economic situation is dire

[DeepDish]

Maybe an economical system that punish savers with inflation is not worth to save?

I am a fan of Mises.

[Dr_Pangloss]

Maybe an economical system that punish savers with inflation is not worth to save?

I am a fan of Mises.

You're a fan of a well known crank? Why?

[DeepDish]

Mainly because I do not think the fractional reserve banking system is a sound way forward. There will always be problems in the end with the difference maturity on the loans, and in the end it will not end well, unless one finds new people and companies to loan money.

Booms become bigger than they needed and busts become eventually bigger and has worse consequences.

[blandy]

I'm not gonna jump into the debate wether the countries who has lived far beyond their means should extend and pretend some more.

But every person should do their part in difficult times and cut their personal spending and pay down on debt. Don't be a modern slave, pay down as much debt as you can and do not fall for the temptation to buy stuff you don't need.

it sounds sensible, and it is in most ways, for an individual. The problem is, if [hypothetically] you stop going into the shop every week and buying some chocolates for the kids, or a nice bottle of wine, or cancel the papers, then the shop keeper has less money to spend, so he has to sell his car, and he stops buying petrol, so the petrol station ends up closing, so the tanker driver loses his job, and the taxy drivers have to drive further to refill, so the fares go up, so the little old lady can't afford to go to the library, so the library closes, so the coffee shop next to the library loses trade, so it only opens on weekends, so the people who relied on working there in the week, to supplement family income have less money, so they don't go to the pub, so the pub closes.

We end up with no corner shop, no pub, no library, and everyone out of work.

That's why when individuals all start saving/paying off debt, all at the same time, the thing goes to ruin.

But if the Gov't says, We'll build a new power station and a renew the railway track and repair the roads, the people get jobs, the corner shop man sells more chocs and papers to the workers on the road, the pub sells beer to thirsty train line menders, the coffee shop gets trade from the supervisors, and we end up with a thriving pub and shops, and the library stays open, and not only that there's better road and rail infrastructure and a power station that will last for 50 years, and the air is cleaner, and people have jobs, and so they can pay off their debt without causing others to suffer.

So out Gov't should be doing everything possible to create genuine work and employment, specifically in areas where the fruits of those jobs will be better infrastructure, better environment, things that everyone benefits from, and for a long time. Yes cut out genuine waste, yes to some extent re-shape the economy or benefits or NHS, but make them better, not just superficially "cheaper" to run.

And the GOv't should stop with the blame, whether it be "the poor", the EU, the bankers, the last Gov't or whoever and start with "it is our Number one task to make things better for our nation" and then stick to it, and take advice from people who understand, and act on it. DOn't play politics, or help just your mates, or indulge in bashing soft targets that rile you.

[peterms]

...That's why when individuals all start saving/paying off debt, all at the same time, the thing goes to ruin...

It would help to get away from this idea that all debts must be paid, which is like a weight around our necks. Some debts actually shouldn't be paid. There is growing interest in ideas about debt jubilees, debt commissions to assess which debts should be written off, and so on.

[blandy]

It would help to get away from this idea that all debts must be paid, which is like a weight around our necks. Some debts actually shouldn't be paid. There is growing interest in ideas about debt jubilees, debt commissions to assess which debts should be written off, and so on.

It would help to get (back) to a situation where credit is not so easily available as it is now, where there is no predatory lending, and where as such, all personal debt should be paid back. The notion that it shouldn't, as a matter of almost routine, is part of the cause of many problems. Easy credit, easy default, start again...it's a trap.

[peterms]

It would help to get (back) to a situation where credit is not so easily available as it is now, where there is no predatory lending, and where as such, all personal debt should be paid back. The notion that it shouldn't, as a matter of almost routine, is part of the cause of many problems. Easy credit, easy default, start again...it's a trap.

Yes, agree with that. But when creditors become rich from extending credit recklessly, and when their losses are covered by someone else, there's no incentive for them to lend responsibly. Exhortation doesn't work, regulation is bypassed - what other than facing the consequences of their own bad lending will stop them?

And how would we get from the level of debt we have now to a better place without writing off a lot of the debt which has been created? If we put the brakes on credit while leaving the debt in place, that suggests years of economic stagnation while we slowly transfer very large sums from debtors to the already fabulously wealthy, who are amassing wealth but not creating it. Why would that be a good scenario, other than for billionaires?

[blandy]

It's a complete dilemma, I think. If people are just "let off" then there will be a strong temptation for them (us) to go and get another loan, and not pay that back either. And as you say, if we make people pay off debt, regardless of whatever circs the loan was advanced in, then many will struggle or suffer.

The problem is not really what should be done if we were starting from scratch, but what should we do given where we are. The answer surely must lie around case by case review. The law must protect both genuine lenders and genuine borrowers, and punish the irresponsible, whether by defaults being allowed, or by repayment terms enforced or made less of a burden, whilst still ensuring full rpeayment - it's down to circumstance. And regulation has to be the key. But it seems like that sort of work is not what the regulators and legislators want to do....

There's no ideal simple answer, just at the moment various thoughts.

People at the moment can be declared bankrupt, and the ease by which individuals and businesses can unscrupulously do that to avoid debt is too easy. As is the ease with which lenders can set themselves up and set unjust T&Cs. The whole thing needs looking at. The ease of availability of credit to people who should never be allowed it is a major problem for society.

That said, the economic situation forces many people to have to go to these lenders, as does igonrance and lack of understanding of interest rates and the amount that adds up to be repaid.

Mess.

[peterms]

Clamping down on tax havens?

A leaked government document seen by International Tax Review reveals that the UK is planning to impose its own version of the US Foreign Account Tax Compliance Act (FATCA) on its Crown Dependencies and Overseas Territories. The move will deal an almost-fatal blow to tax evasion through the UK’s tax havens.

Responding to an International Development Committee report earlier this week, the government publicly rejected the need for a UK version of FATCA, which would require tax authorities to automatically exchange information relating to UK citizens or corporations.

In private, however, the government has already drafted FATCA legislation which it will impose on its Crown Dependencies and Overseas Territories. These include some of the world’s most notorious tax havens such as the Cayman Islands, the Channel Islands and the Isle of Man.

The draft agreement, seen by International Tax Review, will require the automatic exchange of information for each reportable account of each reporting financial institution. That will include full details of all beneficial owners of the account, including those whose identities might otherwise be hidden by trusts or companies

It will also require the account number, name and identifying number of the reporting financial institution as provided when registering with the IRS for FATCA purposes, and the account balance or value as of the end of the relevant calendar year or other appropriate reporting period or, if the account was closed during such year, immediately before closure.

The move will come as a huge blow to tax havens and companies and individuals hiding money in them. But it is a coup for the Tax Justice Network (TJN), which has long been arguing for automatic information exchange.

“This is a requirement for full, open disclosure,” said the TJN’s Richard Murphy. “It looks through trusts, companies, who owns the assets. It’s full automatic information exchange.”

Murphy says the UK Crown Dependencies and Overseas Territories will never be the same again and he has a simple piece of advice for anyone hiding money in these locations.

“The evidence is now clear: the writing is on the wall for secrecy in the UK's tax havens,” he said. “There are now two options for those hiding their funds in these locations. The first is to own up now. That’s the wise option. It’s the only safe option. The alternative is to flee. My suspicion is that it’s already too late for that to work.”

Murphy says he understands that Jersey is strongly opposed to the legislation, but Guernsey and the Isle of Man are likely to “roll over and take it”.

Malcolm Couch, head of the income tax division at the Isle of Man Treasury would not comment on the prospect of a UK FATCA, but said that the Isle of Man has noticed that discussions on international tax cooperation have moved to a new place as it has become clear that FATCA will work.

“Discussions on automatic exchange of information have come to the fore,” Couch said. “The Isle of Man needs to determine its position appropriately as things move, but they are moving.”

The UK Treasury declined to comment, but said that it is assisting the Crown Dependancies and Overseas Territories in their response to FATCA.

International Tax Review expects an autumn announcement from the government, with the legislation coming into effect on January 1 2014.

[Risso]

That idiot Murphy has been declaring the end of "tax havens" for years, and it hasn't made a blind bit of difference. People don't need to have secret accounts to be able to use offshore jurisdictions, which is the point he seems incapable of grasping.

[jonno_2004]

That idiot Murphy has been declaring the end of "tax havens" for years, and it hasn't made a blind bit of difference. People don't need to have secret accounts to be able to use offshore jurisdictions, which is the point he seems incapable of grasping.

As noble as his cause is (rather odd given his alleged 'grievances' in the past) the lack of basic economic theory in his arguments is astonishing, particularly in regards to third world countries. I recall reading how he shouted 'fascist!' at a man during a Lib Dem conference as the chap had suggested lowering taxes and taxing land value instead (which cannot be moved offshore for obvious reasons).

[peterms]

That idiot Murphy has been declaring the end of "tax havens" for years, and it hasn't made a blind bit of difference. People don't need to have secret accounts to be able to use offshore jurisdictions, which is the point he seems incapable of grasping.

He's not saying it's the end of tax havens. He's saying it would be a big step towards ending secrecy in tax havens.

[peterms]

... taxing land value instead (which cannot be moved offshore for obvious reasons).

I'm not so sure about that. Here's some land being moved offshore.

[jonno_2004]

Those pesky tax avoiders will think of anything. Looks like scum-sucking accountants will have to become skilled at working a JCB with that scheme.

[Risso]

As noble as his cause is (rather odd given his alleged 'grievances' in the past) the lack of basic economic theory in his arguments is astonishing, particularly in regards to third world countries. I recall reading how he shouted 'fascist!' at a man during a Lib Dem conference as the chap had suggested lowering taxes and taxing land value instead (which cannot be moved offshore for obvious reasons).

His only cause is nauseating self-promotion. I honestly think he doesn't really give a shite about any of this, he just wants to get his name in the press and flog a few books. Look at his hissy fit when he wasn't invited to appear on Newsnight, and how many times he referes to himself in his blog. He's an absurd little man.

[peterms]

As noble as his cause is (rather odd given his alleged 'grievances' in the past) the lack of basic economic theory in his arguments is astonishing, particularly in regards to third world countries.

This seems to be a line coming from the Adam Smith Institute's Tim Worstall, whose argument is that companies don't pay tax, ever, it's only people who do that, so trying to make companies pay tax just makes people in the third world poorer: what would make them richer is the unrestrained free trade which, er, made them poorer...

I recall reading how he shouted 'fascist!' at a man during a Lib Dem conference as the chap had suggested lowering taxes and taxing land value instead (which cannot be moved offshore for obvious reasons).

Actually Murphy's position is that we should have land value tax, but that the claims of people who think it could replace every other form of tax are overstated:

I remain adamant: a land value tax cannot replace all other taxes. That’s like playing a round of golf with only a putter to hand. But is land value taxation part of the future for British taxation? It has to be. It’s interesting that it’s only in the FT you’ll really find people saying that.

[jonno_2004]

Actually Murphy's position is that we should have land value tax, but that the claims of people who think it could replace every other form of tax are overstated:

Well, I certainly would have more respect for him had he not taken the opportunity to gee up the crowd (or whatever his misplaced response intended) but instead responded in a mature and constructive manner.

This seems to be a line coming from the Adam Smith Institute's Tim Worstall, whose argument is that companies don't pay tax, ever, it's only people who do that, so trying to make companies pay tax just makes people in the third world poorer: what would make them richer is the unrestrained free trade which, er, made them poorer...

As I'm sure you know, we can go round and round with economics to suit your own viewpoint. Reading Murphy's glee at the thought of one economy crashing because it simply suits a political agenda does not sit right at all, and is pretty disgusting in all honesty.

[peterms]

Reading Murphy's glee at the thought of one economy crashing because it simply suits a political agenda does not sit right at all, and is pretty disgusting in all honesty.

Sorry, I don't follow what you're referring to?

[legov]

it sounds sensible, and it is in most ways, for an individual. The problem is, if [hypothetically] you stop going into the shop every week and buying some chocolates for the kids, or a nice bottle of wine, or cancel the papers, then the shop keeper has less money to spend, so he has to sell his car, and he stops buying petrol, so the petrol station ends up closing, so the tanker driver loses his job, and the taxy drivers have to drive further to refill, so the fares go up, so the little old lady can't afford to go to the library, so the library closes, so the coffee shop next to the library loses trade, so it only opens on weekends, so the people who relied on working there in the week, to supplement family income have less money, so they don't go to the pub, so the pub closes.

We end up with no corner shop, no pub, no library, and everyone out of work.

That's why when individuals all start saving/paying off debt, all at the same time, the thing goes to ruin.

But if the Gov't says, We'll build a new power station and a renew the railway track and repair the roads, the people get jobs, the corner shop man sells more chocs and papers to the workers on the road, the pub sells beer to thirsty train line menders, the coffee shop gets trade from the supervisors, and we end up with a thriving pub and shops, and the library stays open, and not only that there's better road and rail infrastructure and a power station that will last for 50 years, and the air is cleaner, and people have jobs, and so they can pay off their debt without causing others to suffer.

So out Gov't should be doing everything possible to create genuine work and employment, specifically in areas where the fruits of those jobs will be better infrastructure, better environment, things that everyone benefits from, and for a long time. Yes cut out genuine waste, yes to some extent re-shape the economy or benefits or NHS, but make them better, not just superficially "cheaper" to run.

And the GOv't should stop with the blame, whether it be "the poor", the EU, the bankers, the last Gov't or whoever and start with "it is our Number one task to make things better for our nation" and then stick to it, and take advice from people who understand, and act on it. DOn't play politics, or help just your mates, or indulge in bashing soft targets that rile you.

[peterms]

God, this is depressing. The brightest and best brain in the BoE, hemmed in and trimmed, by the appointment of some tory placeman. This guy recently went and spoke to Occupy. Listen now to his careful hedging, mindful of his new boss and what that portends. One more reason why that moron Osborne should be cast adrift in an open boat.

http://audioboo.fm/b...he-world-at-one