Category: Europe

It’s Become a Much Less Friendly World for Secret Bank Accounts

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I don’t know who found pictures of Lichtenstein’s royal family engaged in unnatural acts with a sheep, because, they have announced that they have, “agreed a landmark deal with the U.S. to drop bank secrecy in cases of tax evasion and could make similar concessions in the European Union.”

They now have to show evidence of likely tax evasion, as opposed to proving that there is deliberate tax fraud, which, you know, you generally cant without having access to the accounts in the first place.

You are going to see a whole bunch of people paying back taxes soon.

I Don’t Wish That This Was Still England,

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But I do wish that we had their banking regulators:

Banks will face huge fines if they do not treat their customers fairly, under a crackdown to be announced by the Government today.

Ministers have decided to turn the voluntary code of practice operated by the banks into a legally-binding one, amid mounting concern that they are flouting their own rules during the credit crunch. The move follows claims that small businesses and individual customers have had the terms and conditions of their loans and overdrafts changed overnight by their banks.

The UK is Not My Country

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And I don’t want it to be my country, and I don’t want to be….Take the Royal Family….please!

That being said, I really wish that we had their banking regulators:

Credit card giants have been given two weeks to agree to stop charging exorbitant rates to borrowers or risk losing their operating licences.

Ministers said they were giving Britain’s major lenders one last chance to prove they were not profiteering from the downturn. The ultimatum was delivered at a four-hour Whitehall summit called after The Independent disclosed some credit card and store card providers had raised interest rates – in some cases to 30 per cent – even though the cost of borrowing had fallen.

Perhaps we can trade them Hank Paulson and Ben Bernanke, for a few dozen Trident Missiles and future considerations?

NATO Meeting Finds Compromise at Meeting

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So NATO agrees to resume limited ties with Russia while also allowing for better ties with Georgia and the Ukraine without any road map to NATA membership.

Obviously, it makes sense to resume ties with Russia. They are geographically and historically very important in dealing with Iran and Afghanistan.

As to kicking NATO membership down the road for the two former Soviet Republics, that’s just stupid, but the best that could be had with Bush and His Evil Minions™ still in power.

NATO does not need expansion, and the idea that a nut job like Georgia’s Mikheil Saakashvili, or a man who seems to be actively in the running for nut job like Ukraine’s Viktor Yushchenko to have the ability to mandate actions on the part of three nuclear powers is absurd.

One of the great diplomatic missteps of the 1990s was the expansion of NATO.

Just imagine how bad it would have been if Georgia had been a NATO member when it launched its assault on civilians. Do governments in the rest of Europe want to be held hostage by someone like Mikheil Saakashvili?

Do the militaries in the rest of Europe want to have to share data with a country whose military was so completely penetrated by Russian intelligence?

The expansion of NATO has been driven by 3 things:

  1. The US desire for new markets for defense equipment.
  2. The desire by some players to treat Russia as a conquered nation, and to use NATO rub their face in their current status.
  3. The European goal of continental union.
  4. Dick Cheney and His Evil Minions™ want to recreate the bad old Russian bear, because it gets Republicans elected, so they keep poking Russia with a number of sticks, of which NATO expansion is one.

I will note that the rapid expansion of the EU, which is, after a civilian institution hasn’t gone well either.

One need only look look at Bulgaria, a virtual Mafia state whose accession to the EU was driven by pan European triumphalism, to a lesser degree places like the Baltic republics, which are engaging in genteel ethnic cleansing, and that whole “twins” thing in Poland.

Both the EU and NATO have over expanded because of this, and the possibility of adding Ukraine and Georgia gives me the willies.

If the road to a unified Europe is inevitable, and I think that it is near inevitable, then expansion can take part at a measured pace.

The greatest threat to a real European super-State policy is the EE’s collapse from overambitious expansion.

The Last Refuge of Well Connected Nuts: The WSJ Ediitorial Page

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In this case it’s Georgian President Mikheil Saakashvili, who continues to pimp the lie that the Rissians attacked first.

No, they didn’t. They knew that you would attack, and they knew when and where you would attack almost before you did, and so massed troops on their side of the border waiting for the balloon to go up, but you attacked first.

Being stupid, and having your state security apparatus thoroughly penetrated by a large unfriendly neighbor does not make you the victim of an attack. It just makes it either stupid or insane to launch an attack against their troops and allies.

You sir, notwithstanding your vaunted Western education, are both stupid and insane.

Economics Update

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Well, it looks like today was the day for all the stuff you wanted to dump before a 4 day weekend.

First, consumer spending fell 1%, well beyond the prediction of 0.7%.

Remember that these days, the Christmas season starts in October for a lot of people.

This is a crushing figure, and it’s not just due to falling energy prices, because people are paying down debt too.

The consumer confidence numbers reinforce this. The index is at 55.3, the lowest number since 1980, though still above the record of 51.7 in May, 1980.

Confidence not any better on the business side of things, with
durable goods orders falling 6.2% in October, and no, that’s not an annual rate, that is the shrinkage for the month.

The unemployment stats say that weekly jobless claims fell last week, but I’m taking that with a grain of salt for the following reasons:

  • Initial claims for state unemployment insurance benefits were a seasonally adjusted 529,000 in the week ended November 22 from an upwardly revised 543,000 the previous week…..Meaning that you compare lower initial numbers versus the later ones from the previous week, and it’s a “drop”….yeah right.
  • The 4 week moving average, which smooths out the noise, hit a 25 year high. (click for full size pic)

Just in case you are wondering how bad this will get, note that Fitch just cut its ratings on Toyota’s bonds to AA from AAA.

Seriously this is a Stay-Puft Marshmallow Man news.

The credit markets are freezing up, though applications for mortgages are up, largely on insanely low interest….I wonder how many applications are rejected though.

I would also note that new home sales declined to the lowest level since 1982, so its not like there are a sh^%load of buyers out there.

As a result of all this, we are seeing a number of rescue packages world wide, with the European Commission announcing a €200 stimulus plan, ]China’s central bank cutting rates.

These are probably what drove the dollar up today, and it also drove oil up

That being said, I think that the most troubling indicator is the fact that the 10-year Treasury yield fell below 3%, a new record, and this indicates that the flight to the relative safety of US Treasuries is continuing unabated.

Stupid Lame Ducks

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Well, the US is threatening Russia over it not complying completely with the cease fire agreements, in this case my guess would be over their disinclination do withdraw from portions of Abkhazia that Georgia seized a year of so ago:

Russia is still failing to meet its ceasefire obligations with Georgia and Washington’s European allies must not overlook this and rush to embrace Moscow, a senior U.S. official said on Tuesday.

Matthew Bryza, Deputy Assistant Secretary of State for European and Eurasian Affairs, said Moscow must pull back its forces as agreed in a French-brokered ceasefire that ended the war in August before there could be “business as usual.”

Mr. Bryza, you are a complete idiot.

No one cares what you thing. You will be gone in 8 weeks, along with the rest of your skeevy incompetent associates, and the Russians and the Europeans know this too.

Please, just have a steaming helping of STFU.

More on the JSF Norway Buy

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So, we have the statement by the Prime Minister that Norway has settled on the F-35 as its F-16 replacement.

What I find interesting is this article, which says Norway will pay $2.54 billion for 48 aircraft, because that figureds to $52 million per aircraft, which is less than half the unit costs I’ve been seeing.

Something is seriously whack with those numbers, which, as the Norwegian PM notes in his statement, is less than the Gripen, which is half it’s weight, and you pay for aircraft like you pay for ground beef, by the pound.

It may be that the money already put into the program by Norway as a JSF partner is being counted, but there have to be some seriously heavy duty “Jedi mind tricks” in the accounting too.

Switzerland?????

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According to Crooked Timber, it’s Switzerland that is the next western nation to be hit by the credit crisis:

Not only major institutions but whole national economies are up for grabs now. The national bankruptcy of Iceland seems likely to followed by something similar for Switzerland. As Citi itself points out, UBS and Credit Suisse are bigger, relative to the Swiss economy, than Kaupthing was for Iceland. Felix Salmon (also predicting doom for Citi, has been all over this).

Go read the whole article, whose main thesis is that the financial markets are heading toward either very aggressive regulation, or government ownership, or both.

But still, what hit me in the gut was the Swiss possibly being broke….That’s amazing.

I gotta go short Swiss chocolate futures.

This Will Only Hurt a Bit, Now Bend Over

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Well, it looks like public pressure is working, because that’s about the only reason that the seven top executives at Goldman Sachs would send a memo to the board of directors asking for no bonuses this year.

Hopefully, this will spread across the industry.

It’s also happening in Europe, where UBS will not pay bonuses to top staff in 2008.

In fact, it’s going further, to change the incentives for a quick buck:

Starting from 2009, top managers’ bonuses will be blocked for at least three years instead of being paid immediately and executives will receive variable pay if UBS results warrant.

Which means that the quest for a quick buck for a quick bonus has just become more difficult.

Great, Now I’m Agreeing With A German Politician

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Former German Finance minister Oskar Lafontaine, now a member of the Left Party, is calling for an 80% income tax for people earning more than €600,000 a year.

While a maximum marginal income tax rate of 91%, which persisted through much of the Eisenhower administration, and was lowered to 77% under Kennedy, is probably excessive, the explosion in executive pay, and the falling real wages for the rest of us , largely correspond with the maximum tax rate falling to 50% in 1980, and below 40% from 1987 on (link).

Higher marginal tax rates, with greater limits in deductions would go a long way to fixing much of what is wrong with the US economy.

Economics Update

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Well, the idea the economies have decoupled is once more giving the lie by the India central bank cutting its interest rate by 50 basis points, the Australia central bank cut its benchmark interest rate by 75 basis points, and South Korea announcing an $11 billion stimulus package.

Of course, those are just the official actions, on the level of the financial markets, we have a number of German property funds freezing redemptions, and because they are heavily into UK real estate, “German funds have been among the most active in snapping up City of London and West End properties this year,” this does not bode well for either the UK or German financial systems.

When we finally get to the United states, we have Institute for Supply Management’s its manufacturing index falling to 38.9 in from 43.5 last month, the lowest reading since . It was the lowest reading since September 1982.

Additionally, construction spending in September fell 0.3%, which is better than the 0.8% expected, but Lehman’s collapse probably came late enough not to move that number much.

The October construction number will be positively grim, because it runs on credit, which is still nearly non-existent.

Speaking of credit, it appears that the LIBOR and other interest rates are down, indicating some loosening of credit. (see also here)

On the other hand it appears that while banks are slightly less reticent to lend to each other, they are still tightening lending to everyone else, according to a Fed survey of lending practices.

I don’t blame them, after all Iceland Bank Swaps are losing 97¢ on the dollar.

All this news has pushed oil prices lower, which is no surprise.

Not Enough Bullets: Scotland Edition

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Specifically, the Royal Bank of Scotland, which just received a £20 billion bailout from the British government, but still intends to pay bonuses to the people who screwed up the bank in the first place:

The bank has set aside £1.79bn to cover “staff costs” – including discretionary bonuses – at its investment banking division for the first six months of the year alone. The same division caused a £5.9bn writedown that wiped out the bank’s profits for the same period.

The last ‘graph in the article says it all:

Banking sources privately acknowledge that the sight of these bonus accruals may provoke anger. They concede the industry’s pay and bonus regime is under unprecedented strain as it fails to reflect profitability, asset writedowns or share price declines.

The idea that you give people bonuses who lose you money is not, “Unprecedented Strain”, it is insanity.

HRW Alleges Georgian War Crimes in South Ossetia

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It’s a BBC radio broadcast (at link), but the money quote is:

Research by the organisation Human Rights Watch [HRW] ints to indiscriminate use of force by the Georgian military and the possible deliberate targeting of civilians.

Indiscriminate use of force is a violation of the Geneva Convention and serious violations are considered to be war crimes.

No big surprise here, this was obvious in the first few hours of the war, before, you know, the Russians eradicated the Georgian military.

It marks a turn around for HRW though. In the early days following the war, they accused the Russians of using cluster bombs….Until it was revealed that the physical evidence that they had was all ofS weapons.