Bolitics The New Condem Government

[peterms]

Your point about tax havens, I don't agree with. Jersey and the IoM and the Caymans are not tinpot islands with no democracy. They are democratic - they have free elections and so on.

They do very well from their no tax status and their secrecy and I can't see that situation changing, so they're not going to do what the article writer seems to think is a simple matter to make them do.

They are indeed pale imitations of democracy, which make even our system look rigorous and inclusive in comparison. They can however be influenced to do the right thing.

The IoM for example shat themselves when Obama and the OECD threatened to blacklist them, and they have done what was required to avoid that, and clearly without that imminent threat would have carried on as they were. Their secrecy will change as and when it is required to, which is precisely the point about getting tough with such jurisdictions. They seemed to find it simple enough to change their secrecy rules a little when they thought they were going to get dumped on by nations acting in concert (which echoes your earlier point about us needing to act in concert with others).

Jersey is notorious for being run by a clique who marginalise dissenters (look at how the childrens home abuse story was treated, for example). Elected representatives are shopkeepers and the like, supposed to stand up to international corporations with no political party support; they were told to pass the legislation introducing limited liability partnerships within two weeks, and did so, despite several of them frankly admitting they didn't understand it but assumed it would be for the best. You're dealing with the equivalent of parish councils here, people who stand as "Independent Ratepayer", or people who phone radio talk shows to express a view, not any sort of organised and effective political force.

And the Cayman Islands? A democracy? Please. It's run by a Governor, appointed by the Queen (probably by Goldman Sachs, I expect). Its court of appeal is the Privy Council. Whatever passes for elections there is for show only; it is run and managed as a tax haven controlled by the UK, and that's about the beginning and end of the matter.

[Awol]

My view isn't that we shouldn't 'print money' but that such a process is not a panacea, has consequences and should be strictly controlled.

I agree.

Further views, where we may disagree, are that creating money should be the preserve of the state, not derogated to private institutions;

We do indeed agree on this, as long as private banks control the creation of money and the system of credit they control everything.

As Nathan Rothschild famously said: "I care not what puppet is placed on the throne of England to rule the Empire. The man who controls Britain’s money supply controls the British Empire and I control the British money supply."

Just about every US President worth his salt since the founding fathers has said the same thing in their own way.

we should be doing it right now, not being panicked by wildly exaggerated scare stories about deficits and debt.

This is where I struggle with the logic of your position.

You acknowledge that we are part of a system that, if rejected, would 'blow up the engine' of the economy and the financial basis of society. So if we are to stay within the confines of that system then simply ignoring its rules and creating more money is not an option.

Whether you consider the danger of debt and deficit levels to be exagerated or not, the people and institutions that make up that system would dish out harsh consequences for ignoring them.

We can't have it both ways.

Another possibility is that some large shock provokes such a shift at a pace we wouldn't have chosen.

Yes, hence the ECB/EU's (immoral and illegal) efforts to prevent default in Greece. A further collapse in the European banking houses would wreak havoc.

[peterms]

This is where I struggle with the logic of your position.

You acknowledge that we are part of a system that, if rejected, would 'blow up the engine' of the economy and the financial basis of society. So if we are to stay within the confines of that system then simply ignoring its rules and creating more money is not an option.

Whether you consider the danger of debt and deficit levels to be exagerated or not, the people and institutions that make up that system would dish out harsh consequences for ignoring them.

We can't have it both ways.

That's very much the argument that is made against default - if you default, the markets will punish you by refusing to lend, or lend only at punitive rates, and then you'll be in crisis. Experience has shown that's not the case where countries have actually defaulted - there's a short-term effect, then lending resumes if it looks like there's a better prospect of it being repaid, but the old argument is still repeated regardless of the evidence. Of course the argument is made by the people who fear making a loss and their cheerleaders for their own benefit, rather than because it is actually true. That's very much what is happening with countries like Greece and Ireland, with banks and those who promote the interests of banks and bondholders trying to say there is no alternative to massive cuts and selling off state assets, rather than banks and bondholders taking the pain.

In the case of a country (one which is not part of the euro) deciding to live with larger deficits and allow debt to rise, would we not see a similar effect? Lots of dire warnings, lots of orthodox economists explaining that the end of the world is nigh, some initial herd behaviour from markets, followed by perhaps a calmer assessment of what was actually happening in the economy? Especially in a situation where national debt was not unusually high, which despite all the bollocks spouted is the position we are actually in.

If a country acts in a way which brings the economy to its knees, you can expect people to shy away from investment there, or to price risk very high. That would happen if for example a country were to continue to expand credit far beyond the productive capacity of the economy, creating rampant inflation. At a time of depressed demand and idle resources, like right now, if there is a manageable stimulus to the economy (not a further round of throwing money at banks to bolster their balance sheets and hand out bonuses instead of being used productively), if demand grew, some growth occurred and conditions started to improve, surely there would be a different reaction?

And in that situation, if the markets still refused to take up issued debt at acceptable prices, we might start to ask why it was even necessary to deal with the markets in this way at all, for debt in respect of that nation's own currency. Why would a sovereign country need permission from markets to issue its own currency?

We can't have it both ways in the sense that it's not possible for a country to go on creating wealth out of literally nothing (which is a fair description of the three-card-trick of the house price bubble and credit card debt). But when a country has unused real productive capacity, it is possible to bring that into use without playing the magic money tree game.

Again, isn't it interesting that for decades we have had banks creating credit (debt to us) out of nothing in order to enrich themselves, which is the real debt problem we and other countries should be looking at, yet when anyone suggests that sovereign countries take some action to stimulate real economic activity, we are told the world will end?

Foreign exchange is a different matter, and the same argument doesn't apply.

[Risso]

They are indeed pale imitations of democracy, which make even our system look rigorous and inclusive in comparison. They can however be influenced to do the right thing.

The IoM for example shat themselves when Obama and the OECD threatened to blacklist them, and they have done what was required to avoid that, and clearly without that imminent threat would have carried on as they were. Their secrecy will change as and when it is required to, which is precisely the point about getting tough with such jurisdictions. They seemed to find it simple enough to change their secrecy rules a little when they thought they were going to get dumped on by nations acting in concert (which echoes your earlier point about us needing to act in concert with others).

Jersey is notorious for being run by a clique who marginalise dissenters (look at how the childrens home abuse story was treated, for example). Elected representatives are shopkeepers and the like, supposed to stand up to international corporations with no political party support; they were told to pass the legislation introducing limited liability partnerships within two weeks, and did so, despite several of them frankly admitting they didn't understand it but assumed it would be for the best. You're dealing with the equivalent of parish councils here, people who stand as "Independent Ratepayer", or people who phone radio talk shows to express a view, not any sort of organised and effective political force.

There's an awful lot of poorly informed nonsense and contradictions in your post. On the one hand you accuse us of being pale copies of democracies and uninclusive, then make sneery remarks about being run by shopkeepers.

It wasn't offshore centres that caused the world banking crisis, it was professional politicians like that fucktard Gordon Brown, who has actually held his hands up and said that he didn't understand the global banking system.

In no way did the Isle of Man "shit itself" either. For the last decade or longer, it's been working hard to shed itself of the "tax haven" image and has taken great pains to sign various tax treaties and stay on the right side of the EU and the OECD.

[drat01]

It wasn't offshore centres that caused the world banking crisis, it was professional politicians like that fucktard Gordon Brown, who has actually held his hands up and said that he didn't understand the global banking system.

Mart you keep banging that drum, which is nothing more than Tory party propaganda.

The world, and that is the key, crisis was as a result of the banking / financial sector. This is something that goes across borders and political ideology. Now political leaders, such as Cameron and Gideon, are quick to try and gain political points from pointing fingers at certain people but the reality is that the finance sector caused the issues and continue to screw the world, helped by "friendly" Gvmt's and areas such as Peter explains. I appreciate that living in IOM and working in that sector that may not fit well but it's true.

The world wont change though because with more globalisation and the reality of borders being nothing more than man made limitations, organisations such as the finance ones will become even stronger in terms of their abilities to impact

[Risso]

Do you realise how big the UK banking sector is in terms of the global banking sector Drat? In 2009, we had the biggest bank in the world, and 4 of the other top 10 biggest banks were from the UK. When a sector that size had been allowed to run riot for over a decade, then you have to look at who should have been regulating them, and who didn't do a very good job at all, ie that idiot Gordon Brown. Yes it was a global crisis, but as we played such a huge part in global banking, then it was to a lagre part caused by us.

[drat01]

Oh I know that the banking sector is big and its importance to the UK economy very well - I worked for one of the largest for over 10 years. You say the sector is allowed to run riot as though that was a one country thing, but again the reality is that it's a world wide thing. No bank is a one country operation these days and we saw the impact that the Icelandic collapse had on places like the UK and the Netherlands, was that Brown's fault? The US financial sector is enormous and the problems there were not Brown's fault. You, and Gideon as it happens, keep attaching the blame to Brown as though it was all his fault, which is nothing more than nonsense IMO.

The reality is simple in that organisations such as those who now make massive profits as a result of places like the IOM, Jersey and other areas around the world are the root cause of the problems that affect the whole world. That is not saying that places mentioned are the sole blame, not at all, its a much bigger picture. But likewise the blame that you constantly put on Brown, again as the ConDem gvmt seem to peddle, is misguided and frankly wrong.

[drat01]

I see Cable is now really earning his Tory party monies by threatening to impose more and more laws to prohibit strikes. Interesting how the countries where we are trying to sell arms are encouraged to show dissent on the streets but in the UK a return to Thatchers worst days are exactly what this Gvmt wants to do.

Shame on them, and shame on their supporters

[Risso]

Oh I know that the banking sector is big and its importance to the UK economy very well - I worked for one of the largest for over 10 years. You say the sector is allowed to run riot as though that was a one country thing, but again the reality is that it's a world wide thing. No bank is a one country operation these days and we saw the impact that the Icelandic collapse had on places like the UK and the Netherlands, was that Brown's fault? The US financial sector is enormous and the problems there were not Brown's fault. You, and Gideon as it happens, keep attaching the blame to Brown as though it was all his fault, which is nothing more than nonsense IMO.

The reality is simple in that organisations such as those who now make massive profits as a result of places like the IOM, Jersey and other areas around the world are the root cause of the problems that affect the whole world. That is not saying that places mentioned are the sole blame, not at all, its a much bigger picture. But likewise the blame that you constantly put on Brown, again as the ConDem gvmt seem to peddle, is misguided and frankly wrong.

So the banks' profits are all because they have offshore subsidiaries? really?

And if Brown had nothing to do with the banking crisis, despite being either Chancellor or PM for 13 years, then:

a) what on earth was was he doing?

why did he feel the need to apologise for it?

[snowychap]

I see Cable is now really earning his Tory party monies by threatening to impose more and more laws to prohibit strikes. Interesting how the countries where we are trying to sell arms are encouraged to show dissent on the streets but in the UK a return to Thatchers worst days are exactly what this Gvmt wants to do.

The Beeb"]

Cable said, "Despite occasional blips, I know that strike levels remain historically low, especially in the private sector.

"On that basis, and assuming this pattern continues, the case for changing strike law is not compelling.

"However, should the position change, and should strikes impose serious damage to our economic and social fabric, the pressure on us to act would ratchet up.

"That is something which both you, and certainly I, would want to avoid,"

That's pretty poor form, Vince. It rather reads like a threat that if people exercise their right to do something then it will be removed.

Now he may well be laying out the actual position of government but he surely can't be defending that as the right course of action?

[drat01]

So the banks' profits are all because they have offshore subsidiaries? really?

And if Brown had nothing to do with the banking crisis, despite being either Chancellor or PM for 13 years, then:

a) what on earth was was he doing?

why did he feel the need to apologise for it?

No Mart, that is not what I said at all.

Banks and their like make massive profits all over the world not from one market. Places like IOM, Jersey, various other off sore places have contributed towards these and still do, also enabling localised taxes to be avoided. If these places were not appealing or useful to the banks they would not be there at all, if anything they would be the first places they dropped

You consistently place the blame for the world crisis at Brown's feet, again avoiding the many factors that went into causing it. The facts are there for all to see how multi-national organisations contributed the most towards the worlds problems and continue to impact significantly. If you believed the rubbish spoken by the ConDem's you would think that all of these would never have happened if Brown had not held office, which is frankly absurd. The banking sector, which still struggles to apologise, were the key to the problems. These organisations are not concerned re national boundaries and use places like IOM, Jersey etc as a means to avoid regulations and avoid taxes in areas where they cause the most impact.

[peterms]

There's an awful lot of poorly informed nonsense and contradictions in your post. On the one hand you accuse us of being pale copies of democracies and uninclusive, then make sneery remarks about being run by shopkeepers.

No, it's you who is poorly informed. Jersey operates a system where the place is run by a small elite, and the parliament has no organised opposition. Individuals in this system tend to be independents. Austen Mitchell describes how they lack research support, often need to hold down another job (by the way, these do include things like guest house owner and yes, shopkeepers), and are thus very poorly placed to hold to account the people who run the place. Do you think this is incorrect? Can you offer some information to correct what I am saying, which you claim to be poorly informed?

It wasn't offshore centres that caused the world banking crisis, it was professional politicians like that fucktard Gordon Brown, who has actually held his hands up and said that he didn't understand the global banking system.

Gordon Brown and other politicians caused the world banking crisis? Not, er, the banks? Not the people who were actually creating dodgy loans on overvalued "assets", concealing them (including through offshore centres, with their expertise and history of concealing financial transactions), and then demanding to be bailed out when the systematic deception came to light? Wow. There's rewriting history, and then there's this.

It is fair to say that regulation should have been tighter. To say instead that the global crisis was the fault of governments, rather than banks for doing what they did, is to blame the policeman for the crime. Ludicrous.

In no way did the Isle of Man "shit itself" either. For the last decade or longer, it's been working hard to shed itself of the "tax haven" image and has taken great pains to sign various tax treaties and stay on the right side of the EU and the OECD.

The actions taken have been in response to growing international criticism, haven't they? Like the criticism voiced quite strongly in the US Senate investigation into tax dodging. The IoM very much didn't want to be on the wrong side of enforcement measures. The point is that it is coming into line in response to these pressures, having previously set up the kind of regime which received these criticisms.

[Risso]

You should be a politician Drat!

I'll try again though:

If the person in charge of the country with by far the biggest banking sector in the world, and the person who played a huge part in the complete and utter lack of regulation of it (eg the FSA debacle) isn't to blame in any way for the banking crisis, then what WAS he doing for 13 years?

And if he wasn't to blame, then why did he apologise for his part in it?

[peterms]

That's pretty poor form, Vince. It rather reads like a threat that if people exercise their right to do something then it will be removed.

Now he may well be laying out the actual position of government but he surely can't be defending that as the right course of action?

I think he is, though. You can keep the right to strike, but if you use it, we'll take it away. Not me, mind, it's the others, the bad cops. I'm just telling you what they're like. I'm on your side, me.

On the bright side, we've probably also got a whole load of other rights we never knew we had, as long as we don't try to exercise them.

[Risso]

In no way did the Isle of Man "shit itself" either. For the last decade or longer, it's been working hard to shed itself of the "tax haven" image and has taken great pains to sign various tax treaties and stay on the right side of the EU and the OECD.

The actions taken have been in response to growing international criticism, haven't they? Like the criticism voiced quite strongly in the US Senate investigation into tax dodging. The IoM very much didn't want to be on the wrong side of enforcement measures. The point is that it is coming into line in response to these pressures, having previously set up the kind of regime which received these criticisms.

Well, that sounds rather more like the process I was describing, ie a sustained move towards international tax cooperation as part of a long established and ongoing procedure, than your "oh shit, Barack's upset, we'd better shape up sharpish" suggested by your post. I'm not aware of any big shift in policy as a result of anything Obama said, as to be honest the US doesn't make up that big a percentage of the Island's trade.

The last substantial chaneg in policy as a result of external pressure was to bin the Atrribution Regime for Individuals to appease the EU, who were looking into the zero-ten system. With that measure, the Isle of Man is now fully compliant with the EU Code of Conduct for Business Taxation, which it adopts on a voluntary basis.

[snowychap]

To say instead that the global crisis was the fault of governments, rather than banks for doing what they did, is to blame the policeman for the crime.

If the chief of police is dining with the mafiosi and commending them upon the actions they have taken, it's not too extreme a position to take to suggest he bears some responsibility for the crime rate.

[Awol]

To say instead that the global crisis was the fault of governments, rather than banks for doing what they did, is to blame the policeman for the crime.

If the chief of police is dining with the mafiosi and commending them upon the actions they have taken, it's not too extreme a position to take to suggest he bears some responsibility for the crime rate.

Or if the Chief relaxed the law at the request of the mafioso and then recruited dolphin trainers to keep an eye on organised crime.

[peterms]

To say instead that the global crisis was the fault of governments, rather than banks for doing what they did, is to blame the policeman for the crime.

If the chief of police is dining with the mafiosi and commending them upon the actions they have taken, it's not too extreme a position to take to suggest he bears some responsibility for the crime rate.

Or if the Chief relaxed the law at the request of the mafioso and then recruited dolphin trainers to keep an eye on organised crime.

Yes, it was a pretty crap analogy.

Governments bear responsibility for agreeing to requests to soften regulation, for being too cosy with financiers (Blair getting a reported £5m from JP Morgan, the tories getting the majority of their funding from the fiance sector), and for being in thrall to an approach which puts the interests of global capital above that of the people who elected them.

But as to whether politicians or banks caused the global financial crisis, it is the banks in the starring role, despite their cries of "Oh, you should have stopped us!"

[snowychap]

Yes, it was a pretty crap analogy.

Really? Why so?

Governments bear responsibility for agreeing to requests to soften regulation, for being too cosy with financiers (Blair getting a reported £5m from JP Morgan, the tories getting the majority of their funding from the fiance sector), and for being in thrall to an approach which puts the interests of global capital above that of the people who elected them.

They bear responsibility for their actions and, as their actions facilitated the actions of the bankers, financiers et al, they bear some of the responsibility for the results of the actions of these 'masters of the universe'.

[peterms]

Yes, it was a pretty crap analogy.

Really? Why so?

In that analogy, it's the regulator who would be the policeman. The responsibility of government is to see that regulation happens, but also to do many other things like encouraging economic activity which as a side-effect, create opportunities for banks to do the wrong thing, or do things wrong. The regulatory job, like the police role, is far more limited and simpler.