Strong Opinion from our Stable of Star Turns
Last week's news is this week's trouble
The first week of 2013 opened with a plethora of opinion that this year would be one of strong global recovery, and even a resumption of that newly-elusive commodity known as growth. Perhaps this is an illusion, fostered by a bounce in QE-driven global stock markets and strong earnings growth in the key economy – the USA.
The second week of 2013, however, held deeply different factual news, and I set these out here in no particular order, as they all convey the reality of where the global economy is actually heading:
• Increased rumblings from the election-losing Republicans about the forthcoming war in March with the White House over the Total Debt Enactment Order.
• On 7 January the US Government ran out of money, and is being kept solvent by the Fed’s printing presses – printing future inflation and joblessness – until March’s debt ceiling vote.
• Ratings agency Fitch announced: ‘It is highly uncertain what would happen if Congress did not raise the debt ceiling before cash balances were exhausted.’
• Goldman Sachs (and Morgan Stanley) announced record quarterly earnings, but its UK bonus payments would be deferred so as to avoid the higher rate income tax.
• Alexsis Tsipras, the opposition leader in Greece, told the Germans that propping up Greece was a waste of time and money.*
• UK banks are failing to pass on the full benefits of BoE cheap funding, and the two state rescued Scottish banks need extra capital of around £30.0 billion, according the UK Finance Select Committee.
• The BoE Governor said UK banks still have unwritten bad debts of £60.0 billion.
• The Bundesbank is repatriating its physical gold, worth £115.0 billion, from London, Paris and New York, in order to combat future currency crises.
Read more: Merkel's austerity mania will bring down the EU
• The new Japanese premier, Shinzo Abe, has attempted to nationalise the BoJ; he doesn’t have to, as in the Spring the top three retire, and he will appoint their replacements.
• Nissan, a company that sees UK membership of the EU as vital for its Swindon plant, announced that a quarter of its Swindon workforce would be made redundant, as sales to the EU were down 5 per cent, but up 7 per cent in the UK.
• President Obama, whose administration is surviving on printing presses, told Mr. Cameron, whose coalition is also surviving on printing presses, to stay in the eurozone, which is also surviving on printing presses, as he wanted ‘a strong UK in a strong European Union’.
On BBC’s Dateline on Saturday morning, the editor of Le Monde, when asked what was going to save the eurozone, replied that it would be on the back of ‘growth and a re-launch of the economy! Stupide!’
If a fatal complacency is the French habitual disease, then Germans live in a dream-world of fantasy, myth and fairytales, best exemplified by the high regard for their ‘philosopher’ Hegel, who spoke in such riddles that his students held him in the highest regard, because they couldn’t understand a word he was saying.
The Franco-German combination, whose 50-year partnership is due to be celebrated today, doesn’t bode well for the great EU’s future, which is rapidly being left behind in the global economy’s race to the future.
*His actual words were: ‘Not only is it an inhuman programme [loans in exchange for austerity], it is an inefficient programme, but it has also led to a cul-de-sac. This programme has been revised twice and failed twice, and you can be assured that it will be revised a third time and will fail again... German taxpayers are paying money into a bottomless pit. I really want the German people to know that the Greek debts are unsustainable.’
Our specialists solve your HNW problems (gratis!)
In this new anti-tax-avoidance era, when so many tax reliefs have been withdrawn, I've heard that investing in a Business Property Renovation Allowance scheme is one of the few remaining good opportunities for maxing your tax position. Is it true that you can get up to 100 per cent tax relief on the amount invested? And what exactly are these schemes? How do they work? What are the upsides? Downsides?
In this climate, it is a relief to see one potentially attractive tax allowance come through unscathed from recent criticism
- Kaiser Partner reports 'solid' results for 2012
- STEP: British 'tax havens' make plans to reveal who owns what
- Philanthropists recognised in Queen's Birthday Honours
- Trying to import art to the UK to sell? It's just got more difficult
- LA Times: $100m of art seized from antiquities dealer
Links to blogs we like
Long or Short Capital
The Wealth Report
Real Time Economics
Iain Dale's Diary
ITA Wealth Management
The Lesperance Letter