Tax
competition between
countries is good. International agreements that organise tax
harmonisation are bad. Tax competition
compels
governments to
economic use of
public resources. It stimulates efficient
public
services, prevents wasteful public
spending
and saves taxpayers money. Learn
the logic, ethics & Benefits of of
tax competition
in this
5
min Video by
Daniel J.
Mitchell Ph.D.
Richard
Epstein of the University of Chicago
talks with EconTalk host Russ Roberts
about
the relationship between happiness and wealth, the effects of
inequality on happiness, and the economics of envy and altruism. He
also applies the theory of evolution to explain some of the findings of
the happiness literature.
The “Great Deception” involves that successive treaties embodying
economic integration were needed to give more jobs and economic growth,
when the real agenda throughout has remained political integration, the
construction of a Federal European Superstate under the joint hegemony
of France and Germany.
Former Federal Reserve Chairman Alan
Greenspan, Former Treasury Secretary John Snow, and SEC Chairman Chris
Cox testified about the state of the economy, recent turmoil in the
U.S. and global financial markets, and the role of federal regulators
in the breakdown of the market on Wall Street. In response to sometimes
partisan and pointed questioning Mr. Greenspan said that he may have
been mistaken about the reliability of some financial instruments, such
as insurance-like credit-default swaps, that were not yet common when
he expressed his views about markets being able to police
themselves See the
24-10-2008 hearing here Listen
to Ron Paul's comments here
One
of the biggest fallacies of the current debate is that high oil
prices cause inflation. That is not true. Only excessive money supply can cause a general price
rise. Central Banks' easy money
is the only cause of the inflation they claim to fight.
Greenspan warns: More Bank Failures
in the Pipeline The
insolvency crisis will come to an end only as US home prices begin to
stabilise, and this is when the absorption of the huge excess of vacant
homes that emerged from the housing boom is much further advanced than
it is now. (Aug 4 2008)
Three
Things to Know About
Fannie Mae and
Freddie Mac
Mark Thornton explains the reason why
record setting skyskrapers are excellent forebodes of recessions:
Unnatural abundance of easy credit causes unnatural construction booms
which cannot but unwind in a bust when
overexpensive buildings find no tenants. (10 min. mp3) - 18
Aug 2008
Lessons
from the 1970s
The
only historical period that bears any resemblance to what is happening
today is the 1970s. Then, and now, an oil price shock turned into a
rise in the general price level. Both then and today, central banks
largely accommodated this price rise. It was a mistake then and is a
mistake now.
Monetary policy
has been excessively accommodating for more than a decade, building up
excessive inflationary
pressures in the global economy....
Prices
for rice, corn, wheat and
oil have doubled over the
last 12 months. With half of the world's population living on less than
2 US$ a day the price hikes caused food riots in many
countries and even oil price
protests in Europe. Meanwhile the FED continues to print new money at
the rate of 18%/yr
and EU's m3 is at 12%. Real
inflation already hits 7% and
-if the money printing continues- could reach 15% within 12-18 months,
necessitating rate hikes
with massive failures as a result. It is the excessive money printing which
caused the credit crunch
helped by mortgage fraud and
the derivates orgy. The
crisis will
continue to deepen for another 24 months
Collapse
of the paper money system? Europe's
growth is fake
The wealth produced by Europe's army of bureaucrats is a fiction.
Still their wages continue to be accounted as contribution to GDP.
The real value of the public spending orgy for our common wealth is in
reality
worthless and therefor causes inflation. Monetary
tension is building up
and European interest rate
spreads widen rapidly.
Italy
and Greece could soon be
forced to
leave
the Common Currency, which would cause a worldwide collapse of
confidence in
the Euro and in our whole fiat monetary system. A
worldwide disaster
is in the making and just
as in 1929, thearchitects
of thedesaster
are our Central
Bankers
(60min-13mb
mp3).
You can shear a
sheep many times, but you can only
skin it once...
States are aggressive entities which steal property through taxation
and expropriation, initiate physical force, create monopolies,
and restrict trade. States today are as normal as slavery was in the
old days.
For
the 13th year in a row Auditors refuse
to approve the European Union budget.
12 % of regional spending was not
accounted for. Farm subsidies got to Horse-breeding
and golf courses
The
rise of anti-Americanism in Europe is a danger to both American and
European pocketbooks, and our collective liberty. Here is why: Europe
and America are each other's biggest trading and investment partners,
and anything that damages that relationship is harmful to everyone
involved.
More
social spending by EU governments
is not the best way to reduce inequalities, and can have unintended
consequences, says Jan Krzysztof Bielecki, a former Prime Minister of
Poland. He argues that the fastest route to cohesion both between and
within member states is freer movement of people, capital and services
How
poor are the American Poor ?
Poverty
is an important and emotional
issue. Last year, the
Census Bureau released its annual report on poverty declaring
that
there were 37 million poor persons living in the United
States
in 2005. 12.6 percent of
all Americans. This number has varied from 11.3 percent to 15.1
percent of the population over the past 20 years. To understand poverty
in America, it is important to look behind these numbers—to look at the
actual living conditions of the individuals the government deems to be
poor. Official data show 43% of them own a three bedroom
dwelling. 80% enjoy air conditioning, 75% have a car and 31% of the
poor families even have two vehicles. American poor on average dispose
of 114 m² living space. Substantialy more than the European
agerage of poor ànd wealthy families together: 86 m² in
Belgium and 85m² in
the UK.
Using
data from the
U.S. Census Bureau, the Goldwater Institute finds High-tax and
-spending states suffer increases in poverty rates, both general
and
in childhood poverty rates. The paper provides scientific
evidence
that private-sector job growth is the most effective antipoverty
program.
Policymakers who seek to reduce poverty and improve the
lot of the poor should embrace policies promoting as much
private-sector growth as possible, and therefor reduce taxes and limit
the growth of public spending. Contrary to dogmatic beliefs and
special interest claims by those those employed by the government
programs the paper demonstrates that the promotion
of Big Government, high taxes and public
spending
destroy wealth and actually hurt the poor.
The
Laffer Curve explained In these short
Youtubes, Dan
Mitchell
explains the relationship between
tax rates
and tax revenue, and the reasons
why marginal tax revenu
declines
when tax rates increase. Historical examples
proove the case for moderate tax rates. by
Daniel J. Mitchell Ph.D. Part
1Part 2Part 3
Destructive
State Agencies by
Dr. Martin De Vlieghere Ph.D Not
only dictatorships but also democracies have appallingly destructive
state agencies, that threaten both internal and international peace.
Apparently western civilization has not yet developed an adequate
understanding of the dangers of state power. Martin De Vliegere
analyses the destructiveness of state activities and investigates the
reasons why Why it is so difficult to curb the growth of government.
How
insane can Environmentalism get?
Congressman Hank Johnson (Georgia)
expresses his concerns (video)
that the US. Island
of of Guam is going to "tip over and capsize" due to overpopulation. When will China and
India Catch up with the
USA?
After an initial decline, the cost of insuring sovereign debt
against default hit new highs on June 1st. The markets shun Eurozone peripheral
government debt, causing bond yields to spike higher – especially for
crisis-hit Greece. The announcement of the $trillion package initially
helped to contain the contagion. But sovereign yields and credit
default Swaps (CDS) are on the rise again as worries persist about
governments’ abilities to implement austerity plans.
The
environmental lobby gradually succeeds in promoting "the environment"
to the "Golden Calf" of the 21st century. Rationality and sense of
proportion have vanished from the environmental debate. Whoever
questions Al Gore's climate alarmism gets labeled as "negationist"
worse even than Holocaust deniers. Even human rights, democracy and
prosperity give way to the new idolatry.Recent research
however learns how much the climate alarmists exaggerate “global
warming” an its effects. Anti-globalist motives seem to dominate the
Copenhagen Climate Conference rather than environmental concerns. This
hidden agenda is likely to distort global trade and inflict development
and the environment more bad than good.
Not Capitalism
but our ill conceived
Monetary System caused the Crisis
We do not need to replace the Capitalist
System with a Swedish style social model as UN economist Jeffrey Sachs
argues. We only need a just monetary system. Such system can only
be equitable and achieve efficient allocation of resources when money
growth is zero or at the most limited to the growth of the real
economy. A return to the gold standard may be the best guarantee thereto
Prices on
credit default insurance on US government bonds are rising, meaning it
costs investors more to protect their investment in Treasury bonds
against default than before the crisis hit. It even, briefly, cost more
to buy protection on US government debt than on debt issued by
McDonald’s....
Prof. Allan
Meltzer
talks with EconTalk host Russ Roberts about the current state of
monetary policy and the potential for inflation. Meltzer explains why
inflation hasn't happened yet, despite massive increases in reserves
created by Fed policy. Then he explains why inflation is coming and why
it will be politically difficult for the Fed to stop it. Meltzer also
analyzes the Japanese experience in recent years and talks about why so
many investment banks overreached and destroyed themselves.
Woods gives
his free-market look at why the stock market collapsed, the economy
tanked, and government bailouts will make things worse. Tom Woods' web siteVon
Mises
Institute Review
Two key questions Keynesians never aswer about their bailouts and spending
stimulus packages are: Where does the money come from? How
would the money have been spent without public interference?
The fact of the
matter is that the money spent or re-allocated by governments allways
comes
from somewhere else in
the economy. Public programs are financed through higher taxes, through
borrowing or -worse still- through inflationary money printing. Buying
power is thereby withdrawn from the private sector and public spending is therefor allways crowding out private spending. Moreover public
agencies face high
operating costs and lack the tradition, knowledge and incentives for
efficiency, making public initiatives
far less productive than the
foregone private investment. Public interference is therefor hindering growth and
productivity rather than
boosting it. Japan's
lost decade is a typical example how public misallocation of
resources has lead to a long lasting stagnation. From
The
Wallstreet Journal
Michael Porter, professor
at Harvard Business School, talks with Bloomberg at the World Economic
Forum meeting in Davos, Switzerland, about President Barack Obama's
$819 billion fiscal stimulus package, the turmoil in credit markets,
and the U.S. education and health-care systems.
RAHN:
The optimal Size of Government Spending
Fundamental research shows that economic growth and new job creation
begin to slow when total government spending is larger than about 25
percent of GDP, Government spending in the United States is actualy
about 36 percent of gross domestic product (GDP). Is Obama's big
spending policy really the way to to create more jobs and boost
economic growth? See
the Washington Times The Chris Martenson
Crash Course Learn
everything you need to know about the economy in the shortest amount of
time. A unique series of 20 spoken presentations of ± 5 minutes
each. The series helps to understand the challenges in
these troubeled times
of creative destruction of malinvestment and
excessive bureaucracy and helps to see the
opportunities in this transgression to a more
prosperous society.
The
centralisation of power in the European Union continues apace. Last
week, the Bruges Group and Free-Europe.org exposed the policies
that the EU wants to force on Europe over the coming year. These plans
include adding more costs onto business; more EU control over financial
services; EU oversight of the nuclear industry; more EU control over
energy policy; complete EU control over asylum and immigration; even
more EU threats to consumer rights; more EU control over transport;
more EU control over justice and home affairs; and more EU involvement
in health and education...
Peter Boettke,
of George Mason University, debates with EconTalk host Russ Roberts on
the
Austrian analysis of business cycles, monetary policy and the
current state of the economy. The debaters explore the distortions and
exuberance resulting from of easy money policy and government
intervention. Another great
EconTalk podcast which
lifts the public debate on public policy on a higher level.
Paulson and Bernanke treat this crisis
like a liquidity
crisis. Trillions of unearned
dollars are being poured in the
building sector, in ailing
banks, insurance companies and car manufacturers. However this is not a liquidity crisis but
a structural crisis of poor business models and overleveraged
mal-investment in
unproductive assets and
overcapacity. As a logical
result of years of easy
credit these ailing
sectors misallocated huge
amounts of capital in ill
conceived business projects and
overcapacity. They
now need restructuring and scaling down. Struggeling to perpetuate the bureaucracy and excessive public
interference or the
massive overcapacities in
banking, building, car manufaturing as well as only will make
the agony last longer. Just like in
the seventies when Europeans
delayed the unevitable creative
destruction of their coal mines and outdated steel mills.
This
is
indeed NOT a liquidity
cisis but a structural crisis of bad debt which debtors can never pay
back with the poor returns
of their bad
investment . On basis of
the wrong diagnosis,
Bernanke prescribes the wrong medicine. Bernanke's Cash injections only add
fuel to the fire and will
ultimately result in higher taxes and higher inflation
for many years to come. Don't
be fooled by the temporary price drop of assets and commodities. The
present price relief is temporary and the result of banks and hedge
funds
deleverageing speculative
positions and excessive
debt, selling whatever assets they can.
When the
trillions of
Bernanke's unearned money ultimately hit the market later this year,
(hyper)inflation will
accelerate, and distort and ruin our economy, just like money printing
ruined
Zimbabwe. Better
invest in
tangible assets now, and protect your savings against the worldwide
excessive money
printing and hyperinflation.
Robert
Higgs, of the
Independent Institute, talks with EconTalk host Russ Roberts about the
Great Depression, the
New Deal, and the effect of World War II on the
American economy. Using survey results, financial data, and the pattern
of investment in the 1930s, Higgs argues that New Deal
policies created
a climate of uncertainty that prolonged the Great Depression. Using
consumption data, he argues that prosperity did not return during
wartime, but rather after the war when government intervention in the
economy subsided.
Even "new-Keynesian" John B. Taylor (inventor of the "Taylor rule") now
admits and provides empirical evidence that government interventions caused,
prolonged, and worsened the
financial crisis. They caused it by a wrong interest rates policy.
They prolonged it by misdiagnosing the crisis as a liquidity crisis
rather than risk crisis. They made it worse by providing support for
certain financial institutions and their creditors but not others in an
ad hoc way without a consistant framework
The Sharp Cut in Interest Rates Was
Accompanied by a Rapid Increase
in Raw Material Prices through the tirst Year of the Crisis.
No matter who you are: investor, trader,
homeowner, or CEO you are bound to feel the impact of Alan Greenspan's
“Age of Ignorance” for years to come. Greenspan's 19-year
career as FED Chairman is worse than anyone imagined.
Labeled “Mr. Bubble” by the New York Times, Greenspan was nothing less
than a serial bubble blower with a long history of bad
decision-making.
Interest
rate cuts may be desirable, but
are ineffective in dealing with the current crisis. The
only effective instrument to prevent economic downturn is fiscal policy.
We now hear almost every
day that banks will not lend to each other, or will do so only at
punitive interest rates. Credit spreads -- the difference between the
government cost to borrow and what private-sector borrowers must pay --
are at historic highs. Ms. Schwartz,
co-author
with Milton Friedman of "A Monetary History of the United States"explains that this is not due to a lack
of money available to lend, but to a lack of faith in the ability
of borrowers to repay their debts.
"The Fed," Ms. Schwartz argues, "has gone about
as if the problem is a shortage of liquidity. That is not the basic
problem. The basic problem for the markets is the uncertainty if the
balance sheets of financial firms are credible." Ms. Schwartz explains how
to restore interbank trust and how to avoid the present financial
crisis from develloping in a full blown depression. more here
Iceland — named the world’s best
country to live in by the U.N. last year — is facing total financial
ruin in the fall-out from the global credit crisis. Residents are
hoarding food and the currency is now rated just above Zimbabwe.
" If
a loose monetary policy and rapid asset
price inflation really were the
route to economic prosperity, Argentina would be the richest country in
the world by now." Read this and 8 other most pertinent
observations on the present
financial crisis andthe
inevitable conclusion here . (another great
analysis from John Mauldin's Frontline
Thoughts )
Democratic
constitutions protect citizens from the excesses of government
power. The European
constitution did exactly the the opposite: it was
all about protecting bureaucrats and political elites from the citizen
and from accountability
to the people. The Lisbon Treaty was a rewrite of this European
constitution which the Frensh and Duch Peoples convincingly rejected. Declan
Ganley, leader of the Libertas Institute explains why Ireland
blocked the Lisbon Treaty, and why the Irish vote must be
respected. Watch
It was fear for loss of their
sovereignty which made the Irish vote NO against the Treaty of Lisbon:
fear that European law would prevail
above national law particularly in
the field of taxation, morals and abortion. The European Court of
Justice now seizes the power which the Irish People rightfully refused
to grant her. In the Metock ruling the European Court lets prevail
European laws above national immegration laws anyway. This is a most
dangerous precedent as in this way Europeans step by step loose their
souvereighty. Denmark has the most immediate problem: this
jugment declares their recent immigration
legislation completely void and worthless. 04 Aug 2008read more here
Dr. Hans Herman Hoppe
shows that small countries are performing much better than large ones.
Prosperity, well being and democratic rule are better in small states.
He explains why the EU superstate is not about free trade and peace,
but about bureaucracy and about harmonising
legislation and tax regimes throuhout Europe to avoid
tax competition and enabling exploitation
of hard working European citizens by the political elites.
Why Americans (and
Europeans) don't save and what to do About It
Ronald Wilcox
describes how the “savings crisis” adversely influences personal
lifestyles and undermines national wealth and our standard of living.
Wilcox alanyses rational and irrational reasons behind individuals’ and
governments' failures to put money away, and the steps
people can take today to help themselves. The
book is an attempt to reinvent thrift, to find practical ways to help
people consume less and save more now so that we can regain long term
prosperity. Jim Puplava interviews the author.
The
Irresistible Shift of Global Power
to the East
This
book of Kishore Mahbubani brings an
incisive analysis of the implications of the ongoing
shift
in the global center of gravity as seen
through Asian eyes, and offers both warnings and
lessons
for the West. For centuries, Asians have been bystanders in world
history. Now they are ready to become co-drivers. Asians have
implemented Western best practices in many areas: from free-market
economics to modern science and technology, from meritocracy to rule of
law and have become innovative in their own way, creating new patterns
of cooperation not understood by the West. The
global
shift in
economic center of gravity unavoidably will
cause tensions.
Will
the West resist Asia's
rise or welcome
it and prepare for a new global partnership? Author
Kishore Mahbubani privides us warnings and surprising insights as seen
through Asian eyes.
A basic assumption underlying
our economic system and our way of life is that cheap and plentiful
amounts of oil will be available for the foreseeable future. In this
book two retired oil company scientists present the case that this
assumption regarding future oil supplies is dangerously flawed. They
believe that a peak in worldwide oil production is imminent and that
the ensuing decline in oil production will have devastating social
consequences unless steps are taken immediately to lessen the impact of
this event. Easy solutions to the problem of peak oil such
as replacing conventional oil with ethanol or the Canadian-Venezuelan oil sands will
prove to be highly uneconomic, highly unecologic and very partial
solutions.
Conservation of energy must be an essential feature of how we respond to the energy crisis.
Desperate to
wean its dependence on the powerful OPEC cartel, the United States is
pitted in this struggle against Russia, China, and Iran, all competing
to dominate the Caspian region, its resources and pipeline routes.
Transnational energy corporations are complicating the
playing
field with their own agendas. Wild West-style
entrepreneurs have taken control after the collapse of the Soviet
Union. Author Kleveman met with
the principal Great Game actors between Kabul and Moscow: oil barons,
generals, diplomats, and warlords. Based on extensive research, "The New Great Game" is a gripping
narrative, and an incisive analysis of the power struggle for
the world's remaining energy resources. Jim
Puplava interviews the author.
The
French
and Dutch peoples rejected the EU Constitution in their
2005 referenda. In
order to avoid more defeats, the political
elites
annuled referenda in 5
other countries. In stead they disguised the rejected
Constitution as the "Treaty of Lisbon" with identical content.
Only the Irish people
were asked for their consent, and the verdict
again was a clear NO ! Politicians
of other
EU states agreed to give up
their sovereignty to Brussels without referenda. The
political elites
are thereby violating EU rules and transforming European democracies
into a Sowjet-like centralised bureaucratic superstate. Under EU laws,
if
one member state rejects a treaty, the EU must scrap
the
bill.
Should the Eurocrats ignore the Irish NO-vote and pursue anyway,
the EU would loose its
legitimity and EU democracy will be changed in an
illegitimate
autocracy
of manufactured consent.
The text most
governments introduced to their
Parliaments is NOT
the same as the final versionof
the Treaty.Governments
sold a pig in a poke. Peter
Machdiscovered a
seemingly
inconspicuous sentence in the middle of the final consolidated version
enabling the EU Council of Ministers to adopt directives
on minimum rates for taxes and excise duties upon a claim
that
national rates distort
competition. The sentence gives a fatal blow to the sovereignty of
member states in the most crucial field of fiscal matters. This was not
approved as
such by Parliament.
The fraud exposes what
this treaty really is about:
disabling Tax
Competition and transforming
the European continent in a
huge HIGH TAX CARTEL from which no escape is
possible. more.... Why the
EU can get along without Lisbon Treaty very well.
PART 1PART
2: EUSSR EU
Commissioner Wants Far-Reaching New Powers for Brussels
The EU's monetary affairs
commissioner has called for far-reaching new powers for the European
Commission. He would like Brussels to have greater control over
economic policy in euro zone countries and wants its members to speak
with one voice on the international stage
Everyone, including politicians, agrees that
red tape stifles the economy. Unnecessary and preventative regulation,
based on no data or scientific investigation, let alone a risk
assessment, impedes entrepreneurial activity, social existence and
liberty. It makes the lives of those it tries to protect, empty and
dull; it prevents technological development; and lowers economic
performance, keeping many people in poor conditions. Read the
pdf paper here
June 4th 2008. Milton Friedman once declared: "Europe
is becoming ever-more
susceptible to asymmetric shocks. Sooner or later, when the global
economy
hits a real bump, Europe's internal
contradictions will tear it apart." Friedman foresaw all to
well that at some point, the weaker European countries were
going to
need more monetary stimulation than the majority of the countries in
the union. The major asymmetric shock may well come from an
unexpexted source: Asia. Asian
central banks have long been buying US$ and Euro
to prevent their
currencies from rising. Rapidly
rising food and energy are now leading to fast inflation rates across Asia. This has
triggered a change in Asian monetary
policy, notably a willingness to let the currencies appreciate and slow
down their
inflation. As a result Asian central banks will no longer buy
as much Euro bonds, and at least some European
governments may well find it very difficult to raise further financing.
Will
this Asian asymmetric shock mean the end of the Euro? Maybe. The
problem is that Europe is not a nation and the Euro is still an
experiment in cooperation, and that
governments go bust when they issue too much debt in a currency that
they cannot print themselves. Considering the number of players
involved in the monetary decision process policy paralysis could soon
grip
Europe. Markets have
finally acknowledged that the European solemn
promises to converge have not been kept. All across Europe, spreads
between bonds of the "stronger" nations (Germany, Holland..) and the
"weaker" signatures (Italy, Greece, Belgium, France) are widening.
Another question, of course, in the present credit crunsh is what would
happen in the event a major European bank went bankrupt. Would EU's
competition rules allow the ECB
or government to bail out the failing institution? Read the
analysis hereMore on the Euro here
Surging
inflation will stoke riots and conflict between nations, says report.
Merrill says inflation will widen gap between rich and poor and that
governments must curb rising prices. Riots, protests and political
unrest could multiply in the developing and developed world as
soaring inflation widens the gap between the "haves" and the "have
nots", the investment bank predicted...
The
single greatest danger to human life is the centralized political
State, who extinguished more than 170 million souls during the
bloodiest rampage in recorded history. Modern States are the last and
greatest remaining predators. The danger has not abated with the demise
of communism and fascism. All Western democracies currently face vast
and accelerating escalations of State power and centralized control
over economic and civic life. In almost all Western democracies, the
State chooses how children are educated,
the interest rate citizens can
borrow at, the value of currency, how employees can be hired and fired,
how more than 50% of their citizens’ time and money are disposed, when
to go to war, who can live in the country, where we can build our
houses etc...Most of these intrusions into personal liberty have
occurred over the past 90 years. States are parasites which always
expand until they destroy their
host population. Most
people are
comfortable with the idea of reducing the size
and power of the State. Most
become uncomfortable with the idea of getting rid of it completely. It
could be done and make us all hapier and
wealthier... read more
here
The
world’s
most important central banks:Fed,ECB and BoE are losing all
credibility. They persistently fail in their prime duty of fighting
inflation. Fake official inflation figures fool people about the pace
their savings are loosing value. Monetery policy is no
longer targeted at price stability but at bailing out the banking
sector
from their greedy malinvestments at the expense of people's buying
power and living standard. More about the political pressures
facing Central
Banks in
this ***** podcast
Adding fuel
to
the fire: In this testimony
before the financial committee, FED
Chairman Bernanke admits the credit crisis is the consequence of
the excessive
credit boom resulting from too low interest
rates. (listen to the fragment 02:00-03:00).
In another
speach however chairman Bernanke says he has no intention to
tighten monetary policy. If necassary the FED will not hesitate to cut the rates to zero(0.00!) for a
prolongued period of time and beyond this aggressive Japanese-like
therapy of rate cuts,
further NON-TRADITIONAL
measures may be invisaged. More inflationary tricks are in the
pipeline... ( see fragment from 23:00 onwards)....
In a CNBC report
marketwatcher Don Ruskin
warns that rate cuts cannot help as negative
real interest rates would only add momentum to the accelerating
inflation. The FED's over-expansive credit policy over the last
decade caused too much overindebtness and malinvestment allready. Too
much money is tied up in overexpensive houses or spent
in overconsumption. Easy credit can
only
make things worse, deepen
debt and ultimately
lead us in a
severe recession.
In this Fox News
Interview, presidential candidate Ron Paul
expects that new injections in the monetary system will
only prolongue the agony for a few days. Paul forcasts
that the beneficial effects of creating money from thin
air will be shortlived leaving
only the adverse long term effect of more inflation and declining
buying power when rising costs of commodities burst their way through
the pipeline and are being passed along to consumers downstream.
In an interview
with CNBC, Jim Rogers critic on the FED's bailout moves is even
moere severe: Printing more money
is only making
things worse through higher inflation and a collapsing dollar.
It is not the FED's task to accept risky
collateral from investment banks in exchange for
Threasuries, nor to pay for the Maserati's of Wall street people.
That would be socialism
for
the rich. Rogers explains what he would do if he was on
Bernanke's chair and
gives a few advises how to gain a fistfull of Rinimbis in the
present crisis. FED
chairman Ben Bernanke
also calls on banks to cut
the principal of their laons to homowners to prevent more homeowners
from falling into foreclosure. Rising
numbers of foreclosures yielding only 50cts on the dollar
are distressing the housing market. This slows down the national
economy, which is
in a recession
already. Is
reducing the capital a better way than cutting interest
rates? Peter
Shiff explains that scaring away credit
providers can make the credit crunsh in
the housing market only worse.
Rate cutting will not get us out of this
mess
By
Wolfgang Munchau
(Financial Times)
Burst
asset price bubbles triggered the Great Depression in the 1930s and
more recently cost Japan a decade of economic growth. The
stupidity that got us into the presenty financial mess was low, and
occasionally negative, real interest rates over long periods of time.
Now that the housing bubble has burst, central banks are responding by
cutting
interest rates yet again.... Why
the Fed should NOT prevent a US recession
By
Paul de Grauwe, K. U. Leuven
The
subprime crisis laid bare the unsustainability of the US
economy. US monetary authorities allowed Credit
and liquidity to expand to unsustainable
levels. This fueled the unsustainable
US consumption boom. What the US needs is a higher savings rate.
There is no way around it. The best way to achieve the structural
reforms needed is through an old-fashioned recession. Unfortunately US
authorities will do everything they can to prevent such a structural
reform. Central
Banking : The art of
Deception
Why
are central bankers giving us misleading m2 money supply figures and deceptive
(partial) Consumer Price Indices (CPI)? Central bankers do not want You
to know the real rate at which they are
printing
money nor that M3 Growth rates hit
all-time highs all over the
world. They do not want people to know at what rate our
money is loosing its value. John Williams (Shadow
Government Statistics) is interviewed
here by CNN. He expects the
deception wil end in a deep depression. In
this interview with "Financial Sence Newshour" (Apr 12th 2008), Williams
warns US m3 money growth
reaches 17% and that real inflation already is a
double digit rate. Williams forecasts that the FED's continued low
interest policy will lead to a massive flight out of the Dollar and
forecasts a hyperinflationary Depression in the US by 2010. Inflation
is the only way out to avoid US government from defaulting
on its massive debt and unfunded social security
obligations amounting to 400% GDP.
The International
Monetary Fund last week gave central banks some wicked advice*. They
should no longer ignore residential property prices when setting
interest rates. At the same time, the IMF recommends central banks
should retain their inflation-targeting frameworks. It all sounds very
plausible. Unfortunately the two goals are inconsistent.
Inflation targeting proponents
view central banks’ responsibilities as minimalist. But the subprime
crisis shows that central banks cannot avoid taking responsibilities
that include the prevention of bubbles and the supervision of all
institutions that are in the business of creating credit and liquidity.
See this CNN report how easy
money and the bank
sector's greed causes social drama. See how aggressive mortgage
sales &
refinance loans lead to overindebtness and tragic situations in
millions of
American households. It is time to
fundamentally rethink this monetary system which favours such abuse and
risks to
cause a
global crisis.High
finance caused too much grief already.
Will the US
housing recession spill over into the euro area ?
In
the past, housing shocks were
transmitted across the Atlantic. Will it happen again? There is a high
correlation between US and EU house prices. Deutsche Bank measured the
sensitivity of European house prices to change in US house prices, and
concluded that Ireland and Spain are most vulnerable to a slowdown in
US housing...
In this most informative
and entertaining
audio series George
Gordon analyses
cause and effect of the
credit crunch
and reveals
some
possible
outturns.
The
credit crisis
is the school model of malinvestment resulting from exorbitant credit
expansion. Runaway money supply, highly underrated
inflation and disguised credit risk disturbed the correct pricing of
the risks of credits and
lead the credit mania.
When
the Bubble bursts (pdf) Lessons from 200 years of
Stock market crashes, Booms and
Recessions from
1800 to 2002 - Facts and figures Global
adjustment will be long and painful
By Wolfgang Munchau (Financial
Times) 29.04.08 CDO
repackaging The
repackaging of CDOs (known as CDO repacks) is a relatively recent
phenomenon arising from the poor performance of a number of CDOs in
2002 and 2003. Repacks are considered to be ‘first derivatives’ of CDOs
and, as Moody’s explains: “In a typical repack, the terms of the
existing CDO are restructured, with changes in seniority, notional
amount, coupon, maturity and waterfall priority. The cashflows of the
existing debt are used to support restructured debt securities to
achieve the desired ratings.” Learn
How mortgage CDOs work in this 3 minute graphic presentation US and
EU
Public Debt could loose AAA Rating
Moody's,
Standard & Poors as well as US Chief accountant
Comptroller General David WALKER confirm: Social
security may pressure US and European public debt ratings if medicare
and social security reforms
are not carried out. Moody's Investors Service cautioned, adding that
subprime risks do not affect the government's rating. 'In the
very long term... these two programs are the largest threats to the
long-term financial health of the US and to the government's 'Aaa'
rating,' said Moody's vice president Steven Hess. Loss of AAA
rating would skyrocket the burden of the public debt service.
Free
MP3 downloads
suitable for RealPlayer, Windows-Media,
mp3-players, Ipod, etc...
Meet the world's wisest thinkers in this
impressive series of radio interviews, audio debates and book reports.
Leading economists and philosophers share their wisdom and debate
matters of everyday life, money, personal choice and public poGlicy.
Featuring Nobel Prize laureates Robert Lucas, Milton Friedman,
Stanley Engerman, ary Becker, Vernon Smith and many other
leading scientists. The radio-library has a full page of lectures
of Prof. Hans-Hermann Hoppe (UNLV-Nevada). Hoppe is philosopher and
leading Austrian-school economist. He authored widely-discussed books
and articles in defense of libertarian rights.
ncreased
international tax competition will make it more difficult for
governments to collect corporate and personal income taxes from their
citizens. Taxes on consumption will become a more important
source of revenue. This tax shift will however improve economic
efficiency, boost growth and protect employment as it will encourage
savings and investment. It will also reduce marginal
tax rates and
thus increase the incentives for indeavour. Specific indirect
taxes can also be help to improve efficiency and environment
friendlyness. Distortions from consumption taxes are
much less harmful than those from income taxes.
Read the full OECD report here
High
public spending does not only cause slow economic growth. Big
Government also significantly lowers the quality of life. This
is the main conclusion of an empirical research into the
effects of government involvement in the economy and into the question
whether public involvement is conducive
or detrimental to life
satisfaction in a cross-section of 74 countries.
Christian Bjørnskov,
Axel Dreher and Justina Fischer provide a test of a longstanding
dispute between standard neoclassical economic theory, which predicts
that government plays an unambiguously positive role for individuals’
quality of life, and public choice theory, that was developed to
understand why governments often choose excessive involvement and
regulation, thereby harming voters’ quality of life. Results of the
empirical research show that life satisfaction decreases with higher
government spending.
This negative impact of the
government is stronger
in countries with a leftwing median voter. It is alleviated by
government effectiveness – but only in countries where
the state sector is already
small.
Before
government hijacked charity in the form of the New Deal and Great
Society, compassion and charity began at home. People were to feed the
hungry, clothe the naked, visit prisoners, care for widows and orphans
and love their enemies. Those were biblical commands to individuals,
not government.
Democratic politicians see things
differently.
Apparently believing there aren't enough caring people, they want
compassion to originate in Washington or Brussels, depriving it of its
true
meaning. They define compassion as big and ever-growing government and
a guaranteed check forever with no expectation - or requirement - the
recipient will ever better his or her circumstances.
Traditionally,
Republican compassion has encouraged private charity with government
picking up the leftovers of what religious and other charitable
institutions were unable to do. President Bush, through his
"faith-based initiative," took this one step further by subsidizing
religious groups with federal money. This removes the responsibility
and privilege from individuals and turns it over to government. When
that happens, religious organizations become one more constituency in
the never-ending campaign for political support. ...When politicians
speak of compassion, put your hand on your wallet because they intend
to spend your money, not theirs.
The subprime Meltdown
Is
the Credit Crisis
really over ?
The fundamental Analysis
Your Banker won’t disclose.
To find out whether the
present financial crisis annex real estate bubble and hedge fund
collapse will remain confined
to a minicrash or whether more turmoil is still to come, the authors
investigate whether the deeper causes leading to the crisis are now
remedied. The credit crisis is
the school model of malinvestment
resulting from exorbitant credit expansion. Runaway
money supply during the boom and
highly underrated inflation disturbed the correct pricing of the risks
of credits and lead to a credit mania.
The
ECB played a
central role in the credit expansion. For the sake of the lagging
countries in the European
Monetary Union the ECB maintained interest rates too low for too long,
causing an exorbitant 11.7% money growth rate which was still adding to
the worldwide credit bubble initiated by the FED. The
essay launches an original and justified plea for a reduced money
supply not higher than the growth rate of the real economy for as long
as gold
standard is not restored. The essay ends with an strong advise to
savers to closely monitor the money growth rates and interpret any
further acceleration as an unmistakable early warning of worse to
come. More here.... pdf format here....
The
turmoil in the
US subprime mortgage market has developed into an international credit
crisis. It is eroding investor confidence in credit and credit-related
products and, most important, raising concerns about the solidity of
the banking sector, as evidenced by banks' elevated funding terms and
diminished stock prices.
As a direct response to the
credit crisis, the US
Federal Reserve Bank lowered borrowing costs even further, disregarding
the alarming risks of inflation since early 2006. Financial
markets are speculating that
the US central bank could cut rates even further. The cause of the
international credit crisis lies in the government-controlled
paper-money regime and their systematic attempt to push interest rates
below the natural market rate in an effort to boost the economy. This
artificial boom can last only as long as the credit
expansion progresses at an ever-accelerated pace. The boom will come to
an
end as soon as additional quantities of fiduciary media are no longer
thrown upon the loan market.
In the
first wave of the housing crisis, homeowners across the U.S. lost their
properties to foreclosure. Now, many of the nation's
small and midsize home builders are on the ropes....
The
onrushing
financial collapse in the United States is receiving ample coverage.
The financial problems
are however not limited to the US; they are of a global nature. It
seems unknown to most, that in
fact the majority of the
Western 'developed' world and not just the United States is facing
national bankruptcy shortly ahead.
Standard &
Poor's warn that European indebtness is just as
unsustainable as the American, and that downward rating of public debt
is in the pipeline.
American
specialists discuss the credit
Crisis in these podcast: Talking
about FED monetary policy: "
If
These Guys Were Doctors,
We'd All Be Dead " Real Player | WinAmp
| Windows Media | Mp3Transcript here
New
Statistical Study Confirms that High Tax Rates
Discourage Productive Behavior: America Should Learn From Europe's
Mistakes
The Center
for Freedom and Prosperity Foundation
today released a study estimating the negative employment impact of
high tax rates on labor. The Prosperitas report, which analyzed data
from the United States and several European nations, is adapted from
A.J. (Bram) de Bruin's thesis, submitted as part of the graduate
program in Econometrics and Management Science at Erasmus
University in Rotterdam, Netherlands.
Mr. de Bruin's
paper entitled, "Labour Supply and Marginal Tax Rates: A case
study of Belgium, France, Italy, the Netherlands, the United Kingdom
and the United States of America,"
investigates the effect of labor income taxes on the supply of paid
labor for several Western countries over the last two decades. In
addition to confirming the damaging effect of labor income taxes, the
paper also gives specific estimates of its magnitude for several
countries and at the same time sheds some light on the amount of time
it takes for changes in taxation to affect the labor market.
Peter
Heemeijer, a lecturer on quantitative economics at the University
of Amsterdam, who wrote the policy
summary for this study, found that the "conclusions of this paper are
consistent with the notion commonly known as the Laffer Curve, which
holds that a decrease in marginal tax rates on productive activity in
high-tax societies will stimulate economic activity, thereby generating
at least some additional government revenues that compensate for the
revenue loss due to the lower tax
rate." Link
to
Paper: http://www.freedomandprosperity.org/Papers/bruin.pdf
Tax
Competition File
We should favour Tax competition between countries and fight against international tax
cartels and
tax harmonisation because tax competition compels governments to
economic use of public resources.
It stimulates efficient public services, prevents wasteful public
spending and saves taxpayers money.
The
German government purchased a CD with stolen information from a
Liechtenstein bank as part of a wider jihid against tax evaders. Germany
always had a problem with tax evasion because of high marginal tax
rates. Slovakia with its 19% flat tax has no such problem. Austria,
which has one of the lowest tax rates of the industrialised countries,
has no such problem either, even though, unlike Germany, it has a
direct border with Liechtenstein...
High-tax
nations and international organizations such as the European Union, OECD
and UN seek to squelch tax competition between nations.
Severe sanctions against tax havens and countries protecting financial
privacy are already in place. The OECD is incriminating
tax competition as being “harmful”. This a reversal of reality.
Competition is on the contrary encouraging
efficiency and higher growth rates. Tax competition limits the ability
of governments to limitless tax increases and provide
politicians with incentives to improve government efficiency. Competition
between governments encourages efficient public services save
taxpayers money and prevent wasteful public spending. Tax
competition therefor promotes good fiscal policy and
protect human rights. The anti tax-competition campaigns
and the attacks on financial privacy are intended to
perpetuate highly uncompetitive structures and wasteful
bureaucracies rather than searching to
reform the European high-tax regimes.
People aiming to
stifle tax competition often assume that competition is a zero-sum
game. In reality, the large economic gains made possible by tax rate
cuts mean that tax competition can be beneficial for all
countries. As countries adopt more efficient tax systems,
economic growth is maximized, and all citizens have higher incomes. All
countries end up better off as each country pursues its own interests.
Tax harmonization initiatives aim to place higher taxes on capital, yet
capital formation is the key to economic growth. Higher taxes on
savings and investment result in less investment, lower real wage
growth, and more poverty. Tax competition is therefor beneficial to
both prosperity and freedom. Read the analysis here
Tax competition exists when people can
reduce their tax
burdens by
shifting capital and/or labour from high-tax to low-tax jurisdictions.
This migration disciplines
profligate governments and rewards nations that engage in pro-growth
tax reform. This process is good for the global economy since lower tax
rates increase incentives to work, save, and invest. Not surprisingly,
some high-tax governments despise tax competition and would like to see
it reduced or eliminated....
International competition
between
governments is akin to market competition for products. Market
competition encourages production efficiency and satisfaction of
consumer demands. Tax competition provides politicians with incentives
to improve government efficiency and satisfy voter demands. The result
of tax competition should be that the level of taxes reflects typical
preferences within each jurisdiction. Tiebout’s theory focused on local
governments, but with growing international flows of labor and capital,
national governments are becoming more like local governments as they
compete for taxpayers across national borders.
Rising
tax competition has caused governments to also adopt defensive rules to
prevent residents and businesses from enjoying lower tax rates abroad.
Defensive responses to tax competition include proposals to harmonize
taxes across countries and to restrict countries from offering tax
climates that are too hospitable to foreign investment inflows. Such
defensive responses are detrimental to progress as well as to tax
receipts... : http://www.cato.org/pubs/pas/pa431.pdf
Too much sloppy thinking concerns itself
with evasion. Low-tax
and notax environments offer many social benefits, writes Daniel J
Mitchell. Many “onshore” nations are tax havens, and this is a
good
thing. Tax havens, wherever they are based, promote good fiscal policy
and protect human rights. The anti-tax competition campaigns of
international bureaucracies, by contrast, are based on bad economics
and dubious morals. If high-tax nations want to reduce tax evasion,
they should fix their tax systems. Thanks to tax competition, this
process already is under way, but many politicians from high-tax
governments – particularly in Europe – are fighting to preserve their
uncompetitive welfare states. The narrow and selfish agenda of these
politicians should not be allowed to undermine the valuable role of tax
havens in the global economy.
ABSTRACT
"This paper
examines various arguments addressed in favour and against
tax competition. We pay attention to deӿnitional matters of tax rates
and bases, review empirical evidence concerning development of
corporate taxes in the EU and the OECD countries over last decades and
investigate whether anything suggests that there has been
interdependence in corporate tax rate setting across countries.
Furthermore, we recapitulate efforts done both by the OECD and the EU
to stop tax competition. Finally, we argue that tax competition is not
harmful and that it emerges as a means of constraining governments to
discipline." Number
2, 2006, New Perspectives on Political Economy, Volume 2, , pp.
86 – 115, by Dalibor Rohác, Evidence and Myths about Tax
Competition http://pcpe.libinst.cz/nppe/2_2/nppe2_2_3.pdf
The Economist
has an entire section on the "offshore" world
in the latest issue. Among the
key findings are that so-called offshore financial centers promote growth and
discourage wasteful government:
…the most
vexing problem that highly mobile financial flows pose for governments
is that
when they cross borders they may take tax revenues with them. …As
companies
become ever more multinational, they find it easier to shift their
activities
and profits across borders and into OFCs. …Financial liberalisation—the
elimination of capital controls and the like—has made all of this
easier. So has
the internet, which allows money to be shifted around the world
quickly, cheaply
and anonymously. …tax, regulatory and other competition is healthy
because it
keeps bigger countries' governments from getting bloated. Others argue
that OFCs
may be an inevitable concomitant of globalisation. "Even if today's
OFCs were
somehow stamped out, something like them would pop up to take their
place," says
Mihir Desai of Harvard Business School. Some academics have found signs
that
OFCs have unplanned positive effects, spurring growth and
competitiveness in
nearby onshore economies. …International organisations have launched
various
initiatives to try to get OFCs to tighten supervision, co-operate more
with
foreign governments to catch tax cheats and, at least in Europe,
eliminate
"harmful" tax practices. OFCs think such initiatives are designed to
force them
out of business. The countries that set these standards "are an
oligopoly trying
to keep out smaller competitors. They are both players and referees in
the game.
How can they be objective?", asks Richard Hay, a lawyer in Britain who
represents OFCs. …the broader concern over OFCs is overblown. Well-run
jurisdictions of all sorts, whether nominally on- or offshore, are good
for the
global financial system.
The FT
notes that tax competition between
nations encourages responsible behavior by the tax-authorities and that
low taxes promote growth. Unfortunately Europe's big-tax lobby will not be
satisfied until all such pro-growth tax policies are exterminated.The European Commission seems to
recognise no limits in its drive to
impose tax harmonisation across Europe. Having issued a sanction
against Luxembourg last July for its preferential tax regime on holding
companies, Brussels is now trying to put pressure on
a country outside
the European Union by targeting Swiss cantons' tax breaks
and low
business tax rates.
Such
a move, if it succeeds, will hurt not only the
Swiss but all taxpayers in Europe. Tax
competition gives you - the
entrepreneur or citizen - the opportunity to escape fiscal pressure
from your own government by moving to jurisdictions with more
favourable tax regimes. It gives strong incentives for all governments
to lower taxes, allowing taxpayers to keep more of their money and
making markets less distorted. Such
tax competition has existed for
some time in Europe and is being intensified by
globalisation. The EU harmonisation logic will inevitably lead EU
bureaucrats to attack other regimes that benefit taxpayers, be they in
the EU or outside. In Ireland, for example, the corporate tax rate is
lower than in Swiss cantons and in Estonia undistributed corporate
profits are simply not taxed. When can we expect pressure on Ireland to
raise its rates or on Estonia to repeal a system that has contributed
to its economic dynamism? Read
the FT essay here More concerns over Europe's
attempted Tax Cartel hereand hereand hereand here.....
Excellent
New Study on European Tax Cartel
The
European Tax Cartel and Switzerland’s Role
Most
European States
expect to record high increases in public spending, due to the lack of
adaptation of social dependency programs in the face of demographic
change. The taxpayers' fiscal exhaustion leads some Member States to
use the European Union to centralize and standardize tax systems in
order to render less competitive those countries deemed too attractive
for capital or residents, increasingly encouraged to "vote with their
feet
Tax
centralization at
European Union level progresses at a much faster pace than is generally
perceived. High minimal rates for the VAT, which represents more than
one third of all tax revenues, the standardization of excise taxes and
tariffs, the Savings Tax Directive and the project of a Common
Consolidated Corporate Tax Base for corporate income taxes are all
examples suggestive of the extent to which the European tax cartel is
already a reality. The EU makes use of such dubious concepts as
"harmful tax competition" or "fiscal state aid" in order to attack less
penalizing tax regimes, as in the case of the current tax dispute with
Switzerland.
Fiscal
diversity places
some limits on an excessive tax burden and thus favors capital
accumulation at the source of innovation and economic progress. It
leads to greater overall prosperity than under a standardized tax
regime. Tax competition is also an essential condition for
institutional innovation by allowing comparisons between countries and
the emulation of best practices. Finally, fiscal diversity is a
necessary bulwark for individual freedom and legitimate rights by
restraining the potential for abuse of the monopoly of force intrinsic
to the State and by making "voting with one's feet" easier. (Link to
full study below.)
If
we want to apply to Irish recipe to other countries, we should not use
the wrong ingredients. The Goldwater Institute identifies the key
features of the Irish growth.
In
the
mid-1980s, Ireland transformed its economy from a European backwater
into the “Celtic Tiger” by achieving impressive rates of economic
growth. Government non-interest spending declined, from a high of about
55 percent of gross national product in 1985 to about 41 percent of GNP
by 1990. The top Irish tax rate dropped from 65 percent in 1985 to 44
percent in 2001. The standard income tax rate dropped from 35 percent
in 1989 to 22 percent in 2001. All these measures increased Irish
wealth and reduced poverty. According to the Goldwater Institute, some
experts have been drawing the wrong lessons from Ireland’s economic
success in attributing it to subsidies in biotechnology. The Irish boom
began many years before these investments were made. In fact, these
subsidies may have harmed the growth. According to the author, the key
feature for Ireland’s sustained growth has been an increasing economic
freedom. Read the full
report here.
Ireland's economic boom and explains that smaller
government and lower tax rates are the key reasons the nation's
explosive growth. Bureaucrats in Brussels and opponents of limited
government sometimes claim that subsidies from Brussels deserve the
credit, but advocates of this position are unable to explain why Greece
and Portugal (which received similar subsidies) have remained poor.
Tax
relief—particularly corporate tax relief—has played an indispensable
role in Ireland’s economic success. At present, Ireland has a
12.5 percent corporate tax rate, which has made it a magnet for
powerhouse firms: Google, Yahoo, Microsoft, and scores of other
companies have established their European headquarters in
Ireland. In 2004, then-Irish finance minister Charlie McCreevy,
who now serves as EU commissioner for internal markets, proudly
declared: “In Ireland, I have reduced the standard and top rate of tax
by 6 percentage points each since 1997 and have put in place measures
which have resulted in a situation where 35 percent of all income
earners are now outside the tax net.” In the same speech, McCreevy
urged envious nations calling for Ireland to raise its corporate tax
rate to mind their own business.
There
have been increasing signs of
optimism from European economy watchers. After some years in the
doldrums, with slow growth and rising unemployment, things appear to be
looking up: labor markets are more efficient; growth was good for 2006;
and the euro is doing well against the dollar after years of weakness
following its inception in 1999. However these promising signs must not
be misunderstood as indications of permanent improvement, for the
conditions that caused Europe's decline—rigid and inflexible markets,
too-high public spending, and excessive taxation—are still there. The
long-term survival of the European "social model," with its massive
welfare spending, will ensure that the continent will lag behind
America, much to the chagrin of the chauvinistic French, and the
Germans who seem to have forgotten the Erhard doctrine and the secret
of the success which once made Germany the world's third-biggest
economy... Although there once was a radical freemarket
tradition in France, this is now but a distant memory. Formal Marxism
might be dead, but it still casts a long shadow. read the essay
article here
Writing
in the Washington Times, Helle
Dale points to a recent OECD study which found that the EU and
other European countries are falling further behind the United States
as Europe's economy continues to stagnate. Among the key reasons for
Europe's economic woes are protectionist policies which favor national
companies at the expense of foreign competition. American politicians
who are intent on turning the clock back on free trade can learn a
valuable lesson: According the OECD Economic Survey of the
European Union (www.oecd.org/eco/surveys/eu), the EU and other European
countries are falling further and further behind the United States in
standard of living as the U.S. economy continues to outgrow those of
Europe.
The Mona Lisa, Leonado da
Vinci's oil painting from 1503 - and in excellent condition is perhaps
the most famous and most desired piece of art in the world. It is
property of the French state, and may come up for in five to ten years,
when France's doomsday of bankruptcy nears.
Other lines of thougt to finance France's unfunded pension debt go in
the direction of more discrete sale and lease-back formulas.
Indian financiers are reported to have made conctrete sale and lease
back proposals for both the Louvre Museum and Eifel Tower, which have
however been dismissed by Frensh officials as these were seen as the
greatest humiliation of France since the state last went bankrupt in
1720.
France is bankrupt and
can no longer afford to pay its workers generous salaries and
subsidies, its prime minister has declared. Francois Fillon
made the undiplomatic outburst during a trip to the French island of
Corsica, where farmers were demanding more government money. "I
am at the head of a state that is in a position of bankruptcy," he
said.
read here : http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/09/24/wfra124.xml
Public finances should be put on a
sustainable path so as to avoid large increases in taxes – and hence in
the excess burden of taxation – or brutal cuts in social programmes
when ageing related budget pressures rise. The HFC estimates that
public finances would be on a sustainable path if the structural budget
balance were increased to a surplus of 0.3% of GDP in 2007 rising to
1½ per cent of GDP over 2011-18 before slowly falling back to
zero by 2030 as the budget costs of ageing rise. Public debt would fall
from 97% of GDP in 2004 to 30% by 2030. Effectively, lower interest
payments make room for higher ageing-related budget costs on this
trajectory. There is still some way to go to put public finances onto
this path – taking into account announced measures and abstracting from
non-recurring transactions, the structural budget balance is projected
by the OECD to be a deficit of around ½ per cent of GDP in 2007,
similar to the estimated current level. The government should take
consolidation measures to increase the structural budget balance
(abstracting from non-recurring items) by about 1% of GDP by 2007 so as
to put public finances on a sustainable path. In view of Belgium’s
already high tax burden and the adverse effects that this has on
economic activity, the priority should be given to expenditure
restraint in budget consolidation.
The IMF and the Itenera Institute
caution the Danish reality is bleaker than it appears. In the
latest edition of their bi-annual study of Westen social models, the
Brussels Free Institute for Economic Research found Danish performances
deplorable. Obligate employment in low-productive jobs ruins
productivity and leads to social regression. They warn flexicurity is a
painfull and totally useless exercise and that the social cost is high.
Flexicurity means late retirement, early school leave, loss of job
security, shrinking leisure and time for a decent family life and
lacking opportunity for the children's education. Flexicurity is not an
economic miracle nor the social paradise some want us to beleive. The
institute found the Irish model by far the best performing alternative.
Hard working Yuppies have no time to think. Whenever they
get a few days off, their suitcases are packed to fly to Ibiza for a
weekend-party or for some pro-active off-road Hummer-adventure. Their
vacations are as hectic as their jobs. So even then there is no
opportunity to reflect on their lifestyle. This is a vicious circle:
pressed by the mass media and the advertisement industry the young
professionals do not get the chance to question their cultural image of
normality. Politicians
do not have the courage to tackle the squandering either.
Rather than simply taxing energy consumption they create a new
bureaucracy with thousands of inspectors and technicians to promote
‘ecological’ technology. A CO2tax
is much more simple and effective. Let the polluters pay the ecological
cost of their squander. High fuel prices can stop the madness and
encourage research without new bureaucracy. ...continue
reading Martin De Vliegere's analysis here...
EconTalk
- Greg Mankiw on Gasoline Taxes, Keynes and Macroeconomics
Greg
Mankiw of Harvard University and Greg Mankiw's Blog talks about the
state of modern macroeconomics and Keynes vs. the Chicago School. He
defends his proposal to raise gasoline taxes and discusses the politics
of tax policy.
Worldwatch:
Shifting Tax Burden to Polluters could cut Taxes on Wages and Profits by 15%Increasing
taxes on pollution and
resource use while lowering taxes on
income and wages is a powerful new tool for protecting the environment,
reports a new study from the Worldwatch Institute titled Getting the
Signals Right: Tax Reform to Protect the Environment and the Economy.
Such a tax shift could also create millions of jobs and boost living
standards of the working poor.
Countries around the world are now
experimenting with environmental
taxes, says the report, which documents how five nations have made
revenue-neutral "tax shifts," using the money from environmental taxes
to cut the conventional taxes that penalize work and investment. Continue reading the
Worldwatch views here. (Worldwatch is an Independent
research institute for an environmentally sustainable and socially just
society.)
In
this eye-opening documentary viewers will discover how the most
respected researchers from all over the world explode the doom and
gloom of global warming. Humans stand accused of having set off a
global climate catastrophe by increasing the amount of carbon dioxide
in the atmosphere. The prophecy of doom is clear and media pass on the
message uncritically. Now serious criticism has arisen
from a
number of heavyweight independent scientists. They argue that most of
the climatic change we have seen is due to natural variations.
Western
Europe and the United States are wealthy. Both achieved this
because of sensible policies and institutions. While much of the world
was and
still is crippled by the absence of functioning market economies,
Europe and the
United States have enjoyed remarkable growth thanks to property rights,
the rule
of law, and minimal government.
However over the last decades some European
nations allowed the burden of government to climb to depressing levels.
Government spending consumes more than 50 percent of GDP in
France and Sweden and more
than 45 percent in Germany and Italy.
Their
poor performance
provide useful lessons
about the economic
consequences of bigger government,
and these lessons suggest that also America is
on the wrong
track. The most important lesson to be learned is that GDP is linked
to policy.
Even a cursory review of
European economic performance shows
that excessive government has
serious adverse
effects: slower growth, higher
unemployment, lower living standards, and a bleak future. Bluntly
stated, the
United States is in danger of becoming a decrepit
welfare state like France. Find out
more here at :
Judging
by the pot-holes, rusting street lamps, broken traffic lights and
pencil-thin residents of Harare, Zimbabwe's capital city, the former
model of an African economy is at the end of its
tether. The water supply
fails in much of Harare as frequent electricity cuts
hit. With each
passing month the city is darker, a bit more decrepit and home to more
child-beggars. Those with jobs are forced to walk for hours to get
home, as wages no longer cover the cost of public transport. Hunger is
spreading. Life expectancy has dropped to roughly 35 years as AIDS and
lack of food bite. More families skip meals entirely. Political tension
is rising high: divisions in the ruling Zanu-PF party; a series of
violent attacks by police on the opposition Movement for
Democratic
Change this month ....
One
more very sad example confirming Hayek"s law:
when dictators rule the economy rather than free markets
they only
create create artificial scarcity, inflation, and price- and market
distortions, economic stagnation and ultimately political
instability....
In a
report on the Swedish economy, the Oecd the notes the problems
of
Sweden's high tax rates and excessively generous welfare
benefits. It
calls for the elimination of the wealth tax and reductions in punitive
marginal tax rates. It even suggests that Sweden abolish
the state
income tax alltogether.
Sweden's new government has will stick
to the target for general
government net lending of 2% of GDP over the cycle which is necessary
to keep public finances on a sustainable path. Underlying this target
is the assumption that taxes can be sustained at current levels which
could be difficult in the future, not least due to mobile tax bases and
international tax competition.
The share of 20 64 year olds who depend
on public income transfers has
declined to 20% in 2006, but it remains much too high. Sickness absence
among those employed and the number entering disability pension
increased rapidly from the late 1990s. The numbers are now falling,
although the stock of disability pensioners remains among the highest
in the OECD.
Letting people keep a bit more of the
value they create is vital to
encourage both labour supply and entrepreneurship. The plans to abolish
the wealth tax should therefore be endorsed as it might lead to
repatriation of capital, possibly making more investment capital
available for new small firms. Marginal income taxes are also
important. The combination of social contributions, income and
consumption taxes drives the effective marginal tax rate above 70% for
over a third of the full-time employed, helping to explain why working
hours for those employed are below the OECD average. In fact,
completely abolishing the state income tax would cost just 1½
per cent of GDP.
Big
Public Spending means
poor Growth. Slow
Growth
results in Poverty.
These
are the key findings from our research
confirming the results of earlier
studies such as this
which compared the growth differentials of 30 OECD countries
over 45 years (
over 1000 data-pairs !!! )
Suggestions
and help welcome - Please give us a link on your webpage
The monetary union
drives the EU toward further political
integration. It sets in motion forces that are difficult to control
probably ending in a United States of Europe, a real federal
state with a central fiscal, social, educational, trade and foreign
policy. Martin De Vlieghere explains why this will likely happen, why
it is better to stop this development but why it is so difficult to
stop, and what the
history learns us about earlier monatary unifications.
It
could still go the other way. This means broadening
the European Union, but not deepening it, by accepting additional
member states (the more the better) without abandoning the veto-right
of each member state in matters such as fiscal and social
harmonisation. The ten new member states have had a beneficial effect
on European politics. They have caused mounting pressure to reform the
Common Agricultural Policy. Since the Poles joined, for instance, their
agriculture has gained access to an enormous market and it will grow
enormously. There are no physical restraints to the expansion and the
productivity rise in Polish agriculture. But under the current CAP
rules the numerous Polish farmers and the emerging big industrial farms
will devour the entire European budget. European agricultural policy
will simply collapse if it is not changed drastically. Continue reading.printerfriendly
version
The
introduction of the Euro was an erroneous policy inspired by Europe's
haughty ambition speed up integration and to catch up with the US.
Europe's economies were unsufficiently synchronised for
justifying a common monetary policy. Today the consequences of
this political gamble disregarding economical reality are dramatic. 7
years only after the launch of common currency, European economies have
seriously grown apart. In just 7 years a fast modernising country like
Ireland gained 37% in competitivity relative to the OECD average,
whilst Italy lost 19%. This adds up to an intramonetary union
difference in competitivity gain of 57%. In a system with national
currencies the Lira would have continued its long term tradition of
depreciations and Italy would have maintained its competitiveness. With
this option now excluded, and international labour mobility lacking
Italy faces the risk of a deep depression if it stays inside the EMS.
Unable to set interest rates at an appropriate level for its fast
growth, Ireland now risks run-away inflation, and a sudden and sad end
to its uninterrupted quarter century success-story of fabulous
growth. ..... Find out more here
The
population in Europe is aging and declining. A trend that could have
been perfectly manageable with foresight could turn into a catastrophe
given the increasing unfunded liabilities arising from pay-as-you-go
(PAYGO) public pension programs, now more than 200 percent of GDP in
France and Italy, and more than 150 percent of GDP in Germany. This
situation is especially difficult in a continent where entitlements are
deeply entrenched in a welfare state culture. The European
Commission
recently stated, "There is a risk of unsustainable
public finances in some half of EU countries. Belgium, Germany, Greece,
Spain, France, Italy, Austria and Portugal are on this black list."
EMU countries with Unfunded
pension schemes may want to follow the old Latin American
recipe—namely, devaluation, so that the ensuing inflation reduces the
purchasing power of benefits. But "Funded EMU countries " will probably
oppose devaluing the euro. A clash may ensue amidst the centers of
decisionmaking in Europe, especially within the board
of the European Central Bank.
So, the PAYGO pension system could turn out to be one of the gravest
threats to the single European currency.
In this paper
the European Central Bank (ECB) studies the performance and the
efficiency of the public sectors of 23
industrialised OECD countries. They compute public sector performance
(PSP) and efficiency
indicators (PSE) for the government as whole and for its core functions. When
deriving performance indicators they distinguish the role of government in
providing "opportunities" and a level playing field in the market process and the
traditional "Musgravian" tasks of government. The results
for Belgium are remarkable: Although
Belgium has the second best industrial productivity in the
world, it has the third worst public sector efficiency....
Lawrence Reed explains how Governments and the Central
Bank catastrophically
mishandled a moderate slowdown of the business cycle, and so caused a
mild recession to
degenerate in the full blown 1929
financial crisis. He explains how the excessive money supply in
the late
twenties first caused the reckless stock market mania and a generalised asset
bubble. When the Fed finally decided to slow the asset inflation they unexpectedly contracted the money supply by a massive
1/3 in six months from August'29
till March'30. The market reacted most vigorously. Stocks plummeted
and asset
prices crashed. Governments then tried to remedy the
accelerating recession by raising import duties, causing reprisal trade bareers by
trading partners. The new tariffs slowed down international trade,
boosting unemployment. Facing declining revenues and increasing wefare
demands
President Hoover doubled income taxes in his 1932 Revenue act. In 1933,
Roosevelt
symply seized peoples gold holdings, abandoned the gold standard, and
devalued
the dollar with 40%....
It was
in deed not free market failure which produced the 1929
depression. It was political bungling on a grand scale, with the one policy blunder succeeding the other: tradecrushing
tariffs, incentive-sapping taxes, mind-numbing controls on production
and competition, senseless destruction of crops, coercive labor
laws and not in the least the FED's mismanagement. The social cost of the political blunders
was the severest crisis in history.
Stocks fell
to 10% of their pre-crash value, income fell by 28%, car
production fell by 75%, banks failed in record numbers, dragging down
hundreds of thausends of customers. 13 million unemployed in the
US causing rumors of revolt even.
The Clean Energy Scam
Analysis Behind and
Beyond Government Economic Reporting 
Desperate to
wean its dependence on the powerful OPEC cartel, the United States is
pitted in this struggle against Russia, China, and Iran, all competing
to dominate the Caspian region, its resources and pipeline routes.
Transnational energy corporations are complicating the
playing
field with their own agendas. Wild West-style
entrepreneurs have taken control after the collapse of the Soviet
Union. Author Kleveman met with
the principal Great Game actors between Kabul and Moscow: oil barons,
generals, diplomats, and warlords. Based on extensive research, 
Before
government hijacked charity in the form of the New Deal and Great
Society, compassion and charity began at home. People were to feed the
hungry, clothe the naked, visit prisoners, care for widows and orphans
and love their enemies. Those were biblical commands to individuals,
not government. 
To find out whether the
present financial crisis annex real estate bubble and hedge fund
collapse will remain confined
to a minicrash or whether more turmoil is still to come, the authors
investigate whether the deeper causes leading to the crisis are now
remedied. The credit crisis is
the school model of malinvestment
resulting from exorbitant credit expansion. Runaway
money supply during the boom and
highly underrated inflation disturbed the correct pricing of the risks
of credits and lead to a credit mania. 
Ireland's economic boom and explains that smaller
government and lower tax rates are the key reasons the nation's
explosive growth. Bureaucrats in Brussels and opponents of limited
government sometimes claim that subsidies from Brussels deserve the
credit, but advocates of this position are unable to explain why Greece
and Portugal (which received similar subsidies) have remained poor.
Judging
by the pot-holes, rusting street lamps, broken traffic lights and
pencil-thin residents of Harare, Zimbabwe's capital city, the former
model of an African economy is at the end of its
tether. The water supply
fails in much of Harare as frequent electricity cuts
hit. With each
passing month the city is darker, a bit more decrepit and home to more
child-beggars. Those with jobs are forced to walk for hours to get
home, as wages no longer cover the cost of public transport. Hunger is
spreading. Life expectancy has dropped to roughly 35 years as AIDS and
lack of food bite. More families skip meals entirely. Political tension
is rising high: divisions in the ruling Zanu-PF party; a series of
violent attacks by police on the opposition Movement for
Democratic
Change this month ....
The monetary union
drives the EU toward further political
integration. It sets in motion forces that are difficult to control
probably ending in a United States of Europe, a real federal
state with a central fiscal, social, educational, trade and foreign
policy. Martin De Vlieghere explains why this will likely happen, why
it is better to stop this development but why it is so difficult to
stop, and 
The
introduction of the Euro was an erroneous policy inspired by Europe's
haughty ambition speed up integration and to catch up with the US.
Europe's economies were unsufficiently synchronised for
justifying a common monetary policy. Today the consequences of
this political gamble disregarding economical reality are dramatic. 7
years only after the launch of common currency, European economies have
seriously grown apart. In just 7 years a fast modernising country like
Ireland gained 37% in competitivity relative to the OECD average,
whilst Italy lost 19%. This adds up to an intramonetary union
difference in competitivity gain of 57%. In a system with national
currencies the Lira would have continued its long term tradition of
depreciations and Italy would have maintained its competitiveness. With
this option now excluded, and international labour mobility lacking
Italy faces the risk of a deep depression if it stays inside the EMS.
Unable to set interest rates at an appropriate level for its fast
growth, Ireland now risks run-away inflation, and a sudden and sad end
to its uninterrupted quarter century success-story of fabulous
growth. 
The
population in Europe is aging and declining. A trend that could have
been perfectly manageable with foresight could turn into a catastrophe
given the increasing unfunded liabilities arising from pay-as-you-go
(PAYGO) public pension programs, now more than 200 percent of GDP in
France and Italy, and more than 150 percent of GDP in Germany. This
situation is especially difficult in a continent where entitlements are
deeply entrenched in a welfare state culture. The European
Commission
recently stated, "There is a risk of unsustainable
public finances in some half of EU countries. Belgium, Germany, Greece,
Spain, France, Italy, Austria and Portugal are on this black list."
Lawrence Reed explains how Governments and the Central
Bank catastrophically
mishandled a moderate slowdown of the business cycle, and so caused a
mild recession to
degenerate in the full blown 1929
financial crisis. He explains how the excessive money supply in
the late
twenties first caused the 
It was
in deed not free market failure which produced the 1929
depression. It was political bungling on a grand scale, with the one 
The
author also impressively describes 