Barnier: get out of Europe, fast!

That is the only message any financial service professional with a brain between his ears will get when he reads the interview that the EU's financial service supremo, Monsieur Barnier, has given to the Handelsblatt. In it he claims that 'bankers' have acted "irresponsibly, amorally and unethically". We would be the first to admit that not all was (is) well in the financial services industry but to have the senior EU bureaucrat uttering a wholesale condemnation of all those who are working in the industry can only be called scandalous. That such a statement comes from an apparatschik who is in fact responsible to no one except the puppet masters among the ruling political clique in Europe, and especially France (do we want to remind you of Sarkozy who reminds us more of more of Louis de Funes in his heyday?), underlines the fact that the future of the financial services industry in Europe will one day be a copy of the common agricultural policy.

Sauve qui peut!

Today's news is dominated by triumphalist announcements by the bureaucratic supremos that want to control (strangle?) the financial markets in the EU. Michael Barnier and Jean-Claude Trichet are both products of the statist mindset that is drilled into the brains of the French bureaucrat (or 'Elite' as they call tend to call themselves). But after checking again we found not the slightest shred of evidence that either of them has ever earned a single penny by providing useful services to their fellow citizens. They spent their whole lives at the expense of the taxpayer and both enjoy wielding unprecedented power in artificial bureaucracies that allow them to issue edicts without any democratic restraint. If Britain wants to preserve any chance to keep its position as a world-class financial center it has seriousely to consider to opt out of regulation that is imposed from outside. The alternative is the acceleration of the migration of qualified experts to friendlier climates like Switzerland and further away.

FACTA: Will the EU stop US power grab?

As the implementation of the Foreign Account Tax Compliance Act by the US authorities draws nearer, it will be interesting to see how the usually toothless EU bureaucrats react to this one-sided power grab. We see no reason to accept the US intention to extend the reach of their tax law beyond the US borders. If the IRS wishes to have full control over the assets of US citizens it should set up a system of rigorous border controls and monitor all transfers of asset into and out of the country. Alternatively, the US can impose withholding taxes if it so wishes but as the country is dependent on foreign investors supporting the profligate spending by government and consumers alike it would only hurt its own interests by doing so.

Lagarde: Stress tests will show EU banks healthy

Strange that she seems to know what the tests that are currently performed will look like.

IMF - full of bureaucrats and tax dodgers

When the IMF bureaucrats call for more taxes on the banking system one can only feel a sense of revulsion. Not enough that politicians think they have to justify their existence by dreaming up a never-ending flood of regulations and spending plans, - but with them we at least have the consolation that they are subject to elections (far too irregularly though). The bureaucrats in the IMF (and similar international organisations, including the EU) face no such threat. They have secure tenure gilded by tax-free salaries. Naturally their instinct is to tax and spend other people's money, the socialist creed that keeps them in their jobs in the first place.

Geithner intervenes in EU hedge fund regulation

One has to wonder what Tim Geithner's priorities are at a time when the USA faces an unprecedented gap in its budget and the economy has just left the intensive-care ward. The USA puts massive restrictions on foreign fund managers that try to market their services or securities to its citizens, the boilerplate restrictions on most securities prospectuses and fund manager's brochures and websites bear witness to that. Why should the EU not have the right to protect its citizens? Any non-EU fund manager is welcome to set up a EU-compliant subsidiary and thus get access to a market of 500 million people.

Greece: Why not declaring bankruptcy?

Martin Feldstein's piece in yesterday's Financial Times (Let Greece take a holiday from the Eurozone) caused us to send him a brief note and we will watch the reply of the sage with interest:

Dear Mr. Feldstein!

Your article - like most other articles concerning the Greek Debt Saga - tacitly assumes that one simple way to solve the problem is not feasible: a declaration of bancruptcy and subsequent resolution comparable to Chapter XI in the USA.

At present, the only two options that are being discussed are (1) a bailout by EU member states or (2) Greece leaving the Eurozone. Eliminating the option of bancruptcy from consideration creates an unproductive stalemate between two diametrically opposed viewpoints (aften aggravated by different ideologies regarding the philosophy behind the creation of the Euro).

EU competition policy arbitrary

When a major bank states that the EU may force 'unforeseen' asset sales alarm bells should be ringing. We have repeatedly stated on these pages that the competition policy is highly arbitrary and undemocratic. The people in charge (usually lifelong members of the employment club exclusively staffed by lifelong politicians or members of think tanks or universities) have no democratic mandate and are only subject to minimal and ineffective outside control. There are no proper procedures in place that make regulation transparent - otherwise how could it be that there could be unforeseen asset sales? If the rules would be clear every observer could predict exactly what measures would be taken to ensure that competition exists in the banking sector. Instead there are discriminatory rulings straight out from Central Command. We hope that the managements of the banks concerned have the guts to take every available legal step to delay the effect of measures that would harm their shareholders.

EU wants automatic exchange of Tax information

The EU develops more and more into a bureaucratic and undemocratic monster. The latest news is the 'demand' for an automatic exchange of tax information about foreign bank customers between member states. The EU was originally declared to be an economic union but the main instigators behind the 'project' always intended this stated purpose to be the Trojan horse that would allow their statist fantasies to be imposed piecemeal on an unsuspecting population. Napoleon and Hitler certainly would have been well-advised to try this approach rather than go the route of military conquest.The raison d'etre of a state is that the citizens of that state enjoy full sovereignty over their affairs. Delegating powers to a foreign authority - especially one that they have no control over - is a grave violation of that principle. In the case of taxes there is no reason to inform any foreign government in any way. The whole purpose of putting money into another country is to remove it from the sticky fingers of the home government. The host country than in turn can tax the affected funds in any way it wishes. In the interest of tax harmony it should not favor foreign investors in any way and give them different terms than those offered to home country investors.The home country of the funds concerned has in turn full authority to tax the money as long as it is in the country. If it so wishes it can create an 'Iron Curtain' and prevent money from leaving the country.Just imagine what 'full information' would have meant in past periods: would the Dutch have 'informed' the corrupt French regime of Louis XIV about the investments that prudent French citizens had made in Amsterdam, or should the French government of the 1920s have informed the thuggish Communist government of the USSR?Europe prospered BECAUSE there was no uniformity of government and religion had finally given way to a civil regime after centuries of struggle. How much longer can the control freaks in Brussels be allowed to destroy the fruits of these battles?

Lloyds TSB - Neelie does it again!

This is a full-time job - keeping up with the arbitrary rulings of an unelected bureaucrat in the twilight years of a career spent sailing through various public sector jobs! Mrs. Kroes even finds time to chair Poets of all Nations in her spare time. But on a more serious note we think that the latest threat to Lloyds TSB - while maybe justified in principle - is lacking any moral justification as long as no one (and we wait for contributions from any reader who can provide them) has given us an explicit explanation of the yardsticks that the EU Kommissars apply in their rulings. (see our earlier comment further down for more on this scandal).

Neelie Kroes dabbles in bonus debate

We would have been disappointed if Neelie Kroes would not have tried to get involved in the debate about banker's pay and bonuses. After all, every bureaucrat has a natural urge to increase his power whenever and where ever the opportunity exists to do so. And even better when the taxpayer pays for you and the citizen has no chance to control your action. However, when judging the competence level of Ms. Kroes' department we always have to remind ourselves of the curious fact that while the department refuses to give detailed information about the background of its staff there are the portraits of the drivers on the website. Talk about high life in Brussels! Repeated requests to disclose the yardsticks that are applied during the investigation of competition cases have been stonewalled. So we do not expect that it will be made transparent what type of bonus and pay regulations will be applied in the case of banks that receive state support.

Fantasy World of Eurocrats

We challenge anyone to get a clear answer from Neelie Kroes with respect to the rules that are applied when she and her lightweight team decree what Banks and Governments are expected to do in order to conform to their whimsical ideas of a competitive banking market. Anyone can see that her department employs two drivers for the occasional excursion into Euroland. This is a nice human touch as it shows that all staff are equal but the sad thing is that most of the other staff look like fresh out from university and utterly unqualified to decide the fate of Europe's banks (and economies). In what fantasy world do these Eurocrats live when they think that major banks can shrink dramatically while the economies are still on the tipping point to a prolonged recession? Try to get a curriculum vitae for all the staff listed on Kroes' website if you can. We did not have much luck doing just that.

UK government support for City lacklustre

It is amazing that lightweight EU member Ireland can force renegotiation of EU laws while the Prime Minister of a large member state and the state with the most important financial markets of the EU appears to be powerless to protect the national interest during the negotiations for yet more centralistic and statist control advocated by the EU Commissars and assorted hangers-on.