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Taxing Bank Bonuses is Petty Fascism

Politics / Credit Crisis Bailouts Mar 26, 2009 - 11:08 AM GMT

By: Andrew_Butter

Politics

Best Financial Markets Analysis ArticleThe recent idea to put a punitive tax on bank workers is a modern equivalent of yellow badges.

But maybe I'm biased ..."some of my best friends are bankers".


The amount of money is a pittance compared to what's at stake, and the point is simply that there was a legal contract of employment, the workers did the job; they should be paid. That's the Law, at least it was until recently.

If (a) the new owner thinks that the workers are being paid too much, then re-negotiate or fire them. And if you can't find anyone else to run the company, then run it yourself Mr. OWNER.

If (b) the new owner thinks that the workers and management conspired to rip of the company then there is a legal framework to deal with that, what you do is ring up the FBI with a complaint about racketeering, and if they think there was a crime then they will deal with it under the Law.

What you don't do is change the Law after the fact to penalize a minority, particularly if you are doing that to whip up political support from a handful of thugs that get off on sending threats to hang people with piano wire.

Do that and see how many private companies take up on your idea of a public-private partnership!

Come to think of it, with all this talk about piano wire, and changing laws to dispossess an unpopular, wealthy minority, my mind wanders to the question - well who cares?

The background to the most successful Fascist Empire ever:

It is arguable whether the "New Deal" rescued the US economy; some people say that all it did was rescue the destitute, and as such it was more of a (smart) social policy (the alternative might have been riots), rather than an effective economic policy. A better benchmark for a highly successful Keynes style stimulation was the Golden Years in Germany (1923-29), which has many more similarities to the current situation in USA , for example:

a): Then Germany was heavily in debt, USA was not.

b): Germany was running a huge current account deficit, then USA was not.

c): Those days Germany 's manufacturing was shot; the industrial power house was USA , these days substitute USA for Germany and China for USA .

d): Germany 's main trading partner ( USA ) was financing it's debt (today ditto China ).

The Golden Years laid the economic foundation for a spellbinding and charismatic (and evil) orator who incidentally wasn't actually a "true full blooded German", to illegally take power, put in place brutal (yet "legal") discrimination against minorities he didn't like and start a World War.

All that started step by step, precedent by precedent.

Remember when Jaques Chiraq went on TV to explain why he thought going into Iraq was a bad idea (and the net result of that was that the "French" in French Fries was removed from menus throughout USA ).

Well what he said is that for the world to work properly, there has to be "La Justice", which means THE RULE OF LAW.

Well he was right then and he is still right (notwithstanding that he was wrong about a lot of other things).

Lose that and in the end you can lose everything.

By Andrew Butter

Andrew Butter is managing partner of ABMC, an investment advisory firm, based in Dubai ( hbutter@eim.ae ), that he setup in 1999, and is has been involved advising on large scale real estate investments, mainly in Dubai.

© 2009 Copyright Andrew Butter- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Andrew Butter Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Nadeem_Walayat
26 Mar 09, 12:51
Facist Taxes

I see a flaw in the argument, in that if the banks had been allowed to fail as companies are allowed to, then the likes of Fred Goodwin would be getting a pension of £20,000 per year instead of £700,000 plus 3.5 million lump sum.


Andrew_Butter
26 Mar 09, 13:12
Facist Taxes

OK so let them fail, when the government decided to buy they knew the deal.

And if they thought it was illegal then sue for racketeering.

I think there was a lot of what happened that was racketeering where management made cozy deals.

My point is you can't change the law after the fact.

If the law allowed management to make cozy deals with their mates - so it was a stupid law, but you can't change the law retroactively

You don't fight corruption with fascism.


Nadeem_Walayat
26 Mar 09, 13:53
Facist Taxes - Rioting

The bankrupt bank liabilities have been fruadulently dumped onto the tax payers, they are the innocent party that will pay the price for decades.

The governments have been FORCED to bailout the banks by the actions of the bankers in charge. It is fraud, and any bank that has beeen saved at tax payer expense needs to have all employment contracts voided as had a reciever been appointed then their contracts would have ended, instead the

foolish government has been conned into bailing them out so that those responsbile continue to bank bonuses and pensions. It will destroy capitalism if you reward fraud on such a scale as the people will not put up with it, there will literally be rioting on the streets and the

emergence of some crackpot socialist ideology.


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