The Great Question - Politicians, Financiers, And Tax Havens

One of the Human Rights is privacy, up to a point. Our tax affairs are private. As I am unable to find any rational explanation for the level of tax I pay from the Inland Revenue, this might be taking privacy too far, but this should reassure me that nobody else will know. My bank account is supposed to be private, but a dedicated hacker can find out. Whether this might given them cause for complaint about disturbing images when they see the figures I cannot say.

Tax Havens are keen on privacy as well. Indeed secrecy, discretion, and absolute trust are what it is all about. Ask Mr. Madoff and Mr. Stanford, where would they be now if it wasn’t for these priceless advantages? At one time these facilities were for the few and rich, a limited number in the know. Nowadays they are a major part of our financial sector that compete to gather in as many people with assets or decent income as possible into the networks of accounts and trusts that are such a large part of their trade and profits. One of our local jobbing builders now operates his affairs from a tax haven, even his vehicles are registered in one.

This gives such people a priceless advantage, because they are then much better informed about their tax affairs. In short, not how much they pay, but how little and it seems that a large part of the UK potentially higher tax bracket has gone off-shore. So the government prides itself on the wonders of our finance sector one minute, and then complains bitterly about the increasing fiscal deficit the next.

During this year there has been the hullaballoo over the expenses of Members of the House of Commons, and the House of Lords, which has spilled over into the incomes and expenses of many in the public sector. This is small change in comparison to the real scandal because like the fabled gorilla, elephant, or mad bull in the room The Great Question is not being asked.

Only in one or two parts of the media is there a trace of any suggestion, and then by very guarded inference. Otherwise you get slapped with a libel suit by some of the costliest lawyers in the universe and in the UK in a libel case you are guilty unless you can prove your innocence. The trick here is that the Judge will not allow you to submit the documents or evidence that would do this. Privacy, you understand, is paramount, especially for rampant financial extortionists. These days judges are integral members of The Political Class.

You will not hear anything from the BBC nor Sky, the media in general; nothing from the press, nor from those brave bloggers now in their holiday villas abroad, they will all maintain a discreet silence either because they are all such quiet and deferential people, or their bosses are involved, or other peoples bosses will put the hoods onto them. In Russia people might get shot, in other places they just get turned over a few times.

The Great Question in the UK is this, how many Parliamentarians, their associates, their families and connections, have offshore accounts and trusts, who are they, and what is the extent of their holdings? Subsidiary questions involve what payments are going in and from what sources, and what are going out and where? Further to this is how much tax would they have paid had all these funds been held in the UK and there been fully liable for ordinary levies?

Then there are the really nasty questions, who are all the financial and property side kicks who are amongst their allies and associates, and have enabled them to build up their portfolios? Bear in mind the FTSE these days is just a money temperature measure where the big boys lights matches under the mercury bulb.

It is my belief that the Iceland crash was London made, much as the AIG crash and others were also London made. Those involved will be in sectors of the property and finance markets where tax is an optional side dish. Very recently there have been leaks of certain documents relating to Iceland and amongst the companies listed with huge debt levels there are names that raise the eyebrows. It would take time and trouble work out the who’s and what’s and the joins are hardly seamless, but it is likely that there are a series of networks that are interlinked tightly enough to make a whole.

So that is where the bailout money is really going, channelled through the banks, what ever all the spin and speeches. It is going to the chancers that drove up the figures and caused the crash. Because if they go down, then they will take a lot of people with them. In fact they might bankrupt the bulk of the Political Class that as well as the judges includes the media.

Just like in 1772 when some high rollers in Ayrshire borrowed too much from the local bank and broke it, took down Fordyce’s discount house and then most of the City with them, including Arnold Nesbitt, friend and financial adviser of the famous and the fabled. Nesbitt stayed out of gaol and managed to leave his estates to his family. Well his best friend was secretary to the Prime Minister and came out smiling with an estate in Hampshire. The Austen’s knew him, but not closely.

So this explains why the FSA is delicate in its approach to bonuses, why the UK deal with Lichtenstein has more get out clauses than there are exits from Wembley Stadium, why there are no UK cases of fraud, why the OECD’s initiatives are becoming a bedroom farce, why the proposed UK regulation is as light as ever, why there is no real interest at all in either sorting out mess or sorting out those who created it. It is because just about everyone who might do much has their own offshore arrangements and trusts to worry about, and why those who haven’t but are stuck with the UK government are going to pay.

And it is why The Great Question is not going to be asked, at least in the UK. While our troops are in Afghanistan helping out the Americans, it is hoped this will shut them up, at least for a while, but the price is losing the last vestiges of the Special Relationship. We shall be the embarrassing relative who got nicked for stealing handbags from pensioners outside post offices. In Europe, if we are lucky, they might summon up the courage to close down the various rackets in the UK financial sector. In Araby and the East they might think it safer, cheaper and quicker to cut out London altogether in the future.

In the meantime we must all pretend that things will get better, which they won’t for most of us. But they certainly will for the lucky few who are being bailed out with our money.

Weddings

It is reported that a government minister and his wife, Mr. Jim Fitzpatrick, left a Muslim wedding to which they had been invited because men and women were segregated. During the 1940's in Liverpool I recall, this kind of thing was not unknown on any family occasion. After the necessary had been done, the men used to go off to the local pub where they would exchange fundamentalist views on football, beer, jobs, and the trials of nagging women. The ladies would tour the kitchen and living room supping gin etc. and exchange fundamentalist views on rents, rationing, repairing clothes, and the uselessness of men. The children did what they liked. It seemed to work very well, so long as the happy couple remembered to catch the train to go on their honeymoon.

The Shape Of Things To Come

The picture above from 1956 shows a computer memory device being loaded onto an aircraft. It is very large, very heavy, and very expensive. It stored 5mb of memory. In those days there were few computers, they were little known, and managed by a mysterious cult of boffins. The first real container shipping service began that year, although there had been a handful of specialist ships in the previous decade.

Imagine, food cost a quarter of the ordinary family incomes, and supermarkets did not exist. Manual adding machines and ball point pens represented heights of technology. A fridge was a serious luxury item for the ordinary family. A TV was a new experience where you watched what you were told to watch, and newspapers had real news. Most people rented their homes, few could obtain much if any credit, and a car was still a distant ambition. The dockyards were filled with men, as were the workshops of industry and mines and railway facilities and farms employed many labourers. The City of London was a place where people knew what they were doing. I could go on.

In the past when I was young and callow, I did try to make forecasts. Early in 1967 in a discussion at the local Chamber of Commerce, I suggested that the UK position was weak, we were facing difficult choices, and one of the basic problems in coming to terms with our present, let alone the immediate future was our hang-ups about world power and prestige, especially the latter. For this I was roundly denounced at work by my boss for disloyalty to Queen and Country, lack of patriotism, and inability to recognise the greatness and might of Britain. A few weeks later the pound was devalued and the Wilson government announced the withdrawal from East of Suez. He never forgave me.

Now we are all broke, yet again, perhaps it is time to reflect on just what might be in store for us in the next fifty years. I can do so confident in the knowledge that the vast majority of the futurologists of 1956 to 1959 had it hopelessly wrong. A more delicate issue and maybe an advantage is that I will be unlikely to be around unless something really remarkable happens to the expectation of life figures. However, if I manage to get some things right then I might become an object of veneration, a new Nostradamus for the 21st Century. The trouble arises immediately I begin.

A major challenge is the wealth of information, sources, and debate now the web has opened up the minds and thoughts of the world to any who cares to debate or inform. Whilst properly this should lead to uncertainty and questioning, people have been brain washed into expecting positive and firm predictions, even when they know those who give them are lying through their teeth or have a personal agenda and something to sell. In any case, the figures probably will be manipulated, vital evidence be suppressed, and “research” done to order.

My personal problem is that if I set out predictions in which I honestly believe, using the LBO methods of analysis (Laws of the Bxyzabcg Obvious) some will be deeply uncomfortable, very difficult to accept, and will attract similar complaints to those made in genuine anger in 1967. But does anyone really think that life in 2010 will be anything like that we expected in 1980, never mind 1960? As for fifty years hence what will 2060 have to offer?

At least amongst all the advice and information nowadays there are online sites which advise you how to learn the basic skills of hunter gathering, but I am keeping this information to myself. But then I really am very old fashioned, and still think that 5mb is a lot of memory to have. Well, Bill Gates did once say that 256kb of memory was as much as any ordinary computer user needed, and who knew any better in those heady days of 1980?

Ainsworth, Army, Kingsmen, Liverpool, Lenin

Mr. Robert William (“Bob”) Ainsworth is the present Secretary of State for Defence, and has encountered a certain amount of criticism since taking up post, relating to his personal experience and background. The name brings up memory, and the way all things connect.

22598 Private Charles Howard Ainsworth of the 20th (4th Pals Service) Battalion of the King’s Liverpool Regiment was killed in action on 30th July 1916 during the Battle of the Somme. His loss is recorded on the Thiepval Memorial, there is no grave, nor will one ever be found. On that day the 30th Division, with the 17th, 19th, and 20th Battalions launched an attack on Guillemont and encountered heavy shelling. Charlie was remembered as a good and brave man, and a steadfast friend.

From these three battalions alone almost 500 were killed, and an unknown number died later in the dressing stations and hospitals. To that should be added many more who were severely or otherwise injured. Most men were from Liverpool and of ordinary working background. Inevitably, because of the high rate of migration into the City from other parts of Britain and Ireland, many had other connections. In The King’s there were battalions of Scottish and Irish, there ought to have been a Welsh, the numbers were enough to support one. However, Ainsworth is a Lancashire name, taken it is said, from the old Township that lies between Bolton and Bury. I quote from the Ainsworth family web site:

“There are few famous people, but one of that name, Robert Ainsworth, 1660-1743, was a lexicographer who compiled a famous dictionary of Latin (Ainsworth’s Latin Dictionary, 1736) that was the standard work for at least 150 years and saw 24 authorized editions in England and two in Boston. He was a friend of Charles Wesley, the founder of Methodism, who mentioned their meeting in 1738 in his diary: “I was much moved at the sight of Mr. Ainsworth, a man of great learning, above seventy, who, like old Simeon, was waiting to see the Lord’s salvation; that he might depart in peace. His tears and vehemence and childlike simplicity showed him upon the entrance to the Kingdom of Heaven.”

The tragedy of the 30th July 1916 is made greater in that on 1st July, the first day of the Battle, the 30th Division, and the Pals, took all their objectives by an early stage of the day with limited casualties, and then waited, looking at open fields, for their orders. They had made a breakthrough that was never followed up because they were not expected to, and the Army staff was reluctant to change their plans. There was also a difficulty, in that to the right of the 30th Division were the French, and this was intended to be a British success, and not a French one.

The picture above is of a platoon of the 20th Battalion at Belton House, by Grantham after their battle training. They look ready for action, and they were. A photograph of the same men shortly after enlistment shows a group distinctly unready. Charlie, I have good reason to believe, is the on the front row, lying down, and on the far left. Had he survived The Somme, his chances were not good. In October 1916 there was the Battle of the Transloy Ridges. In February 1917 they were in the line outside Arras, and in April were involved in storming the Hindenburg Line.

Then it was up to Ypres for the Battle of Messines, followed by the Third Battle of Ypres at Passchendaele on the Menin Road. Then the Pals returned to the grind of the trenches at Arras. In February 1918 an Army reorganisation disbanded the 20th and its men were sent to other battalions in the Arras area, where they felt the full weight of the German onslaught of March and April, the Huns last attempt to wring victory from impending defeat. If Charlie had been still alive and been really unlucky and transferred to the 17th then after the Armistice of 11th November 1918 he would have found himself being sent to Russia to deal with the Bolsheviks.

Belton House is a popular National Trust venue, with a great many visitors. A classic 1930’s country house with all the opulence and comfort of that era, it is particularly well known as the place where Edward, Prince of Wales, and his lady friend, Mrs. Wallis Simpson, used to enjoy periods of private pleasure with their friends away from the prying media. It is this which brings in the punters. In the house there is one small memento of the Machine Gun Corps, which occupied the estate in the later part of the First World War. Of the Liverpool Brigades of the Kings and the Liverpool Pals there is not a mention nor any hint of their time there. Outside where some of the men, many of whom died, scratched their names and initials onto the walls of the stables, they have been sandblasted back to the brick, and cleansed from the memory of the National Trust.

In his younger days “Bob” Ainsworth was said to be a fervent Marxist and a believer in communist ways of running economies and government systems. Whether he was related to Charlie or not, I do not know; but there were other Ainsworths about in Liverpool. I wonder if any of them fought against Lenin?

Mervyn King - An Open Letter To The Governor

Dear Merv,

Picking up my morning newspaper, a “Metro” free sheet, from the waste bin outside the local station, (who pays for print these days?), I learned that the Bank of England, which is yours and mine, intends to scatter munificence to the order of £50 billion more smackers to your nearest and dearest in The City, Westminster, and Mayfair. Perhaps it is time for me to make a bid for small non-business, in fact small non much at all, these days. We may be able to help the recovery you want far better than the dodgy geezers in those parts.

On a works outing to the Royal Opera, perhaps it was “Gotterdammerung” that gave you the idea for Quantitative Easing (QE). At her immolation, when the heavens collapsed with the doom of the ancient Gods, Brunnhilde hurled The Ring back into the Rhine to restore the Rhine Maidens guardianship of the Rhine Gold. The ordinary people then emerge blinking into the dawn of a new era where they now have the power to decide. Obviously you can’t have any of that, but as chucking good money about is the dish of the day for mainline economists, I see your reasoning.

But what neither Wagner nor Marx ever understood about capitalism, the basic issue is compound interest. It is not much in fashion these days, in fact one of the things that people want to ignore, as one of those “difficult” subjects. Indeed you may not be aware of it yourself. Once upon a time no home was without its little handbook of tables that set out costs and figures of different rates of interest, but perhaps these were too tricky for the typical software engineer to programme. Certainly, they do not fit all those marvellous mathematical formulae and structures on which all our lives, and your systems are now based. I know politicians never could understand them. They can only work in days, although those of higher intellect might manage weeks, but when it comes to months or years, oh dear, and they could never accept that interest is the price of money and has to be paid.

The people to whom you hand all this loot, don’t keep it at home, or even spend it. It is sent by High Priority Mail to off shore banks, trusts, investment funds and the rest to help them make their figures more convincing, especially when they are sent on a merry-go-round of computer servers around the world. This way it is secret, so when they tell you and us that all is now well, you have to believe it, or they will just come back and ask for more, again, and maybe again.

I know some may find its way into the odd pension fund, or lending to big business, who are all then persuaded to buy Treasury Stocks to support government spending, which then enables you to do some more QE, and this will, OK, I give up. What worries me is the interest payable. You see the rate of interest you publicise, and the rates of interest I have to pay, and all the local people I have to deal with pay, are wildly different. As a three card trick, it is wonderful, what I don’t like is what is happening to my budget.

Those who benefit, and earn mega money, do not pay much, if any, UK tax, and have no intention of doing. But when the Treasury borrows, it will then pay interest and this will be compound. As there isn’t a cat in hell’s chance of any of these debts being repaid soon, the interest liabilities will increase and will rocket after a few years, and I, and others like me will have to pay the lot. Unlike all those with offshore outlets, who will be liable for nothing at all, in fact, if they owe the Bank or the government any significant amount they will be allowed to write it off or paid off with a profitable nationalisation deal.

I know Keynes said that to spend might be wise, and I know exactly what he meant. Whenever someone goes on about QE and all that the first thing I do is to reach for the “General Theory of Money And Employment” and the wall sized diagram I have that sets it out in visual terms. Keynes did not mean throwing huge sums at casino bankers and Heath Robinson financial engineers to salt away abroad for free and without safeguards. He meant real investment yielding real long term benefit for the national community. He assumed that the whole of the community would pay their taxes, indeed the poor would pay as few as possible. He did not mean that the rich would be able to evade or avoid the lot, leaving the whole liability on the ordinary working people or the poor. He did not mean slushing money into the hands of foreign oligarchs and high rolling speculators or bingeing on prestige sports events, nor did he mean indulging in fantasy colonial wars.

If I may give you an example. Closely involved with many of the more hopelessly bust banks are some property men. They now control many of the freeholds and much of the property management services in the private rented sector, including the bulk of the retirement housing sector. Very few of those who live in these flats have much in the way of income or wealth, many of them are at the margins and on tight budgets. The service charges of the great majority of the old and vulnerable in these flats has been racked up nearly 10% compound for a few years now by the private property conglomerates controlled by private offshore Trusts concerned. The consequence is that their real disposable incomes have been cut by up to a third. The Office of National Statistics does not factor this into any indexes, and service charges do not count in calculations of many benefits or the claims for disablement or care, so the leaseholders are triple losers.

Do I need to spell out what this means? The income streams extorted from these people, entirely legally, have been used to leverage property speculation and take on debt from casino banks. So when you bail out these banks you are bailing out the property magnates, and supporting their lavish and wonderful lifestyles directly at the expense of the old and disabled. The Treasury knows this, you know this, others know this and certainly many politicians, but the magnates are their best friends. There is one downside, however, and that is you may have just about wrecked the market in flats, now an overbuilt and over priced sector, where the service charges now cost more than any mortgages, putting them beyond the bounds of affordability.

So if you must spend on consumption, then why not direct it to the old and poor one way or another who are being and have been screwed blind and whose incomes are deteriorating by the day? In parallel, why not do something to protect the unlucky victims of the mad scramble for loot that has caused all the trouble? In that way QE might actually mean what it says.

More important Keynes believed in certain moral imperatives. Alas, Merv, neither your Bank nor anyone it deals with these days believes in that kind of thing. But Keynes was a fan of the ballet. Perhaps Merv, you might try ballet for a works outing instead of all the Wagner and opera stuff. Like President Bill Clinton when he saw the Royal Ballet at the Kennedy Arts Centre in Washington DC in a performance of “The Sleeping Beauty”, you might realise the need for your very own Lilac Fairy.

If you have a look at the plot it is the Lilac Fairy who overcomes evil and deceit in the name of good and the truth.

We're All Going On A Summer Holiday

With apologies to Alan Sherman:

Hello Gordon, hello Obama, here we are, on Grand Bahama.
Our stock is slipping, our hedge funds dipping,
And our frozen assets have turned to filthy dripping.

We went to Lichtenstein, with all that loot of mine,
All we get there now, the attorneys line,
Is heaps of bills and letters that are full of bitch and whine.

Down in Monaco, we were all ago,
Now every day, it’s all so very slow,
And Casino bouncers say that we are strictly NO!

On the bourses, we lost our horses,
Betting shops, and all race courses,
And the restaurant, we endorses, charges extra, for all the fancy sauces.

All our moveables are owned by China,
Carried there, by ocean liner,
The Dow Jones tells us there is nothing any finer.

We’ve sold our pots, our art in lots,
The villas grand are left to rots,
To make it worse, and send us dots, we have even lost our fleet of ocean yachts.

Away in old Frankfurt, our dollars rank as dirt,
Our motor interests have lost their fancy shirt,
We bought big hotels, now just cheap motels, and all the takings anecdotals.

Hello Mandy, hello Summers, it is all, a lot of bummers,
The company has grabbed my Hummers,
We drive taxis, for a pittance, and all the brokers now a pack of crazy dumbers.

Hello Gordon, hello Obama, it has all, been quite a drama,
Can you be, our financial Lama?
A few more trillions, and bonus billions, would make us all a very great deal calmer.

Afghanistan - A Scrimmage In A Border Station

There are those saying that we are likely to be in Afghanistan for decades yet in order to stabilise the country and to establish a more democratic society. We will not be satisfied until the financial quarter of Kandahar has a fully fledged Hedge Fund industry, or something. There are a number of other reasons, which has led to the complaints about “Mission Creep”, that is added extra duties. The trouble with these is if you are neither able to impose them nor to carry them out. It was exactly this kind of political activity that gave us most of the Empire and caused us so much trouble in getting out of it when the profit margins had evaporated.

I had vowed to abjure military matters in this blog, but having seen that Michael Yon was with the British troops again, changed my mind. It was his dispatches from Iraq when he spent a great deal of time with them that told us so much more about the realities than all the MoD press releases and British media put together.

http://www.michaelyon-online.com/night-into-day.htm is his latest posting and tells us all a great deal more about what is going on than we normally see. I had thought to cherry pick his piece, but it is much better for others to take a good look. The picture at the head is of the encampment at Kabul during the Afghan War of 1839 to 1842, and is from James Rattray’s “Costumes and Scenery of Afghanistan” of 1848. Few of those in the tents would have survived, Kabul was later a scene of disaster.

What is astonishing is that there is so much known from this encounter, and from the later war of 1878-1880, let alone all the activity on the North West Frontier in the time of Empire. Then there is the Russian experience of the 1980’s. There is no chance of the UK being there for decades, because it will break us first.