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HomeBrits Teach America Lesson on Credibility and Transparency
Posted by Larry Doyle on June 14th, 2010 2:25 PM |
Spending money one does not have and making promises one can not keep is no way to run a business let alone a country.
The changing of the guard at 10 Downing Street has also brought about a change in the willingness of the British government to face these realities. The reality of the British economy may not be pretty but it is real and it will not change based purely upon false hope and government artifice.
The Financial Times highlights the ‘tough love’ and ‘financial rigor’ that the regime of new British Prime Minister David Cameron is serving the British populace.
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‘There’s No Money Left’
Posted by Larry Doyle on May 17th, 2010 8:46 AM |
Spending money you do not have is a clearly defined road to fiscal ruin.
Politicians the world over, but especially in Washington, have little appreciation for this concept. A departing chief secretary in the U.K. Treasury, Liam Byrnes, addresses this topic with crystal clarity in a message left for his successor, David Laws. (more…)
British Taxman Whacks ‘The City’
Posted by Larry Doyle on December 9th, 2009 9:04 AM |
You’re a mean one, Mr. Grinch…!!
Are British bankers headed to the pub early today to drown their sorrows? Little doubt, as the Chancellor of the Exchequer Alistair Darling (British equivalent to Treasury Secretary Tim Geithner) announced that year-end bonus pools for British banks will be hit with a one-time, top line tax of 50%!! Ouch!!
Bloomberg provides a brief synopsis this morning in writing, Darling Levies 50% Tax on U.K. Bank Bonuses Above 25,000 Pounds:
Chancellor of the Exchequer Alistair Darling said he will impose a one-time 50 percent tax on banks for all bonus payments of more than 25,000 pounds ($41,000).
The tax, effective from today until April 5, will be levied as a surcharge on the employer. It will apply to all banks and building societies operating in the U.K., including subsidiaries of foreign banks.
The Treasury estimates the tax will raise about 500 million pounds and affect about 20,000 bankers.
What does this mean? Take 50% off the top line of the bonus pool and then distribute the balance. Those bonus proceeds are then subject to the U.K.’s current tax rates, the maximum of which is right now 40%.
Add it all up and the effective tax rate for the majority of the bankers impacted is between 65 and 70%!!
What does the crowd in Washington and on Wall Street think about that?
While I am not one for increasing taxes, the fact is the British banks and the U.S. banks were saved by the taxpayers. This tax is merely a return of some of the taxpayers’ money.
While the bankers will view Darling as Mr. Grinch, do you think the unemployed laborer in the U.K. or here in America has any real sympathy for those in the City or on Wall Street?
Would the crowd in Washington have the stones to impose a similar one-time hit on Wall Street?
LD
United ‘Kingdom’ In Name Only
Posted by Larry Doyle on October 23rd, 2009 9:01 AM |
With the report, are we witnessing an acceleration in the demise of this ‘kingdom?’ I believe we are. The Wall Street Journal offers insights into the economy of this once proud and productive kingdom, in writing, The U.K’s Unbelievable Shrinking Economy:
The reaction to this report was an immediate decline in the value of the British pound. Analysts project the British government will have to engage in further quantitative easing and fiscal stimulus. The money needed to support those government initiatives is money the U.K does not have.
The WSJ adds further:
The U.K’s AAA-rating is nothing more than a joke at this point propagated by the rating agencies which have little credibility. I would venture that the UK has not been downgraded simply due to political pressures.
Long live the Queen, but given the current economic situation and projected ongoing fiscal deficits, the UK is a ‘kingdom’ in name only.
LD
Tags: British pound, deficit in United Kingdom, economic recession, fiscal stimulus in United Kingdom, Goldman Sachs comment on U.K. GDP, recession in U.K, sterling, The U.K.'s Unbelievable Shrinking Economy, U.K recession, UK GDP, UK remains in recession, United Kingdom GDP
Posted in Economy, General, United Kingdom | 1 Comment »