Browsing PBH By Articles

How Wealth Floods Offshore

The Article: Wealth doesn’t trickle down – it just floods offshore, research reveals by Heather Stewart in the Guardian.

The Text: The world’s super-rich have taken advantage of lax tax rules to siphon off at least $21 trillion, and possibly as much as $32tn, from their home countries and hide it abroad – a sum larger than the entire American economy.

James Henry, a former chief economist at consultancy McKinsey and an expert on tax havens, has conducted groundbreaking new research for the Tax Justice Network campaign group – sifting through data from the Bank for International Settlements (BIS), the International Monetary Fund (IMF) and private sector analysts to construct an alarming picture that shows capital flooding out of countries across the world and disappearing into the cracks in the financial system.

Comedian Jimmy Carr became the public face of tax-dodging in the UK earlier this year when it emerged that he had made use of a Cayman Islands-based trust to slash his income tax bill.

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Rethinking American Exceptionalism

The Article: Dimmed excellence: ‘American advantages serve those who can afford them’ in RT.

The Text: The concept of “American exceptionalism,” which traditionally places the US ahead of the rest of the industrialized world, should be dramatically reconsidered as the health and wellbeing of US citizens are sacrificed in the name of profit.

This is according to Dr. Howard Steven Friedman, a leading UN health economist and statistician, and author of the book ‘The Measure of a Nation.’

Friedman says that America – birthplace of the ‘American Dream’ and once an exceptional nation of freedom, equality, opportunity and high living standards – has long since lost many of these qualities. The richest one-third of the American population now rules the lives of the rest, he argues.

Howard Friedman: I was initiated by a conversation with my cousin when we were discussing the Patient Protection and Affordable Care Act. He had been defending the current system in America, saying that it is the best in the world. I asked him, “how do you know that?” and his response was, “I have no idea.”

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The Escalating Scandal Of LIBOR

The Article: The Rotten Heart of Finance in the Economist.

The Text: THE most memorable incidents in earth-changing events are sometimes the most banal. In the rapidly spreading scandal of LIBOR (the London inter-bank offered rate) it is the very everydayness with which bank traders set about manipulating the most important figure in finance. They joked, or offered small favours. “Coffees will be coming your way,” promised one trader in exchange for a fiddled number. “Dude. I owe you big time!… I’m opening a bottle of Bollinger,” wrote another. One trader posted diary notes to himself so that he wouldn’t forget to fiddle the numbers the next week. “Ask for High 6M Fix,” he entered in his calendar, as he might have put “Buy milk”.

What may still seem to many to be a parochial affair involving Barclays, a 300-year-old British bank, rigging an obscure number, is beginning to assume global significance. The number that the traders were toying with determines the prices that people and corporations around the world pay for loans or receive for their savings. It is used as a benchmark to set payments on about $800 trillion-worth of financial instruments, ranging from complex interest-rate derivatives to simple mortgages. The number determines the global flow of billions of dollars each year. Yet it turns out to have been flawed.

Over the past week damning evidence has emerged, in documents detailing a settlement between Barclays and regulators in America and Britain, that employees at the bank and at several other unnamed banks tried to rig the number time and again over a period of at least five years. And worse is likely to emerge. Investigations by regulators in several countries, including Canada, America, Japan, the EU, Switzerland and Britain, are looking into allegations that LIBOR and similar rates were rigged by large numbers of banks. Corporations and lawyers, too, are examining whether they can sue Barclays or other banks for harm they have suffered. That could cost the banking industry tens of billions of dollars. “This is the banking industry’s tobacco moment,” says the chief executive of a multinational bank, referring to the lawsuits and settlements that cost America’s tobacco industry more than $200 billion in 1998. “It’s that big,” he says.

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The Godlessness Of East Germany

The Article: Why Eastern Germany Is The Most Godless Place On Earth by Matthias Kamann and Gernot Facius in World Crunch.

The Text: Bad news for all those who’d hoped Christianity might make a comeback now that the Cold War-era German Democratic Republic (DDR) is becoming an ever more distant memory. Atheism, according to a new study, is very much alive and well in the eastern part of Germany.

The statistics are most striking among those under 28 years old: more than 71% of eastern Germans in this age group say they have never believed in the existence of God. That’s nearly as many as in the 38-47 group, of which 72.6% are non-believers.

What the figures mean is that in eastern Germany, very young people are on the same wavelength as people from the middle generation when it comes to belief in God. The political transformation of former East Germany, in other words, hasn’t had much of an effect on people’s ideas about religion. While there are somewhat fewer atheists among young adults aged 28 to 37, where “only” 63.6% say they’ve never been believers, those in the following generation are at least as non-religious as their parents.

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America’s Failed Retirement System

The Article: Our Ridiculous Approach to Retirement by Teresa Ghilarducci in the New York Times.

The Text: I work on retirement policy, so friends often want to talk about their own retirement plans and prospects. While I am happy to have these conversations, my friends usually walk away feeling worse — for good reason.

Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. The specter of downward mobility in retirement is a looming reality for both middle- and higher-income workers. Almost half of middle-class workers, 49 percent, will be poor or near poor in retirement, living on a food budget of about $5 a day.

In my ad hoc retirement talks, I repeatedly hear about the “guy.” This is a for-profit investment adviser, often described as, “I have this guy who is pretty good, he always calls, doesn’t push me into investments.” When I ask how much the “guy” costs, or if the guy has fiduciary loyalty — to the client, not the firm — or if their investments do better than a standard low-fee benchmark, they inevitably don’t know. After hearing about their magical guy, I ask about their “number.”

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