AUTHOR´S EDITORIAL 12/03/2004
New fiscal system for the European Union


The topic of the previous editorial was about a parallel fiscal system that allowed to get the enough economic resources to promote the massive construction of self-financed housings. They were distinguished three phases. In the first one Funds were emitted with very superior yield to the normal ones in the financial market, redeemable with the collection of the mortgages of the housings. It was only needed to coordinate the collections with the payments. In the second phase Funds are emitted that will be redeemed with the retentions of the taxes about the interests of the first emission, when being capital returns. Of equal it forms the paying-off of the third bond issue it will be made with the retentions of taxes of the second emission. This way we will have the net worth of those last two emissions without any class of indebtedness. They are autonomous revenues that you/they require an own, separate administration totally of the general Budget of the State.
In the page Web when proposing the system to the European Union to generate considerable revenues for the community budgets in views to the integration of new countries to the UE, I analyze the successive bond issues as for guarantee, indebtedness profitability and the capacity of the financial markets of absorbing the volume of Funds that you/they would be emitted. All the calculations and particulars are in the Web. The main points are:

1. The Bonds in euros issued by the EU offer a real guarantee because they are linked to mortgage debts in force, that at the same time are guaranteed by employment in stable jobs, promoted and guaranteed by the same system. If this were not sufficient, as a complement they have another real guarantee that arises from an innovative system of financing and accumulation of economic resources. The FIRST issue is guaranteed by the mortgages of the buyers; the SECOND and THIRD issues are guaranteed by the sure collection of taxes on the capital income.
2. The Bonds that the European Union would issue are not debts, nor do they represent charges for capital or for interest. The State Bonds, U.S. Bonds or the Bonds issued by any nation whether medium or long term, are debts of the State and in their Budgets they must destine expense items such as “”Debt Service”.
3. As a refuge for savings, the Bonds from the European Union would offer greater advantages for their
a) Stability. The interest rate is higher, fixed and is not subject to market fluctuations influenced by the fixed interest rates by the central banks. Due to the reserves that are formed, the interest can always be a point above the current price of currency.
b) Capitalization of savings. Each year the Bonds increase 1.66% in value due to the certain revaluation of the 50% net, at maturity. This circumstance prevails over any other fixed income investment. It also influences the premium of 50% that the Bonds will have upon amortization at the end of 30 years, with the possibility that this premium varies upwards, based on the “remainders”, a mass of money destined for Research and Development, to industrial, agricultural, and infrastructural programs

Evaluating the attitude of the financial markets towards the successive issues of Bonds in euros is a complex subject, and it is a good idea, perhaps, so that each one makes his own deliberations, to compare two blocs of great economic power, with different political characteristics. On one side we have the United States forming a single nation, one single political disposition, one language and one dominant currency. On the other side there is the European Union, to date 15 nations, with many languages and the hope that the euro will be consolidated as the only currency. Seen like this and in a simplistic form, we can affirm that the United States is a compact political bloc, with a currency heavily backed by the strength of its economy. On the other hand, the European Union, also with economic strength, is supported in the political disposition subject to the internal circumstances of each sovereign nation. This sovereignty, by free referendum, can modify the relations with the other nations, breaking or slowing the existing equilibrium and stability in a certain moment of time. For the European Union to form a political bloc similar to the United States, much time will have to pass, counted by many generations.
(That weakness that I point out in the page Web has been confirmed by the divergences in the focuses of the war of first Iraq and in the I sabotage later of the project of the European Constitution, with personal arguments, in name and interests of euphemisms, endorsed by its acolytes and rejecting and ignoring the civic protests olympically, as if went disgusting traitors to the homeland)
In this situation, the United States has no problems in issuing Debt Bonds, a refuge for savers who want security in their investment because they have confidence in the nation and in its economy, security for the persons and for the States as a means of consolidating their reserves. But there exists a basic difference between the U.S. Bonds and the European Union Bonds. The former have no real guarantee. The gold of long ago only exists in books. Credit has substituted the materialization of the guarantees. The European Union Bonds, on the contrary, would have a real guarantee, that would not be any percentage of precious metals but rather a physical guarantee, total, in the form of mortgages guaranteed by constant work, and periodic income materialized with the tax withholding on capital income. Arriving a this point, it is right to think that both the European Bonds as well as the euro would be reserve goods, accepted and desired by the financial markets, by the States and by individuals.
Europe does not form a homogeneous political bloc, which is a negative factor. Neither can we say that it forms a single economic body because it is the sum of the heterogeneous groups. The European cohesion must be found in the formation of a single economic bloc, that cannot be a general figure formed by industry, agriculture and fishing or by economic products from concrete geographic areas, because they denounce the exclusionary national differences. There must be a characteristic sectorial composition, newly created, with common pressure, in a branch of goods of general necessity, desired, of long duration, revalued and transmissible. This sectorial branch I consider should be the self-financing housing construction industry. It would be a economic sector financed with the issue of Bonds in euros, mixing the strength of 375 million Europeans and thus taking advantage of an economic similarity, consequence of a political will, to avoid discrepancies, thinking only in common objectives. A project to provide houses to those that want them and payable in 30 years. Of the capital obtained a predetermined part would be destined towards the construction of houses. Another very important part, earned in the process of construction by and for the Member States, will be of free disposal within the framework agreed upon with a view towards progress and internal and general well being… and with ZERO COST.
I insist on another difference, already pointed out, between the Bonds in euros and the Bonds in dollars issued by the United States. The Bonds in euros of the European Union will not constitute any debt and, consequently, neither will the interest paid be an expense. On the other hand, the U. S. Bonds are debts of the State and the interests constitute an important expense item. The European Bonds, such as I design, will always be able to pay interest a point higher than the market rates if it is considered necessary and, besides, the amortization at 30 years will be with a fixed premium of the net 50 percent of its nominal value, always susceptible to upward variations. In these conditions, the euro will stop being a currency with speculative problems provoked with certain frequency by external factors that dominate the financial markets, to become a solid currency, for reserves and refuges, like the dollar. And we Europeans will have available the means to shape an indestructible economic unit that will protect us from any political division.
Certainly I am conscious that all that I am writing doesn't stop to be laments in the desert without any practical result. The political leaders make casus omissus of all suggestion that doesn't emanate of their advisory circle, possessors of the only truth, faithful guardians of the sacred mantel of the boss that protects them and it feeds. Expert of his idiosyncrasy, doesn't affect me in the most minimum thing. Therefore, I will continue insisting, how if was a hobby. It is possible that some sheep in good faith considers that my project is good, it is real that is only needed political will, good faith and awake mind to understand it. A Project that it links the capacity to mobilize unsuspected resources without indebtedness, to create mass employment and with the employment to get the stability in the personal thing and, for extension, to have enough elements to fight against the poverty by means of the work. But that he/she goes not to be stoned by heretic carefully.
My admiration toward the messianic leaders, for its good faith, is synthesized in the following verses. (Only version in Spanish)

12/03/04

Francisco Montaner


Globalizing housing with zero cost