Monthly Archives: June 2013

Why the Status Quo Is Doomed

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“Every one of these implicit assumptions has been turned on its head: growth is barely above the rate of inflation; by some measures, it has already fallen below the real rate of inflation.  Debt is increasing much faster than income or wealth. Virtually all of the recent expansion of wealth/income is flowing to the top 10%.  This is why the status quo is doomed: there is no Plan B or even conceptual alternative to the ‘more growth forever‘ agenda.  The oft-touted fantasy is that ‘we’re going to grow our way out of this,‘ but it is abundantly clear that debt is rising far faster than growth or incomes.”

http://charleshughsmith.blogspot.com/2013/06/why-status-quo-is-doomed.html

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“Banish Fractional Reserve Banking for Real Reform”

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“. . . says Thomas Mayer, a former IMF economist and former Chief Economist of Deutsche Bank Group and Head of DB Research, and now a Deutcshe Bank Senior Advisor.  Mayer goes on to cite Austrian monetary and business-cycle theorist Jesus Huerta de Soto on the causal connection between fractional reserves and banking crises throughout history. He points out: ‘Since there is no single state in the eurozone able to bail out banks in a systemic crisis, a banking regime without state backing is needed.’ He concludes his letter with a four-step plan for ‘comprehensive’ banking reform that would implement just such a regime.”

http://bastiat.mises.org/2013/06/banish-fractional-reserve-banking-for-real-reform/

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British central bank softens rules for banks to give economy £70bn boost

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“The UK’s big four lenders will be able to reduce their cash and cash-like assets by 20pc under the recommendation, made by the Bank’s Financial Policy Committee (FPC). The excess ‘liquidity’ could then be used ‘to support lending to the real economy’, it said. The FPC estimated the impact of the rule change on the big four to be ‘around £70bn’.  Interest rates have been at a record low of 0.5pc for more than four years and households have become increasingly reliant on such cheap credit. The proportion of borrowers on variable rate mortgages linked to the 0.5pc rate is close to a historical high, the Bank said.”

http://www.telegraph.co.uk/finance/economics/10143049/BoE-softens-rules-for-banks-to-give-economy-70bn-boost.html

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The Last Mystery of the Financial Crisis

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“Thanks to a mountain of evidence gathered for a pair of major lawsuits, documents that for the most part have never been seen by the general public, we now know that the nation’s two top ratings companies, Moody’s and S&P, have for many years been shameless tools for the banks, willing to give just about anything a high rating in exchange for cash. In incriminating e-mail after incriminating e-mail, executives and analysts from these companies are caught admitting their entire business model is crooked. ‘Lord help our fucking scam . . . this has to be the stupidest place I have worked at,’ writes one Standard & Poor’s executive.”

http://www.rollingstone.com/politics/news/the-last-mystery-of-the-financial-crisis-20130619?print=true

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Mocking Germans Adds Irish Insult to Banking Injury

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“Irish politicians say jibes at Germans by some of the country’s former bankers undermine their case for securing help to cut the 64 billion-euro ($83 billion) bill for saving the financial system.  John Bowe, a former executive at the now defunct Anglo Irish Bank Corp., sang ‘Deutschland Ueber Alles’, according to recordings of 2008 conversations that were published this week.  Irish borrowing costs surged in 2010 as investors grew concerned about the mounting burden on the taxpayer. Now the government is trying to persuade German Chancellor Angela Merkel and other euro-region leaders to refund part of what was spent on saving the country’s lenders.”

http://www.bloomberg.com/news/2013-06-27/mocking-germans-adds-insult-to-irish-banking-injury-euro-credit.html

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Official figures reveal Ireland is back in a recession

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“Ireland’s bailed-out economy slumped back into recession in the second half of last year, and continued to shrink in the first quarter of 2013, official figures showed on Thursday. GDP tumbled 1.0 percent in the third quarter of 2012 and by 0.2 percent in the fourth quarter, meeting the definition of a recession, according to revised data from the Central Statistics Office (CSO), which added that the economy shrank 0.6 percent in the first quarter of this year.”

http://www.rawstory.com/rs/2013/06/27/official-figures-reveal-ireland-is-back-in-a-recession/

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French bank watchdog levies stiff fine against UBS over tax avoidance

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“A French banking watchdog said on Wednesday that it fined the French branch of UBS, Switzerland’s largest bank, ten million euros for helping hundreds of well-heeled clients stash money away in undeclared Swiss accounts.  The bank immediately hit back in a statement, protesting that the fine, about $13 million, was disproportionate.  The issue jumped back to the top of the government’s agenda in the wake of a scandal surrounding the former budget minister Jérôme Cahuzac, who in April was himself placed under investigation for tax fraud. His role as budget minister included tackling tax evasion.”

http://www.thelocal.ch/20130626/french-banking-watchdog-levies-fine-against-ubs

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The French National Sport Is Taxation, not Soccer

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“It seems that Monaco’s fiscal policy is good for the local soccer team.  But it seems there’s a controversy in this fiscal paradise. Or, to be more accurate, there’s a controversy in the tax hell next door. The French are complaining that lower tax rates are an ‘unfair’ form of tax competition. So how did the French react? By engaging in their true national sport – imposing higher taxes.  Naturally, their ‘solution’ is to impose higher taxes in Monaco, not to lower taxes in France. It’s also worth noting that the French approach won’t work.  The French soccer league will continue to lose top players so long as the government has a 75% tax system.”

http://danieljmitchell.wordpress.com/2013/06/25/the-french-national-sport-is-taxation-not-soccer/

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Tempers fray in France as drastic cuts loom

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“President Francois Hollande has already angered much of his own Socialist base with plans to cut spending next year in absolute terms for the first time since 1958, but this may be just start of the battle. The Cour des Comptes said France is not even ‘halfway’ through its fiscal squeeze.  The warnings came as a blizzard of grim news dashed hopes for a rapid recovery from two years of slump. A recent study by Pew Foundation said French support for the European Project has crashed from 60pc to 40pc over the past year. Just 22pc now think EU economic integration is positive.”

http://www.telegraph.co.uk/finance/financialcrisis/10147219/Tempers-fray-in-France-as-drastic-cuts-loom.html

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Very Bad News for Europe’s Young People

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“Big business, big labor, and big government are getting together and considering a €100 billion slush fund that will line their pockets.  They want us to believe this will lead to more jobs for young people, but they overlook (and hope we’re unaware of) Bastiat’s warning about the seen and the unseen. Expanding the EIB will simply divert resources from more productive uses. So what’s the answer? Here’s what I recommended as part of some speeches earlier this month in Europe. I began with what should be a common-sense observation that businesses won’t create jobs unless they think new workers will add to the bottom line.”

http://danieljmitchell.wordpress.com/2013/06/27/very-bad-news-for-europes-young-people/

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