Liechtenstein initialed a deal with Germany to drop bank secrecy laws starting next year that until now have prevented cooperation in tax probes, one of the first concrete outcomes of promises that offshore tax havens across Europe made this year to open up their bank sectors. Friday's agreement in Berlin was triggered by pressure ahead of April's meeting of Group of 20 nations, which had threatened to produce a blacklist of alleged tax havens for targeting with sanctions. Promises made by Lichtenstein and other offshore banking centers just ahead of the meeting caused G-20 leaders to back off, but the threat of sanctions remains if bilateral cooperation deals aren't reached. A Liechtenstein government spokesman said the German accord follows a model recommended by the Organization for Economic Cooperation and Development, an intergovernment think tank based in Paris. Friday's pact still needs to be signed formally and ratified to take effect.
Liechtenstein initialed a deal with Germany to drop bank secrecy laws starting next year that until now have prevented cooperation in tax probes, one of the first concrete outcomes of promises that offshore tax havens across Europe made this year to open up their bank sectors.
Friday's agreement in Berlin was triggered by pressure ahead of April's meeting of Group of 20 nations, which had threatened to produce a blacklist of alleged tax havens for targeting with sanctions. Promises made by Lichtenstein and other offshore banking centers just ahead of the meeting caused G-20 leaders to back off, but the threat of sanctions remains if bilateral cooperation deals aren't reached.
A Liechtenstein government spokesman said the German accord follows a model recommended by the Organization for Economic Cooperation and Development, an intergovernment think tank based in Paris. Friday's pact still needs to be signed formally and ratified to take effect.
Problem is, consumers won't start spending until they have money in their pockets and feel reasonably secure. But they don't have the money, and it's hard to see where it will come from. They can't borrow. Their homes are worth a fraction of what they were before, so say goodbye to home equity loans and refinancings. One out of ten home owners is under water -- owing more on their homes than their homes are worth. Unemployment continues to rise, and number of hours at work continues to drop. Those who can are saving. Those who can't are hunkering down, as they must. Eventually consumers will replace cars and appliances and other stuff that wears out, but a recovery can't be built on replacements. Don't expect businesses to invest much more without lots of consumers hankering after lots of new stuff. And don't rely on exports. The global economy is contracting. My prediction, then? Not a V, not a U. But an X. This economy can't get back on track because the track we were on for years -- featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere -- simply cannot be sustained. The X marks a brand new track -- a new economy. What will it look like? Nobody knows. All we know is the current economy can't "recover" because it can't go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin. More on this to come.
Eventually consumers will replace cars and appliances and other stuff that wears out, but a recovery can't be built on replacements. Don't expect businesses to invest much more without lots of consumers hankering after lots of new stuff. And don't rely on exports. The global economy is contracting.
My prediction, then? Not a V, not a U. But an X. This economy can't get back on track because the track we were on for years -- featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere -- simply cannot be sustained.
The X marks a brand new track -- a new economy. What will it look like? Nobody knows. All we know is the current economy can't "recover" because it can't go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin. More on this to come.
H/T to Jessie of Le Café Américain whose sometime sig line is apropos here:
"The banks must be restrained, and the financial system reformed, and balance restored to the economy, before there can be any sustained recovery."
More from Jessie's post There Will Be No Recovery:
The median wage must generally increase for consumption to resume, and for this to happen the heavy taxes of the financial sector and the oligarchs on the real economy must be lowered significantly in proportion to its size. There is reason for pessimism that this can happen voluntarily. I have come to the conclusion that there is a pathological drive in some small portion of the population to acquire and control and devour rather than consume, even to their own destruction.
There is reason for pessimism that this can happen voluntarily. I have come to the conclusion that there is a pathological drive in some small portion of the population to acquire and control and devour rather than consume, even to their own destruction.
Amen to that. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
the heavy taxes of the financial sector and the oligarchs on the real economy must be lowered significantly in proportion to its size.
So the solution to the problem of low median wages is to reduce taxes for the very rich ??? My arse. keep to the Fen Causeway
Which is true, although the wording could be clearer.
Almost a year after A.I.G.'s collapse, despite a tidal wave of outrage, there still has been no clear explanation of what toppled the insurance giant. The author decides to ask the people involved--the silent, shell-shocked traders of the A.I.G. Financial Products unit--and finds that the story may have a villain, whose reign of terror over 400 employees brought the company, the U.S. economy, and the global financial system to their knees.
