Financial fuckery thread

[Junkenstein]

Sort of related:
http://www.vice.com/en_uk/read/the-real-story-about-londons-housing-crisis

Particularly related:

One such place, of course, was Rushcroft Road. Indeed, it's not difficult to make the wider connection between these evictions and a broader opposition to anyone deemed to be challenging the nature of property ownership. Last year, Westminster passed legislation banning squatting in residential property. "Squatters who break the law [must] receive a proper punishment," declared prisons minister Crispin Blunt, in a consultation published before the ban in 2010. "There are avenues open to those that are genuinely destitute which do not involve occupying somebody else's property."

But are those avenues effective? Not only is it extremely difficult to access social housing, but a report by the Resolution Foundation suggests that rent is now unaffordable for two thirds of families on lower incomes. A House of Commons select committee report on the housing crisis published last week highlighted plans to tackle bad landlords and letting agency fees, but not rent control. This weekend, the Guardian's Patrick Collinson suggested that this is due to the Conservative Party's concerns that imposing such controls would cause landlords to spend less money maintaining their properties. On a more basic level, it also seems to indicate the extent to which the party is devoted to protecting the rights of property owners over those of their tenants, despite the critical circumstances.

When even councils with a Labour majority, such as Lambeth, are in agreement with this, it seems that the confidence with which the police and bailiffs evicted the residents of Rushcroft Road was not just a matter of tactical conduct, but a symptom of the extent to which the ideology of austerity is now an unquestionable part of mainstream politics – a politics that has now begun dedicating itself to the forcible clearance of centres of opposition.

Austerity as part of main stream politics seems dead on. I doubt that's going away.

[Cain]

Yves Smith on the Eurozone crisis:

We've been pointing out for some time that Germany has refused to budge from wanting contradictory things relative to the Eurozone. Germany wants to continue to run trade surpluses, which are now predominantly with other countries in Europe. That means it needs to finance its trade partners' deficits. But Germany simultaneously does not want to do that, at least with other Eurozone members. The only way to square that circle would be if the euro were vastly cheaper, so that Germany's trade surplus was more with the rest of the world than with its fellow Europeans, and that countries like Spain could come closer to a trade balance or achieve a trade surplus via trade with the rest of the world. No one has entertained that as a solution, since the required level of euro depreciation would be so large as to invite retaliation from Europe's major trade partners (I haven't seen good estimates, but early on, Wolfgang Munchau suggested between .6 to .9 to the dollar).

The whole premise of the EU/Eurozone project was successive crises would force further integration. We'd assumed that the Eurobanks were sufficiently wobbly that absent more banking integration (at a minimum, a deposit guarantee), you'd eventually see some sort of Big Problem (see an analysis by Josh Rosner from last year of the poor condition of the German banks). Yet the European officialdom has managed to pull off years of "barely enough at the last minute" salvage operations to keep things from falling over. But the Germans have also insisted on crushing and failed austerity, and refuse to relent even as compliant periphery countries keep missing their targets and in the case of Greece, the result of breaking a country on the rack is a failed state.

Even though we've had quite a few individual commentators from Europe argue in favor of a Eurozone dissolution, the pundit class has treated that as impossible because the costs were so high that whatever compromises needed to be made would eventually be reached.

Now something still has to break, but some of my correspondents who've just been in Europe now think that we will see a political crisis in Europe before we see an economic one, and that, like objects in your rear view mirror, may be closer than it appears.

[hirley0]

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[Cain]

I know it's HuffPo, but you go to war with the article you have, not the article you wish you had:

http://www.huffingtonpost.com/2013/08/15/income-inequality-wall-street_n_3762422.html

This echoes an OECD study from earlier this year that found the U.S. had the highest income inequality in the developed world. It followed only Chile, Mexico and Turkey among all nations.

One other thing you'll notice from the chart is that the United Kingdom has slashed taxes on the top 1 percent almost as aggressively the U.S. has, and yet the share of income going to the top 1 percent is not nearly as big. So there's something else going on here besides just tax breaks.

That something is Wall Street, more or less, as Matthew O'Brien of The Atlantic points out. The same politicians that have busily been slashing taxes on the wealthy have also been loosening fetters on banking, allowing the financial sector to swell to bloated size and mop up ever-more income while contributing ever-less back to the economy. Again, this is consistent with other studies that have attributed much of the rise in in inequality to the pay being sucked up by bankers and overpaid CEOs.

At the same time, U.S. lawmakers have also made it easier and more tax-friendly for the wealthy to pile up more capital gains on their investments. As O'Brien puts it, "The top 1 percent leveraged itself to the market, and haven't looked back."

[Mesozoic Mister Nigel]

I know it's HuffPo, but you go to war with the article you have, not the article you wish you had:

http://www.huffingtonpost.com/2013/08/15/income-inequality-wall-street_n_3762422.html

This echoes an OECD study from earlier this year that found the U.S. had the highest income inequality in the developed world. It followed only Chile, Mexico and Turkey among all nations.

One other thing you'll notice from the chart is that the United Kingdom has slashed taxes on the top 1 percent almost as aggressively the U.S. has, and yet the share of income going to the top 1 percent is not nearly as big. So there's something else going on here besides just tax breaks.

That something is Wall Street, more or less, as Matthew O'Brien of The Atlantic points out. The same politicians that have busily been slashing taxes on the wealthy have also been loosening fetters on banking, allowing the financial sector to swell to bloated size and mop up ever-more income while contributing ever-less back to the economy. Again, this is consistent with other studies that have attributed much of the rise in in inequality to the pay being sucked up by bankers and overpaid CEOs.

At the same time, U.S. lawmakers have also made it easier and more tax-friendly for the wealthy to pile up more capital gains on their investments. As O'Brien puts it, "The top 1 percent leveraged itself to the market, and haven't looked back."

Yep

And there are all kind of studies in the works right now about stress, health disparities, and life expectancy based on income inequality. The long-term ramifications are truly grim for the nation as a whole, because a comfortably middle-class, educated populace is vital for the production of a large pool of innovators and researchers.

[Junkenstein]

There's a number of threads this is relevant to:
http://www.bbc.co.uk/news/business-23924860

Vodafone's sale of its 45% stake in Verizon Wireless to the US telecoms group Verizon Communications for a staggering $130bn (£84bn) looks set to be announced on Monday.

I understand that the board of Vodafone has today approved the massive disposal. The final hurdle, thought to be a formality, is approval from the board of Verizon, which is expected on Monday.

Will there be a furore over the absence of any UK tax payments by Vodafone on the £84bn proceeds from the sale of its 45% stake in Verizon Wireless?

Well my understanding is that Vodafone does not believe any tax would have been payable, even if the assets had been held in the UK, and not via a Dutch holding company.

That is because the last Labour government's 2002 Finance Act introduced an exemption from tax on capital gains from "substantial shareholdings" held by companies.

So, in Vodafone's view, if MPs on the Public Accounts Committee wants to blame someone for the absence of revenues for the Exchequer from the eye-wateringly huge deal, they should direct their criticism at Gordon Brown, chancellor at the time.

Tax reform was mentioned by all 3 parties at the last round of elections. I'm sure you'll be amazed at how much reform has been done. There's no mention of Vodaphones other tax problems in the UK (I.e - not paying any, ever) so I assume that's a non-issue now.

[The Good Reverend Roger]

http://www.nbcnews.com/business/swiss-banks-say-theyre-sorry-assisting-tax-cheats-8C11062055

[Reginald Ret]

http://www.nbcnews.com/business/swiss-banks-say-theyre-sorry-assisting-tax-cheats-8C11062055

Wait, what??
Banks taking responsibility?
This world just gets weirder and weirder.

[P3nT4gR4m]

Hang on, they're making out as if hiding billions in offshore accounts to avoid tax is some kind of crime. Hasn't someone legalised that yet? Fuck are these idiots thinking about? Or is this just a case of the US figuring out a neat new way to fleece non-oil bearing nations for a quick buck?

[hirley0]

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[hirley0]

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[Mesozoic Mister Nigel]

Relevant to this thread and my interests

http://www.thebull.com.au/articles/a/40900-neuroscience-may-help-us-understand-financial-bubbles.html

I'm skeptical, but interested.

The study asked participants to make trades within an experimental bubble environment, where asset prices were higher than underlying values. While making these trades, they were hooked up to scans which detected the flow of blood to certain parts of the brain.
They found two areas of the brain's frontal cortex were particularly active during bubble markets: the area which processes value judgements, and that which looks at social signals and the motives of other people.
Increased activity in the former suggests that people are more likely to overvalue assets in a bubble. Activity in the latter area shows participants are highly aware of the behaviour of others and are constantly trying to predict their next moves.
"In a bubble situation, people start to see the market as a strategic opponent and shift the brain processes they're using to make financial decisions," De Martino said.
"They start trying to imagine how the other traders will behave and this leads them to modify their judgement of how valuable the asset is. They become less driven by explicit information, like actual prices, and more focused on how they imagine the market will change."
"These brain processes have evolved to help us get along better in social situations and are usually advantageous. But we've shown that when we use them within a complex modern system, like financial markets, they can result in unproductive behaviour that drives a cycle of boom and bust."

[Cain]

-

[Mesozoic Mister Nigel]

Yeah, I'm suspicious as well.

Also, just thought you'd like to know, the Fed is fucking you:

In an interview on "Squawk Box," the founder of Duquesne Capital said the Fed's policy of quantitative easing was inflating stocks and other assets held by wealthy investors like himself. But the price of making the rich richer will be paid by future generations.

"This is fantastic for every rich person," he said Thursday, a day after the Fed's stunning decision to delay tightening its monetary policy. "This is the biggest redistribution of wealth from the middle class and the poor to the rich ever."

I know, you already know this.  But being able to quote a billionaire hedge fund manager agreeing may even cause a few glibertarians to wake up and take notice.

I really don't know, at this point, what it will take to make people wake up. I kind of think that everybody is just depressed and awaiting their inevitable fate. I don't understand what else it could be.

Also, thanks a lot, Obama.

[Reginald Ret]

Yeah, I'm suspicious as well.

Also, just thought you'd like to know, the Fed is fucking you:

In an interview on "Squawk Box," the founder of Duquesne Capital said the Fed's policy of quantitative easing was inflating stocks and other assets held by wealthy investors like himself. But the price of making the rich richer will be paid by future generations.

"This is fantastic for every rich person," he said Thursday, a day after the Fed's stunning decision to delay tightening its monetary policy. "This is the biggest redistribution of wealth from the middle class and the poor to the rich ever."

I know, you already know this.  But being able to quote a billionaire hedge fund manager agreeing may even cause a few glibertarians to wake up and take notice.

I really don't know, at this point, what it will take to make people wake up. I kind of think that everybody is just depressed and awaiting their inevitable fate. I don't understand what else it could be.

Also, thanks a lot, Obama.

I know I, for one, have the 'bend over and lube up' approach to the economy and politics clusterfuck.

I have the desire to run for the hills but I live in flatland