The “shadow economies” in the crisisridden countries of the euro zone

Well, The German Parliament approved the planned bailout for Cyprus, in a transparent and clear vote in the Bundestag. The aid program and package proposed obtained a sizable majority after most members of the opposition Social Democrats (SPD) and Greens voted to approve it also. The bailout legislation received 487 votes in favor and 102 against it, with 13 abstaining. After the vote, the German Finance Minister Wolfgang Schäuble of the conservative Christian Democratic Union (CDU) said the billions in aid for Cyprus are necessary in order to ensure the stability of the entire euro zone. "We must prevent Cyprus' problems from becoming problems for the other countries," he said on behalf of the government lead by Chancellor Angela Merkel. Schäuble warned there was a "significant risk" of contagion, especially to Greece and other vulnerable euro-zone countries before the vote came in his favor. However, despite his faction's broad support, SPD's party whip Frank-Walter Steinmeier accused Merkel's government of management failures in the way it handled the Cyprus crisis. He said the mandatory levy originally planned even for small-scale depositors had been a "huge mistake." Nevertheless and as expected, the SPD cast its votes Thursday in favor of the bailout. The opponents of the bailout packaged failed in their attempt on Wednesday night to halt the vote after the Federal Constitutional Court in Karlsruhe rejected a petition to delay it. The court did not provide information on who had filed the petition. In conclusion, under the bailout package, which is currently undergoing the mandatory approval process in euro-zone national parliaments, the European Union's permanent euro bailout fund, the European Stability Mechanism (ESM), and the International Monetary Fund (IMF) will provide Cyprus with a €10 billion ($13 billion) loan. The loan conditions stipulate that the country must radically restructure its banking sector. A

the debt-ridden countries are only eligible for the billions from bailout funds if they satisfy certain conditions in return. Estimates by European expert economists. The Bundestag also approved this month an extension of the maturity dates on bailout loans issued to the euro-zone countries Portugal and Ireland beginning in 2011. compared with almost 25 percent in Greece. In other words. which is one reason households with far smaller incomes have been able to accumulate substantially larger assets than German households. Portugal and even southern France. the hidden economy makes up over 20 percent of GDP. Portugal and Spain occupy the first four positions in the applicable negative ranking. To be precise. and they are worse off today than in the past. Among all the countries in the Organization for Economic Cooperation and Development (OECD). and has been doing so for decades. if attitudes toward taxation in Southern Europe were just as good as they are in the north. By a broad majority within Merkel's conservatives. then even Greece will 2 . Spain and Portugal. Published data and figures also show that in Greece. They too feel that they are victims of the crisis. the debt-ridden countries would have solved their budget problems long time in my humble opinion. as well as in Italy. If tax laws not only appear on paper. Cyprus is expected to raise €13 billion in additional funds for the bailout on its own. Greece. but even people who are considered “affluent by the numbers” do not consider themselves rich.mandatory levy must also be applied on bank accounts with large deposits in the country. The scope of the “shadow economy” has declined in Italy in recent years. and significantly less than 10 percent in other euro countries. the “shadow economy” plays an even greater role today than it did in the late 1990’s. the SPD and the Greens voted in favor seven-year loan extensions for the countries. Italy. but only slightly. By comparison. In addition to spending cuts and tax increases. Italy and other countries of dozens of billions of Euros in tax revenue each year. they generally include the obligation to actually collect taxes. like Austria and the Netherlands. All said and done however. Southern Europe's hidden Economies Southern Europeans in a number of countries have traditionally paid no taxes on a good share of their income. the business-friendly Free Democratic Party. reveal how horrifying the scope of the “shadow economies” is in the crisis-ridden countries of the euro zone. but are also drastically enforced. But does this mean they cannot be expected to bear a greater burden to save their country? Of course not. the “shadow economy” deprives Spain. it only constitutes about 13 percent in Germany. Through the deposit tax and other measures. In Spain.

1078 www.58. able to set aside doubts concerning the sustainability of its debts. Date: april 20. Despite the drawbacks and qualifications of the ECB's wealth figures.SIPG. one realization remains: The countries of the south are far more prosperous than previously supposed. I noted that the “ailing economies” of Southern Europe Countries have already begun increasing taxes on their citizens. 2013 Mircea Halaciuga. although I believe strongly that cash-strapped countries that have already taken advantage of aid from the bailout funds should be required to increase their own contribution even 3 . Along these lines. 0040-724. I also believe that their governments should also be be taking aim at their long lists of assets. There is still plenty to be written about on the subject. in some cases substantially and in this context.

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