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Cee money czech pm fears mkt bogeyman more than govt collapse


The Czech government's insistence on pursuing its deficit-slashing agenda at any cost, including its own collapse, is based on the questionable fear that markets will punish one of the EU's best run economies for any sign of fiscal slippage. Prime Minister Petr Necas took power in 2010 by warning savings-minded voters to embrace austerity or go the way of Greece, but is now under fire for policies that have helped extend what is now a three-quarters recession. Adding to the economic woes, he has kindled political uncertainty in the country of 10.5 million and is at risk of following a string of EU leaders toppled by public anger and internal party clashes in their pursuit of austerity measures. After six members of his Civic Democrat party teamed up with the opposition to defeat of a tax hike bill in parliament last week, Necas has vowed to resubmit the package and tie it to a confidence vote in his cabinet. Canvassing Czech media with his finance minister, Miroslav Kalousek, Necas made clear the future of his government - and political stability -- was less vital than slashing the deficit."If we are going to continue in our reform package, we have to get the public budget deficit to below 3 percent of GDP next year, and without this consolidation package, it won't happen," Necas told television station CT24 at the weekend. "I won't sit in a government that won't fulfil its fiscal strategy."Necas has said he will discuss possible compromises with the rebel deputies before the bill comes up for vote again this autumn, but he and his ruling party control only half of parliament's 200 seats, so every vote will count. His approach is a stark departure from peers who have eased off on austerity when not under immediate market pressure to avoid undercutting growth or stoking political tension. The same day Necas vowed to push on with his unpopular tax hike package his Polish counterpart, Donald Tusk, announced he was abandoning his goal of bringing the fiscal deficit to below 3 percent of gross domestic product this year."We don't want to impress with reformers' zeal," Tusk said.

GROWTH VERSUS DEBT Necas's main argument is that any wavering on reforms will trigger downgrades from credit rating agencies and drive up borrowing costs, which will then cause even deeper deficits. It has puzzled economists who note that, having already over performed in 2011 and with debt at half the EU average at around 40 percent of GDP, the Czechs face little market risk. A bigger problem, they say, is that the unrelenting pace of austerity is driving the country deeper into recession. While the exports that make up 85 percent of Czech output are growing, consumer demand fell by 3.3 percent from April to June and was the main reason for a third quarter of recession."I save because I have to. This year my expenses are higher than last year, but my income isn't," said Jana, a middle-aged woman selling handbags in Prague. "Everything has gotten more expensive. Even if it's just a little bit, it matters when it's across the board."

Data indicate shoppers are saving both in anticipation of next year's tax hikes and also because of an earlier hike to value added tax (VAT) that kicked in this year has backfired. Meant to boost VAT tax receipts by 15.5 percent, that rise has led to an increase of only a tenth of that amount in VAT revenue. But it has helped push consumer confidence to its lowest point in more than a decade, while purchases of durable goods like cars and TVs have fallen by a fifth year-on-year. POLITICAL INSTABILITY But Necas and Kalousek say a failure to push on with more tax hikes would do more damage than the economic downturn.

"If we paid the same level of interest on our government bonds as Poland, which is considered a relatively successful economy, it would cost us 14 billion crowns more in debt servicing costs than it does today," he told CT24. But the comparison is a stretch. At 1.38 percent, Czech five year bond yields are at a record low, a third of Poland's level. Ratings agency Standard & Poor's ranks the Czechs three notches higher than Poland at AA-, while Fitch ranks it two. Moody's has it only one rank higher. It said this week that if the government did not pass Necas's tax-hike bill it "would itself not prompt a loss of creditworthiness". At the same time, it said politics could."Should the government fall before the scheduled June 2014 parliamentary election, reform paralysis is likely to set in," it wrote. "This development would be a major impediment to the structural reform agenda that sought to increase competitiveness and improve investment conditions in the Czech Republic."Necas's government originally aimed for a deficit of 3.5 percent of GDP this year, but after cutting to 3.1 in 2011 (versus an original target of 4.2 percent of GDP), it lowered that goal to 3. Now it sees the 2012 deficit at 3.2 percent. Michele Napolitano, an analyst for ratings agency Fitch, said some fiscal loosening would not hurt."If the government was to target a slightly higher fiscal deficit, for good reasons -- the measures should be somehow growth supportive -- that wouldn't have any negative rating impact on the Czech Republic," he told Reuters. "The fiscal position is strong enough to tolerate a slight upward revision."Perhaps the most accurate indicator of market sentiment is how bond yields react. When Tusk announced his retreat from his government's budget target, five-year bond yields were steady, then ticked upwards 10 basis points to 4.3 percent on Wednesday. How have Czech yields done in the same period? They kept track almost exactly with Poland's, rising 13 basis points.

Financial infidelity five ways to avoid money secrets


(The writer is a Reuters contributor. The opinions expressed are his own.) When it comes to love and money, the prospects for harmony don't always depend on what is disclosed. They also hinge on what is not. Just ask Leslie Tayne. The attorney from Long Island, who was engaged to be married a couple of years ago, found her fiance was evasive whenever she brought up money issues."I didn't know anything: How much money he was making, his debts, his expenses," says Tayne, who, ironically, specializes in financial law. While physical infidelity may involve a surreptitious smooch with a co-worker or meeting strangers through a hook-up site like Ashley Madison, financial infidelity may involve deceit such as the hiding of bank accounts or credit-card bills. "It's one of the biggest things that can impact relationships," says Tayne, who eventually called the whole thing off with her fiance. Indeed, if you don't know anything about your partner's income, debt or expenses, that's a big, fluttering red flag. And judging from new data from CreditCards.com, there are a whole lot of red flags out there. SECRET ACCOUNTS The site's poll found that 13 million Americans, or one out of 20 of us, have hidden banking or credit-card accounts from their partner. And 19 percent have splurged more than $500 on a big item without telling their significant other."If you're hiding some big financial secret and it gets discovered, it's only natural for the other person to ask, 'I wonder what else he's hiding?'" says Matt Schulz, senior industry analyst for CreditCards.com. The age group that's most likely to keep financial accounts on the sly? Naughty millennials between 18-29. Those over 65, perhaps not surprisingly, were the most transparent with each other. (As the saying goes: All secrets come out eventually.)New research from Ally Bank also uncovers a surprising amount of financial hanky-panky. In its latest Love and Money survey, among respondents who reported serious, ongoing money arguments, 17 percent said that hiding debt was a key issue, while 7 percent cited the hiding of assets.

So, how can couples avoid this particular brand of infidelity and celebrate Valentine's Day with some financial transparency? Here are five tips. EXCHANGE NUMBERS No, not phone numbers. You need to share your credit reports and net-worth statements, suggests Kathleen Grace, a financial planner in Boca Raton, Florida, and author of "Prince Not So Charming." Not just before marriage but before living together, as well. If there are worrisome signs such as late payments, maxed-out cards or towering debts, that is where you will find them.

ACCOUNT ACCESS You do not have to merge all your finances. Many couples are more comfortable with separate accounts. But you should at least trade logins and passwords so that financial information is available to partners if they want it, says Grace. If your significant other becomes "withdrawn or defensive" at the idea, that is another warning sign. GROUND RULES Making a big purchase? Set a level at which you have to discuss or clear it with your beloved, say, $100 or $500. This will help foster mutual trust and act as a natural barrier to outlandish or unnecessary purchases you may regret later. According to the CreditCards.com survey, 41 percent of Americans have spent more than $100 without tipping off their partner. If reckless spending happens on both sides, you are planting the seeds for suspicion, resentment and possible financial trouble down the road.

BUDGETING APPS Think of apps like Mint, You Need a Budget, or EveryDollar as a kind of forced marital transparency. When you can see the account in one display, it makes it hard to hide a different set of off-the-book numbers. If that process brings secrets to light, then so be it. "Secrets can destroy a budget," says CreditCards.com's Schulz. "Plain and simple, there's no way to do an accurate, meaningful budget if you don't know exactly how much money is coming in and going out."GET IT IN WRITING Arrange a co-habitation or prenuptial agreement, Grace advises. The process of writing down your expectations will reveal any serious money disconnects, and the earlier this happens, the better. That does not mean shaming or scratching off lower-income partners, by the way. After all, few spouses make exactly the same amount of money. It just means acknowledging each other's financial realities, and calibrating your expectations accordingly. Having learned her lesson, for instance, Leslie Tayne in Long Island has taken a different tack in her current relationship."We were very upfront, and disclosed everything right away," she says. "It makes a huge difference."