It was in mid- September that I reported the first day on which this blog had 6,000 readers in a day.
A couple of weeks ago I reported the first on which it had 7,000 readers in a day.
And yesterday was the first with 8,000 readers in a day.
Thanks.
Oct 192010
Oct 192010
The poverty of thinking within the ConDem government is becoming more apparent by the day.
We learned today that the replacement for Trident is to be delayed. Which is good news. Except that in the meantime we will keep an entirely inappropriate,wholly ineffective, and unnecessary nuclear deterrent at sea at enormous cost when there is absolutely no risk to justify its presence. Why not just get it over with, and scrap it?
Maybe, just maybe, if that decision had been taken the wholly illogical decision to buy two new aircraft carriers, but no planes to fly from them, might not have looked quite so stupid. As it is, these will be the most expensive white elephants ever acquired.
And in the meantime aircraft already in the air – eight squadrons of Tornadoes – one of them flying over my office quite often and indirectly underpinning much of my local economy – are to be scrapped with no obvious reason given.
Anyone, anywhere, who could call this a policy, let alone a defence policy, should not be put in charge of a guardhouse, let alone the Ministry of Defence.
If this is evidence of the disaster that is facing us, it is going to be worse than I could ever have imagined.
Oct 192010
We are told time and again that the major economies of the world, who are borrowing funds to finance their deficits, will be going bust any time soon. It was, therefore, interesting to note in this morning’s Financial Times that:
Foreign investors scooped a near record amount of US debt in August and sharply increased their holdings of Treasury bonds, according to the latest Treasury International Capital report.
August was marked by fears that the US economy faced a possible double dip recession and yields on Treasury bonds fell sharply as bond investors priced in a move by the Federal Reserve to start another round of quantitative easing. The Fed announced in August that it would start reinvesting principal payments from its agency debt and agency mortgage-backed securities in longer-term Treasury securities.
What can be interpreted from this?
The first, obvious conclusion is that investors are utterly irrational if those who predict economic devastation for Western governments are correct.
Alternatively, there is now no such thing as the long-term, and therefore all action is completely and utterly speculative. But in the case I wonder where this money will go when it pours out of Treasury bonds? There is no obvious destination.
Alternatively, and perhaps most plausibly, we’re not going bust any time soon. Nor is the USA. In fact, in the absence of any sign of serious economic activity relating to growth, new products, innovation, investment or enterprise in the market sector the only sensible place to put your money is in government bonds because like it or not the government are the only people who can use money to good effect at this point of time. And what the markets are saying is that they want governments to act proactively with their money to clear deficits by promoting growth.
That’s not what the naysayers want to hear.
But that’s what the serious money is saying.
I’m with the money on this one.
Oct 192010
I’ll be speaking at the TUC rally against the ConDem cuts at Central Hall Westminster today.
Why?
Because, as I might say:
If we stopped the cuts in staffing at HM Revenue and Customs.
And if we spent another billion pounds each year on tax collection.
And if we had a general anti-avoidance principle in the UK.
And if we stopped the abuse that the domicile rule allows in this country.
And if we had a proper bank tax.
And if we spent the money that the government proposes to spend on tackling benefit fraud on beating tax cheats then I can tell you this with absolute confidence.
We wouldn’t get back £1 billion a year. We would get back £20 billion a year.
And that’s the annual investment that we need now if we want turn this economy round to create the jobs we so badly need – and which would create the wealth and generate the tax – all the tax – we need to clear the deficit.
Which is exactly why we don’t need cuts.
Oct 192010
There is an absurd paradox in US tax. It wisely taxes its citizens on their world wide income without consideration of whether they are resident in the US or not. Despite claims to the contrary, this clearly works well for the US – and those who say otherwise are amongst the easy to find “anti-tax” lobby in the US.
On the other hand it taxes its companies on a completely perverse territorial basis – so that profit earned outside the US is not taxed until remitted from abroad. It is very easy to see the tax avoidance opportunities this paradox creates.
Bush exploited this by allowing in – I think it was 2007 – US corporations to remit funds back to the US at a 5% tax rate for a one off boost in receipts – which did nothing for employment in the US, which was his supposed aim. Now the FT reports:
US multinational companies are clamouring for a tax holiday to repatriate billions of dollars “trapped” overseas but are being rebuffed by Barack Obama’s administration.
JPMorgan research estimates that 30-40 per cent of the almost $1,000bn in cash held by non-financial S&P 500 companies is in foreign jurisdictions.
The answer is very obvious: the US needs to reform its basis for determining tax residence for corporations – and tax them on their world wide income. As is obvious from this demand, any other option gives rise to abuse.
Which is exactly why the UK is wrong to be relaxing this approach.
On the other hand – the UK also needs to reform its basis for determining tax residence for companies. The rule based on the location of central management, focussing on the board meeting is absurd and so easily abused it is well over due for reform.
Oct 192010
FT Alphaville has published an exchange between UBS economists on the need for a central infrastructure bank at this time of economic crisis. Extraordinarily the exchange concludes with this comment:
My basic position is that fostering the kind of structural economic transformation and innovation that has been laid bare as essential by the financial crisis is a – maybe the – central public purpose. The private sector cannot make the running here – certainly not yet. We have no choice. A national infrastructure bank that facilitates and channels the excess money in our economies towards, say, new and alternative energy technologies, and the type of infrastructure that might revolutionise manufacturing processes is a worthy pursuit.
What is quite extraordinary about this is that this is, in effect, an endorsement of the whole Green New Deal position.
I’m delighted to welcome them on board. So long as UBS can take part openly, honestly, accountability, transparently, and with full information exchange taking place, they can join the green new deal any time they like.
Why trust this lot?
ConDems
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Oct 192010
Nigel Stanley at the TUC notes:
In today’s Daily Telegraph 35 business leaders sign a letter backing the cuts.
We’ve done some quick digging around and so far we have got their total annual salary up to £14.6 m a year, though there are still some gaps.
I don’t think they are going to be hurt very much by the cuts. Tax would perhaps be another thing.
He’s right.
And why trust people signing what amounts to a collective corporate suicide note anyway?
Oct 182010
I am well aware I could be accused of bias in writing this blog, but would like to recommend you watch tonight’s edition of Dispatches on Channel 4, which had the above title.
It’s not because I appeared numerous times – as did John Christensen – although it’s true, we did – but because the programme revealed better than any documentary I have done before just what is going on in secrecy jurisdictions, how two faced they are, and how undermining of transparency, accountability and democracy their activities are.
And the former PM of Cayman did make a fool of himself as did BVI officials, which added to the amusement.
And one thing is very clear – despite all the claims we are “not in this together”.
Congratulations are due to the production team.
I am amused by an article in the Jersey Evening Post today. It says:
Thousands of jobs could go and hundreds of millions in tax revenues be lost if the States were to tinker with the Island’s tax system.
That is the stark warning issued by the body responsible for promoting the finance industry. In a shot across the bow of backbenchers, Jersey Finance has spoken out as it fears the effects of amendments that might be put forward to the Budget in December.
Jersey Finance chief executive Geoff Cook said that stability is the cornerstone of what Jersey has to offer as an international finance centre and even reports of potential changes to the tax system can inflict both damage to the Island’s reputation and business interests.
So here is Jersey, running a tax system that the EU has suggested to be illegal and which is in urgent need of reform whilst at the same time it is rapidly heading for insolvency due to the massive black hole in its finances which amounts to at least 20% of its annual budget, and then along comes the state financed quango whichthe finance industry in the island refuses to support saying that whatever happens no change must be made which threatens the finance industry, even if at the cost of the complete breakdown of the government of the island.
You can see that they’ve got their priorities right, can’t you? Blow everyone who lives on the island, and their well-being, tax abuse comes first.
