FT Alphaville » Cadbury, Kraft sweeten up.
It’s a long time since Cadbury was a Quaker business. But somewhere deep down it still thought it was.
About a decade ago I was involved in writing Good Business: Ethics at Work – Advices and Queries on Personal Standards of Conduct at Work
It’s a different world view. And we’re poorer for another, even remote exponent, disappearing.
FT.com / Columnists / Philip Stephens – How the big banks rigged the market.
Excellent to see a columnist asking why and how banks make their extortionate profits and at cost to whom (it’s you, by the way – this is a ginat exercise in shifting resources from less well off the most well off)
As Philip Stephens notes:
When Lloyd Blankfein met politicians in London a little while ago he brushed aside warnings that investment banks faced higher taxes if they ignored the rising public outcry about multibillion-dollar bonus pools. The Goldman chief executive seemed to believe governments would not dare.
He was wrong. They do dare. Apparently Goldman were ferocious in counter attack.
But as Stephens also says:
The next stage must be scrutiny of the structural distortions that allow these institutions to rack up such huge profits. Broadly speaking, the leading players in at least three areas of investment banking – wholesale markets, underwriting and mergers and acquisitions – have been operating natural oligopolies.
Their profits have been in significant part a reflection of the absence of robust competition. There are different reasons for this in the different areas of business – what economists call asymmetries in some and market dominance in others. But as long as they are not addressed, the banks will make profits – or more accurately, extract rents – out of all proportion to any contribution they make to the wider economy.
And this has to look at something that is usually ignored – and that is the incidence of the charges the banks make. Incidence is an argument beloved for the right wing tax lobby – always being used to claim taxes ion capital only harm labour. well, I say let’s work out who the profit harmed in the first instance before we even worry about who the tax harmed.
And there’s good reason to ask this. Do you want to know why your pension is lousy? I’ll tell you: bankers stole it. Your fututre si their present excess.
Ditto the collapse of endowments.
And now much of the economy.
This is what we need to know. Because when we realise that all bankers have done is a modern version of enclosing the comm,ons – capturing semi-communal property such as pension funds for their personal gain then we’ll see exactly why massive change in the system is needed.
Let’s make this personal I say. Because it is. These people aren’t doing God’s work. They’re lining their pockets unjustly. And all the rest of us lose from beginning to end.
FT.com / UK / Politics & policy – Darling sharpens axe on spending.
The FT notes:
Alistair Darling will order ministers this week to start work on the most swingeing public spending review in a generation, as officials acknowledged that some departments could see cuts of about 16 per cent over three years.
With no real sign of recession being at an end and with deflation still a high risk this is madness.
The Compass report ‘In Place of Cuts‘ sets out a clear alternative that will work. Labour has to be radical. Darling has been captured by the Treasury. If, by chance, they win an election he will have to be moved.
Swiss Banker Blows Whistle on Tax Evasion – NYTimes.com.
Ruedi Elmer continues his brave and lonely work. As he says:
Offshore tax evasion is the biggest theft among societies and neighbor states in this world.
I’m glad to see he is Jack Blum working for him as his lawyer. There’s no better man to have.
I’m also delighted that Jack is a leader of Tax Justice Network USA.
FT.com / Lex / Finance & governance – Auditors.
The Lex column of the FT notes:
Welcome to the real world. UK audit firms will finally have to behave in the same way as the public companies they monitor when independent non-executives join their boards this year.
Auditors are already fighting back according to Lex:
Auditors’ criticisms are readily apparent. The independents won’t be involved in day-to-day business, are unlikely to know the details of individual audits, and so may not be able to prevent another Andersen, post-Enron collapse. Issues which usually occupy the time of independents, such as mergers and acquisitions and remuneration, are also rarely problematic inside a partnership such as Deloitte, KPMG or Ernst & Young. So it may be easier to see them as schmoozers whose job is simply to represent the firm at dinner parties.
And yes, that is exactly how I see them. Appointing a few friendly chaps – almopst certainty from the alumni of the firm to be non-execs is going to change absoluely nothing at all.
Lex thinks it will.
Dream on, I say.
Without Chinese economic reform, global recovery may be doomed | Business | guardian.co.uk .
I note Larry Elliot, in his column this morning, touched on a theme I addressed yesterday, quoting what is generally thought to be a right wing source:
The banks are still in a weak state, markets are febrile, the public mood is sour. [Charles Dumas of Lombard Street Research] is concerned that by late 2010 or early 2011 there will be a second leg to the global downturn, this time with political as well as economic ramifications. If he’s right, things will then get very nasty indeed. As I said, enjoy it while it lasts.
This is the real risk of the next stage of the recession; that there will be serious political spill over.
I share the concern.
I have written many times on this blog about the anti-democratic philosophy of those who promote tax havens. This, I think, reflects the attitudes of the big banks, lawyers and legal firms in our society, all of whom di in my opinion work to deliberately undermine the taxation revenue due to elected governments in a deliberate attempt to undermine their mandate to govern.
Sometimes this is explicitly confirmed. Take this comment on the blog from a right wing libertarian (most of whose comments, I admit, I block):
I condone invdividuals keeping the sweat of their brow and/or spreadsheet. “Breaking” laws which are unjust (e.g.. taxation as currently practiced by many governments around the world) is not a crime, it is an individuals right (bordering on their duty).
Just as I would condone the freedom marchers in the southern US “breaking” laws or refuseniks “breaking” laws behind the old iron curtain.
Tyranny and authoritarianism (even if it is just a little for our own “good”) as practiced today needs it up ‚Äòem at every turn.
Much the same thing was said at a recent Cato Institute conference in the USA by Veronique de Rugy. Richard Teather, a UK chartered accountant, lecturer at Bournemouth University and commentator for the Adam Smithj Institute and Institute for Economic Affairs has also said much the same thing (page 81) when discussing attacks on tax havens by democratically elected governemtns:
This is attacking a classic use of a tax haven, as explained in the previous chapter, in which a person resident in (or otherwise subject to the taxation system of) a highly taxed country places his capital in a tax haven where it can earn untaxed income. While there are many cases where the home country does not tax foreign source income (such as the UK’s non-domicile exemption discussed above), most Western countries have a worldwide taxation system that seeks to tax the worldwide income of its residents (or all of its citizens in the case of the USA). This tax haven income therefore does not cease (legally) to become liable to tax merely by being earned offshore: it is still liable to tax and the investor has a duty to report it to his home tax authority. In practice, however, if the investor does not report his income, then the home country can have great difficulties in discovering and taxing it, particularly if the haven country has strong banking secrecy laws.
While I am not seeking to condone dishonesty or criminal activity, from an economic perspective this is merely another example of tax competition: indeed, it is often necessary behaviour in order to take advantage of tax havens. Without the willingness of some to engage in this sort of activity, tax competition would be much less effective and therefore reduce the benefits that flow from it for the rest of us.
I added the emphasis: what I think he is doing is condoning criminality.
This is supposedly done, you note, top preserve the right to property. This, however, is an entirely false argument. Since property rights are inseparable from the duty to pay tax – both coming from the same source and being indivisible - the right to hold property is equally and exactly matched by the duty to pay tax. So anyone arguing a tax is not legitimate has at the same time to say property rights do not exist or that government is illegitimate. Those are the options.
I think that is what is being said. Those from the right and the financial elite who seek to justify tax crime and the avoidance of obligations to government seek to undermine the state and the society we live in. we need to be aware that the choices to be made are ultimately as blunt as that. And it is the very essence of society that we are arguing for when we defend the right to tax.
Op-Ed Columnist – Bankers Without a Clue – NYTimes.com.
Krugman in the New York Times:
The official Financial Crisis Inquiry Commission began taking testimony on Wednesday. In its first panel, the commission grilled four major financial-industry honchos. What did we learn?
Well, if you were hoping for a Perry Mason moment ‚Äî a scene in which the witness blurts out: “Yes! I admit it! I did it! And I’m glad!” ‚Äî the hearing was disappointing. What you got, instead, was witnesses blurting out: “Yes! I admit it! I’m clueless!”
As he continues:
O.K., not in so many words. But the bankers’ testimony showed a stunning failure, even now, to grasp the nature and extent of the current crisis. And that’s important: It tells us that as Congress and the administration try to reform the financial system, they should ignore advice coming from the supposed wise men of Wall Street, who have no wisdom to offer.
The Masters of the Universe are clueless. All they know they want is the power to continue to purloin assets for their own benefit at cost to the rest of it. So long as they can do that, by capturing our savings, our pension funds, our bank accounts and our tax revenues for their own benefit, then they’re happy. If they can’t, they’ll impose their demands on us.
But the politicians still listen to them – so granting them power. And the time has come for bankers to lose that power. They have to loose the power to create money, the power to dictate markets, the power to impose policy, the power to ravish economies.
I think the desire to do that exists. The only hope that a Conservative government offers is that it will expose to people what happens when bankers get unbridled power – as they will under the Tories. And that might then produce the necessary incentive to create change.
But right now this looks horribly loike us and them, where them is the bankers, and all we can say for sure about them is they’re a) clueless and b) out to abuse the rest of us.
Debtonation ¬ª Blog Archive ¬ª Osborne’s puppet-masters: Soci?©t?© G?©n?©rale..
Ann Pettifor notes the delightful style of Societe Generale who wrote last week:
Removing the stimulus will involve pain; lower growth, higher unemployment and political unpopularity. But policy-makers don’t like lower growth, higher unemployment and political unpopularity. They enacted the stimulus in the first place to avoid it! At what point will they decide they do want lower growth, higher unemployment and political unpopularity?
Given the choice, they won’t, ever. So it will be imposed on them (and therefore us) by a suddenly less generous bond market via a government funding crisis.
So there we have it: banker’s attitude to democracy is stuff electorates, we’ll get what we want by imposition.
Have no doubt about it – the fight with bankers is about who rules. And the antidemocratic elites of finance (for that is what they are – in banking, accountancy and the legal profession) want to rule. Democracy is not for them. And they’ll precipitate a crisis in it to get what they want.
This still has the capacity to turn very nasty indeed.
| © 2005 - 2011 Tax Research UK. Some rights reserved.  |
Suffusion theme by Sayontan Sinha |
