Monthly Archive: May 2018

ABC of the financial crisis: what do the terms mean?

Berlin – In the European financial crisis, many concepts emerge that are not easy to digest. What do the different keywords mean?

News / Finance

Image: Euro coins as gears


For fear of bankruptcy, the Greeks have long ago raised billions of euros from their accounts or made them abroad. If the danger continues, it comes to the acute bank run: The customers try en masse to empty their accounts. The banks would bleed out, they could lend the companies no more money, the economic activity succumbs.

Capital controls

In order to prevent the run of the bank, the banks would have to be temporarily closed completely and online transfers would be interrupted. If they open again, foreign transfers would be prevented and withdrawals at the machine would be limited to smaller amounts. This is how it was done in Cyprus three years ago. The last capital controls were canceled there only this spring. The massive intervention would require the government in Athens to decide on an emergency law almost overnight – it can not be forced to do so by the euro partner countries. “The Greeks have not prepared anything,” states an EU diplomat.


Whether a state is bankrupt is usually determined by rating agencies by determining a so-called credit event. However, even if that does not happen, Athens will not pay its installment to the International Monetary Fund (IMF) on 30 June, according to ING chief economist Carsten Brzesk. Because this is not about market papers. Crucial is not the market, it says, however, in euro circles: If Athens does not pay back to the IMF, the ECB could actually no longer accept Greek bonds as a pledge and would have to turn the drip for the Greek financial system. The banks would have to be transacted practically overnight.


A bankruptcy Athens would not automatically the Euro-Aus for Greece – so the Grexit – the result. In fact, expulsion from the Euro Club by the remaining members is only possible if the Greek Government itself agrees in the end: a new treaty must be concluded – signed by Athens. But a large majority of Greeks want to keep the euro. If they remain in the euro without further financial assistance from the ECB and euro countries, banks and the economy will dry up. So the government would be forced to Grexit and return to the drachma. A chaotic transitional phase of at least half a year would be the result, estimates economist Carsten Hefeker from the University of Siegen.

parallel currency

A kind of middle ground between euro and Grexit would be the introduction of a parallel currency: Because the state lacks cash, he pays officials and pensioners at least partially with promissory notes. To do business at all, traders and service providers would accept the promissory notes as a means of payment, explains the French financial scientist Eric Dor. Due to the risk, however, the promissory notes would be less valuable than the euro. The promissory notes are called in the financial world “IOU”, after the English “I Owe You” (I owe you). California successfully resorted to the aid in the summer of 2009 to bridge a bankruptcy phase.


The term was invented by former German bank chief economist Thomas Mayer and in May he explained his concept to Greece’s finance minister Giannis Varoufakis. “Geuro” notes would provide Athens financial latitude and strengthen the competitiveness of the country by the devaluation, so his theory. However, the bill would only come if the international creditors defer their claims and the Greek banking system would continue to be supported by the euro bailout, which is considered excluded by experts. A return from the Geuro to full membership of the European Union would only succeed if Athens generates a budget plus through economic reforms and can gradually trigger the promissory notes.

Primary surplus

The generation of a primary surplus – ie an increase in the budget before deduction of debt repayment – is the deciding factor in the recovery of public finances: if Athens earns more by taxes and privatizations than it spends, it can gradually pay off its debts. The previous government has achieved a surplus through drastic cuts. Instead, to achieve a plus through higher government revenues, can only succeed if the trust returns. “There is no hint for that,” says ING expert Brzeski.

debt cut

Both Athens and the IMF want to persuade the eurozone countries to abandon at least some of their demands in order to enable the over-indebted country to restart. The Greek government has signaled to implement the required reforms in a haircut. In addition to the IMF, many experts also consider it a waiver of the only viable option.

However, that would amount to a third rescue package. The planned special summit of the euro states would have to make a statement for it, to draft a new program and to secure debt sustainability in an application Athens. For this, Chancellor Angela Merkel (CDU) would need the backing of the Bundestag.



News New laws from January 2018: tax, child benefit, Hartz IV

News New laws from January 2018: tax, child benefit, Hartz IV

Monday, 01.01.18 , written by Julia Meier As of January 2018, new laws will come into force that will allow parents, workers and retirees in particular to enjoy more money. The basic and child allowance, the child benefit rule rate and the disability pension increase. Other relevant innovations also exist in terms of pension, maintenance entitlement and social assistance benefits. >

Rente, Kindergeld, Hartz-IV: Das bringen die neuen Gesetze ab Januar 2018 New laws from January 2018: Good prospects for families and pensioners

  • New laws promise financial relief from January 2018, especially for families, Hartz IV recipients and retirees.
  • The basic allowance is raised to 9,000 euros for singles and 18,000 euros for couples.
  • Also in the case of occupational pensions, the state is starting to pay off from January 2018.

Whether parents, welfare recipients or pensioners: The new year promises people more money. As of 1 January 2018, changes such as raising the children’s allowance by 72 euros per year, the child benefit rate by two euros per month or the basic allowance are on the agenda. In addition, pensioners and welfare recipients can benefit from the innovations.

New laws from January 2018 provide financial relief for families and single parents

In addition to the increase in the basic allowance to 9,000 euros, on which workers can look forward to January, there are also relieving for parents innovations. The most important are probably that the annual child allowance increased by 72 euros and the monthly child allowance is increased by two euros.

Even single parents can look forward to an increase in the maintenance payment. Because from 1 January 2018, the minimum maintenance rate increases by up to seven euros per month. The exact surcharge depends on the age of the child and the net income of the debtor. For example, the paying parent with a monthly net income of € 2,301 has to cede a sum of € 439 to the child between the ages of six and eleven.

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Rule set for social assistance benefits increases

As of 1 January 2018, social assistance recipients will also be subject to changes in monthly benefits. Thus, the Hartz IV rule set for single persons increases from previously 409 euros to 416 euros per month. For couples, the rule rate increases to 374 euros. Depending on their age, children can expect a subsidy of up to five euros, and thus receive up to € 316 a month.

Employees will benefit from new pension laws from January 2018

Good prospects for all employees: As the statutory pension insurance is well positioned, all employees expect a reduction of the pension contribution by 0.1 percentage points from January 2018 onwards. If an employee earns 3,000 euros a month , this means a monthly reduction of 1.50 euros.

For all those who can not work due to illness or have limited access from January 2018 onwards and have to retire early, from January on, the compensation period for the reduced earning capacity pension will be extended by three months. If, for example, an employee does not have the opportunity to fully pursue his / her profession after the age of 45, he / she is currently provided with the calculation of the disability pension as if he had worked fully until the age of 62. This attribution time increases with the changes to January 1, 2018 by three months. By 2024, the value will gradually increase by three years, ie to the age of 65.

For new pensioners, this means, in the long term, a significant increase in pension entitlements in the event of a reduction in earning capacity.

Occupational pensions should become more attractive from 2018

With the beginning of the year, the company pension for small and medium-sized enterprises should be designed and promoted more appealing. This happens, for example, through the promotion of low-income earners . For this purpose, employers receive a tax allowance of 30 percent, which is offset against payroll tax if they support employees with low incomes in occupational pensions.

In order to convince more and more people of occupational pensions, the adjustments in the law also contribute to relieving employees through allowances of up to € 200 in the future if they are dependent on the basic pension in old age .

East-West Pensions: Seven Steps to Social Unity

From 2025, the pension will be calculated the same throughout Germany. This is the goal of the East-West pension adjustment , which the Federal Council approved in early 2017. Because the pension system is the only social system in Germany that is not uniform in East and West.

So it is all the more gratifying that almost 30 years after the fall of the Berlin Wall, the gradual process of alignment is starting. From July 2018 to July 2024, the East Rentenwert will be adjusted in seven steps to the West Rentenwert. In the coming July, the eastern value is thus increased from the previous 94.1 percent to 95.8 percent of the western value. This is followed by an annual adjustment of 0.7 percentage points until the 100 percent are fully achieved.

From January 2025 onwards, the pension adjustment will finally take place throughout Germany on the basis of the overall German wage development.