A few Thanksgiving reflections by Biderman.
As we get ready for Thanksgiving, I have a great deal to be thankful for in my personal life. But as to the world, particularly the global economy, there does not appear to be much to look forward to as we approach year end.
Before I talk about our fiscal cliff, the rest of the world seems like bad news. It looks to me as if Iran is hell bent upon creating a war between Hamas and Israel that takes attention away from Persian nuclear weapon building. Greece and Spain are going no where fast. And Japan is now committed to destroying what is left of its economy by undertaking even more massive money printing.
Guest post by Peter Tchir.
Today I will be attending Ben’s talk in NY. I’m curious to see him speak in person, but can’t help but think of the questions I would ask if I could.
- Do you think that low rates are hurting savers, allowing big established businesses to make money while stopping new entrants, and do you finally admit your wealth effect theory is totally wrong since the wealth isn’t well distributed and has failed to produce results?
- At one point will you admit that the ultimate exit strategy is to just forgive the debt? That for all the talk about fiscal cliff, it would still leave us with a large annual deficit and really no end in sight to a ever growing pile of debt, making debt forgiveness the logical next step since you already pay back all the coupon income?
Okay, those are the questions that I would like to ask, but if I was given a chance to ask those questions, I would probably be too nervous. They seem obnoxious, even by my standards, and as much as I’d like answers to them, here are some more likely questions I’d ask.
A few months ago, when The Trader was writing about the Spanish problems, the world was obsessed with the Greek drama. Well, now it is all about Spain. A few good points by Megan Greene on the similarities between Spain and Ireland.
Watching developments in Spain since the beginning of April has been source of non-stop déjà vu for anyone who spent 2010 watching events unfold in Ireland. There are a number of striking similarities between the position in which the Spanish government now finds itself and the Irish government’s situation in November 2010, just before it was forced into an EU/IMF bailout programme. Based on Ireland’s experience, a bailout for Spain seems inevitable.
The trifecta of problems
While many have deemed the eurozone (EZ) crisis to be fiscal in nature, it has never been that simple. It is true that neither Ireland nor Spain were as fiscally healthy as the headline numbers they were posting may have suggested. But that fiscal vulnerability was largely a reflection of other problems in the two economies. Both Ireland and Spain had allowed their public finances to become reliant on property bubbles that had also seen the countries’ banks over-extend themselves and their construction sectors grow unsustainably large.
Many have tried to explain the Eurocrisis, but fail to do so, as they make things too complicated. Keep it simple, and even kids will understand. Curing the system with more debt is not the right way. Another must see video by Omid Malekan below.
With Unemployment running well above 20%, the property market having collapsed (and will collapse even more), and the Economy is struggling, Spain should review some of Richest tax practices. When Tax Evaders are seen as heroes, the country misses out on a lot of Tax Revenues. If Spain, additionally, also would include the many non registered Wealthy foreigners enjoying Spain’s sun, while officially not living there, the tax revenues would improve dramatically. In Spain, everything is under the sun, even the Tax Evaders.
From El Pais;
A country’s tax policies are among its most defining characteristics. They show what kind of country and what kind of people we are, or would like to be: supportive of each other and the common goal, or self-interested and blind to the problems and realities of those around us; generous or mean. It really is as simple as that: two opposites. There are no third ways, particularly in a country like Spain, where five million are registered unemployed as it struggles to deal with a deficit that is close to 100 billion euros. In short, the time has come to take a long, hard look at taxes.
In the United States, where generous tax policies toward the wealthy are virtually enshrined in the Constitution, Warren Buffett, the planet’s third-wealthiest man, is calling on Barack Obama to make him pay more. In France and Germany, the respective 16 and 50 richest people are asking their governments to take more of their money. Their gestures are little more than symbolic, but they should make Spaniards sit up and ask why they aren’t hearing similar calls here. “This is a country where people who avoid taxes are regarded as heroes,” says Miguel Ángel García, an economist who works for the CCOO labor confederation.
Full article here.