The FT says twice as many business leaders say that the world economy is going to improve in the next six months than think it is going to get worse, according to the FT/Economist global business barometer.

Well, I presume the survey does say that but I find that distinctly weird, or yet further evidence that these people are utterly out of touch.

The Euro is in crisis and has no clue what to do about it.

Japan is in recession. We totter in the brink. The GOP in the US want to quite literally tear the government down through acts of gross irresponsibility. The High Street is making clear that people aren’t buying. Savings ratios are staying high with good reason. Unemployment is high: I think it will rise still.

But I guess if you’re a baker, commodities dealer, oil company or other rentier then sure, things look just dandy.

That’s the disconnect that we now suffer between business and economic reality.

And it’s good reason for saying the interests of business (especially big business) should be ignored when much policy is set: what’s good for them is not good for us. Surely that’s obvious now?

 

The FT reports:

Amazon.com says it is selling more e-books for its Kindle electronic reading device than paperback and hardback print editions combined, helping its book business to see its strongest growth in more than a decade.

I’m amazed: on the UK site the Kindle book is often more than what I might call the real thing.

But, I’m no technophobe. I haven’t embraced this yet. So this is an off the usual topic request: is the Kindle worth having?

 

My analysis of Jersey’s potential failure to comply with the EU Code of Conduct on Business Taxation, yet again, reached the Telegraph today. They reported my opinion very accurately. The Jersey response?:

In response to Richard Murphy’s suggestion that Jersey’s Zero/10 policy contravenes the Code of Conduct by granting advantages to companies without any real economic activity and substantial economic presence on the island, director of international tax for the States of Jersey, Wendy Martin, said: “The condition requires an advantage to be given.

“Since our general rate of tax is 0 per cent which applies to all companies with some limited exceptions, it cannot be said that Jersey is offering an advantage and therefore it cannot fall foul of this criteria.

“Regardless of this, Jersey is not in the business of what might be considered post box companies i.e. those with insufficient substance to justify their activity.

“International tax standards have progressed significantly in recent years such that domestic tax rules work against corporations shifting their profits to low tax jurisdictions without demonstrating adequate substance.

“It is clear from all of the evidence that the EU Code Group’s concern is with the deemed distribution and attribution rules and not the Zero/10 aspect.

“The position taken by Richard Murphy is his view and is both contradictory to his previous position and does not accord with anything that is coming out of the Code Group.”

Oh dear Wendy: go back and read what the Code says and what they said again, and then wonder why they didn’t wave you through in February this year when you’d announced that you’d abolish the deemed distribution rules. Was that because that wasn’t enough for them? I suggest so.

In that case I’d look long and hard at 3 – because you failed it for good reason.

And my sources (thanks to all of them) suggest three things right now. First, you’re not being invited to the next Code review that will consider this. I wonder why that might be? Second I gather that the UK isn’t singing from the same hymn sheet as Jersey on this one. Third, even more ominous I hear the Treasury is beginning to share my opinion on the viability of Jersey’s economy – looks like they’beginning to think Jersey’s going bust too.

All in all – things aren’t on Jersey’s side. Could be that the bravado from Jersey on this is just that then, yet again.

 

Because of Jersey’s failure to collect the tax it needs to run its government -  Something I have been predicting since 2005 –  it has been forced to increase its GST ( or VAT as we in the UK know it)  from 3% to 5% in the next few weeks.

There are, fortunately, some members of the States of Jersey who are of independent mind and who  seek to represent the people of the island.  Some of them fought very hard to ensure that this increase in GST was matched by the introduction of zero rating on essential items that ordinary people  cannot do without. Things like food, for example,  which is zero rated in the UK but which has been subject to GST in Jersey.

They took this battle into the States itself, and yesterday they lost. The vote to impose GST on almost all transactions in Jersey was passed by 29 votes to 22. It does, of course remain the case that such essential items as marine fuel for yachts are not charged to GST, but food that ordinary people have to buy is taxed. This is justice, Jersey style.

The tax burden is shifted from the tax abusers who use the island to avoid their obligations elsewhere in the world onto the ordinary people who live there.

The vote does however show the power of those ordinary people is rising. Sometime soon, as their government declines into economic failure due to the collapse of their corporate tax receipts as a consequence of the zero/ 10 tax policy which they are pursuing, despite Europe’s opposition, then I suspect the people of Jersey will overturn the rotten government that they have suffered for so long. In the meantime, they suffer.  And that is why I continue to take an interest in their affairs.

 

I’ve just become Forbes’ first paid blogger in Europe.

I make the disclosure of payment because it’s important to do so and not because it’s a lot!

My first blog in this new guise will be soon after 1 June.

And under the agreement with Forbes what I write about is entirely up to me.

I will, of course, be linking to the Forbes material from here.

And no doubt there will be those who will take opportunity to comment. Which on this occasion will amuse me, because that will help increase the remuneration. Now that’s going to create a dilemma for some.

 

Philip Hammond has made the most extraordinary range of comments in response to a report on the future of our railways according to the Guardian.

As they note:

Philip Hammond said above-inflation fare rises could disappear within four years if reforms set out on Thursday in an independent report are implemented. But he ruled out fare cuts as he warned that the £5.2bn-a-year state subsidy for the “relatively small” and “better off” proportion of the population that use trains is unsustainable.

Yes, of course: I see. £5.2 bn of subisidy will go but fares won’t rise. That’s obvious, isn’t it?

Next:

“In the long term the taxpayer will not be prepared to just continually increase the level of subsidy that they give to the relatively small number of people who ever use trains – something like only 12% of the population. And of course those who use trains tend to be better off anyway,” he said

Quite so: let’s shut down all our cities then. There’s no other way they can function: tarins are critical to their survival. I wonder how he’s going to handle the chaos of removing their arteries, or the economic disruption of the extra pay that’s going to be required to cover fares?

And doesn’t he realise that passenger rail services in this country have almost certainly never paid? Until the post war period freight made all the money for railways. Losses began when freight went to roads. Until it did it cross subsidised passengers. Like Lansley demanding of the NHS something that has never been done before now Hammond is demanding that railways make a profit running passenger trains –  something that has never been done before.

The next selection of the inspired wisdom?:

[The report] will avoid echoing the Beeching report of 1963 that resulted in the closure of more than 8,000 miles of track and will not recommend cuts in heavily subsidised rural lines. But the report is expected to lay bare the cost of supporting such services. Hammond said responsibility for those lines could be devolved to local authorities.

Ah, the standard Tory ploy these days – don’t blame us for cuts. We gave responsibility to local authorities and they closed the service. The fact we cut their budgets by billions and denied them the right to raise taxes has nothing to do with it of course. The Tories are  doing this on health (where the Health and Social Care Bill specifically creates a Local and not a  National Health Service with the state having no role left in health care – all responsibility being devolved to local authorities who will have no cash at all to undertake the task given to them) and now he’s doing it with railways. Saying a local authority is responsible for subsidising a local route but giving it no additional funds is simply saying someone else must take responsibility for closure. That’s sure indication of the pygmies we have in this cabinet.

Finally – to show ignorance of rail operation:

Hammond also paved the way for taking carriages out of service out of rush hour, a suggestion blocked by his Labour predecessors. “What’s the point in running empty trains around the country? In some parts of the network carriages could be taken off in off-peak. Shorter trains are a possibility.”

Of course it costs energy to move trains around. But it takes additional staff, extra trains movements, extra line capacity and considerable extra cost as a result to split trains, move them to carriage sidings for a few hours and then bring them back again. This suggestion shows the most basic lack of understanding of railways. But then he’s a transpor secretary in the mould of Thatcher – I suspect he thinks only failures use trains. She did (she did not go near them – like buses). And that’s what’s at the core of this.

Railways work as a system, collectively, with cross subsidiation and sometimes subsidy. It’s the best net outcome for soc

 

The FT’s report on Japan slipping back into recession is either bizarrely written or indicative of deeply worrying priorities. It says:

Japan’s economy contracted sharply in the first quarter, underscoring the vulnerability of the world’s third-largest economy which has been battered by the March 11 earthquake and tsunami, and marking a return to technical recession.

Gross domestic product fell 0.9 per cent in the first quarter compared with the previous three months, according to preliminary government data, even though the natural disaster struck Japan less than three weeks before the end of the period.

The decline follows a contraction in the final quarter of last year and will probably strengthen calls for greater government spending on relief and reconstruction, despite widespread worries about the impact of the extra borrowing required on an already highly indebted state.

It’s the last paragraph that troubles me.

The country has been hit by a national disaster. And yet there’s doubt that the governemtn should reconstruct what’s been destroyed?

And there’s concern that the interests of the (invisible) bond vigilantes should come higher than the needs of the communities so badly affected?

That seems to be the implication.

If true, that’s the end product of neoliberal madness – and how callous is that?

 

 

I thought this piece in the FT really well written.

I love J K  Galbraith (the second best economists of the twentieth century and a massive influence on my early economic thinking) for saying it.

But the introduction is first rate too, so I make no apologies for reproducing this:

In 1958, Harvard economist John Kenneth Galbraith was looking for a term to describe certain ideas that were commonly held, intellectually accessible and yet fundamentally flawed. To define such widely spread misconceptions he wrote: “I shall refer to these ideas henceforth as the conventional wisdom.”

What’s the conventional wisdom now?:

a) That there are bond vigilantes;

b) That cutting government spending will result in an immediate uplift in private sector activity

c)  That there is significant and abnormal level of inefficiency in the state sector.

None of those things is true of course.

But they are the conventional wisdom.

 

I discussed inflation and unemployment on Radio 2 this lunchtime.

My opponent’s arguments were not just annoying, they showed considerable indifference to the needs of people in this country. So I let out my frustration by turning on the webcam:

PS I know it cuts off short – sorry – but it’s only by a few words and I haven’t got time to re-record them

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