that had not been approved by the local health authority and tested by the World Health Organization (WHO).

Vaccinated persons provide data on the effectiveness of the vaccine

The vaccination consists of two doses given two weeks apart. It remained unclear whether the MCC staff had already received both. The Chinese Ambassador, Xue Bing, made it clear that China was not conducting clinical trials of vaccines in Papua New Guinea.

As early as June, the Chinese party newspaper “Global Times” reported on plans to make vaccines against Sars-CoV-2 available to employees of state-owned companies before they were approved if they were working in risk areas abroad. In this way, a delay in projects along the “New Silk Road” should be avoided, wrote the newspaper. In addition, the vaccinated should serve as test subjects to provide data on the development of corona antibodies and the effectiveness of the vaccine in different countries. However, they are not a substitute for the clinical tests that are strictly prescribed for all potential vaccines.

The funds not yet approved for the Chinese foreign employees come from the state-owned pharmaceutical company Sinopharm, which is currently testing two vaccines in the United Arab Emirates in a third clinical phase. Since this final phase requires the two test groups to have a high risk of infection, it cannot be carried out in China because the number of infections there is too low.

Test subjects are praised for “spirit of willingness to make sacrifices”

In July it became known that the state-owned oil company Petro-China is also providing its employees with a vaccine that has not yet been fully tested “for emergencies”. The Chinese government emphasized that it was “absolutely voluntary” to have the drug injected, and the company pointed out that 30 of its own employees and managers had also participated. However, the action is accompanied by a rhetoric that calls into question the character of the voluntary nature. Sinopharm portrayed the vaccinated in advertising texts as heroes and patriots who would help “forge the sword of victory”. They were also praised for their “spirit of sacrifice”.

The slogans give an idea of ​​how great the pressure is on companies to demonstrate China’s leadership in the global race for a vaccine against the coronavirus. The Chinese military has already given in to this pressure and approved a vaccine developed by military researchers for internal use, although official approval is expected in four months at the earliest.

Half of the eight vaccines that have entered the third and crucial round of clinical trials worldwide come from China. To this end, the companies involved have concluded cooperation agreements with institutions in Saudi Arabia, Brazil, Indonesia, Canada, Peru, Bahrain, Morocco and Pakistan, where the tests with many thousands of people are already taking place or are to start soon. There is also talk of cooperation with Russia. Some of the confidential contracts are known to guarantee the respective countries priority access to a potentially successful test candidate.

There have always been scandals in China’s vaccine industry

China’s state and party leader Xi Jinping announced at a WHO conference in May that vaccines from China would be treated as “global public goods”. It remains to be seen which countries will be the first to access it. Because of the low number of infections, China could pass the substance on even if large parts of its own population have not yet been vaccinated.

In any case, it is not clear how many Chinese want to be vaccinated at all. The Chinese vaccine industry has been repeatedly shaken by scandals in recent years. In 2018, it was revealed that more than 200,000 children had been given poor-quality and ineffective vaccines for diphtheria, tetanus and whooping cough. The head of the Chinese Disease Protection Agency, Gao Fu, recently admitted that there were doubts internationally as to whether China could produce a safe vaccine in such a short time. That’s why he offered himself as a “guinea pig” and had an agent injected, he said. “If we don’t, how can we convince the whole world to get vaccinated?”


Chile recovers calm after the storm

After a two-week rollercoaster ride for fees on noise generated by the AFP withdrawal plan, combined with messages of reassurance from the Central Bank, the market expects rates to stabilize a little more this week, and possibly with a slight downward trend.

The message of central bank of what will mitigate any disruption in the market as a result of the AFP retirement project, it went deep last week. The rates, which they went up to 70 bps with the debate on the initiative in Congress, they regulated around -50 bps after the announcement of the entity’s president, Mario Marcel. This week, the attention of the market will focus on the detail of the instruments that the plant can deploy, while future effects of pension fund withdrawals would already be, for the most part, incorporated into prices.

“The credibility of the Central Bank caused the market to become a buyer and the rates to return,” says Mariano Álvarez, manager of fixed income at Larraín Vial. This week, rates should continue to compress a little more, but with the strengthening of the peso against the dollar, it cannot be ruled out that foreign investors choose to sell, adds Álvarez.

Piñera enacted the pension project in Chile

In contrast to the sovereign instruments of the region, the superior yield of Chilean bonds could be coming to an end after the AFPs are forced to sell funds for up to US $ 20,000 millions, dice Davison Santana, analista de Bloomberg Economics.

Given the high volatility of base rates, last week there was very little liquidity for corporate and bank bonds, says Diego Pino, head of credit and equity trading at Scotiabank. “That volatility put corporate issues on hold, with issuers preferring to wait for the market to calm down. But the shock of the AFP project was transitory and as volatility decreases this week we should see greater flows and perhaps a reactivation in emissions, “he adds.

The AFP project will come into effect after its publication in the Official Gazette, a process that could take a couple of days.

The countdown to liquidate assets is almost underway, considering that the affiliates can request their 10% As soon as the rule is published, the AFPs have only 10 days to pay half of the money requested and up to 40 days to transfer the entire payment.

The project that allows the Central Bank to buy Treasury bonds in the secondary market has followed a much slower course in Congress than the market expected. Last week it was dispatched by the Senate, but it remains to be reviewed by the Finance Commission of the Chamber of Deputies, the Chamber of Deputies and possibly the Senate in a third procedure.

For the moment, the Central Bank would aim to take other measures, such as continuing with the purchase of bank bonds, of titles of its own emission and adaptations for the development of Repos or similar. It also evaluates additional measures to guarantee liquidity in the fixed income market.

On the other hand, the Ministry of Health shows more and more signs of an early economic reopening. On Friday, the partial removal of quarantines was announced in nine communes in the country, six of them in the Metropolitan Region. Four others, meanwhile, were added to the list of towns in confinement.


Young academics are so humble – except for the lawyers

AEven if the labor market in the Corona crisis offers difficult conditions for young professionals: As a rule, students earn more than they expect after they graduate. “Graduates look more pessimistically at the job market than it actually is,” says a study published by the personnel service provider Studitemps on Wednesday. Only lawyers with “clearly excessive salary expectations” attracted attention in the investigation.

“I don’t see the cliché that young people would have excessive expectations of their future employers,” said Studitemps boss Eckhard Köhn. “They tend to sell below value.” Köhn attributed this to fear of the future and advised graduates to be more confident and optimistic. According to the personnel company, a total of around 300,000 students were asked about their ideas about working life for the study with the University of Maastricht over a period of eight years.

Higher expectations of income went hand in hand with higher expected satisfaction. “Highest levels of satisfaction and salaries” were said to await students who wanted to work in software and hardware, in the automotive industry, in chemistry, and in banking. Another result of the study: Around three out of four respondents preferred a permanent job in the office. Only about one in ten wanted to work permanently in the home office.

Meanwhile, the students had little hope of a lot of free time: 52 percent expected a 40-hour week, twelve percent expected to work up to 50 hours a week, and 17 percent expected even more work. Although the willingness to work of young people is often questioned, the ideas of many students are “still very classic and quite conservative,” said Köhn.