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| UNDER THE BED? TREASURE ISLAND? OR TAX-HAVEN BANK? |
I see the unprecedented and
extraordinary proposal to tax customers’ bank deposits in Cypriot banks as an escalation
of the war against tax-evasion-capital-flight,
which at $21
trillion and rising by $1 trillion a year is a direct and immediate threat
to the stability of the global economic system.
The OECD tax evasion unit
has for 20 years politely and diplomatically and gently nudged all nations and
tax-havens to reduce tax-evasion and money laundering. Now, as the world hits
The Wall, they have to get tough. No more Mr Nice Guy.
Now, in 2013, it is clear that
most OECD nations are being driven by tax-evasion-capital-flight into “Mountains of Debt”. In addition, most
big businesses are freezing billions in their Balance Sheets, also mostly
off-shore, which they will not reinvest in the source nations. The corporate
managers have stashed away their personal ill-gotten and ever growing tax-free
piles and say “screw you” to the
rest of us - their valued customers. UK economists
estimated this week (Budget Week) that UK companies have frozen £750
billion sterling - $1 trillion – that they will not invest. These “Rivers of Cash”, siphoned offshore,
have caused massive unemployment in previously vigorous economies – typified by
50% graduate and youth unemployment. Greece has been killed stone dead and
disintegrates into anarchy. America
boasts 40 million on Food-Stamps and has tides of homeless refugees. This is
very dangerous for society. It is the stuff of revolution.
The UK (Pop 63M) cannot balance its books.
The USA (315M) hovers on the edge of their “fiscal cliff” and, if blaring
anti-European journalists and currency speculators are to be believed – the EU
(550M) and The Euro are in constant crises and budget deficits. All rich
Russians (143M) migrate to tax-havens and all rich Chinese (1.2B) would migrate
if they dared risk a lifetime in solitary confinement for re-education. India (1.1B) is
a corrupt leaky sieve, and the rest of the world (4B) is raided and
impoverished by stupidly greedy dictators, regimes, bankers, gangsters and “top”
families. Maybe Pope Francis 1st will knock some social ethics and economic sense into
their numb skulls …or maybe not.
At the eye of the storm is Cyprus (1M).
This jewel of the Mediterranean joined the
European Union 9 years ago (MAY 2004), plugged into the EU bank system, and immediately
embarked on incontinent money laundering and tax-sheltering. It now has a whole
army of “financial services” professionals – cooking the books, shovelling the
cash and kissing the feet of “the super-rich”. In taking $60 billion deposits
from foreigners, Cyprus
has just woken up to the counter-intuitive fact that the island owes those same
foreigners …$60 billion. Many of them are Russian gangsters and Greek Mafioso –
ooo’er. Unfortunately, Cypriots are not experienced and expert bankers. They
have “lost” (i.e. stolen) the $60 billion through all the usual back-to-back losses,
bad loans to pals, gross stupidity etc. Somebody, somewhere has the money but Cyprus cannot pay the $60 billion
back.
9 months ago – Cyprus asked
the EU to give them $60 billion. The EU asked what the Cypriots (international
global bankers) were putting into the pot. The Cypriots ignored the EU. Now, it
is crunch time and the EU does not want to harbour a major loss making financial
sector, managed by a bunch of amateurs or crooks, in its ranks. The EU does not
want any such siphons draining its life-blood away, of its 550 million hard working
citizens, to tax-havens – whether the havens are in Delaware ,
Singapore , Isle-of-Man
(Irish Sea Pop.83K), The Caribbean, or London .
Light Blue Touch-paper and Retire: The EU has shockingly said to Cyprus , “Take
10% from the tax-evaders”. This is not banking as we like to think of it. Only
the 1917 Bolsheviks, Wall Street and The City of London can misappropriate other
people’s money on that scale (to pay immense bankers’ bonuses on bank losses).
Tax-haven Banks should be safe-havens in tax-havens.
This will, and has already, immediately ruined Cyprus
as a tax-haven. Nobody will stash their offshore loot in Cyprus ever
again. Whatever the outcome of the current talks – Cyprus must forget its “Financial
Services” and focus on Tourism. Cyprus
will get over it. In the meantime, the tax dodgers, The Greeks, The Russians,
The British, The Italians, The Spaniards, et al – will panic off to other
tax-havens. Wherever they choose will be unsafe. Irrespective of the bank logo
over the door - all tiny tax-havens are now unsafe and untrustworthy. All
major tax-havens, like Delaware (about 350,000 dodgy tax-free companies) are
targets for a 10% maybe 15%, maybe more tax on deposits, levied by the ruling
government. America with a $16 trillion deficit, needs a
major boost to its tax-revenues – if the EU can do it, why not the USA ?
Four or
five panic moves by tax-evaders and four or five unexpected taxes will repatriate the
cash-deposits, The Rivers of Cash, to the source nations.
At a stroke (of bureaucratic genius?) – Regardless of how the little
local difficulty plays out between Cyprus and the EU – and regardless of
which bank group is holding the funds - tax haven accounts have been doomed. There
are no longer any guarantees from major governments that the governments will pick up the
tab for rogue bankers. It is back to burying treasure on sandy atolls at
midnight.
Here’s a tip! The Madoff-Cornfeld
Bank of Bermuda is offering 12.5% on all deposits – guaranteed by the Combined
Oceanic Banks of Iceland – in turn guaranteed by The Imperial Sovereign Wealth
Funds of The Gulf (just as the world is replacing oil with fracking-gas) – in
turn personally guaranteed by Richie Rich, Barclay's cleverest investor - in turn guaranteed by The Vatican Bank. In God We Trust!
Best advice – go home, repatriate your loot as soon as possible, settle
your taxes, and sue your tax-planners and Wealth-Managers while their Professional Indemnity
Insurance is still valid.
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