from MacroScope:
The word on Gordon Brown from Cayman
Gordon Brown is truly having a rough time. Rebuffed by the United States, International Monetary Fund and others for floating the idea of a tax on financial transactions at this weekend's G20 meeting, he has now got short shrift from the Cayman Islands.
McKeeva Bush, the veteran Caymanian politican who is now premier of the British Overseas Territory, popped in to the Reuters London headquarters for a chat this week. His main concern was to explain plans for making the islands an easier place for financial services personnel to live in. He would like some of those 8,000 hedge nearly 10,000 funds that are registered there to be more than just brass plaques. But, when asked, he also had time to dismiss the idea of a transaction tax out of hand.
"That's an old hat. I have been hearing about it for 25 years. It's just not practicable. It will not work."
And just in case the point was missed:
"We have looked at it and we do not think this is something that would work."
Bush would not be drawn on the idea that a tax on transactions could, metaphorically speaking, sink his Caribbean island homeland under the waves. But Paul Byles, a government financial services consultant who accompanied the premier, did touch on the liquid nature of the issue:
"Tax flows, and they will move somewhere else."
Wish I hadn’t said that…
As sterling sinks to a 7-1/2 year low against the dollar, traders and investors are wondering who was the established political figure that made the following comments when Britain was kicked out of the Exchange Rate Mechanism in 1992.
“A weak currency arises from a weak economy which in turn is the result of a weak government.”
Answer: Gordon Brown, then Shadow Chancellor, in an article in London’s Evening Standard newspaper.
History may have caught with Gordon Brown, but it has to be stress that his statement released on Evening Standard does not entirely reflect the current economic situation. The international economic mechanisms have broken down and the United Kingdom can not fix them on its own even if great savings where made in booming time. To show his flexibility, he has even tried to borrow Tories policies, which he intends ti implement soon though noone knows whether this will work or not. Gordon Brown has the credential around the world as one of the best economy managers and the situation he finds himself in is rather exceptional, but as in any good democracy, he has to be held responsible
Please put a penny…
Britons are not only having to contend with a pound falling to near parity with the euro and hitting multi-year lows against the dollar, they are also now being weighed down with change.
The country has long been one for coinage. The smallest note is for five pounds, which earlier this year was worth about $10 and is now around a mere $6.50. No equivalent of the paper dollar and hence lost of change.
Now, however, pockets are filling up with more pennies than usual, courtesy of one of Prime Minister Gordon Brown‘s economic stimulus plans. Brown cut 2.5 percent off value-added tax. So now a £3.50 film rental costs £3.41 and a $2.15 coffee is £2.09. Lots of increasingly worthless coppers floating around — unless of course deflation joins the party.
EDF fails to push Britain’s nuclear button
A dramatic last-minute hitch to plans for France’s EDF to buy British Energy leaves managements, shareholders and especially the British government in a quandary.
It was a 12 billion pounds ($24 billion) deal that was supposed to relaunch Britain’s nuclear energy programme. Everyone had been told to expect it. In fact, the collapse of talks came too late for French newspapers, several of which had been briefed on the deal and splashed it prominently on their front pages on Friday.
In end, however, big insitutional investors persuaded British Energy to reject EDF’s offer as low-ball, despite the best endeavours of the British government, with a 35-percent stake.
So what happens next? Talks are continuing and British business minister John Hutton says he remains convinced an EDF takeover makes sense; yet the gulf between the EDF and British Energy boards on price is clearly substantial. British Energy says there can be no certainty of any deal.
It is yet another headache to spoil Prime Minister Gordon Brown’s summer holiday, as his popularity slumps to a record low .
(Reuters photo: A sign is seen on the security fence of British Energy’s Heysham nuclear power station)
As in the words of Adam Smith, it is unwise to invest capital abroad or attract capital investment from abroad. Smith warns such endeavors lead to the use of military force to protect influential investors. Yet this is the current practice of multi-national corporations which is referred to as globalization. It is unlikely we should see war between nations anymore (accept the U.S.), however WTO trade talks have been marred by violence and protest. Rwanda, Darfur, the Cong… I wonder just how much oppression and poverty the people of third world endure behind the agreements reached between their corrupt governments and large global corporations. Amnesty International for years has consistently sighted low wages as the leading cause of poverty.
