Or the Seychelles?

The latest in a line of opinion pieces in the Wall Street Journal presenting the ill-effects of the USA's system of taxation for overseas citizens, this one from investment banker Ken Moelis --

Congress should borrow from U.K. policy and provide an immediate tax holiday to any American citizen who takes up residence and works in Africa for more than one full year. The incentive of paying a maximum local tax rate of, for example, 15% in Mauritius may be just the motivation needed to get our most ambitious and forward-thinking Americans to put down roots in one of the world's most important regions.

Is someone planning to retire to Mauritius?

The crisis will be over?

European Union Economic and Monetary Affairs Commissioner Olli Rehn --

"Today's [GDp] figures, when combined with other recent positive survey data are encouraging and suggest the European economy is gradually gaining momentum. They support the European Commission’s 2013 spring forecast and its projections for a subdued, mild recovery in the second half of 2013. The data also supports, in my view, the fundamentals of our crisis response: a policy mix where building a stability culture and pursuing structural reforms supportive of growth and jobs go hand in hand. This slightly more positive data is welcome - but there is no room for any complacency. Self-congratulatory statements suggesting "the crisis is over" are not for today.

So in consecutive sentences he praises policies he has advocated but just does not want to publicly claim they have worked, yet. 

The Maverick act does not travel well

Reuters analysis of USA policy challenge in Egypt:

A visit by outspoken Republican senators John McCain and Lindsey Graham to Cairo last week, intended to help pull Egypt back from the brink, seemed to backfire, enabling the military to rally public opinion against "foreign interference".

How Bahrain showed the way

It has been tempting for the last two and a half years to ignore Bahrain. Too small and too locked in by its regional and global connections for any other outside influence to mean much. Yet it looks like the case study for Egypt now. Gadaffi tried force and lost. Assad tried force and caused a civil war. Ali Abdullah Salah in Yemen tried force and just about managed to exit physically and financially intact. So its track record has not been great. But the government in Bahrain showed that if you use force, short of all out force, that forces people to choose sides, you might win. Manama in February 2011, Cairo today.

The Most Trusted Name in Local News

Sequence of news stories at 9am pb east coast of USA on CNN, with Cairo convulsed and reporters for the channel on the scene.

UPS plane crash in Alabama, 2 fatalities and lots of looping footage of emergency vehicles

Hannah Anderson social media messages complete with screen grabs thereof

Bank robbery gone awry in Louisiana

Real housewives of NJ legal drama

Google privacy rules

By that last item, MSNBC was well into Egypt coverage.

UPDATE: Egypt was the 6th item.

Gnome of Zurich

Former Republican Senator Phil Gramm has an opinion piece in the Wall Street Journal today which blames Bill Clinton inspired mortgage loans to low income households for the global financial crisis. That has been debunked enough. What is stranger is that the Journal never mentions that Gramm made his first post Senate stop a job with Union Bank of Switzerland which nearly went under except for exceptional support from the Swiss government and access to other global central bank relief mechanisms. And it was the investment banking division, not the plain vanilla lending that did the damage. The part that Phil Gramm was in.

Recent terror alert likely had Saudi angle

The general focus of the explanation for the recent terrorism alert in the Middle East has been on something that may have been in the works in Yemen, although there are elements of this that sound either preposterous on its face (e.g. a supposed SPECTRE-style meeting of all Al Qaeda affiliates) or are subject to doubt even by some of the governments involved.

But now there is an intriguing news report from the Saudi Press Agency --

The security spokesman at the Ministry of the Interior said that the security authorities through monitoring and follow up of published messages of incitement and hatred through social networks managed at the beginning of the last ten days of the holy month of Ramadan to arrest two expatriates (a Chadian who was previously deported and returned with a passport of another state, and the other is a Yemeni.) The two recruited themselves for the service of deviant thought, as evidenced by their seized items which included computer hardware, electronic media and mobile phones and which indicated their communication with the deviant group abroad either by electronic encrypted messages or through identities via the social networks (such as Abu Alfidaa, Hspouy, Muawiya Almadani, Rasasah fi Qusasah, and Abu El Feda Aldokulai) so as to exchange information about impending suicide operations in the region. Their initial statements also supported this fact.

The "deviant group" is the standard terminology for Al Qaeda. Of course the statement is cagey, but it suggests that whatever information breakthrough took place over the last few weeks had as much to do with Saudi surveillance as any of the programs of the US National Security Agency. 

One likes to believe in the freedom of music

Does the President of MTV networks, Van Toffler, know that he's the white guy in this Offspring video? Because that's what he is, a corporate tool who uses phrases like "my peeps" in corporate e-mails. Explanation here, and if various blocking tooks will let you, video explanation from Stephen Colbert here.

Iftar gossip

There was that tantalizing meeting of Saudi Prince Bandar and Russian President Putin a week ago. Well now this Reuters story presents a version of what happened:

Syrian opposition sources close to Saudi Arabia said Prince Bandar offered to buy up to $15 billion of Russian weapons as well as ensuring that Gulf gas would not threaten Russia's position as a main gas supplier to Europe. In return, Saudi Arabia wanted Moscow to ease its strong support of Assad and agree not to block any future Security Council Resolution on Syria, they said. A Gulf source familiar with the matter confirmed that Prince Bandar offered to buy large quantities of arms from Russia, but that no cash amount was specified in the talks. One Lebanese politician close to Saudi Arabia said the meeting between Bandar and Putin lasted four hours. "The Saudis were elated about the outcome of the meeting," said the source, without elaborating.

What Lebanese politician would be close enough to Saudi Arabia to have that kind of information?

Makkah, Ramadan 25, 1434, Aug 3, 2013, SPA -- The Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz Al Saud received, separately, at Al-Safa Palace here today, visiting Yemeni President Abdo Rabo Mansur Hadi and the accompanying delegation and the former Lebanese Premier Saad Al-Hariri. The King held an Iftar banquet in honor of his guests. Both the audience and the banquet were attended by Prince Khalid Al-Faisal, the Governor of Makkah Region; Prince Abdul-Ilah bin Abdulaziz Al Saud, Advisor to the Custodian of the Two Holy Mosques; Prince Muqrin bin Abdulaziz Al Saud, Second Deputy Premier, Advisor to and Special Envoy of the Custodian Two Holy Mosques; Prince Faisal bin Abdullah bin Mohammed, Minister of Education; Prince Abdulaziz bin Abdullah bin Abdulaziz, the Deputy Minister of Foreign Affairs; other princes and the Minister of Culture and Information Dr. Abdulaziz bin Mohieddin Khoja.

Poetry Corner

Lines written upon the demise of "Superquinn"

So
Farewell then, Superquinn
Homegrown upmarket Irish grocery chain
"You'll come for the prices and stay for the service"
Yes, that was your catchphrase
And indeed it always seemed worth going the extra few miles to Blanchardstown
For the better fruit and veg and brighter store
Now you will just be "Supervalu"
The missing E symbolizing the final exit of Quinn
Given the recent associations of that name
It's probably just as well

(with the customary apology to EJ Thribb)

Uncommon market

Wall Street Journal editorial page on the latest Gibraltar fracas --

With GDP per capita nearly twice that of their neighbors in Spain and 3% unemployment compared to 26% north of the border, that's unlikely to change any time soon. Maybe the better path is for Spain to try to become more a part of Gibraltar—at least by adopting its low-tax, free-trading economic model.

Essentially therefore the advice to Spain is to become a giant duty free shop -- which would mean being outside the EU customs union. Free-trade indeed!

The world is sloped

There's a resilient talking point among a certain genre of cosmopolitan American pundit that the rest of the world -- and specifically Western Europe and East Asia -- are more technologically advanced and better at delivering modern services, especially ones consumed by said pundits, than the USA. A selection of examples from arch-exponent of this view, Thomas Friedman:

[2007] Look at our infrastructure. It’s not just the bridge that fell in my hometown, Minneapolis. Fly from Zurich’s ultramodern airport to La Guardia’s dump. It is like flying from the Jetsons to the Flintstones. I still can’t get uninterrupted cellphone service between my home in Bethesda and my office in D.C. But I recently bought a pocket cellphone at the Beijing airport and immediately called my wife in Bethesda — crystal clear. I just attended the China clean car conference, where Chinese automakers were boasting that their 2008 cars will meet “Euro 4” — European Union — emissions standards.

[2008] It actually started well, on Kau Sai Chau, an island off Hong Kong, where I stood on a rocky hilltop overlooking the South China Sea and talked to my wife back in Maryland, static-free, using a friend’s Chinese cellphone. A few hours later, I took off from Hong Kong’s ultramodern airport after riding out there from downtown on a sleek high-speed train — with wireless connectivity that was so good I was able to surf the Web the whole way on my laptop. Landing at Kennedy Airport from Hong Kong was, as I’ve argued before, like going from the Jetsons to the Flintstones. The ugly, low-ceilinged arrival hall was cramped, and using a luggage cart cost $3. (Couldn’t we at least supply foreign visitors with a free luggage cart, like other major airports in the world?) As I looked around at this dingy room, it reminded of somewhere I had been before. Then I remembered: It was the luggage hall in the old Hong Kong Kai Tak Airport. It closed in 1998.

He has since made this into a more general theme that America needs to invest more in infrastructure.

Now, that may be true. But if the motivating examples are, as they appear to be for him, airports and wireless communications technology, they need more elaboration. A lot more. Here's a European Commission report from just over a week ago:

As European holidaymakers head to the beach and mountains for their ritual summer holidays, new figures show virtually none of them will have 4G access when they arrive. Three out of every four people living in the EU can’t access 4G/LTE mobile connections in their hometowns, and virtually no rural area has 4G. In the United States over 90% of people have 4G access.

And here's a nice Wall Street Journal article on airport efficiency:

Asian airports have something in common with airports in Europe: they’re far less efficient than their American counterparts. That’s according to Tae Oum, lead author of a new airport efficiency study by The Air Transport Research Society at the University of British Columbia. Compared to those in the U.S., Asian airports have a lower productivity ratio, use more employees and pass more costs onto consumers and airlines, he says.

Of course, "efficiency" is not the same thing as "looks cool" and it's definitely not the same thing as "flashy lounges available to globe-trotting pundits." But that former notion of efficiency probably corresponds a lot more to the cost/quality bundle of a typical airport passenger than the Moustache travelling experience. So which one should the country be basing policy on?

Project manager

In the photo (from Saudi Press Agency), King Abdullah who is holding court in Mecca for the end of Ramadan meets the new Emir of Qatar, Sheikh Tamim. Unusually for these photos, the curtains are open and clearly reveal a large number of construction cranes outside, presumably related to the next phase of Mecca expansion. Maybe Sheikh Tamim will take a hint about what's actually involved in getting ready for FIFA 2022 World Cup.

This one goes up to 11

White House statement on Vice President Joe Biden's phone call with Iraqi Prime Minister Nouri al-Maliki --

Regarding the situation in Syria, the two leaders discussed the importance of working together to isolate extremists on all sides of the conflict there.

Who are the extremists on the Assad regime side that are more extreme than the regime itself?

Everything's gone green

At National Review's The Corner. Eric Stakelbeck puts the microscope to Al Qaeda --

In fact, al-Qaeda, its affiliates, and its allies now cover more geographical ground across the Muslim world than they did on 9/11 — everywhere from Pakistan’s tribal regions to Yemen, Somalia, Sinai, Syria, Nigeria, Libya, Iraq, Europe, and the Sahara desert region, specifically northern Mali and southern Algeria.

Europe?

Shiny new toy

So John Henry has bought the Boston Globe from the New York Times company but he is really, really, not losing interest in his major overseas investment, Liverpool Football Club? He'll have dumped his ownership in the club by Christmas.

We knew we'd seen Edward Snowden somewhere before

No doubt about it, he appears to be leading the dancers in this classic Spike Jonze video for Fatboy Slim's Praise You.

Fly on the wall needed

Legendary geopolitical operator Prince Bandar ("Bush") bin Sultan bin Abdulaziz of Saudi Arabia -- looking remarkably well for a dead man -- meets Russian President Putin with the two countries in diametrically opposed positions on Syria.

Photo: from SUSRIS since our earlier Al Arabiya link is mysteriously busted.

How Bond explains the world

Daily Telegraph -- The Bank of England has admitted its role in one of the most controversial episodes in its history - helping the Nazis sell gold plundered from Czechoslovakia months before the outbreak of the Second World War.

We already knew that the Bank of England had its hands on some dodgy gold via the classic Bank dinner scene in Goldfinger.

Image via Mitteleuropa film locations.

God is the solution

So ... acknowledging up front that this blog seems to coming All Wall Street Journal Criticism All The Time ... the US government has an ostensibly worthy entity called the US Commission on International Religious Freedom. In Friday's WSJ, two of its members -- Princeton professor Robert "Robby" George and Katrina Lantos Swett -- argue that that the US has a legitimate role advocating world-wide for the freedom of people to believe in any religion, or none. That's fine in principle, the question is what specific foreign policies this might justify, upon which they don't elaborate.

Anyway, in the course of the argument, they deploy none other than Cardinal Newman --

The British religious thinker John Henry Newman observed in 1874 that "conscience has rights because it has duties." We honor the rights of conscience in matters of faith because people must be free to fulfill what they believe to be their solemn duties.

Given Newman's religious trajectory, this quote warranted a check and here's the essay from which it comes.   What does Newman mean by "conscience"? Luckily, he tells us what it is:

First, I am using the word "conscience" in the high sense in which I have already explained it,—not as a fancy or an opinion, but as a dutiful obedience to what claims to be a divine voice, speaking within us; and that this is the view properly to be taken of it, I shall not attempt to prove here, but shall assume it as a first principle.. Secondly, I observe that conscience is not a judgment upon any speculative truth, any abstract doctrine, but bears immediately on conduct, on something to be done or not done. "Conscience," says St. Thomas, "is the practical judgment or dictate of reason, by which we judge what hic et nunc is to be done as being good, or to be avoided as evil." Hence conscience cannot come into direct collision with the Church's or the Pope's infallibility; which is engaged in general propositions, and in the condemnation of particular and given errors.

and, what it isn't:

but in this age, with a large portion of the public, it is the very right and freedom of conscience to dispense with conscience, to ignore a Lawgiver and Judge, to be independent of unseen obligations. It becomes a licence to take up any or no religion, to take up this or that and let it go again, to go to church, to go to chapel, to boast of being above all religions and to be an impartial critic of each of them. Conscience is a stern monitor, but in this century it has been superseded by a counterfeit, which the eighteen centuries prior to it never heard of, and could not have mistaken for it, if they had. It is the right of self-will.

Thus, invoking Newman on conscience may have been a nice rhetorical flourish, it carries a lot more weight than you'd understand from how it is used above.

Photo: Newman House on St Stephen's Green in Dublin via Wikipedia, the ancestor of University College, Dublin.

He's on spin-enhancing drugs

Karl Rove in Thursday's Wall Street Journal --

When Barack Obama ran for president in 2008, he promised that America would be more respected and liked in the world. Foreign leaders would bow to his wishes. Ancient conflicts would end. In a speech before hundreds of thousands in Berlin, he vowed to do nothing less than "remake the world."

Actual paragraph from that speech --

People of Berlin - and people of the world - the scale of our challenge is great. The road ahead will be long. But I come before you to say that we are heirs to a struggle for freedom. We are a people of improbable hope. With an eye toward the future, with resolve in our hearts, let us remember this history, and answer our destiny, and remake the world once again.

It's obvious from the context of that paragraph that he was talking about a generation remaking the world. not himself. The attribution of the "remake the world" to Obama for himself seems to have originated with Mike Allen at Politico.

Later from Rove --

His agenda for the continent [Africa]? The president told African leaders in Tanzania on July 1 that his priority is to "modernize customs, move to more efficient border crossings, reduce bottlenecks, reduce the roadblocks that stymie the flow of goods." This was worthy of a speech by a commercial attaché, not a U.S. president.

Indeed, President Obama did make those remarks to African leaders. African business leaders -- who would want to hear about commercial issues. When he was talking to actual African leaders, he talked about the developmental issues you'd expect him to talk about.

Incidentally, the WSJ's description of Rove notes that he helped organize the political action committee American Crossroads -- a description that never appeared during the 2012 election season when Rove had the same slot on the Thursday op-ed page.

Fictitious Capital

Wall Street Journal editorial page on threats to its beloved flat tax, 11 January 2013 --

The rapid economic development of Central and Eastern Europe counts as one of the Continent's success stories of the last 20 years, and no small part of the revival had to do with the flat tax. Beginning in the mid-1990s, several governments east of the river Oder tried flat taxes to lure investment and promote growth. Early success in the Baltics caused the idea to spread. This time last year, more than a dozen European capitals from Prague to Tbilisi taxed income at a single, flat rate.

Wall Street Journal editorial page on Germany's solidarity levy financing of reconstruction in east Germany, 24 July 2013 --

The solidarity surcharge is arguably a failed project: Much of the East still lags behind the West economically. The better solution in 1990 would have been to turn the ex-communist states into a development zone that could attract private enterprise with low taxes and lighter regulations and social protections. (A similar strategy today could lift the Southern euro-zone countries.)

In fairness, there's nothing worse about their proposed Transition II programme for Greece, Spain, Portugal, Cyprus, and Italy than what Eurocrats actually have on the table.

Actual Australian input needed

In the Wall Street Journal, Andrew Roberts uses the royal birth to confidently bury the Republican cause in Australia --

Australian immigration demographics presently imply that such a divorce won't occur, because immigrants into Australia from dictatorships and former communist countries tend to equate the constitutional monarchy with domestic political tranquillity, the rule of law and limited government. If the baby prince turns out to be as photogenic as his parents, all that Prince William and the Duchess of Cambridge will have to do is visit Australia on the eve of any republican referendum to bury the movement's chances there.

This time wasn't different

Writing in the Wall Street Journal, James Glassman (currently executive director of the George W. Bush Institute, an affiliation that is not included in the article) is outraged that Argentina is fighting tooth and nail not to pay holdout creditors with whom it has been in protracted litigation in New York court --

The really important principle in the Argentine case that needs defending is not about minority creditors and a deadbeat government. At stake is New York's status as the top destination for sovereigns to issue bonds. Some $420 billion in sovereign debt subject to New York law is outstanding, and this market cannot operate smoothly unless creditors are able to enforce contracts. If Argentina gets away with stiffing creditors, one consequence will be that lenders in the future will demand higher rates for their higher risk; another is that they won't make loans.

Two questions.

1. Why should the interest of one particular place, New York, in being a bond issuing center, drive the important global public policy question of when and how countries can default?

2. The table above is from the Rogoff and Reinhart book, This Time Is Different (note: book has very different intellectual history than the similarly-authored article). What exactly did the investors in Argentina bonds think they were getting into?

No magic variable

In Sunday's New York Times, conservative columnist Ross Douthat looks to place the current controversy about abortion restrictions in Texas in an international context and specifically by comparison with Ireland, where as he notes there are some similarities in the destination to which Texas appears headed, namely severe limitations on legal abortion but a right to travel outside the jurisdiction. His point is that Ireland doesn't look like the benighted anti-women inferno which he infers as a theme of the pro-choice rhetoric in Texas.

A couple of reactions. First, his column contains the subheading What Dublin's experience means for Dallas's future. It could just as easily be What Belfast's experience means for Dallas's future. Because Northern Ireland has essentially the same landscape of access to abortion as the Republic, with only the recent exception of the arrival of the Marie Stopes clinic in Belfast. Both sides of the border, the National Health Service in Britain remains the key fallback mechanism for access to abortion.

Second, as Douthat admits,an important backdrop in the European case is good access to health services in general, something that Texas is busy shredding. Strangely through he views this as something that liberals should be putting more energy into countering, when his own comparison suggests that it's pro-life conservatives who are being the hypocrites.

Finally, if you're looking for one decisive indicator or country comparison to make a devastating critique of one side or the other in the abortion debate, you're not going to find it. European indicators for child and maternal health show all sorts of variation that is not obviously correlated with the stance on abortion, but there are hints of that landmine variable of "culture" playing a significant role.

Also perhaps important in that Ireland-Texas comparison: Ireland confines its biggest political clowns in the abortion debate to a weak upper house of the legislature, but in Texas, they run the state.

Photo: London Olympics NHS tribute via the Guardian.

Not enough mansplaining opportunities

The group photo from the meeting from the Group of 20 largest economies (G20) finance ministers and central bank governors in Moscow today. If you're counting, that's 4 women in total, one of whom (Mme Lagarde) is there in her IMF capacity and not as a G20 member.

Photo: Russian G20 organization.

Don't be afraid to make banks do some work

Wall Street Journal op-ed by Colleen Graffy, an American living in London --

Beware the sledgehammer used to crack the nut. In this case, the nut is the U.S. government's laudable goal of catching tax evaders. The sledgehammer is the overreaching effect of legislation that is alienating other countries and resulting in millions of U.S. citizens abroad being forced to either painfully reconsider their nationality, or face a lifetime of onerous bureaucracy, expense and privacy invasion. The legislation is Fatca, the Foreign Account Tax Compliance Act (FATCA).

The article goes on to complain how onerous it is for Americans living anywhere in the world (or their local banks) to have to report (and potentially pay American taxes on) income earned overseas; this was always an obligation, but it's gotten easier to police since banks are now in the reporting dragnet under FATCA. There was a higher frequency of such articles one year ago as FATCA first kicked in. But then, like Led Zeppelin's Over the Hills and Far Away, FATCA got cool later. Here's a representative explanation from The Economist --

The other big push on tax is to move from an “on request” model of information exchange, where countries have to cajole each other to hand over data, to one where they are swapped automatically. This is already well under way, thanks to America’s Foreign Account Tax Compliance Act (FATCA), which has inspired European countries to make similar demands. It could become the global standard within a decade. Offshore centres are starting to sign up, calculating that a voluntary move now may mean better terms. European laggards, such as Switzerland, Austria and Luxembourg, are also reluctantly increasing compliance. This will make it harder to hide assets abroad.

There's a precedent for this. The US Foreign Corrupt Practices Act (FCPA) used to be bashed by well-heeled interests in the US as putting Americans at a disadvantage overseas, since other countries had laxer corruption laws. But over time, especially due to pressure from poor countries, FCPA became the template. The same thing is happening to FATCA. Even as the horror stories about Americans being turned away from banks trickled in, European countries -- like Ireland! -- saw which way the wind was blowing and did deals with the US to ease the implementation burden. Now the language of international summits is all about having a "Global FATCA."

Sure, banks have to do more work because of it. Those poor banks!

It makes Rudd v Gillard look tame

It's odd to see the shocked, shocked tone of news reports on vicious discord in the Australia cricket dressing room when it takes about 2 seconds to read up on the sectarianism of the 1930s counterpart thereof, Don Bradman v Jack Fingleton in particular.

Squid unbound

From the Goldman Sachs quarterly earnings statement --

As of June 30, 2013, total capital was $240.08 billion, consisting of $78.04 billion in total shareholders’ equity (common shareholders’ equity of $70.84 billion and preferred stock of $7.20 billion) and $162.04 billion in unsecured long-term borrowings.

It's quite a trick that banks can do, getting to count borrowed money as "capital" -- 2/3 of its total capital, in the case of the Vampire Squid. Presumably the wheeze is that since the money is unsecured and long-term, Goldman Sachs can use it to absorb losses.

But of course, when you're too big to fail and too connected to fail and you've got a hotline to the central bank, borrowing unsecured and long-term so that the regulators can check off the "well capitalized" box is probably pretty easy.

Nice work if you can get it.

Also, James Bond would report to Alex Salmond

Good New York Times article about Rory McIlroy's technical and personal struggles, but marred by a strange analogy --

The trap on this path could also ensnare the new Wimbledon champion Andy Murray, a Scotsman who won a gold medal for Britain at the London Games because his homeland does not field an Olympic team. A movement in Scotland to gain independence from Britain, if successful, would make Murray the McIlroy of tennis.

An independent Scotland would be, er, independent and therefore it would have an Olympic team that Murray could represent. Northern Ireland is part of the UK which competes in the Olympics as "Team GB" which doesn't map well to Ireland's mixed identities. That's the problem. Did an editor want an Andy Murray reference for enhanced news topicality?