Bershidsky's View From Europe
Here's today's look at some of the top stories on markets and politics in Europe.
Guardian offshores Snowden reporting due to pressure in U.K.
Working with National Security Agency leaker Edward Snowden apparently landed the Guardian daily newspaper in trouble with the U.K. authorities. Editor Alan Rusbridger revealed in a column that senior officials in the British government contacted him to demand that he hand over documents Snowden had passed to the newspaper. After he refused, according to Rusbridger, the contacts indicated that they would take legal action to recover the files. He also said government security experts had destroyed several hard drives belonging to the Guardian, in an attempt to eliminate sensitive information. Rusbridger said none of this would affect the newspaper's continued reporting on U.S. electronic spying. "We will continue to do patient, painstaking reporting on the Snowden documents, we just won't do it in London," Rusbridger wrote. Indeed, the technological revolution that has made it possible to spy on people thousands of miles away has also made it all but impossible to destroy or suppress information. Governments must take the bitter with the sweet.
U.K. financial services companies raise salaries to circumvent EU bonus cap.
Recruitment group Robert Half found that 65 percent of U.K. financial services companies have increased base salaries by an average of 20 percent for senior employees who may be affected by the European Union-wide bonus cap. The EU regulation, likely to come into force next year, would limit bonuses to twice the annual salary of bankers who make more than $667,000 a year. The bonus cap is intended to quell public indignation with bankers' fat bonuses, but will also weaken the link between performance and pay in the industry. So as not to risk losing top talent to other sectors, banks are raising salaries and offering more expensive perks to compensate stars for their lost bonuses. The fact that they are already doing this is a good reason to reconsider the bonus cap before it is introduced.
French government holds futurological seminar.
French President Francois Hollande and Prime Minister Jean-Marc Ayrault convened cabinet ministers for a seminar to discuss policy goals for the next 10 years. Each government member had to submit an essay for discussion, stating what his or her ministry would like to achieve by 2025. Some of the essays, which started leaking out last week, bordered on science fiction: They spoke of full employment and a 118 mile-per-gallon French car. The political opposition and France's business lobby, Medef, ridiculed the exercise but Hollande was undeterred. "For a year, they told me I had no policy and now they tell me I have to deal with everyday matters," he said at the seminar. Hollande is right to start talking about his long-term ambitions. France recorded stronger than expected economic growth in the first half of 2013, and it is sound politics for the socialist government to stress this is no accident but of the result of a strategic vision.
Investment funds shift focus to European real estate.
Blackstone has quietly launched a new European real estate fund, targeting $5 billion in investment. It will be the third biggest such vehicle, among 112 similar funds seeking a total $46 billion to invest, according to the London-based research firm Prequin. This is only half the amount being raised by funds targeting North American properties. Still, investment in European real estate is picking up and sensing the upward price trend, sellers are putting more properties on the market. For large funds, this is the time to jump into the game: European recovery is not yet certain, but gloom and doom scenarios such as the collapse of the euro have faded.
Germany recognizes Bitcoin as money.
The German finance ministry has formally recognized the electronic currency Bitcoin as a "unit of account" that can be used for private transactions, opening the way to taxation of Bitcoin deals. So far, Germany is only targeting Bitcoin speculators. The e-currency's exchange rate is extremely volatile, and people making money on rate fluctuations are not paying any capital gains tax. All that remains is for the German authorities to figure out how to levy the tax: Bitcoin wallets are anonymous. It is, however, only a matter of time before that problem is solved in one way or another. More and more countries will crack down on e-currencies, seeking to regulate them as they do fiat money. The alternative financial universe on the Internet is headed for a crash.
(Leonid Bershidsky, an editor and novelist, is a Bloomberg View contributor. He can be reached at email@example.com).