Merkel and Sarkozy call for EU to act against speculation

The leaders claim to Brussels together to make a proposal on short selling .- The Commission says working "expeditiously", and announced new products for summer

French President Nicolas Sarkozy and German Chancellor Angela Merkel, have come his way of apparent differences that have arisen between them as a result of unilateral decisions on financial monitoring of Berlin and its dramatic savings plan, which Paris does not just look favorably as it could hinder prospects for recovery in Europe. In a letter published today in the German capital, the leaders of the two main powers of the euro have asked the European Commission (EC) to accelerate the fight against speculation.
In the letter, addressed to the President of the EU executive, José Manuel Durão Barroso, Sarkozy and Merkel will claim that accelerate and intensify work on the regulation of financial markets and to explore the possibility of EU wide ban on short sales in listed companies and the bond market states. "The latest market developments lead us to ask the Commission to accelerate and intensify its work" on the regulation of "infrastructure of derivatives markets," they say. "In particular we believe it is imperative to improve transparency in short sales of stocks and bonds, especially in the sovereign debt markets," added the two leaders in the text.

Brussels has responded through one of its spokesmen, Pia Ahrenkilde-Hansen, who has announced new "during the summer." "The Commission is working expeditiously on these issues and appreciate the support that reflects the letter to our ideas and approaches and, as we announced, we will present concrete proposals during the summer," he has said before nuance that does not interpret the letter as a complaint, "but as a support" to the action plan of the EU.

Germany has unilaterally decided to ban short selling in the open its financial institutions and bonds to curb speculation. The decision, which was the subject of criticism by their partners in the euro to expose the lack of coordination between eurozone countries when dealing with the crisis, which in turn also increased the uncertainty in the markets was completed with the restriction of such operations in the derivatives. He has also forced to disclose short positions in all settings.

The market volatility through the overflow from the fiscal crisis of Greece in February this part has led EU countries to accelerate efforts to advance financial reform. Governments want to control speculators are behind the collapse of the euro, who are enriched by fall of the stock and they are doing business in the secondary markets for debt at the expense of feeding with countries with more deficit. This task is the responsibility of G-20, but has stuck by the divergence of opinions on both sides of the Atlantic and among European executives on how to do it.

A possible rate to banks to prevent taxpayers have to pay next crisis, as has happened in the present and that Germany has already announced it will launch in 2012, more control over the rating agencies and increase transparency markets are some of the main challenges for nearly three years later.

German budget cuts last Merkel to assert authority

German Chancellor Angela Merkel agreed on Monday with his cabinet a package of budget cuts and will outline his policy agenda until 2014, a series of steps he hopes will help push the euro as its own authority.

The ministers resumed talks on Monday after work Sunday night. Merkel is expected to announce the result of the proposed 2011 budget and financial planning for the next four years in the early afternoon on Monday.

Some experts say the plan cuts of up to 10,000 million euros annually (11 940 million), along with some limited tax increases will be the largest German austerity plan since the Second World War.

Merkel wants to give an example of fiscal adjustment to try to regain investor confidence in the euro, damaged by high deficits in Greece and other euro zone states. However, you must deal with a delicate balance to ensure that the cuts will not cloud the fragile recovery of the first euro zone economy.

The German public deficit would likely exceed 5 percent of gross domestic product (GDP) this year. Despite being significantly below the levels of other euro area countries still exceeds the limit set by the European Union's 3 percent.

Moreover, Merkel's political authority is also at stake.

Affected by a decline in the popularity of his conservative party and accused of weak leadership in the crisis in the eurozone, needs to regain the political initiative and present a package that voters support sustainable.

"The cabinet meeting will be an important direction for Germany in the coming years, which will be decisive," Merkel told reporters Sunday before starting the talks.

Merkel has promised to protect education and pensions, but has pointed to social security spending as an area of possible cuts.

It also seems likely to make targeted reductions to unemployment as well as maternity aid for the unemployed, measures which could save around 400 million euros.

In addition, 10,000 jobs will be cut in public, according to German media. The defense budget would be reduced by about 600 million euros in 2011 and savings would reach 1,100 million euros in 2012.

It is also likely to create a tax on the use of nuclear fuel for those companies that benefit from the planned extension of the life of some nuclear plants. According to the German media, the measure could raise around EUR 2,300 million a year.

Once the Cabinet had agreed the draft budget for 2011, Merkel is to gain the approval of the upper and lower houses of Germany, which is not as easy as his coalition lost its majority in the Senate last week .