General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsTax havens like Cyprus, Caymans the modern-day Pirate Treasure Islands
And the very rich and corporation hiding their spoils there are the modern day pirates.
Treasure Island Trauma
By PAUL KRUGMAN
A couple of years ago, the journalist Nicholas Shaxson published a fascinating, chilling book titled Treasure Islands, which explained how international tax havens which are also, as the author pointed out, secrecy jurisdictions where many rules dont apply undermine economies around the world. Not only do they bleed revenues from cash-strapped governments and enable corruption; they distort the flow of capital, helping to feed ever-bigger financial crises.
...............
So, about Cyprus: You might wonder why anyone cares about a tiny nation with an economy not much bigger than that of metropolitan Scranton, Pa. Cyprus is, however, a member of the euro zone, so events there could trigger contagion (for example, bank runs) in larger nations. And theres something else: While the Cypriot economy may be tiny, its a surprisingly large financial player, with a banking sector four or five times as big as you might expect given the size of its economy.
Why are Cypriot banks so big? Because the country is a tax haven where corporations and wealthy foreigners stash their money. Officially, 37 percent of the deposits in Cypriot banks come from nonresidents; the true number, once you take into account wealthy expatriates and people who are only nominally resident in Cyprus, is surely much higher. Basically, Cyprus is a place where people, especially but not only Russians, hide their wealth from both the taxmen and the regulators. Whatever gloss you put on it, its basically about money-laundering.
.................................
But step back for a minute and consider the incredible fact that tax havens like Cyprus, the Cayman Islands, and many more are still operating pretty much the same way that they did before the global financial crisis. Everyone has seen the damage that runaway bankers can inflict, yet much of the worlds financial business is still routed through jurisdictions that let bankers sidestep even the mild regulations weve put in place. Everyone is crying about budget deficits, yet corporations and the wealthy are still freely using tax havens to avoid paying taxes like the little people.
So dont cry for Cyprus; cry for all of us, living in a world whose leaders seem determined not to learn from disaster.
http://www.nytimes.com/2013/03/22/opinion/krugman-treasure-island-trauma.html
dipsydoodle
(42,239 posts)Its on the OECD white list and has the approval of at least 40 governments one of which just happens to be the USA.
Hestia
(3,818 posts)Oil and money, always the big players in the game.