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I've been thinking about these flag-of-convenience countries and how to repatriate the money that's been stashed away there.

Seems to me that we might not even need gunboats for it.

After all, what's been stashed away there isn't gold, or factories, or steel - it most probably isn't even the physical tokens we use to represent money. Sure, somewhere there's a lot of suitcases with $ and € bills in them, but the bulk of the money is in bank accounts, not in suitcases.

Presumably, the flag-of-convenience country banks have lent that money on the global interbank market, rather than kept it as cash reserves (following the same logic that says that the "man with suitcase" delivery method is unlikely).

If that's true, we should see debts from the banks of the countries that the money has been lent to to the banks of the flag-of-convenience countries. Presumably, this is in no small part the countries from which the money has been stolen (because typically, the procedure would be that an individual asks his bank to "move" money to - say - Switzerland, which means that the bank changes its books to say that it now owes the Swiss bank the money, and does not owe the guy anything, and the Swiss bank changes its books to say that it owes the guy money, and the guy's home bank owes it money).

So we could institute a law saying that if a country has been found by a court of law to not cooperate satisfactorily with the tax authorities, according to certain specified criteria (including relaxing bank secrecy in connection with tax fraud investigations), all sovereign debt to said country would be declared void immediately, and all interbank debt to the country would become debt to the government instead.

Then the Swiss banks become insolvent, because they now owe the tax cheats more money than they are in turn owed by the tax cheats' former banks (i.e. more than zero). Even a one or two large economies enforcing such laws - say Germany and Scandinavia+Finland or Germany and France - might cause bank runs in flag-of-convenience countries.

And all of this is accomplished without ever violating any other territory's sovereignty. We only take legal action against banks operating in our own jurisdiction. The fact that there is some - ahem - fallout for certain disreputable countries is both completely intended and in fact the point... and also completely Somebody Else's Problem.

So why can't this work?

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 19th, 2009 at 03:01:16 PM EST
[ Parent ]
Obama's move is going to be more direct, I think.

Who knows - there might turn out to be one or two famous names on that list.

This is looking like it might lead to the Capone Solution for a number of famous and/or influential people. Which will be fun - because unlike constitutional politics, you can't argue about tax law.

As long as there's some evidence of follow-through, I'm liking this a lot.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Thu Feb 19th, 2009 at 03:27:38 PM EST
[ Parent ]
I'd be cool with whatever works to get some oligarchs run out of town on a rail, covered in tar and feathers. Preferably in a reasonably legal manner, so as to preclude future el Presidentes reinstating them over technicalities.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Feb 19th, 2009 at 03:36:02 PM EST
[ Parent ]
Obama to Switzerland: "If our banking system's going down, we're taking you with us."

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Thu Feb 19th, 2009 at 03:41:40 PM EST
[ Parent ]
JakeS:

And all of this is accomplished without ever violating any other territory's sovereignty. We only take legal action against banks operating in our own jurisdiction. The fact that there is some - ahem - fallout for certain disreputable countries is both completely intended and in fact the point... and also completely Somebody Else's Problem.

So why can't this work?

it could.... but for one thing. much banking is international and covert.

patriotic loyalty is subservient to expediency.

"I would rather have questions that can't be answered than answers that can't be questioned." - Richard Feynman

by melo (melometa4(at)gmail.com) on Thu Feb 19th, 2009 at 05:03:46 PM EST
[ Parent ]
The physical infrastructure that makes banking possible is still in the hands of sovereign states. I don't expect Danish banks to help the Danish state repatriate funds from Switzerland out of patriotism. I expect them to do it if there's Danish police sitting in their server rooms with wire cutters, electromagnets and a court order.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 20th, 2009 at 10:23:15 AM EST
[ Parent ]
JakeS:
I expect them to do it if there's Danish police sitting in their server rooms with wire cutters, electromagnets and a court order.

LOL

there have doubtless been countless golf games, convention schmoozes and palms stroked to counter that possibility, still i'm with you, it should only be a question of time, it is where the beef is, at the end of the day.

"I would rather have questions that can't be answered than answers that can't be questioned." - Richard Feynman

by melo (melometa4(at)gmail.com) on Fri Feb 20th, 2009 at 02:52:19 PM EST
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When we legalise cannabis for private use, there'll be plenty of free prison cells for the palm-greasers...

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Fri Feb 20th, 2009 at 03:05:30 PM EST
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So the right wing media campaigns aboutkeeping the dangerous druggies inside in fear that there might be suddenly space for the finacial page corespondent?

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Fri Feb 20th, 2009 at 03:31:35 PM EST
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An interesting hypothesis. Although I think the prison-industrial complex and keeping The People scared (either of all the dangerous loons that have to be locked up, or of being locked up, depending on how perceptive the person in question is) is more compelling as reasons go...

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 22nd, 2009 at 06:37:08 AM EST
[ Parent ]

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