We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Nigel Farage tactfully comments on the euro and the EU

Azathoth: crisis of trust

Crisis for that last amorphous blight of nethermost confusion which blasphemes and bubbles at the centre of all infinity as trust hits record low, the Guardian reports.

Public confidence in the boundless daemon-sultan Azathoth, whose name no lips dare speak aloud, and who gnaws hungrily in inconceivable, unlighted chambers beyond time amidst the muffled, maddening beating of vile drums and the thin, monotonous whine of accursed flutes; to which detestable pounding and piping dance slowly, awkwardly, and absurdly the gigantic ultimate gods, the blind, voiceless, tenebrous, mindless Other Gods whose soul and messenger is the crawling chaos Nyarlathotep has fallen to historically low levels in the six biggest EU countries, raising fundamental questions about its democratic legitimacy more than three years into the primordial idiot god’s worst ever crisis, new data shows.

The blind idiot god encircled by his flopping horde of mindless and amorphous dancers, and lulled by the thin monotonous piping of a demonic flute held in nameless paws “could do much better if its institutions coordinated better”, according to a press release issued today.

Samizdata quote of the day

Voting to leave Brussels will cause your wife to have bigger breasts and increase your chances of owning a BMW M3.

- Boris Johnson, leader of the Conservative Party during the EU referendum of 2017 (as imagined by David Charter in Au Revoir, Europe: What if Britain left the EU?)

Some bondholders are more equal than others…

Cyprus has a ‘bailout‘ deal blessed by the EU. Certain bondholders face being wiped out.

Now I seem to recall when Ireland got its bailout blessed by the EU, it was expressly forbidden to wipe out bondholders, I am right?

Now if I also recall, many of those bondholders were German, whereas many of the bondholders in Cyprus are Russian.

I am reminded of a certain song

Reflections on the Cyprus disaster

This article from John Phelan, at The Commentator, is worth reading:

Functioning banks certainly are a key part of a modern financial system but why should the same be said of the toxic zombies who are blundering round the current financial landscape?

And how did these rotten banks get so big in the first place? It’s because governments and central banks prop them up. Bad banks rarely go out of business, they just lumber on, soaking up and destroying more wealth. Goldman Sachs and JP Morgan were bailed out five times in the 20 years before 2008.

The second lesson is that there really is no such thing as private property. In extremis the government considers itself entitled to any amount of your property it desires even if, as in the Cypriot case, it means revoking its own commitments to protect bank deposits.

But then this is the logical outcome of taxation. If you think that a shortage of government revenue can be solved by the government simply helping itself to someone else’s revenue you really can’t have a philosophical problem with this. If you believe in the 50p tax rate this is where you end up.

The last paragraph is particularly telling. It is good, in a grim sort of way, that people have been alarmed at the idea of governments grabbing savings. But what on earth do people think governments do already? Consider the central banks’ “quantitative easing” policies. Printing money benefits those who get the new money first against those who do not; savers lose out when a government “reflates” an economy. In the UK, for example, inflation – understated by government statistics – is in the low but significant single digits and over a relatively short period, will devastate savings due to the impact of compounding. The proposals from leftist politicians for a so-called “wealth tax” in the UK is merely another form of property rights confiscation, but then again, income taxes are a form of confiscation in that they confiscate the products of work. Confiscation is what governments with a monopoly on the use of physical force do. It is one of their defining characteristics.

Meanwhile, Detlev Schlichter has an interesting new item up about the Cypriot disaster. What is notable about it is that he does not adopt a lazily predictable “bash the eurozone” stance here.

In particular, Schlichter kicks against the assumption that what was proposed – taking a slice of deposits – is somehow uniquely evil:

I am a free market guy. I am in favor of laissez faire so I always like to see placards that read “Hands off”. One could see such placards at demonstrations in Cyprus yesterday: “Hands off Cyprus”. That is great. But be careful what you wish for. A proper hands-off policy means letting the chips fall where they may. That would certainly mean no bailout and thus total collapse of the Cypriot banking system and the Cypriot economy. Don’t forget that Cyprus and its banks and its depositors are still being bailed out with other people’s money here.

That is also what some of my libertarian friends don’t seem to get when they speak, as some of them did yesterday, of another incident of the ‘the state stealing from its citizens’ or of confiscating their property. As much sympathy as I usually have with these views, in this instance they are simply mistaken. If this were expropriation it would mean that the act of abstaining from this expropriation – of the expropriator simply doing nothing – would mean that the ‘victim’ keeps his property. But if the EU did nothing in this situation – “hands off”, laissez faire – it would mean that most depositors, including those under €100,000, got wiped out completely. The choice is not between keeping everything and paying a ‘levy’, but between paying a ‘levy’ and losing almost everything.

 

 

Paying attention in Cyprus

cyp1

In December last year, I had some delicious seafood in one of a chain of restaurants in Cyprus. The chain was actually South African owned, and the style of cooking was actually Cape Malay. The restaurant didn’t mention either of these things in its advertising, signage, or on its menue. There was a vague suggestion that it was Cajun. (Being very vague about where they come from is a skill South African businesses picked up in the apartheid era, and they haven’t lost it). When I got my bill and paid by credit card, I was intrigued to see that the merchant bank was not a local Cypriot bank, but was a South African bank. I was slightly mystified by this at the time (other than that it is no secret that, well, interesting capital flows go through Cyprus), and wondered if the restaurant and the bank shared ownership for reasons similar to the reasons why the mafia also finds it convenient to own lots of restaurants.

Possibly, though, the situation is simpler. The Cypriot banks were and are bust. A South African company doing business in Cyprus does not trust the Cypriot financial system and is avoiding it as much as possible by bringing its own bank. Perhaps my payment for seafood was going directly to somewhere else in the euro area rather than to a Cypriot registered institution. Possibly it was going further afield. Some of the species of seafood on the menu were not native to the Mediterranean, so there were certainly foreign payments to be made, and that part would at least be legitimate to some extent. (To be fair, seafood may be one of the world’s most globalised industries, and this is true of almost any seafood restaurant anywhere). Someone, though, may have suspected what was coming.

EU nagging put nag in your burger

“More regulation” is the cry in every gagging throat, following the revelation that numerous cheap meat dishes in several supermarkets that were labelled as beef or lamb actually contained horsemeat.

Regulation caused the problem in the first place.

From today’s Times (subscriber only):

The Government knew last summer that a sudden ban on cheap British beef and lamb meant it was “inevitable” that unlawful meat would be imported from Europe.

Unintended consequences, again. It would make a horse laugh.

Jim Paice, the former Agriculture Minister, warned the committee last summer that unlawful meat would be imported from Europe as manufacturers sought cheap sources to make up for banned British supplies.

The warning came after the FSA [Food Standards Agency] suddenly told meat processors to halt the production of “desinewed” beef and lamb, which was used in tens of millions of ready meals, burgers and kebabs each year, after orders from European Commission inspectors.

The committee demanded in July last year that the Government set out its plans to prevent illegal imports, stating: “The Agriculture Minister’s evidence suggested that it was inevitable that wrongly labelled or unlawful meat products would be importing into the UK to replace UK produced desinewed meat.”

Emphasis added. Do not, however, expect this aspect to be emphasised in the Radio 4 Food Programme. I could be proved wrong; there is a podcast here which I am not in the mood to listen to, but so far the BBC’s coverage has been a relentless flow of, if you will forgive yet another revolting processed meat metaphor, pink slime.

Samizdata quote of the day

An independent Ireland – an interesting idea, so when are they leaving the E.U. then?

Surely rule from Brussels is no more “independence” than rule from London.

- Paul Marks

 

 

Obeying the law is not enough – you have to read politicians’ minds, apparently

Here is a classic piece of nonsense to start this week in chilly Britain:

The UK tax authority said the amount of tax that big companies may have underpaid by using artificial intercompany transactions to inappropriately reduce taxable profits has risen 48 percent last year. The figure comes as public anger grows over tax avoidance by big businesses and British MPs investigate possible remedies.

- (From a report from Reuters.)

I read this report carefully and nowhere does it say that the firms concerned have broken laws, engaged in fraud, or used violence or engaged in criminal acts. They are taking full advantage of the laws of the jurisdictions with which they have contact, as their shareholders would expect them to do in maximising shareholder returns. If politicians really wanted to reduce what they see as such dodgy tax avoidance, perhaps they should enact taxes that are simple, low, and flat. This is not rocket science, as the 2020 Tax Commission report issued last year showed.

The recent naming and shaming of Starbucks, for example, of simply making use of legal arrangements, was particularly odious. No wonder people are thinking that we are living in a world like something from the pages of Atlas Shrugged.

Tim Worstall writes about this sort of issue a lot, usually in the process of skewering that socialist “accountant” from Wandsworth, Richard Murphy. Tim is always entertaining and instructive at the same time.

 

 

The Political Class is getting uneasy

A large chunk of the Political Class is starting show all the signs of an entrenched deeply entitled group starting to smell the whiff of the great unwashed upwind of them.

No ‘responsible’ leader could ever leave EU, says Danny Alexander

David Cameron risks ‘sleepwalking’ UK out of EU, warns Ed Miliband

My gawd, what might happen if people in the UK actually got a choice about the EU?

But of course anyone who thinks that Dave Cameron actually wants the UK out of the EU, in spite of mild bleeting about ‘renegotiation’, is quite frankly a wilfully blind fool.  My only hope is that Dave is stupid enough to think that he can ride that particular wild horse and keep it under control and taking sugar from his hand without biting his fingers off.

Fortunately I think he really is that stupid.

 

 

Britain’s membership of the EU is in the American interest… so what?

One of Obama’s apparatchiks has said that Britain’s membership of the EU was in the American interest.

Two responses spring to mind.

The first was… So what? This remark was obviously aimed the the dismal British government but furthering ‘the American interest’ should be very low on the list of priorities of any government that is not located in Washington DC.  So even if it was true (and frankly nothing could be further from the truth), this should be of trivial import to anyone in the Sceptred Isles.

The second was… ok, so how much are you willing to pay for that “US interest”? If the US interest is served by continued British membership of the sclerotic EU, then perhaps the hapless US taxpayer should get shafted for, oh, lets say 50% of the cost?

Samizdata quote of the day

“If you think that Westminster exists in a bubble, you should try Brussels. For the 18th successive year, the auditors have failed to approve the EU’s accounts. Meanwhile, the EU wants much more money.”

- Roger Bootle. He is writing in the Daily Telegraph, but given that the DT now imposes a paywall on non-UK readers, I am not going to bother with the link.