Bershidsky on Europe: Turkey Curbs Internet
Here's today's look at some of the top stories on markets and politics in Europe.
Basel committee sets soft leverage ratio rules for banks.
After months of lobbying by investment banks trying to fight higher capital requirements, the Basel Committee, which sets standards for the international banking system, released its set of rules on the leverage ratio. Potentially, the new requirements will raise major banks' leverage ratio (capital to total assets) from 3.8 percent to a little more than 4 percent. Yet they allow banks not to include certain off-balance sheet assets such as derivatives in the calculation of the ratio. Bankers will also be allowed to "net" mutually offsetting repo deals. The Basel Committee, which has always taken a hard line on capital requirements for banks, now appears to be saying that enough is enough. Over regulating banks only strengthens the shadow banking sector. In the U.S., regulators may not heed the new Basel rules and impose stricter ones. That would be a mistake: The banking sector is already on a tight enough leash.
Turkey moves to further limit internet freedom.
Turkish Prime Minister Recep Tayyip Erdogan's party has put forward a legislative proposal allowing the transport and communications minister to block sites deemed to infringe on privacy. The bill would also compel internet service providers to keep users' surfing information and restrict their access to proxy servers. With a corruption probe instigated by Erdogan's rivals getting ever closer to his inner circle and family, the prime minister's reaction is to strengthen censorship and purge the police force of potentially disloyal officers. Erdogan's dictatorial leanings are getting stronger under threat.
French first lady hospitalized after reports of presidential affair.
Valerie Trierweiler, the common-law wife of French President Francois Hollande, entered hospital for "rest and some tests" after Hollande failed to deny reports of an affair he allegedly conducted with actress Julie Gayet. The apartment to which Hollande was apparently taken on a scooter for rendezvous with Gayet has been linked to an actor with ties to the Corsican mafia. All this ahead of a much-anticipated address by Hollande, planned for Tuesday, in which the president is expected to outline his plan for turning around the economy. Hollande's failed presidency is quickly deteriorating into soap opera. More sordid detail about Hollande may be forthcoming, but coherent action on his part is not.
Deezer discussing partnership with Samsung.
The Paris-based streaming audio service Deezer, the strongest competitor to better-known Spotify, is reportedly discussing a partnership with South Korean gadget manufacturer Samsung. It could involve the sale of a stake to the Korean company and the pre-installation of the service on Samsung devices. While the parties are not commenting, a link-up between a streaming service and a major device manufacturer would be a bold move with strong implications for the music industry. If Samsung subsidizes subscriptions to streamed music for the buyers of its smartphones and tablets, the business model, criticized by some artists as unprofitable for them, may come to dominate the market. Deezer for its part, could ride the Samsung partnership into the U.S., where it plans a rollout this year, in any case.
German minister proposes 32-hour week for parents.
Having just formed a coalition to rule Germany, Chancellor Angela Merkel's center-right CDU party and the Social Democrats are already squabbling. Family minister Manuela Schwesig has proposed shortening the working week for parents of small children to 32 hours, guaranteeing their wages would not be cut. CDU politicians responded angrily, calling the proposal "crazy" and saying there was no way to find the money to implement it. Schwesig, who takes time off on Wednesdays to spend time with her son, countered that the measure would cost only $191 million a year. The pattern will be sure to repeat itself: Moderate leftists in the government will call for more spending on more socialism, while Merkel's allies will struggle to hold them back to maintain Germany's famed fiscal responsibility.
(Leonid Bershidsky can be reached at email@example.com).