No French Currency Crisis, Either. JUST PLUTOCRATIC DERANGEMENT SYNDROME.
American economists just discovered what the Euro is all about. Namely the Euro is the French currency. (Please applaud how much more clever they just got!). Professional economists could have known this long ago, if they did more than read each other. See my: Why Europe, Why The Euro.
French yields have improved dramatically. Why? It’s not just what American economists just learned that (Euro = France), because that was true ever since the European Currency Unit (more than 20 years ago).
What has really occurred is that the cause of the present Greater Depression has been stumbled upon, for all to see. Moreover real remedies have started to be applied. (For the first time in this crisis that exploded in 2008.)
The French finance ministry took the lead in making plutocrats pay for their mess (at least in Cyprus; one has to start somewhere!). Good. But that was just a warm-up. Real reforms are now happening everyday.
And a miracle happened. Thanks to Jérôme Cahuzac, a bandit of plutocratic type who happened to be French budget minister, French and Swiss Justice are presently demonstrating how pervasive the plutocratic phenomenon and its entanglement with politicians and tax havens are. In the USA, of course, Jérôme would be just another wealthy politician, legal thoroughly, and cabinet minister. (See, Rice, Susan, for further edification; plutocracy is legal in the USA).
But France and Switzerland are supposed to be democracies, not plutocracies. The incoming consequences of discovering how huge tax evasion by the plutocracy is, are going to be huge. And are already showing up.
Indeed a corollary is that bond market participants know now that Europeans are going to realize that austerity is not just a sham, and a crime, but also a Transfer of Assets To Rich People (TARP!). The bond market understands that the collective consciousness is changing, and that real change on the way. For the better. Hence the collapse in yields.
In a society which does not revere plutocrats as “philanthropists” (as the USA pathetically does), austerity does not have a reason to be. Thus austerity ought to be discontinued, in Europe, the world’s largest economy. But austerity made the deficits worse. So, if tax evasion is mitigated, the economy can restart, and debt loads ought to stay manageable. Hence the bond rally in France. Now for some more details and perspectives.
***
EURO = FRENCH INVENTION:
The Euro is, first of all, a French invention. President Mitterrand proposed to his good freund Kanzler Helmut Kohl to create the Euro, in a deal to support, in all ways, the reunification of Germany (including with French direct investment in East Germany).
Since the grotesque Second World War, all those who half think in Franco-Germania, decided that the one and only way to terminate the interminable, perfectly ridiculous Franco-German wars, was to reset the macropolitical clock back to 800 CE, when the Renovatio Imperium Romanorum extended from Catalonia to Poland. For about a millennium, there was just one currency in Europe. After that, there was war.
Paul Krugman in “France Has Its Own Currency Again” discovers the notion:
“Joe Weisenthal draws our attention to a development that may surprise many people: French borrowing costs are plunging. (Don’t tell George Osborne — he thinks that low British rates are a unique personal achievement)…
But wait– wasn’t France supposed to be the next Italy, if not the next Greece?
Well, Joe has what I agree is the right explanation: markets have concluded that the ECB will not, cannot, let France run out of money; without France there is no euro left. So for France the ECB is unambiguously willing to play a proper lender of last resort function, providing liquidity.
And this means that in financial terms France has joined the club of advanced countries that have their own currencies and therefore can’t run out of money — a club all of whose members have very low borrowing costs, more or less independent of their debts and deficits.
Welcome to the club, France. Now, why are you doing all this austerity?”
[France is not doing that much austerity: she went into a full war in Mali, and the deficit is still going to be closer to 5% rather than 3%; that’s less austere than the USA. Still, there is enormous waste in, and from, the French bureaucracy; a referendum to diminish the bureaucracy just failed in Alsace].
***
WHY THE EURO IN A NUTSHELL:
So American economists, traders and speculators are suddenly realizing what was true all along, that the Euro is very much the French currency. Always has been.
Many Anglo-Saxon leaders are so much into the business of deriding anything French that they believe reality has an anti-French bias, in all things, except wine and cheese. Now that dear Paul Krugman and company self congratulate each other for having come across the obvious, so true for 30 years, let me point out that their slaps in the back do not explain the sudden drop in yields in April 2013.
Before I proceed to do that, let me re-iterate what I have long said.
The Euro is more than the French currency. The Euro is the Franco-German currency. Just like the French, the Germans, after May 1945, and even many of the Nazis themselves (for example Albert Speer) several years before that, came to understand that the only way to win a war against the other was by total unification.
This is what makes the Euro not just unavoidable, but necessary. Once Franco-Germania (re-)unifies, a superpower is immediately created. Indeed, France and Germany, plus the crumbs in between (Benelux), represent more than 180 million people. To this one has to add other satellites: Northern Italy, Austria, Catalonia… Even Switzerland (Swiss Franc is, had to be, pegged to Euro). At this point, one talks about 250 million people, a power roughly comparable to the USA in most of the most significant long term characteristics, most of them living an average distance of 500 kilometers from Bale/Basel.
The fact the distances are so small is of the essence: one can drive through pieces of the largest of these countries with one car, in one day. The Euro is a driving necessity. Before I used to dread to travel from my Alpine home without the proper papers, currencies, etc. It’s as if I were in enemy territory within twenty minutes of setting behind the wheel. Now I am still at home around home, I am not fighting WWII all over again.
***
SO WHY DID FRENCH YIELDS JUST COLLAPSE?
The yields were high because of two reasons:
1) speculators prefer high yields, so they made it so (remember that, thanks to unregulated and mostly secretive derivatives, they have tremendous leverage at their disposal).
2) some bond investors were genuinely afraid they would not get reimbursed by the governments they lent to. (Indeed, watch Stockton, California, file for bankruptcy; ah, not in Europe? Just a detail. Still a government of sorts.) High interest is a way to make sure they get their money back.
An indication of future inability of government to pay back is if said government has high debt and is running a primary deficit (mostly borrowing more to pay past debt). Most Western government ran high primary deficits after 2008, because they had to pay jobless people, and re-capitalize banks.
At least, that’s the conventional explanation. The truth is more subtle. in truth, banks were recapitalized with public money, instead of being recapitalized by finding the money that had apparently disappeared.
Take Cyprus: extravagantly high interest rates (5% to 9% were paid, for years, as world finance collapse). So a Russian Afghan drug runner having dropped his ill acquired wealth in the “Popular bank of Cyprus”, could have made 50% on his money in 5 years.
The way the crisis of 2008 was solved, French and German taxpayers should have saved his 50%. But this time the French and German finance ministers said NEIN. Instead the drug runner plutocrat was told to kiss “his” money bye bye. Next time he can go leave his money in Dubai. This was giant conceptual progress.
By the way, 96% of depositors in Cyprus’ banks recovered 100% of their saving (plus extravagant interests paid!). It’s only the fat cats who are being punished (and even then, mostly in 2 banks).
The old way to solve the financial corruption crisis was plutocratic, unfair, and just a way to extend the crisis, by going on with the transfer of capital from taxpayers (the poor) to the hyper wealthy (the plutocrats whining that their banks had gone bankrupt, because they just finished stealing them down to the last Dollar or Euro).
This is what I have been saying for years.
The old way just made the public deficits worse. “Austerity” was then introduced as a further boost for cutting money to the poor some more.
The “new” way adopted to solve the Cyprus crisis, make the plutocrats pay for the crisis they fabricated, instead of just augmenting the deficits some more (still the Europe gave 9 billion euros to Cyprus, augmenting public deficits by that much, and the IMF, one billion. So even USA taxpayer and beggars pitched in!)
There is nothing really “new” about this “new” way. Debtors going bankrupt were severely punished in the past. Now we are just going to forse them to regurgitate what they stole. Hopefully.
If plutocrats are going to regurgitate a bit, why not go the whole way? Then, it turns out, the deficits would completely disappear. Tax evasion to tax havens in the European Union is evaluated at more than a trillion euros. About half of the yearly budget of the USA.
Hence the following evidence, pointed out today by L’Humanite’, the Communist newspaper: austerity does not have to be. It would be enough to strike the tax evading plutocrats with austerity, as I have been claiming all along.
***
THANK YOU Jérôme:
That’s why we all have to say thanks to Jérôme the bandit. You see Jérôme, was not just a successful plastic surgeon. Part of his business development involved not just having, with his wife, also a surgeon, a private clinic. No. Jérôme became a “socialist”, just like many wealthy people become “democrats” in the USA. You know, the sort of people the president sleeps in with, in the Silicon Valley (Silly Cone?).
As an MD, Jérôme was a natural big negotiator of health stuff with rich health care providers such as Novartis. Thus the bright, towering, energetic and good looking Jérôme was naturally part of the “socialist’ government in the 1980s. he negotiated many things with the likes of Novartis.
Under the table. Under Swiss tables, more exactly. That’s why, as baking secrecy was threatened in Switzerland in 2009, Jérôme tried to get a number of Swiss banks to transfer 15 million euros from Suisse towards the safer tax haven of Singapore. That was not easy, because the banks noticed he was a Member of the French Parliament. Jérôme had to falsify a finance ministry document.
Under Hollande, Jérôme became budget minister, making a giant noise on how he was going to find and punish those who engaged in fiscal evasion. Ironically, the full and enthusiastic cooperation of prosecutors in Geneva brought his case to light, with the amplification of the French Internet magazine “Mediapart“.
Now French Justice has charged Jérôme with “blanchiment de fraude fiscale” (laundering of fiscal fraud”).
***
So let me repeat slowly: the reason for austerity is out. It turns out that French finances are actually excellent. And the finances of many other European countries are also excellent. This is why the yields are collapsing in France.
What has just been revealed to the masses is that the debt crisis was mostly about the hyper rich splurging with other people’s austerity. Make the hyper wealthy fraudsters regurgitate their stolen goods, and deficits disappear.
***
Patrice Ayme
Patrice Ayme's Thoughts 
April 9, 2013 at 9:09 pm |
Lovely.
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April 10, 2013 at 12:07 am |
What is the solution to Greece’s austerity?
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April 10, 2013 at 3:04 am |
Dear Partha: Getting the Greek plutocrats to pay some tax instead of none, would be a good start.
In Cyprus, the “Orthodox” Church has agreed (at some point) to contribute some of its wealth. The Greek Church (a sort of state church) claims it’s helping the poor, thanks to its formidable riches.
Personally, I would REQUIRE to have the Greek ship magnates be taxed say at 50% minimum (instead of the present 0%), before sending another Euro of hard earned Franco-German taxes down there. Moreover, Cyprus has engaged criminal examinations for what happened, and how much money politicians and banksters got from plutocrats. I am waiting for the equivalent in Greece.
So let’s have a little anti-plutocratic revolution in Greece. Best solution for austerity.
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April 10, 2013 at 3:05 pm |
In the interest of fairness, and while I am sure that Laiki Bank made its share of dodgy loans, its primary asset base was in Greek Sovereigns. And why should they NOT have been in Greek Sovereigns??? They are a Greek bank, after all.
Ahh, but then the ECB, in a stroke of the pen, decided that Greece was never going to be able to make its upcoming payment to the IMPORTANT FRENCH AND GERMAN banksters and agreed to take 25 cents on the Euro.
Good enough for them, but what does that do to all the OTHER debt holders? Eh?
It gives them the shaft.
And Laiki Bank has been reeling ever since.
Finally, the co-conspirator IMF decided that Laiki Bank needed some AUSTERITY to fix its balance sheet before that kindly institution could lend it more money. Oh, and since we don’t like all that Russian money (with shaky provenance) on deposit, we will ask them to kick in to the rescue.
Unprecedented.
Unheard of.
UNFAIR.
As GW Bush almost said, “Fool me once, shame on you, fool me twice, shame on me.”
Depositors now know this.
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April 10, 2013 at 3:45 pm |
Wow Old Geezer Pilot! Looks like you agree with none of what I have said since ever! You want to socialize the losses of plutocrats.
As it is the present solution is perfect for me! That’s good! They can go back to Russia, those “depositors” and invest their drug money among each other! Instead of laundering it in Cyprus, and buying Europe with it (thanks to Uncle Sam’s indirect, but huge opiate production in Afghanistan).
So according to you: it’s French and German citizens who should pay for banksters?
I have advocated default forever, because those who caused the mess should pay for it. The way the crisis was solved, by transferring MORE assets to hyper rich people violates equity, justice, socialism, and free market theory. It’s living abjectly at the feet of plutos.
It’s indeed unprecedented that plutocrats would suffer losses. All accounts below 101,000 euros (about 130,000 dollars) are reimbursed 100%. Small people lost NOTHING. Depositors can know that. Russian kleptocrats and plutocrats and drugocrats are not welcome in Europe, either. It was high time for them to know that.
And when the next large Spanish bank fails, it’s all those who made money out of it who should pay, not the average Joe. Good news: the Royal family there, plutocrats if there ever were, is going on trial (basically). That plutocracy ought to be terminated symbolically, and the republic re-established.
BTW, Greek Cypriots talk Greek, but are not Greeks. And small depositors ought to be happy they were not asked to regurgitate their ill gotten interest over the years, and, instead, have Americans and European average Janes pay them…
PA
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April 11, 2013 at 2:04 pm |
I Love Obama.
He is a great talker, and having twice elected a man of mixed race says a lot for where America has traveled since the 60s.
But I would not want him to buy a new car for me, because his first offer would be list price.
And he will cave when he comes up against the big money plutocrats.
He always has.
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April 11, 2013 at 4:24 pm |
Dear OGP: Obama is a friend of mine, I feel for him. He wants so desperately to be accepted by the big. bad white boys, and all and any plutocrats who show up.
Plutocracy defines what’s up for him, deep in his guts. when he was in Indonesia, he was mistreated by the commons. His revenge was the big mansion, with the servants’ residence on the premises. That’s how he could take being insulted by other kids with equanimity.
Although I lived in much less plush circumstances, in the poorest part of the world, I had personal experiences somewhat similar to him, and still do, to this day. So I empathize with Obama. Although he has real roots in Hawai’i, including friends he had for more than 40 years (some part of my family).
I lost around 100% of my friends in the USA when I (fiercely) opposed the Iraq war. I discovered, to my disgust, that money was a more reliable acquaintance. I am sure that’s quite a bit in the back of Barry’s mind.
When Barry became president, I discovered what the whiff of power did. Most of my family recoiled in horror, when I fiercely criticized the direction of prosternation, Tibetan Buddhist style, crawling on one’s belly, towards the great plutocratic mountain. Those worthies apparently decided I had got to be dangerous, as if they expected Barry to order his goons to hunt me down. Or that, being closely associated to me would hinder their great social ascent. Some I had known for decades did as if they were dead since Obama became president.
Fact is, Obama lost his presidency in the first few weeks, when he did not visit terror on the demonocrats such as Feinstein, Pelosi, Baucus, etc… All of them hyper rich (try to find Baucus’ wealth on the Internet! He controls even that. Baucus owns, among other things, a 125,000 acres ranch; fifth generation plutocrat!)
But of course Obama could not go to war, because not only he believes first in me me me me in a rather superficial manner (so what if one becomes a billionaire?), but he is more into navigation than confrontation. Always served him personally better. But that’s the great difference between the master and the slave. The master confronts.
Civilization without confrontation is only ruin of the city.
So let Obama do the work of the plutocrats without having them asking. Removing some of cost of living adjustments leads to an EXPONENTIAL EXTINCTION of Social Security. The mathematical mechanism is exactly the same as in my exponential extinction theory for genes and species…
PA
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April 11, 2013 at 1:49 am |
Au Contraire, I do not advocate Socializing plutocrat’s losses – I just object to screwing over the depositors, even if they are Russians.
And I most certainly object to the Franco-German banksters sticking it to their southern union members who, other than allowing Russians to deposit money in their institutions, have not really done anything wrong.
Fair is fair.
Let the stockholders and bondholders take a hit. I could not care less.
But having made the stupidest decision (the original one) to “tax” depositors, they have rung a loud bell that cannot be un-rung. Watch the money leave Luxembourg, Malta, Portugal, Spain, even Italy when the going gets rough.
People are not stupid.
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April 11, 2013 at 2:34 am |
Dear OGP: First of all, I don’t see the difference with what happened in Sweden in the 1990s. Then three baks, the three biggest, were bankrupted. One was saved privately at the last second (with foreign private capital). The other two got nationalized.
As it Laiki is going to be swallowed by Bank of Cyprus (itself refurbished). I differ from your position about depositors.
Personally, I want to EXPROPRIATE one third of fungible private funds, worldwide. Those in tax havens. Period. Russian plutocratic money is first of all organized crime money. As they buy europe, those criminals, I object. After seizing their money, then I want to put those depositors in jail.
I am not nice. I have had enough.
Nice people in Cyprus are not losing a dime. Bad people have been told they are wearing a target sign on their hides. Good. As I said a few essays ago, I would even put Monaco out of business. Let tax havens live in terror.
Luxembourg announce today that it will denounce European tax evaders starting January 1, 1915. Then Junkers chuckled that they are getting so much plutocratic money from Russia and China, leaders are not worried about “the lights going out in Luxembourg”.
As I have explained in all sorts of directions, the Cyprus story had to do, mostly with organized crime.
Law enforcement is now cracking down, so French yields are collapsing, and hopefully Kim Jong Un is trembling. Oh, BTW, why is not Kim Jung Un’s enormous fortune seized? that sort of things has worked, even in Iran…
I am NOT anti-Russian, very far from it. I even welcome a Russian consortium’s construction, in Paris of the world’s new Twin Towers (to spite primitive Jihadists).
PA
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April 11, 2013 at 4:25 am |
Good luck expropriating 1/3 of private monies. They stole them fair and square. My hope is that they do not swallow up the remaining 2/3.
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April 11, 2013 at 5:28 am |
OGP: things are progressing by leaps and bounds. The main European powers announced yesterday that they would cooperate fiscally. Today Luxembourg capitulated, the richest French plutocrat decided he would rather stay French, after all, because he had no expected to be dragged in the mud as much as he deserved, and president Hollande announced that all countries that would not cooperate with France fiscally will be labelled tax havens. To make things a bit more testy, Switzerland was adressed an ultimatum. france want to be treated just like the USA, as far as Suisse is concerned, France told Suisse…
3.2 trillion of shaddy money is in the City (of London) coffers.
Thus it may well happen. Obambi is now proposing a 30% tax on the hyper rich (I said 50%, can’t he read? Even by 3 year old daughter knows the difference between 3 and 5…) of course he will not get it, but it least he made the right noise (for once…while cutting Social Security, so the plutocrats still want to play golf with him… A sport for plotting peep squeak… Thus if they are squeaks and peeps, they can be squeezed…)
I say, let’s do Kim, and then, thus well launched, we can extend the love to all other plutos….
PA
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April 12, 2013 at 4:04 am |
Krugman: “the modern world’s closest equivalent to the classical gold standard is the euro, which puts European countries back under more or less the same constraints they faced when gold ruled. It’s true that the European Central Bank can print money if it chooses to, but individual countries, like nations on the gold standard, can’t. And who would hold up these countries’ recent experience as an example of something we’d like to emulate?”
Patrice Ayme: That the Euro is the modern gold standard is a very astute observation. That’s why it’s so overvalued.
It’s also a repetition of what France did in the 1930s; clinging to the gold standard, although the dollar, the pound, the mark, and others had long devalued. The consequences were adverse.
It’s no coincidence that, actually, the Euro is the French currency. Indeed not only was the Euro a French idea, but the Euro was created with an equivalence of one dollar for one euro, based on the long term level of the French Franc versus the dollar.
The fundamental truth in all this, is that the state has a duty to create as much money as needed to operate the economy… Or make it so that its agents, the banks, create enough money, injected profitably in the REAL economy. That’s not what is going on now, and the Eurozone is a prime example.
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April 12, 2013 at 9:25 pm |
I agree with all your points Patrice. And regarding Old Geezer’s kind-hearted concern for depositors, I would say this:
ANYBODY who doesn’t know that by loaning her money to a bank at a preposterously high rate, she is actively complicit in some financial crime, be it a Ponzi scheme or a tax-evasion-con-laundromat scheme or both, does not deserve her money back. What she deserves is indictment, as should have most so-called “victims” of Mr Madoff, who were simply hoping to prey on fellow “investors” by jumping ship early enough. The financial rescue of these hapless grannies, as they were shamelessly portrayed by the tabloids, is merciful beyond reason. But hey, who said Europe was evil.
A small detail about French bond yields: they were NOT “high”. They just went from low to extra low (but still above German levels). An explanation for the free fall is provided here:
http://www.france24.com/en/20130405-french-10-year-bond-yield-falls-record-low
It seems that cash-brimming Japanese, desperate to grab public debt, are setting their sights on French debt because it is perceived as AS SECURE as German debt, and MORE REWARDING (or rather, less eroding, since actual yields are negative… pity cash-brimming investors!).
So the fall may not keep in the longer term. Better enjoy it while it lasts.
Which does not detract from your notion that the markets basically trust France, as they trust Germany, paying no heed to the WSJ-anointed Cassandras who predict Euro-Armageddon with a tenacity worthy of better causes.
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April 12, 2013 at 10:48 pm |
Well Dominique, perfect commentary of yours, once again! Let OGP meditate this!
It fits one of my general meta (or mega?) principles; the public is often accomplice. Say the USA public with the Iraq War, the French public with whatever happened in Algeria (both ways!), and especially the nasty Germans of the 1930s with Hitler, or the furious one of 1914 with their pseudo “Caeasar” (“Kaiser”).
I will read the Japanese mechanism later, got to run now. It makes sense, of course. However, I maintain a big contribution is the crackdown on the cheaters… (OK, more potential than real at this point!)
PA
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April 12, 2013 at 11:12 pm |
Thank you, Dominique.
My only concern was for the small depositors who were about to be “taxed”, e.g., fleeced, out of a large portion of their life savings. That was the brainchild of the ECB gurus and the newly elected rightist PM of Cyprus. He changed his tune, but you can’t un-ring a bell.
I also feel for the thousands of former white collar workers who will soon be crushing grapes and picking olives, but, “C’est la vie.”
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April 12, 2013 at 11:42 pm |
Actually, AFAIK, the Eurogroup’s initial proposal was to focus on larger deposits. The idea of spreading the pain across the board was the Cyprus PM’s, in effect taking his own people (and small-income residents) hostage – as human shields for the big fish who are his real owners. He was counting on rejection in Parliament and of course he got it. What he had not counted on was Europe showing spine, and simply getting back to square one – our earlier proposal still stands, we advise you to take advantage. Goes to prove that you shouldn’t listen to certain homilies about wimpy Euros.
About Cypriot banking staff having to work honestly. The Cypriots still have all of their money in the bank. They were not taxed, except for a minority. Their currency’s value was left untouched, instead of nosediving as would have happened if Cyprus had left the Euro. They were not robbed dry as were West Africans in the early nineties with a surprise FIFTY PER CENT devaluation imposed from abroad, fleecing even those with no bank account at all. Those accounts which were impacted were never going to be invested in the development of Cyprus anyway. But Cypriots are in an unexpectedly good position to invest their savings efficiently, including but not necessarily in agriculture. Some could turn to tourism or services or whatever. Not everybody has an investor streak – it’s so much easier to grab a high interest and bask in the idea one is a shrewd player – but I’m sure if the Govt created a structure with a mandate to host these savings and put them to good commercial use and develop a real economy, Europe would even add money to the pot.
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April 13, 2013 at 12:51 am |
Once again, I approve what Dominique says. My argument was that, precisely because the French finance minister, Moscovici, showed spine, that French yields have collapsed.
In the latest news, the Euro Group has decided that Cyprus needs to come up with another 7 billion euros. For total of 13. The Euro Group plus one billion from IMF (USA!) stands. They suggest Cyprus sell stuff, like gold reserves (to which I would add cyprus church stuff), augment taxes. Meanwhile the reimbursement schedules of Eire and Portugal were loosened up.
In still other news, Belgians, in the average, are FOUR times richer than Germans. Why? Real estate is worth MUCH MORE in Belgium. Conventional wisdom is at a loss to explain that. But it’s easy once one has realized Belium operates as a tax haven of sorts…
You don’t want to know the price per square meter of Monaco…
The way Africa has been treated has been atrocious, indeed…
PA
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April 12, 2013 at 11:57 pm |
Dear OGP: Live by the sword, perish by the sword. There is now an on-going judicial examination about who did what in Cyprus. Not to respect the 100,000 deposit insurance was initially a Cypriot idea (from people since resigned). I would have had no problem small depositors regurgitating their ill gained gains. After all, as it is, it’s small depositors in Franco-Germania earning 1% interest who are paying.
I don’t know about grapes and olive, Cyprus is very weak agriculturally, as I explained previously.
Not everybody can go fracking in an empty continent recently cleansed from red skins…
PA
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April 13, 2013 at 7:57 am |
I don’t know about Belgian real estate being expensive. Next to Paris, Brussels is very affordable, despite the pressure from the army of Euro civil servants with lodging allowances – and of Euro lobbyists with fat expense accounts. But of course I have no idea on German real estate.
Belgium is a tax haven of sorts – but this needs qualification.
First, it benefits ONLY the super-rich, who do not get taxed on capital, capital gains or income from capital. The wage slaves (including the well paid ones, but also the very lowest echelons) are MUCH MORE taxed on their income than their French equivalents. (no idea on corporate taxation).
I spent two years in Brussels and a tax advisor strongly advised me to keep my French resident tax status, doing all the math for me. He was very courteous and helpful, and did not want to bill the (obviously) small fry that I was despite a comfortable EU contract. That’s the Belgian way.
The Depardieu ruckus was echoed in Belgium by rumbles among the hoi polloi, who were reminded how badly they were treated relatively to other Europeans.
Second, Belgium does not vamp or coddle foreign plutocrats to come and grace its cosy urban landscapes. Mr Arnault was snubbed! Oh the horror!
Thus IMHO, despite being very nice to its fat cats, Belgium does not follow a tax haven business model – in opposition to Luxembourg, which also happens to be the European nexus for human trafficking (Est Euro pimps).
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April 13, 2013 at 4:46 pm |
Dominique: That the wage slaves paying heavy taxes is well known in Belgium. Truly rich live off cap gains and dividends, hyper rich from borrowing (against capital, thus avoiding taxes all together legally in the USA). So Belgium operates like a tax haven for the hyper rich. That’s why Arnault
I know someone who earns 450K in the silicon Valley, and is pretty upset to discover she pays more than twice in taxes than Obama, who earned twice more (and Obama has quite a few perks). My friend is taxed even on her parking spot! Obama paid 18% tax.
PA
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May 27, 2013 at 6:28 pm |
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