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February 24, 2014
Sovereign Valley Farm, Chile
It’s like 34 drunken sailors holding each other up. That’s the best way I can think of to describe the latest product from the good idea factory that is the OECD.
Over the weekend in yet another cushy five-star hotel, representatives from this unelected supranational bureaucracy announced plans for world governments to exchange all their citizens’ tax and financial data with one another.
The 34 members states of the OECD are enthusiastically supporting this measure. And it constitutes the end of whatever remains of financial privacy.
The premise behind the OECD’s destructive pipedream is, as usual, to stamp out ‘tax evasion’. But this is a misnomer to being with.
Just about every multinational company out there employs strategies to reduce their current tax liabilities that are perfectly legitimate based on existing tax laws.
This is why companies like Google and Apple famously earn billions in profits but pay almost no tax. They’re vilified. But it’s legal.
These companies have shareholders from all over the world. And their solemn responsibility is to maximize shareholder value… not maximize the amount of funds that politicians in a single jurisdiction get to blow on wars and welfare.
There are also isolated individuals who are sitting on undeclared income stashed away in an overseas bank somewhere. But the aggregate amount is tiny compared to the $60+ billion that Microsoft alone has stashed away overseas, untaxed.
You’d think they’d get at the root cause of the problem and try becoming more competitive… lowering tax rates and streamlining government operations (shocker!)
But no. Instead they resort to even more Draconian tactics to lord over private citizens’ financial records and unilaterally set aside long-standing international treaties.
It’s a pathetic display of exactly the sort of tactics that governments embrace when they go broke. And most of these OECD countries ARE broke– Italy, Japan, the US, Spain, Greece, etc.
So what we have now are a bunch of bankrupt member states who think that they are helping the other bankrupt member states raise revenue by terrorizing citizens (rather than actually fixing the problem).
It’s genius. But what else can one expect from the OECD?
This is the same organization which said, in the same meeting over the weekend, that Germany should accept higher inflation so that the rest of Europe wouldn’t suffer from deflation.
The arrogance is astounding.
This is the same logic as borrowing your way out of debt and spending your way out of recession… brought to you by the same guys who completely missed all the warning signs of the Global Financial Crisis. Along with the IMF. The Federal Reserve (and every other central bank in the world). And every government out there.
Yet these are the rocket scientists who pull the levers that control the system.
It behooves anyone who can see the big picture to distance yourself as much as possible from this system.
This means, for example, keeping a portion of your savings in real assets that they cannot control, as opposed to paper assets that they conjure and manipulate.
Most importantly, it means not having all of your eggs in one basket. Bankrupt governments will resort to any measure they feel is necessary to maintain the status quo.
And if you live, work, invest, bank, run a business, own real estate, etc. all in one of these bankrupt countries, you are really taking on tremendous risk.
Danish central bank GovernorLars Rohdesaid most of the nation’s households would survive a jump in interest rates or a loss of income as Denmark tops world debt rankings.
An investigation into household borrowing revealed that high indebtedness curbed spending and economic growth during the financial crisis, the Copenhagen-based Systemic Risk Council, which Rohde chairs, said yesterday. Still, those findings aren’t grounds for alarm, according to Rohde.
“By far the major part of Danish households’ debt is carried by families who are robust enough to be able to handle shocks to interest rates or incomes,” Rohde said yesterday in a written reply to questions. “The threat to financial stability from that corner is therefore not serious in the current situation.”
Danish households owe their creditors 321 percent of disposable incomes, according to the Organization for Economic Cooperation and Development. That’s the highest ratio in the world and a level that has prompted warnings from both the OECD and the International Monetary Fund to rein in borrowing. Danish authorities have argued that households aren’t at risk thanks to high pension and household equity levels.
In neighboring Sweden, central bank GovernorStefan Ingves has suggested capping household indebtedness, not adjusting for assets, at 180 percent of disposable incomes. In Norway, the central bank has cautioned against further private borrowing after households owed their creditors about 200 percent of disposable incomes.
The Paris-based OECD said in November that policy makers in Scandinavia need to do more to stem risks posed by household debt growth.
Referring to its Dec. 20 meeting, Denmark’s Systemic Risk Council said an analysis suggested that households with high debt levels as of 2007 were prone to spend less during the crisis.
“That has probably contributed to a weaker development in private spending and economic activity in recent years, and has affected the financial industry. The council will return to this matter,” it said.
Denmark emerged as Scandinavia’s weakest economy after a housing boom that peaked in 2007 burst a year later. As many as 62 community banks failed during the ensuing slump, according to a September report by a government-appointed committee.
The nation’s AAA-rated government debt load is less than half the euro-zone average, helping keep mortgage borrowing costs low and supporting households. The central bank, which uses monetary policy to defend the krone’s peg to the euro, resorted to negative rates in 2012 to counter a capital influx. Denmark’s benchmark deposit rate, now minus 0.1 percent, has stayed below zero since July 2012.
Gross domestic product contracted 0.4 percent in 2012 and grew just 0.3 percent last year, the European Commission said in November. Growth is set to accelerate to 1.7 percent in 2014, compared with a rate of 2.8 percent in Sweden, according to the commission.
Data today showed that Danish seasonally adjusted bankruptcies declined to 382 in December from 417 the previous month, while adjusted forced sales of homes were at 334 last month, compared with an average of 428 in 2012.
The reports show that the crisis is “loosening its grip” on Denmark, Helge Pedersen, chief economist at Nordea Bank AB, said in a note.
Denmark’s Systemic Risk Council was created last year with a view to advising lawmakers on financial imbalances that may warrant a legislative response. The council also said yesterday it will examine potential risks to financial stability posed by the repo market.
“Increased use of repos and re-use of collateral can in some situations render the financial system more vulnerable,” the council said. It has therefore “decided to do more work on the subject,” it said.
To contact the reporter on this story: Peter Levring in Copenhagen at email@example.com
To contact the editor responsible for this story: Jonas Bergman at firstname.lastname@example.org
The world must eliminate emissions from burning fossil fuels in the second half of this century to lower the economic cost of climate change, the Organization for Economic Co-operation and Development (OECD) said on Wednesday.
‘This is worse than a debt because there is no bailout.’— Angel Gurria, secretary general, OECD
Leading economist and climate change expert Nicholas Stern has said that investment equivalent to two per cent of global gross domestic product a year is needed to limit and adapt to climate change.
OECD secretary general Angel Gurria acknowledged that climate change had serious economic consequences that could not be ignored.
Reducing emissions not enough
He said simply reducing emissions would not be enough to lower the economic costs because carbon dioxide accumulates in the atmosphere…
- OECD: We must eliminate fossil fuel emissions (telegraph.co.uk)
- World Must Eliminate Fossil Fuel Pollution, OECD Chief Says (scientificamerican.com)
- Carbon Markets 16 Times Cheaper Than Renewable Aid, OECD Says (bloomberg.com)
- Long-term unemployment still a blight in Canada, OECD warns (theglobeandmail.com)
- OECD: Canada, U.S. to see unemployment fall (globalnews.ca)
- OECD wants safety nets for long-term unemployed beefed up (elpais.com)
- OECD: Bleak job outlook for eurozone (bbc.co.uk)
- OECD issues warning over Slovenia’s ‘severe banking crisis’ (thetimes.co.uk)
- Slovenia faces ‘severe banking crisis’, warns OECD (telegraph.co.uk)
- Slovenia Faces ‘Severe Banking Crisis’: OECD (stocktipsinvestment.blogspot.com)
- Slovenia could become next Cyprus, may need EU bailout (rt.com)
- UPDATE 1-Slovenia may have misread bank clean-up cost -OECD (xe.com)
- UPDATE 2-Slovenia may have misread bank clean-up cost -OECD (uk.reuters.com)
- Slovenia Faces ‘Severe’ Banking Crisis in Recession, OECD Says – Bloomberg (bloomberg.com)
- 6 things you need to know about Slovenia, perhaps the next euro-zone domino (blogs.marketwatch.com)