GillianTett says the fFinger of blame for the crisis we’re in points to shadow banking’s implosion .
Her answer for the FT?
Revive shadow banking.
Heaven help us.
Apr 252009
Polly Toynbee has written what, for me, has been the most accurate post budget analysis I’ve yet seen. She said today:
The two "truths" universally acknowledged are that borrowing is wildly out of control and that the only remedy is leeching public services and shrinking the state. With aplomb every expert intones these factoids. They are not facts, they are political choices to be made. It’s up to us what we do, not some great steamroller of inevitability.
And as she points out, one of these is not going to happen (having appropriately damned Brown for inaction on the way):
Until this crisis, Labour’s state as a proportion of GDP has been smaller than in most of Thatcher’s time. She swelled it to slightly higher than the 48.1% peak Labour predicts – and just think how hard she tried to wield the axe.
Ask Nigel Lawson: determined to cut, he found only £500m.
Ask Portillo: his "fundamental spending review" found virtually nothing.
But choosing your favourite cuts is the new game in town: Simon Jenkins yesterday picked the Olympics, ID cards, Trident and Titan prisons. We can all pick bad wastages.
But one-offs spent over years yield relatively little. The "efficiency savings", "cutting quangos" and a handful of "over-paid civil servants" Cameron proposed on the Today programme yesterday are the last refuge of politicians afraid to tell the truth.
Precisely.
For all the nonsense of the Right no one has found the savings to be made because it means sick people not treated, pensioners suffering extreme poverty, and the unemployed (the vast majority involuntarily unemployed – let’s be clear) on less than £60.50 a week.
It’s not going to happen.
Let’s face the reality. What failed was neo-liberalism, the Washington consensus, the rule of finance, the idea that we can grow without end. That is what is dead. Gordon Brown says it is dead but does not evidence it. Cameron wants to breathe life back into it at enormous cost to realm people.
Both will fail.
The model does not work. What we will do is transition to a new one. The only hope it that it is relatively painless. And not much blood will flow.
It is reported that:
All EU Member States should agree to exchange full information on interest earned on saving accounts by July 2014, says MEPs in a report adopted on Friday (25m April). Members also called for an end to tax havens.
In approving by 351 votes in favour, 27 against and 20 abstentions, the report by Benoit HAMON (PES, FR), the EP called for the end of the withholding tax option for certain Member States and asked the Council to take action to put an end to so-called tax havens. The aim of the draft legislation under consideration is to improve action against tax fraud.
Under current EU legislation, Belgium, Austria and Luxembourg benefit from a transitional period during which they are not required to automatically exchange information on tax matters and can instead apply a withholding tax to savings accounts of non-residents as an alternative. The approved report calls for an end of this transitional period at the latest by July 2014.
Moreover, Members agreed to call on the Community to "take appropriate action" to improve transparency of so-called tax havens. This would mean, for jurisdictions large and small, including the Monaco, Andorra and Liechtenstein, Switzerland and the US, agreeing to apply the OECD standards in the field of transparency and exchange of information on tax matters.
According to the rapporteur, tax fraud in the European Union amounts to more than EUR 200 billion a year, which represents more than 2% of its GDP.
As is usual with taxation issues, Parliament’s views are advisory rather than binding and the final decision is for the Council, acting unanimously.
Excellent news.
The vote was so clear: the message is emphatic, the withholding option has to go.
Apr 252009
Budget 2009: £3bn raid on top earners’ pensions buried in small print – Telegraph.
If those 1% or so on the highest level of earnings, who benefited most from the economic boom that prceded the credit crunch and recession are not going to pay most for it, who is?
There’s an incredible poverty of thinking here
And the argument that thyey’re worth so much that they’ll leave is ridiculous. As I saw it described in one London evening free paper last night – this won’t be a brain drain – it will be a vain drain.
They’ll come back when they realise just how low the quality of life is away from home if they only leave for money.
No place for the truth in critics’ war
Guernsey
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Apr 242009
This Is Guernsey for the Guwernsey press seems to like TJN:
Predictably, but it was depressing nonetheless, the islands’ most vocal critic and a founder member of the Tax Justice Network found the truth unpalatable and has set about rubbishing the Foot report, the author himself and, perhaps bizarrely since it was what Mr Darling himself wanted looked at, its terms of reference.
On this occassion I think it John Christensen not me they’re referring to.
But isn’t our very objectvity on all involved our greatest merit?
After all, we have nothing to gauin but the truth. Not quite Guernsey’s position, let’s be honest.
Apr 242009
The Guardian has reported:
The International Monetary Fund is facing intense pressure from a coalition led by Bob Geldof to set aside more of the proceeds of a planned sale of its gold reserves to help Africa.
Speaking at a press confidence inside the IMF‘s headquarters in Washington, Geldof said Africa had been left out of the G20 agre ement at the London summit this month, and urged the IMF to find ways of devoting more resources to protecting the poor from the credit crunch.
He said:
All those arguments the activists and the politicians had for many years about aid, or debt cancellation, we can lay them to rest, because we’re all begging for aid. We just call it fiscal stimulus – and we’re all begging for debt relief; we just call it disposing of toxic assets.
Geldof has his faults (but don’t we all – as some like to point out here, often, about me) but this is good work.
Remember, a lot of that gold came from Africa in the first place – and they never got the right price for it then (or now, come to that).
Apr 242009
The FT notes:
Credit Suisse surprised investors on Thursday with a sharp move into profit in the first quarter as investment banking restructuring began to bite and private banking earnings remained robust.
But profit is not waht itn used to be. Under IFRS profit is the change in the net worth of your balance sheet on a mark to market basis: it is not the result of your trading in the quarter.
So if you made incredibly harsh provisions (and most banks did) and then some of the provided for assets perform again you make a profit as a correction to the previous provision.
Under historic cost you wouldn’t.
But when most people don’t appreciate that this looks like a real profit.
I doubt it is. This is part of a false bounce as the value of taxpayer’s funds injected into the market is capitalised. The pro-cyclical reporting cycle has begun again.
Government sticks to development commitments | ToUChstone blog: A public policy blog from the TUC
Development
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Apr 242009
As trhe TUC blog notes:
One element of the budget that didn’t actually make the Chancellor’s speech, but which is nonetheless important is that the Government chose to make clear that it wasmaintaining its commitment to meet its target for overseas aid.
Let’s be grateful for the good news.
A lot of people lobied for this – and it is essential.
‘Name and shame’ tax havens under fire
G20, Secrecy jurisdictions, Tax Havens, Tax justice
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Apr 242009
ePolitix.com reports on yesterdays debate at Westminster on the British Overseas Territories:
During a debate on the foreign affairs committee’s report on overseas territories, Andrew MacKinlay (Lab, Thurrock) accused the government of attempting to distance itself from its responsibilities.
“Ministers can’t pretend it’s a remote problem they are trying to get their hands on, they are to blame,” he said.
whilst, pleasingly a Tory joined in:
John Stanley (Con, Tonbridge and Malling), questioned why the chancellor had dodged the question when asked directly about the number by Liberal Democrat Treasury spokesman Vince Cable.
The Conservative member of the foreign affairs committee suggested that perhaps this was because the chancellor judged the answer might be an embarrassment to the Foreign Office.
“It is somewhere towards shocking that we have half the overseas territories on the name and shame list,” he added.
and the Lib Dems too:
Noting that the UK is directly responsible for financial regulation in many of the territories, Jo Swinson (Lib Dem, East Dunbartonshire) said there should be therefore “no barrier” to reform.
The Liberal Democrat foreign affairs spokesperson said help needed to be given to the territories to re-adjust their economies.
“We do need to recognise that the revenue they receive for financial services form a large part of their economy,” she said.
“Support will need to be given to develop other economic avenues that are less shady or internationally embarrassing.”
That is right: it will be necessary.
In response the governemnt said it had written to the Territories in question. True, it has. But it’s not clear what the Foot Commission is doing. The government has a lot of work to do.
