Keyboard worrier
Showing posts with label UK. Show all posts
Showing posts with label UK. Show all posts

Wednesday, October 22, 2014

A hundred flowers

From ChinaSMACK:


We Must Sternly Repress Counter-Revolutionaries (1951)

前三十年毛把中国弄成了人间地狱,后三十年拔乱返正,逐步走上正轨和理性!
The first 30 years turned China into hell on earth, the later 30 years has brought order to disorder, and now we are gradually getting on the right track with reason/rationality!

这里让评论吗,好害怕
Is commenting allowed here, I’m so scared.

查水表
"Here to check your water meter." ("Often used in responses to posts or comments that may be considered subversive or “inharmonious” by the government, suggesting that the police or authorities will be coming to the original poster’s home to arrest them under the guise of “checking their water meter”.)"

Ha, ha. And yet...



"Careers for linguists at GCHQ"
 
From The Guardian, 21 October 2014
 

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All original material is copyright of its author. Fair use permitted. Contact via comment. Unless indicated otherwise, all internet links accessed at time of writing. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy. The blog author may have, or intend to change, a personal position in any stock or other kind of investment mentioned.

Saturday, June 22, 2013

UK: Gaudy


By the time I had parked in St Giles and collected my room key from the girl in the College porters' office, the dinner was ending. Changed into smart casual, I headed for Third Quad and the College Bar, passing wine-loudened stragglers in the dining hall, knots of blacktied alumni on the path and a servant watching a man being helped back into his wheelchair at the foot of the steps.

Second Quad, where the JCR (junior common room) used to be. This comprised four rooms:  first, an oak-lined room for morning toast and newspapers (and a small red-haired mathematician who would complete the Times crossword as fast as he could write the answers). This opened onto a second room with a TV, where we would watch Match of the Day and hold JCR meetings; the year before I came up, the students elected a goldfish as President (because like his predecessors, he went round in circles, opening and closing his mouth) and appointed an interpreter to convey the President's rulings. Across the stairway entrance, the Piggery, where they played poker and table football, and one Welshman would regularly smash the glass top on the Gottlieb pinball machine when he failed to get a replay.

Once, as the dons proceeded from sherry in the Senior Common Room to the dining hall, they were met with a hail of breadrolls from the open JCR windows as they passed; from then on, they simply used the path on the other side of the quad. Late at night, Bill, the medical student and rugby player, would shamble through the archway from Third Quad, stand solus in mid-lawn facing the Junior Proctor's room, drop his trousers and sing the Sheep-Shagger's Song in a hoarse, drink-exhausted voice. A decade or two ago, the bar (smartened and relocated) included a reference to his ritual in its decor, echoing the way that Oxford had become a theme park dedicated to a cute version of its history; missing the jab of atavistic defiance in his nightly bawling against authority. The decor has changed again, now that a new, ambitious generation is in possession and society here is restratifying (as a St Andrews graduate confirmed to us later that night); the low Gini Index days of the Seventies are gone.

Escaping the roar of the bar, I drank my vodka tonics and exchanged news and reminiscences with half-remembered faces. Below the College library (where one used to catch glimpses of a silent, white-haired professor of Celtic) once lay the evil-smelling toilets or "traps", graffitied ("beware of limbo dancers"); and the baths to whose provision an earlier Principal had objected, saying that the terms were only eight weeks long, and besides, he and wife went to Rhyl every summer.

I went out of the massive wooden side gate to get a lamb kebab from the large, clean van on Broad Street (no more dodgy late-night boiled hot dogs on Magdalen Bridge now, I expect) and got back in using the electronic key, for the days of open College premises have passed. "Weren't you at dinner?" "No, you only get to talk to two or three people and you can't hear anyway. What was the food like?" "Not bad, though there wasn't very much." "And the wine?" "Better than last time." The speeches had been few and short; the Principal had said that if this were America, the doors would have been locked and donations solicited. We expect to be invited back more frequently now, the retired and retiring, the greyhairs watching the smartly-attired whippersnappers walk past from their post-Finals celebrations. There is the sound of fireworks, startling a bat; youngsters are collecting each other and working out where to go; the lights come on in the Graduate Common Room.

A few minutes to go before the bar closes; last chance to get one or two more in. My friend strolls into First Quad to find a toilet and look for an off licence; comes back empty-handed and goes down the bar to get a couple of bottles of red. We sit on a bench in the moonlit sky, chatting to the late leavers. Isolated wisps of backlit clouds drift above the parapets; ghostly white birds wheel over the buildings at midnight; the moon's face appears at a crenel. It is Midsummer Night, and the stage is all but empty.

All original material is copyright of its author. Fair use permitted. Contact via comment.

Friday, June 07, 2013

UK: Green slime

Reading SAS stories, I often come across the nickname "green slime" for the Army Intelligence Corps. I'd hazily thought it was a squaddie comeback at the alien, slightly threatening nature of the people who know more than they'll ever tell you.

It's a bit simpler than that. The Corps beret is a bright green, and so when massed on parade the soldiers will seem to be a moving, verdant carpet.


The kit was devised by its Colonel-in-Chief, the Duke of Edinburgh. The CIC came down to Regimental Headquarters for an inspection shortly after the new outfit had been issued, and asked the Sergeant-Major what he thought of it.

"Bloody horrible, Sir."

"Did you know that I designed the uniform myself?"

"Well then, we've both made a mistake, haven't we, Sir?"

Saturday, May 04, 2013

UK (Cornwall): Shelterbox


Once a year, the Tregothnan Estate near Truro, Cornwall, opens its gardens to the public. Aside from being being a botanical safe haven for many rare plants and trees, it's the only tea-grower in England. So we visited.

The charity they sponsored this year was Shelterbox. This is a truly brilliant idea, the brainchild of Rotarian Tom Henderson OBE. It's a survival kit packed into a sturdy plastic box, and the stroke of genius was to work backwards from external constraints: what was the most weight two airline baggage handlers would be prepared to carry, and how many boxes could be fitted into a standard steel shipping container.

For £590 a pop, you get this:

Contents can be varied according to need, but the basics include a waterproof tent with raised door (protects against floodwater and creeping creatures), stove with cooking and eating equipment, and most importantly, an ingeniously designed water filter. The filter is to help prevent the outbreak of disease that tends to decimate the survivors of the initial disaster, and it can be flushed out and reused in case of prolonged encampment.

Thousands of these boxes are stored in places around the world, for maximum speed of delivery in emergencies. But the stores need topping up and you can not only sponsor a box but track where it's gone.

Fabulous. I'm contacting them to see if a local Rotarian can do a show and tell for a school; maybe you can do something, too.

All original material is copyright of its author. Fair use permitted. Contact via comment. Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog; or for unintentional error and inaccuracy.

Monday, April 08, 2013

UK: Money-movers play catch-me-if-you-can


The global financial crisis is also a local issue for the UK, dubbed the 'global capital of money-laundering' in a Private Eye magazine investigation by Richard Brooks (August 2012).

The role of the financial sector in Britain ballooned in the years before the breakdown: this 2011 report by the Bank of England (pdf) shows that its annual growth was 6%, twice that of the economy as a whole.

That's why we need it. But why does the rest of the world need it to be in London?

In part the answer is that, as David Malone explains below, our system is particularly good at handling money without asking too many awkward questions. Shell companies make it hard to track down who is running businesses.

Moreover, unless money is definitely proved to have come from illegal activities, the authorities are unable to treat money transfers as criminal "money-laundering". Malone's only censored post to date, from which he quotes sections here, was a detailed investigation for Reuters into alleged money-laundering in Cyprus; but his original piece fell foul of that (perfectly logical, of course) lack-of-predicate-crime rule.

In this context it's worth remembering that the UK is also known as the "libel capital of the world", with potentially big payouts for plaintiffs if the defendant cannot prove his allegations (up to three years ago, it could get much worse than a civil court case: there was such a thing as criminal libel, punishable by imprisonment - this was what caused Private Eye's then editor Richard Ingrams to throw in the sponge when Sir James Goldsmith pursued him in July 1976).

And now, following the Leveson inquiry into abuses by mainstream journalists, bloggers may find themselves at risk of high financial penalties, without having the legal and financial resources of the conventional Press to help defend themselves.

I also reproduce here a piece by France-based blogger John Ward, reporting on the vast quantities of cash held in offshore banks that might (if captured onshore) otherwise contribute up to a trillion pounds to the UK economy.

In a digitised world, capital can zip around the globe far faster than leaden-footed regulators and tax authorities. Cyber-money is also very useful for dodging attempts by local banks to grab it to shore up their reserves, as we are seeing in Cyprus - and this article on Charles Hugh Smith's site goes further, implying that EU banks may have influenced a delay in the European Central Bank's enforcement action against the island, to allow them time to extract most of their cash before the shutters went down.

Finally, delay can help bosses as well as the banks they run: there is much noise being made at the moment about "examining powers to take legal action" against three directors of HBOS who were on watch when billions were lost by their company; but the Financial Services Authority has a strict time limit of three years to take disciplinary action against individuals, and that deadline has come and gone. A cynic might wonder why exactly the FSA missed it, but the fact remains that we have to obey the law as it stands, so I don't expect any retrospective ruling against these people, who are far from the only ones to have (allegedly) overseen significant losses in the banking sector.

My sincere thanks to David Malone and John Ward for permission to reproduce their posts.
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Making the Truth Illegal – revisited


“Making the Truth Illegal” is the title of the only post I have ever removed from this blog.
I removed it because I was threatened with legal consequences if I did not. (Plus, I would like to add, some of the way I had written the blog post was stupid and could have hurt someone who had helped me.)

The post concerned an article I had written for Reuters which they decided they could not/would not publish. Reuters pulled the article because they and I had been threatened, by a major European Bank, with legal consequences if they did not. The title of the article was “Cyprus, Magnitsky and the truth about Money Laundering.”

Although I cannot publish the article I can show you how it began and tell you how it is, that the truth it contained was made illegal.

The article began:
Money laundering is the life blood of organized crime. Without it crime would simply not pay. But who does the laundering? The easy and obvious answer is criminals. But that is completely wrong and is at the root of our inability to stop it.

Criminals are the people who need money laundering. They are the clients. But they do not, themselves, know how to launder money. The only people who do know, and who are in positions to do it, are those whose day jobs are the many professional services which make up laundering: the accountants, lawyers, company registration and management agents, account managers in banks and company directors in companies that have no reason to be, other than to pass hot money through an endless spin cycle. In organized crime, criminals provide the crime but professionals provide the organization.
Of course we could get jesuitical about it and say, but those professionals who launder are criminals. Which would be fine, except that we do not treat them as criminals. Criminals break laws. Professionals do not, they have ‘failures of compliance’. One is considered an active, purposeful ‘doing’ of something, for which punishment is de rigeur. The other is excused as an unfortunate and unintentional ‘not doing’; an oversight, omisssion or failure to do, for which one and one’s employer get admonished to ‘do’ better. And as long as you promise you will, all is considered fine and finished. There may be a small fine but nothing to lose your bonus over. No one senior ever goes to gaol.

Criminals are investigated – by police. Professionals are ‘regulated’ – usually, and rather conveniently, by themselves or colleagues. People who rob banks have legal problems. People in banks, who rob people, or help others to rob them by laundering their money for them, they have regulatory issues. One is serious the other is a joke. How many bankers actually went to prison from Wachovia or Citi or HSBC?

All this might seem rather sweeping. But it is not. It is just that usually we do not get to hear about the people and businesses who do the actual laundering nor what happens to them afterwards. When money laundering is reported it is usually the lurid details of the clients of the money laundering, the drug cartels and terrorist organization, who get all the headlines. Hardly ever do we hear of the launderers themselves. And that is because, as already noted, they are never ‘guilty’ of having ‘done’ anything. But events in Cyprus have recently given us a rare opportunity to lift the sewer’s cover, peer inside and see at least some of the people who failed to act; who by omission, oversight, laziness or complicity, intentionally or otherwise, ‘helped’ to launder money.

As the philosopher Edmund Burke famously noted, “All that is necessary for the triumph of evil is that good men do nothing”.
As you can see the purpose of the article was not simply to prove, what everyone already knew, that Cyprus had indeed been laundering dirty Russian money, but to say something about WHO actually does the laundering. The point was to finger the launderers themselves not their clients. Of course that meant naming companies, lawyers, company directors, company registration agents, and last but not least, the banks and individuals in them. These are, of course, people who are not used to the idea that they can be named, take grave exception to being named and who have the power, I discovered, to make sure they are not.

The article also did one further thing. When you added it all together and told the whole tale in all its detail, with all the names, dates, places and amounts, one further conclusion jumped out. The lawyers, accountants, company directors and bankers, who did the laundering, are also the people who the anti money-laundering system relies upon to police the system and stop the laundering. The inescapable conclusion is that the anti-money laundering system not only does not work, but seems expressly fashioned to make sure it does not work.

It is possible – it happened in the Magnitsky case – for a criminal to buy a bank and be granted a bank license. Yet the law says it is the directors of such a bank who will be relied upon to contact the authorities about suspicious transactions. Criminals don’t often turn themselves in, yet in every country this is the non-system our leaders and financial experts maintain. In the UK the law is set up so that a company can be set up without any due diligence at all being done to determine the character let alone the actual identity of the owner. Because of this ‘loophole’ as the authorities coyly refer to it, the UK is home to tens of thousands of shell companies set up by criminals and used for criminal purposes. This may sound like a fantastic charge and one I cannot possibly substantiate. Yet almost every major case of fraud or money laundering will involve UK shell companies. Follow the Magnitsky money and you will see it pass thorough UK shell companies. The same goes for the $64 billion of state money stolen from Kyrgyzstan much of it then passed through UK shell companies. Or the on-going case of money laundered out of Ukraine by means of a fake oil rig purchase. That money too passed through UK companies.

I could give you plenty of other examples but the important point is that NO ONE in authority can offer a shred of evidence to show that I am wrong no matter how many criminal companies I claim there are likely to be, for one simple reason. THEY HAVE NO IDEA WHO OWNS THE COMPANIES. The system is set up so no one knows. Companies register owners but they can be other companies in other jurisdictions. And it is easy to set up a company in such a way so that no one checks on the owner at all, ever. That is the system we maintain.

Every minister who has ever had the power to change this state of affairs has been aware of this but they have all chosen to leave it that way.

In short we have a system which is conveniently designed so it does not stop money laundering but does make sure no one will be prosecuted. It serves to shield the guilty not stop them.

I realize these are statements that can still be dismissed as ‘conspiracy’. Without the 8000 words of detail the article contained, without the references to over a hundred pages of bank transfers and company records, I am left with just what I know to be the case without being able to show you what convinced me.

All I can do, as promised, is show you the final ‘shell’ which surrounds everything else and which allows the rest of the corrupt system to exist and do its job. The last shell is a legal one and I had not understood its importance, nor its power, until it did its job and stopped me publishing.

This is how it works.

First a few facts. In the Magnitsky case $230 million was stolen from the Russian state. That money was then laundered in a scheme that involved five deaths, a lorry load of bank records that exploded, eight banks, numerous shell companies and complete, abject and total regulatory failure. It is called the Magnitsky case after Sergei Magnitsky who was found dead, handcuffed on the floor of a cell in a Russian prison. His body, photographed at the time, was covered in bruises.

Mr Magnitsky had been arrested and then held without charge or trial in the custody of the Russian Interior Ministry for nearly a year. He had been detained shortly after he had named in official testimony Interior Ministry officials and certain tax officials as the criminals behind the theft. The men he named were the ones who arranged his detention.

BUT, the Interior Ministry held its own investigation. What it found was that although the money had indeed ‘gone missing’, none of the officials Mr Magnitsky had named were, according to their official investigation, guilty of anything other than being ‘tricked’ by person or persons unknown. The Ministry did try to suggest several culprits but two of them died mysteriously of heart attacks a thousand kilometres from their homes before they could testify, while another had, rather embarrassingly, died before the crime he was accused of had even been committed. The Ministry looked silly even by Russian standards and no case was brought.

Eventually the Russian officials accused the deceased Mr Magnitsky of being the mastermind behind the crime he had been investigating. At one point the Russian state said it was going to put him on trial posthumously. So far it has not. And thus the case rests with the conclusion that there was no crime, only a ‘trick’ with no one found guilty.

It was also decided in Mr Magnitsky’s absence that despite the photographic evidence of his beaten body, he had died of natural causes and no crime had been committed there either. Case closed. And that ‘Case closed’ is what it is all about.

In the end it doesn’t matter what actually happened nor what evidence is to hand. As long as some official body does its own ‘investigation’ from which it concludes nothing happened, then nothing did, and the case can be closed. Not only that but if anyone should try to look for themselves at the evidence they cannot refer to anyone or any bank as being involved in criminal behaviour of any kind. Because there wasn’t any.

If no money was stolen – and none was because the Russian said so – then no one could have laundered any. How can you launder money that was not stolen?

The Russian decision meant, in legal parlance, that there was no ‘predicate’ crime – no crime from which other crimes followed. Which means, if one authority says there was no crime, every other authority in every other country, should it want to, can point to this judgment and say, ‘why should we investigate anything if there was no crime in the first place?’

This meant when an official complaint was sent to the Cypriot authorities in 2008 alerting them to the Magnitsky affair, right at its beginning, they could ignore it. And they did. The Cypriot police were sent an official complaint in 2008, and to this day they have never replied to it nor even questioned the people, even Cypriot people, named in it.

In fact even when the Cypriot Authorities were sent another much more detailed complaint in 2012, which gave them dozens of leads and lines of enquiry they wrote back saying,
“…it is important that we firstly obtain information from the Russian authorities about the predicate offence or offences committed in Russia.
Thus we plan to contact the Russian authorities in order to obtain information…”
And of course there was no predicate crime. Not officially. Even though companies were stolen and hundreds of millions did ‘go missing’.

Similarly, in 2010 another complaint was sent about the Magnitsky affair, this time to the Austrian authorities. The complaint alleged that the very large and powerful Austrian bank Raiffeisen, had handled much of the money that had ‘gone missing’. The Austrian authorities opened an investigation which concluded Raiffeisen had done nothing wrong at all. Case closed.

The Russians found no crime had been committed on their patch. The Austrians found nothing on their patch either.

This is despite the fact that Raiffeisen did handle the money. But you see handling is NOT laundering. Laundering requires the money be illicit AND that Raiffeisen knew, or reasonably could have known, the money was illicit. And the Austrian regulator concluded that Raiffeisen could not have known there was anything wrong with either the money it was handling, nor the bank from which it came nor the owner of that bank. The owner we are talking about here is the criminal – a convicted criminal who owned his own bank – mentioned earlier. According to Raiffeisen and the Austrian regulator the criminal past of the owner of the bank Raiffeisen was doing business with, could not have been known till a later date.

Now I find this judgement to be difficult to understand since the man in question had been convicted in Russian court in 2006. There are court transcripts of his admission of guilt which I have read. Yet Raiffeisen was handling the money in question in 2008.

BUT it doesn’t matter if I or you find this odd. The only FACT that is important, is that the Austrian regulator looked and found Raiffeisen NOT guilty of any crime. And so they are innocent. Case closed.

This is how you can end up, as I did, compiling facts and dates, evidence of bank transfers subpoenaed in court, which lead you to a conclusion that you are nevertheless not allowed to make public. You can present all the evidence but you must contrive to do it without ever mentioning the name of a crime, nor suggesting any illegal activity in the piece. And of course you certainly cannot conclude in writing what the evidence suggests. If you try to , as I found, you are threatened with the law.

And that is how you make the truth illegal.

If this was just one case it would be horrible but isolated. But it is not. This use of official and legal judgements to squash the truth is exactly what happened in the case of Jonathan Sugarman and UniCredit. He found evidence that UniCredit was very seriously breaking the law. He got an outside company to check and they agreed. The Irish regultor however, said, ‘There’s nothing to see here move along’. And Jonathan was threatened with leagal action if he did not go quietly away and hide.
What does all this mean for money laundering?

Here is how I concluded the article I cannot publish.
People love to talk about the ‘risks to banks and companies’ from money laundering. What risks? Think of the notorious cases of money laundering before Magnitsky: Citi., Wachovia, HSBC. No one was gaoled. No one senior even lost their job. Fines are a joke. Wachovia, for example handled or laundered over $370 billion of dirty or suspect money out of Mexico. They were fined one two thousandth of that amount, just $160 million. As a percentage of the direct financial benefits accrued to Wachovia, from having the dirty money flowing through their books, fines for money laundering are vanishingly small and better thought of as a tip pressed into the palm of a compliant doorman.

In reality, simply looking at the facts of what it has cost the banks in gaol time, fines or even something as intangible as their standing with their regulators and governments, it is very much worth it to launder. As for ‘standing’ or reputation – being guilty of huge money laundering did no harm to Citi when it came to bailing them out. Nothing untoward has happened to Wachovia or HSBC. In short – on a cost benefit analysis I would say it is of huge benefit and virtually no risk, for any bank large enough to be able to launder money, to do so.

And what of all the many companies and professionals, the company agents, lawyers and accountants, who do the jobs which make up the bulk of the work of laundering? Are there any real risks for them? I would say there are few because our system simply does not investigate what they choose to do. Instead it is very careful to only ask them to fill out forms, to self regulate and to ‘comply’.

I think the questions we need to ask ourselves and our politicians is why is it that the financial world is ‘regulated ‘ while we, ordinary citizens, are policed? Why do they have regulations to observe, while we have laws to obey? Why are they asked to merely assess themselves while we are investigated by officers of the law? Who profits from this careful double standard?

When you boil it all down, anti-money laundering is about asking criminals and the law abiding, both, to write reports about themselves. Needless to say the criminals lie. But we pretend not to notice, and so in every country all the paperwork says there is no money laundering going on. Yet hundreds of billions is laundered every year.
 
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Now, John Ward's post:

THE EVADERS: British banks control enough tax evasion to almost pay off our National Debt at a stroke

A story goes global, and damns the self-styled elite

UKgdpdebt
UK debt versus GDP…would be transformed if tax evaders paid their way
 
The amount of tax-haven monies controlled by British banking is estimated to be £1.26trillion. That is six NHS budgets, twenty defence budgets, eighteen welfare budgets, and five UK State pension budgets planned for the UK’s 2014 fiscal year. The evasion total is the same size as the entire public sector pension fund, and only slightly smaller than Britain’s total national debt.

Last Friday, every French newspaper’s front-page from the Rightist Le Figaro to the Leftist Liberation led with the series of offshore tax haven scandals now threatening to overwhelm President Francois Hollande. In the UK, the Virgin Islands name-and-blame game has put David Cameron very seriously on the back foot. And the obvious connection between Tory newspaper The Daily Telegraph’s ownership and the Sark tax-evasion scandals there has shaken many from their torpor of bland acceptance. Throughout Europe’s citizenry this morning, there is a growing feeling that – far from being a tiny minority – rich-businessman tax evasion is the norm.

The Irish Times last Saturday threw up a staggering statistic: over 30,000 Irish firms have directors registered in offshore jurisdictions. Furthermore, in Sark specifically – population 600 – there are more than 11,000 bank accounts of directors registered to Irish firms – 18 for every island resident. There are roughly 560,000 business enterprises in the Irish Republic, of which no more than 240,000 could be described as turning over enough to make directors’ offshore holdings worthwhile. Thus an incredible 1 in 8 of the country’s business élite is stealing from the taxman.

This isn’t going down well among Ireland’s poorer classes – not least because Enterprise Ireland’s own data showed that over a thousand of its business members received government funding in 2010, with a total of 86 receiving commitments for financial support in excess of €100,000 for significant R&D projects. Life is a thing of give and take, but for Ireland’s top earners it seems to be all take and no give.

Coming in the wake of similar behaviour over the last five years from the West’s bankers and the Greek econo-political class, there is something about offshore – and the Virgin Islands story in particular – that seems to have completed a synapse connection….thus allowing the penny to drop at last: the ordinary folks are being gang-raped by greed on all sides.

As many of us always suspected, the insouciant wealth-accumulation obsession of frontal-lobe afflicted bankers is what joins them at the hip with the top earners in business – regardless of which country or culture one surveys. The ever-unpleasant HSBC’s Guernsey operation was last November shown to be shielding £699m in 4,388 accounts in Jersey – with one investor holding £6million. The average balance is £337,000. Equally, the true extent of American and German fat cat tax-evasion has been unearthed by the German Federal Intelligence Service. It is conducting a widespread investigation into Lichtenstein banking – and that of Luxembourg – where tens of thousands of US and Bundesrepublik tax evaders are hiding massive amounts of cash.

A 2012 study of 60 large US companies found that they deposited $166 billion in offshore accounts during 2012, sheltering over 40% of their profits from U.S. taxes. Yet Wolfgang Schäuble has invested a great deal of spin-time trying to suggest that Cyprus shielding the wealth of crooked Russians was atypically evil enough to warrant Berlin’s snaffling of the island’s potential energy economy. This is now shown to have been bollocks not just as a rationale, but also in its alleged uniqueness. And some of Wolfie’s mates appear to be up their eyes in similar operations around the world.

But the burgeoning scandal is more embarrassing for David ‘Legup’ Cameron than any other leader because, as the Guardian for once reported accurately at the weekend, ‘one nation in particular has ties to offshore havens everywhere. It’s a veritable nexus of offshore influence, related to havens in the Caribbean, and much closer to home. That nation is, of course, the United Kingdom.’

As so often happens today, without the leaking of more than 2m offshore files to the International Consortium of Investigative Journalists (ICIJ), the extent of this three-faced hypocrisy would be unknown to us still. So while George Osborne talks a good game about “all being in this together” – and Cameron witters on about “not wanting to associate with” tax evaders – the reality is their administration and bankrolling ranks are crammed with some of the worst offenders and facilitators. Lord Green ran HSBC for years, Jeremy Hunt is an aggressive tax-avoider, the Barclay Brothers run Sark, Boris Johnson is a particular favourite of the Sarkist-Banking fraternity, and numerous large Tory donors are among the wealthy ripping off Sovereign revenue offices: more than 175,000 UK companies have directors in offshore jurisdictions.

The ICIJ’s project uncovered a network of empty holding companies and names essentially rented out to fill out boards of non-existent corporations, including a British couple listed as active in more than 2,000 entities. This is a mirror image of the tiny survey conducted by The Slog last week into the identity of those who were early departees from the Cyprus depositor haircut.

For me, however, it is a calculation of the totals involved globally that change these revelations from being just another “it’s the rich what gets the sorrow” yarn into something that just might – we live and hope – finally get Middle England off its sofa and angry enough to demand justice.

A 2012 report from the Tax Justice Network (a UK company) estimated that between $21 trillion and $32 trillion is sheltered from taxes in unreported tax havens worldwide. Tax havens have 1.2% of the world’s population and hold 26% of the world’s wealth – including 31% of the net profits of United States multinationals. We are indeed talking about ‘a tiny minority’ here – the usual suspects – but also a colossal percentage of the money that should have been paid in Sovereign taxes. Financial opinion leaders I asked last week for an estimate of the percentage of offshore monies administered by British banking thought the number to be between 40 and 60%.

Being kind to the perpetrators and assuming (a) the lower end of those estimates and (b) lowest assessments of global market size and (c) a net tax rate of 15% being evaded, the Government of the United Kingdom knowingly loses almost exactly a trillion pounds in tax revenue thanks to the havenism endemic in the banking system it is supposed to regulate.

That is six NHS budgets, twenty defence budgets, eighteen welfare budgets, and five UK State pension budgets planned for the UK’s 2014 fiscal year. The evasion total is the same size as the entire public sector pension fund (itself a disgrace of illegal embezzlement) and only slightly smaller than Britain’s total national debt.

It is a mind-boggling 70% of United Kingdom GDP.

But here’s the final brass-necked irony: stand by for an attempt by the Global Looters to use this tax evasion reality as the excuse for stealing the savings of everyone with over £100,000 in a bank account that isn’t offshore….and represents the life-savings of a law-abiding taxpayer.
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Principal articles reproduced / referenced above:
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Sunday, March 07, 2010

House prices - Wave 2

Karl Denninger looks at recently-failed US banks and by comparing their asset valuations with losses charged to the Federal Deposit Insurance Corporation discovers that they overvalued their properties - at the time of failure.

If you add up the nominal assets of the three banks - $903 million - and downgrade them to their real value as implied by the losses borne by FDIC - $602.3 million - you will find the collective assets were overvalued by 49.9%. In other words, current estimated real estate values should be cut by 33.3%.

These were banks operating in (now) economically distressed states - Florida, Illinois (both with official unemployment rates at or exceeding 11%), Maryland (over 7 % unemployment), so you can't necessarily apply that regrading to the whole of the USA.

Nevertheless, those states are relatively heavily populated, and so are the others now showing high rates of unemployment - see this US population map. So it may well be that the US housing market in general may need to be reassessed. If, as Denninger says, he is "generous" in estimating houses to be overvalued by 25%, that means we need to cut nominal prices by 20%.

This is borne out to some extent by reported house sale prices - see this real estate website - though the Northwest has shown a rise (why?).

And then we have to consider properties repossessed by lenders but not sold, and owners who are sitting on their properties and refusing to sell.

The UK, with its much more densely-populated land, maybe somewhat different; but I think that when all the recent financial stimuli stop and we get past the next General Election, we may see clearer evidence of declining valuations here, too.

ADDENDUM (10 March):

A counter-argument would be that the FDIC has applied a "forced-sale" valuation, as with individual or company insolvency. On the other hand, the FDIC must be in no hurry to overstate its obligations/losses - its own finances are already very shaky - and there are already many forced residential property sales actually ongoing, so the regrading of assets may to some extent reflect actual market conditions.

Tuesday, February 16, 2010

China extending secret support for USA

Reportedly, China has radically reduced its holdings of US Treasury securities; actually, the truth may be exactly the opposite - see my post on the Broad Oak Blog.

Wednesday, November 25, 2009

Breaking News - "Debtman" sunk

The following extract has been taken from news agencies, though Internet reception is currently poor on account of flooding and there may have been some scrambling of information. For the full story, click here.

British 'Debtman' Gordon Brown ditches in Atlantic

Not Philippe Naughton

The British political adventurer Gordon Brown found himself in deep water today after a failed bid to make the first long-range economic flight using a debt-powered wing attached to his back.

Brown, 58, planned to fly 7 years from the 2008 Credit Crunch to the 2015 General Election, at a speed of almost £120 million per hour, a flight that should have taken about 80 months.

Only a year into the flight, however, the British "Debtman" disappeared from TV feeds. Live pictures shortly afterwards showed him up to his neck in it, swimming around beside his Parliamentary pension golden parachute, while the IMF prepared to winch him to safety.

The reason for his failure was not immediately apparent to anybody except the blogosphere, but the British premier seemed to be unhurt and waved at a passing TV crew.

Friday, November 06, 2009

On democracy in Britain

Following the Czech ratification of the Lisbon Treaty, there's excitement over the widened split in the Conservative Party and the possibility of forming a new party or coalition to wrest power from the professional political elite and restore democracy to the people.

I believe this is completely mistaken.

You will find:

(a) the tremendous power of apathy (look how Karl Denninger has gone from making a personal fortune in equities to crying uselessly on the blogwaves about politics);
(b) when (if) you have split a log, it can be split further, until there is nothing but kindling and splinters.

We do not have democracy in this country, as the ancient Athenians understood the term. We have "representative" democracy, which ultimately reduces the population to two classes:

(i) practitioners
(ii) petitioners

The most we can hope for is to influence one of the two great power factions that take turns to rule us. As David Cameron and co. now feel their vulnerability, our maximum influence lies in the threat to his potential vote. By looking as though we may indeed shatter his support into a hundred pieces and so end with a hung Parliament or even another Labour government, we can make him listen, instead of pretending to listen.

But it has to be a simple, single demand, with the promise that the fragments will gather around it. I would suggest simply, a referendum on EU membership per se, "in or out", and purely on the issue of democratic legitimisation.

The arguments pro and con can come later; in fact, must come later: if you hear bletherskites like Ken Clarke (he so reminds me of ex-Bishop David Jenkins), they're always trying to confuse the referendum with the benefits of EU membership, so as to prevent you from asking for the vote.

Going for the split now uses the weapon without uttering the threat, and will be uselessly destructive.

Saturday, September 26, 2009

Squaring the circle, packing your bags


In Britain, there are 28.89 million employed - 72.5% of the "people of working age"; median earnings approach £25,000.

In China, the average urban wage in 2006 was 1750 yuan per month, or (at today's exchange rate) slightly less than £2,000 per year.
_______
In Britain, there are 3 million homes where no-one works, with an average household benefit payment level of over £4,000 p.a. This doesn't factor in the cost of other benefits provided by the State, such as health and education. For example, State schooling costs something like £6,000 yearly per child.

In China, the official urban unemployment rate at the end of 2008 was 4.2%, or nearly 9 million people. This statistic does not include unemployed not eligible for benefits, or migrant workers - about 20 million out of 130 million migrants have no job. In industrialized Guangdong Province, for those who qualify, unemployment benefit for the first 24 months is 688 yuan per month, or £757 per year.
_____________

In Britain, the 27.5% of the "people of working age" that might be employed but are not, number approximately 10.96 million.

In China, estimates Eric Janszen of iTulip, there are 20 million officially unemployed and the real tally should be 40 - 50 million.
_______________

China has over 1 billion people and is desperate for land, and natural resources such as wood, water and arable soil. Despite restrictions on family size, her population continues to increase, largely because her people are getting to live longer (and will one day incur the high additional costs of growing old). She has industrialized at high speed and has built a massive skill base. She is continuing to acquire technological and scientific know-how, and is sucking in the world's steel and a panoply of key African and Australian minerals and rare earths. She sits on vast reserves of coal. The ruling Communist elite have not spent a long lifetime climbing the exceptionally dangerous slippery pole in their country, to see their beloved nation sink into chaos and their equalitarian beliefs defeated.

You are a British (or American) politician. You know all the above - or your handlers will tell you just before you go on "Question Time" or some other grill-the-pol show. (1) What will you say to your voters? (2) What private plans will you make for yourself, your family and your friends?

Sunday, September 06, 2009

UK public debt worse than USA

It's reported in the Press that UK national debt will reach c. £1 trillion by the end of the year, and when the Office of National Statistics adds-in the cost of bank bailouts to Lloyds TSB and Royal Bank of Scotland, the total should be £2.5 trillion. This will make our position worse than that of the United States, as shown in the graph below.

Friday, July 24, 2009

Turning point; hiatus

Reading around in the wisdom of others, I predicted Dow 9,000 here, here and here. Now it's happened. Good for you day-traders, but a fraidy-cat like me is staying away.

Since Marc Faber and others have been saying for some considerable time that they can't see anything worth getting into, and now the dollar is getting closer to having the carpet yanked out from under its feet, and the British pound may follow suit thanks to the miserable state of the British economy, and China is busy blowing an inflationary bubble to maintain its vampire trading relationship with the West, and the gold-bugs are chirruping ever louder (though the US Government might not only seize gold as it did in 1933, but for those smarties who invest in overseas gold stores the bad news may be that Uncle Sam will also seize US citizens' title to those stores), the question is... where to hide your stash?

For the private investor, maybe part of the answer is to look at the currency market, for a country that isn't over-dependent on international trade, has enough natural resources to survive if the world system goes down, and is reasonably stable by second or third world standards. Sadly, I have even less expertise here than elsewhere, but any thoughts on e.g. the Thai baht?

HIATUS

We're going on holiday now, to a place where cellphones don't work (and it's in the UK) and our place has no broadband. Best wishes to you all, hope to be back in touch soon.

Sunday, July 19, 2009

Locking the doors

The dethroning of the US dollar as the international trading currency is under way. New bonds issued by the International Monetary Fund in the form of "Special Drawing Rights" are related to a basket of currencies, thus diluting the dollar element and reducing America's opportunity to cheat the world by devaluation.

The same article describes a Chinese proposal to start issuing bonds denominated in renminbi, so that if the dollar does drop against the Chinese currency, all that will happen is that the dollar cost of the capital debt will increase.

It occurs to me that such extra security for lenders may help interest rates to remain lower than they otherwise would be. So the threat to borrowers is not that interest rates will increase, but that debt outstanding will continue to feel heavy, since inflation won't lighten the burden. In fact, the burden of foreign debt could get worse, if the dollar weakens in this new foreign-currency-mortgage era.

Another factor, which may be a deliberate strategy with an eye to the above, is China's own expansion of credit. If monetary inflation goes global - including in the East - then there's less hope that Western businesses could use relative currency devaluation to increase the demand for their goods and services. Manufacturers here will still be unable to compete and debt will grow. Our creditors will own us - we'll "owe our soul to the company store".

It's time to grasp the nettle - bust the banks who got us into this, have a tremendous clearout of debt from the system, reset wages and prices at lower (more internationally competitive) levels, get the people back to work and shrink the dead weight of government and its dependants.

That, or see what's left of our wealth leak away, and then suffer all the above as well - at even lower levels of per capita assets and income.

Doubtless the politically-favoured option is the latter - "Let it all happen on someone else's watch, after we've made ourselves into the New European Aristocracy and gone to our country estates." This would be a mistake. The palace of Versailles didn't protect Louis XVI, nor Waldsiedlung the East German communist elite.

Friday, July 03, 2009

The sun also rises


... the governance of Britain which as we have said is semi-feudal, ruled by a few corporations and the wealthy elite in partnership with essentially a one party government.This will go a long way in helping to understand the "British disease" of economic stagnation. You start by crippling the middle class through debt indebtedness to a corporate elite.

So sorry, an error in transcription: for Britain and British, I should have written Japan and Japanese. Gomen nasai. But an understandable mistake, you may think. How much difference will a regime change in the UK make? The inclusion of Ken "fags and Bilberberg" Clarke on the Opposition team seems a deadly marker to me.

Returning to our muttons... Jesse has been focusing on the Land of the Rising Sun recently. He's pointed out that an ageing demographic structure is a major brake on the economy, especially with tight controls on immigration (though we in the UK may have have drawn the wrong conclusion from this); and today he looks at how the Japanese have organised themselves to reduce energy costs and oil dependency.

Especially the car: "I have long thought of cars as vampires sucking the economic life out of every household in the US. And the risk of death and serious injury from car accidents is about half what it is in the US (although the statistics may not be directly comparable)." And considered from a coldly economic point of view, think of the enormous overall costs of those deaths; and the possibly far greater costs of medical care and other support for the vast and growing army of injured and permanently disabled.

It's well worth reading the whole letter from Jesse's friend in Japan - not just about energy, but preventive healthcare etc. They walk to McDonald's - not waddle. They're organising themselves; so can we.

Thursday, June 11, 2009

Euro and EU doomed?

Justice Litle thinks so.

Beg to differ on one point:

If the Brown government fails, Britain will be left rudderless in the midst of the worst fiscal storm in decades. In a worst-case scenario where bad events lead to worse decisions, opines Stephens, the domino chain could even lead to a British exit from the EU.

"Worst-case"? Au contraire, the sooner the better, and for the reasons he has given in his exploration of Europe's problems.

Wednesday, May 13, 2009

Why inflation is going to hit us

Scott Burns at MSN Money (htp: Michael Panzner) calculates that unfunded government programs for social security and Medicare ($46 trillion) represent a debt equivalent to around 90% of all consumers' net worth ($51.5 trillion). If Americans' net assets decline by a further 10%, then effectively the American citizen is bust.

Can anyone provide equivalent information for the UK?

Sunday, May 10, 2009

Us banks vs UK banks

We are now getting used to hearing that the UK is the worst-placed among the G20 countries to recover from the credit crunch. One reason is that we have few banks, and almost all of them in trouble.

By contrast, as you see here, the US has 8,500 banks, most of them in good condition. The problems are concentrated in their handful of giants. Over there, it would be possible to bust them and have others ready to take on their books of loans (discounted) and deposits.

Here, I think we'd have to create a new bank, if only to provide some competition for Barclays and HSBC.

Sunday, March 29, 2009

Horrifying budget

Fraser Nelson in the Spectator:

To comprehend the scale of the sickening task awaiting George Osborne if he becomes chancellor, consider the following. If he were to raise VAT to 25 per cent, double corporation tax, close the Foreign Office, cancel all international aid, disband the army and the police, release all prisoners, close every school and abolish unemployment benefit he would still be unable to close the gulf between what the UK government spends and what it raises in taxes.

Where does all the money go? How can we get out of this in one piece?