Latest from Uncle Sol. A version of this column is scheduled for publication Monday, November 7, 2011, in The Washington Times -- Chris
Follow the money No. 91 | The ABCs of the Euro crisis
Sol Sanders <solsanders@cox.net>
The kaleidoscope of events and mock-events is moving so rapidly in the European crisis, even a dedicated netizen following events finds himself bemused.
It might be good to look at a little history:
The European effort to unify – after two bloody civil wars of near annihilation and the post-World War II threat of Soviet Communism – began with economic integration. Political unity, given the long history of European national, racial and ethnic conflicts, its mainly original French and German sponsors thought, would eventually fall into place were economic coordination achieved. Somewhere down the line, again it was assumed by the idealistic if elitist thinkers, a united Europe would achieve something like North American unity.
A step-by-step customs union followed the 1951 relatively primitive six-nation European Iron and Steel Community, the initial European Union amalgamation seed. That body reorganized the then most important industry in the face of diminishing domestic raw materials and need for revised marketing. But when the visionaries – often slowed down by parochial interests – in 1995 finally got to monetary union, they jumped a cog. For the relatively easy creation of a common currency and a central bank did not insure – nor was it more than theoretically acknowledged – amalgamating national economic policies, and perhaps more important, their bureaucracies. In fact, of course, some of the strongest economies such as Britain and Scandinavia’s opted out with reliance on the vaunted deutschemark’s incorporation as its bedrock. To do otherwise would have required commonality that did not exist even among the most advanced economies, much less their less developed members at almost “third world” economic levels.
It was inevitable when [not if], a major new economic crisis hit the world economy, the Euro would be imperiled. For it was being used by participating governments for their own individual economic strategies rather than any common development. German Chancellor Angela Merkel may now well say the Euro’s preservation is the issue, not Greece’s more parochial interests, But that, too, is 20-20 hindsight. It derives from the major EU members [again excluding Britain and Scandinavia] making another mistake: their inability to solve the Euro crisis quickly has made it a talisman for the continued successful pursuit of European unity.
In fact, the southern Europeans pretended their Euro was a truthful representation of their productivity. They could, therefore, use its perceived unlimited resources to fund a standard of living which their productive capacity did not, in fact, support. Outrageous “benefits” – retirement age in Greece at 50 – were accorded a population only a generation away from the horrors and privations of World War II and the worldwide “Great Depression” which helped produce it. Increasingly, cities like Barcelona and Athens took on la dulce vida they could not really afford with their artificial Euro.
Crunch-time revealed a stark dilemma: northern European taxpayers with their higher productivity must rescue their southern European spendthrift compatriots, or southern Europeans face slashing their living standards to levels not seen for a generation. The German taxpayers, their French fellowtravelers, as well as minor players, Dutch, Austrians, Finns, Estonians, Czechs, are yelling foul. Furthermore, there is danger such cutbacks may reach the bone, destroying these poorer economies’ ability to restart the longer process of achieving higher productivity and the just rewards of higher living standards. [This is a fundamental problem of continental economies with backward areas, not unknown even in the U.S. with its vast homogenization. One element in the present American economic debate: how far does federal taxpayers’ largesse extend to Mississippi and Arkansas?]
What’s at risk, of course, is the whole concept of post-World War II universal European representative government after the fall of Communism. There was applause in obscure corners for Greek Prime Minister George Papandreou’s threat to take the issue of Greek “suffering” to the people for a referendum rather than impose it even from an elected government. Good try! But perhaps to the long term detriment of true European democracy, North European leaders’ threats and Greek politicos’ own maneuvering will again permit a papering over. The risk is grave, of course, mandated “solutions” – the curse of Brussels for a generation now – may run into bedrock popular resistance, even civil unrest.
Can the center hold in perpetuity as it could not in the 1930s? may be the question of the hour.
sws-11-03-11
http://jessescrossroadscafe.blogspot.com/
Posted on November 18, 2011
US Corporate Taxes As a Percent of Corporate Profits
"Once upon a time, the corporate income tax generated a significant share of tax revenues; now, it’s bumping along in the 2%-of-GDP range. Yes, the marginal rate of corporate income tax is high, at 35%. But US companies are extremely good at not paying that.
But at least we know the aggregate amount that corporations pay in taxes. What we don’t know — because they won’t say, and no one’s forcing them to say — is how much any given public company pays.
Allan Sloan has a very good column on this today. Companies already report 16 different tax metrics; they should simply be required to add a 17th — the amount they pay the IRS in taxes — which in many ways is most important. The companies already file tax returns; the number’s right there, on lines 31 and 32. They just refuse to say what it is."
Charts of the day, Corporate Income-tax Edition, Felix Salmon
One thing that is true is that the US has a high 'headline' corporate tax rate at 35%. This was used to justify the distribution of corporate profits as dividends that were made tax free.
But like most things in America, the headline numbers are one thing, and the reality behind the headlines is a very different picture. Some of the loopholes that allow 'offshoring profits' are eating like acid into the real economy. Why is this? As Jack Abramoff recently admitted, Congress is a willing vassal to the monied interests.
"During my years as a lobbyist, I saw scores of congressional staff members become the willing vassals of K Street firms before soon decamping for K Street employment themselves. It was a dirty little secret. And it is a source of major corruption in Congress."
And nothing will make this more clear than the discussions about the US budget. All politicians will work for tips and favors and campaign funds. But if you cannot spot who is on the full-time payroll of the 1 percent, then you might need to change your news channel.
The corporate propagandists do a good job of managing the American people. As one of the more pre-eminent of the pigmen once privately told me: 'Old people are the easiest to handle. You just scare them.'
Greed draws people in, and fear keeps them in line. Its a well-worn script. It is the basis for most ponzi schemes and financial frauds. It is the well-spring of a credibility trap.
The reporting on NYC financial TV was particularly repugnant this morning, as they called the OWS movement over, with nothing left but a few professional agitators.
They contrasted its lack of strict purpose and organized ideology with the much more compliant Tea Party Movement, that allowed itself to be reorganized around corporate advertising principles. It morphed from a financial reform movement into obedient lobbyists for the Koch Brothers and the monied interests.
And it angers the Wall Street demimonde that the loose organization of OWS does not permit an easy foothold with a few influential leaders that can be easily bought and scripted.
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Latest from Uncle Sol. A version of this column is scheduled for publication Monday, November 7, 2011, in The Washington Times -- Chris
Follow the money No. 91 | The ABCs of the Euro crisis
Sol Sanders <solsanders@cox.net>
The kaleidoscope of events and mock-events is moving so rapidly in the European crisis, even a dedicated netizen following events finds himself bemused.
It might be good to look at a little history:
The European effort to unify – after two bloody civil wars of near annihilation and the post-World War II threat of Soviet Communism – began with economic integration. Political unity, given the long history of European national, racial and ethnic conflicts, its mainly original French and German sponsors thought, would eventually fall into place were economic coordination achieved. Somewhere down the line, again it was assumed by the idealistic if elitist thinkers, a united Europe would achieve something like North American unity.
A step-by-step customs union followed the 1951 relatively primitive six-nation European Iron and Steel Community, the initial European Union amalgamation seed. That body reorganized the then most important industry in the face of diminishing domestic raw materials and need for revised marketing. But when the visionaries – often slowed down by parochial interests – in 1995 finally got to monetary union, they jumped a cog. For the relatively easy creation of a common currency and a central bank did not insure – nor was it more than theoretically acknowledged – amalgamating national economic policies, and perhaps more important, their bureaucracies. In fact, of course, some of the strongest economies such as Britain and Scandinavia’s opted out with reliance on the vaunted deutschemark’s incorporation as its bedrock. To do otherwise would have required commonality that did not exist even among the most advanced economies, much less their less developed members at almost “third world” economic levels.
It was inevitable when [not if], a major new economic crisis hit the world economy, the Euro would be imperiled. For it was being used by participating governments for their own individual economic strategies rather than any common development. German Chancellor Angela Merkel may now well say the Euro’s preservation is the issue, not Greece’s more parochial interests, But that, too, is 20-20 hindsight. It derives from the major EU members [again excluding Britain and Scandinavia] making another mistake: their inability to solve the Euro crisis quickly has made it a talisman for the continued successful pursuit of European unity.
In fact, the southern Europeans pretended their Euro was a truthful representation of their productivity. They could, therefore, use its perceived unlimited resources to fund a standard of living which their productive capacity did not, in fact, support. Outrageous “benefits” – retirement age in Greece at 50 – were accorded a population only a generation away from the horrors and privations of World War II and the worldwide “Great Depression” which helped produce it. Increasingly, cities like Barcelona and Athens took on la dulce vida they could not really afford with their artificial Euro.
Crunch-time revealed a stark dilemma: northern European taxpayers with their higher productivity must rescue their southern European spendthrift compatriots, or southern Europeans face slashing their living standards to levels not seen for a generation. The German taxpayers, their French fellowtravelers, as well as minor players, Dutch, Austrians, Finns, Estonians, Czechs, are yelling foul. Furthermore, there is danger such cutbacks may reach the bone, destroying these poorer economies’ ability to restart the longer process of achieving higher productivity and the just rewards of higher living standards. [This is a fundamental problem of continental economies with backward areas, not unknown even in the U.S. with its vast homogenization. One element in the present American economic debate: how far does federal taxpayers’ largesse extend to Mississippi and Arkansas?]
What’s at risk, of course, is the whole concept of post-World War II universal European representative government after the fall of Communism. There was applause in obscure corners for Greek Prime Minister George Papandreou’s threat to take the issue of Greek “suffering” to the people for a referendum rather than impose it even from an elected government. Good try! But perhaps to the long term detriment of true European democracy, North European leaders’ threats and Greek politicos’ own maneuvering will again permit a papering over. The risk is grave, of course, mandated “solutions” – the curse of Brussels for a generation now – may run into bedrock popular resistance, even civil unrest.
Can the center hold in perpetuity as it could not in the 1930s? may be the question of the hour.
sws-11-03-11
http://jessescrossroadscafe.blogspot.com/
Posted on November 18, 2011
US Corporate Taxes As a Percent of Corporate Profits
"Once upon a time, the corporate income tax generated a significant share of tax revenues; now, it’s bumping along in the 2%-of-GDP range. Yes, the marginal rate of corporate income tax is high, at 35%. But US companies are extremely good at not paying that.
But at least we know the aggregate amount that corporations pay in taxes. What we don’t know — because they won’t say, and no one’s forcing them to say — is how much any given public company pays.
Allan Sloan has a very good column on this today. Companies already report 16 different tax metrics; they should simply be required to add a 17th — the amount they pay the IRS in taxes — which in many ways is most important. The companies already file tax returns; the number’s right there, on lines 31 and 32. They just refuse to say what it is."
Charts of the day, Corporate Income-tax Edition, Felix Salmon
One thing that is true is that the US has a high 'headline' corporate tax rate at 35%. This was used to justify the distribution of corporate profits as dividends that were made tax free.
But like most things in America, the headline numbers are one thing, and the reality behind the headlines is a very different picture. Some of the loopholes that allow 'offshoring profits' are eating like acid into the real economy. Why is this? As Jack Abramoff recently admitted, Congress is a willing vassal to the monied interests.
"During my years as a lobbyist, I saw scores of congressional staff members become the willing vassals of K Street firms before soon decamping for K Street employment themselves. It was a dirty little secret. And it is a source of major corruption in Congress."
And nothing will make this more clear than the discussions about the US budget. All politicians will work for tips and favors and campaign funds. But if you cannot spot who is on the full-time payroll of the 1 percent, then you might need to change your news channel.
The corporate propagandists do a good job of managing the American people. As one of the more pre-eminent of the pigmen once privately told me: 'Old people are the easiest to handle. You just scare them.'
Greed draws people in, and fear keeps them in line. Its a well-worn script. It is the basis for most ponzi schemes and financial frauds. It is the well-spring of a credibility trap.
The reporting on NYC financial TV was particularly repugnant this morning, as they called the OWS movement over, with nothing left but a few professional agitators.
They contrasted its lack of strict purpose and organized ideology with the much more compliant Tea Party Movement, that allowed itself to be reorganized around corporate advertising principles. It morphed from a financial reform movement into obedient lobbyists for the Koch Brothers and the monied interests.
And it angers the Wall Street demimonde that the loose organization of OWS does not permit an easy foothold with a few influential leaders that can be easily bought and scripted.
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