Sunday, October 23, 2011

Save the euro for 400k

The recipe is the following, using a VAT system, abolishing the CAP, a system to reduce real estate speculation, micro-manage some countries and force other countries to hold more euros. But first, issuing new eurobonds and minting new currency should be restricted to the European Central Bank as Mrs. Angela Merkel stands for. My idea is to use the VAT across Europe to save the euro. The changes and additions to be done are: First a new higher rate to be introduced on the sale of products and services that are imported into the EU; for example, a company importing goods and services into Europe will have to invoice these goods and services downstream at a higher VAT than usually applied. Inversely, a company exporting out of Europe will have the right to claim back the VAT paid on the purchased goods and services destined to export and the right to flow downstream its export license for these goods and services for its suppliers to use upstream. Both ways, the effect should be domino. The aim of the VAT exercise is to have two VATs, the high one applied on imported goods and services and the lower one for exported goods. A new VAT to be also introduced on real estate trading to prevent speculation and avoid using subsidies and ideas to be funneled to speculation. This answers my idea on reducing the real idea speculation. I had not forgotten about abolishing the CAP, this goes hand in hand with the real estate VAT to avoid speculating on the land not used for agriculture and all the ramifications of the CAP abolishing. The VAT policy above being purely fiscal will not be sufficient, other measures similar to the IMF school applied onto emerging countries should also apply to countries benefiting from subsidies: tax collection or the lack of it, mismanagement of public funds, leniency on tax evasion and tax avoidance and the list is not exhaustive. European countries not using the euro have to hoard in euro as much as in their currency: this should apply to the UK and other EU non-euro countries, a formula should be found with Switzerland to increase its euro share because it can be left in the geographical heart of europe without contributing. Another formula to be applied on the countries of the likes of Turkey who are aspiring to join the EU and the euro zone. This approach should also apply to new countries joining the EU: more stringent rules. I will also contribute my 400k for the ECB to help the euro and will keep adding ideas on my blog for those interested.