Good-bye, Capitalism?

[Héctor]

More than 840 of the largest American corporations reaped a $265 billion windfall thanks to a one-time tax break aimed at bringing home profits stashed overseas, according to recent government data. The windfall resulted from a temporary tax deduction for big corporations, which were keeping billions of dollars in profits in overseas subsidiaries and out of the hands of the Internal Revenue Service. The total amount brought back to the United States was far above some estimates, according to the data, which provides new details on the tax break. American companies can typically defer paying taxes on foreign profits as long as they keep that money outside the United States. When companies bring the money back, they usually pay the top corporate tax rate of 35 percent. In recent years, the biggest and wealthiest companies in the United States have increasingly set up foreign subsidiaries and used them either as foreign operations or offshore repositories. The subsidiaries, many in offshore tax havens like the Netherlands, Ireland and the Cayman Islands, collectively held about $804 billion in foreign profits on which their American corporate parents had yet to pay any United States taxes, according to the I.R.S.

See A One-Time Tax Break Saved 843 U.S. Corporations $265 Billion

[Philidor]

The City is preparing a 50% rise in annual bonuses to £6 billion as bank profits make a swift recovery, a leading research group said.

Better-than-expected second and third quarter figures from the banking industry will result in a leap from the £4 billion seen in January's annual bonus round, the Centre for Economics and Business Research (CEBR) said.

The forecast angered Liberal Democrat Treasury spokesman Vince Cable, who said the big increase did not reflect the particular contribution made by bankers to the economy.

He added: "These bonuses are coming from the fact that banks are earning money from substantial Government borrowing and are able to earn bigger profits because there is less competition. What is particularly galling is that all their activities are in turn underwritten by the taxpayer."

Press Association

LOL The London bankers have won. They're regarded by the British political class as too big to regulate. Sure, the politicians, faced with public disgust, will huff and puff and publish 'consultation documents' but the bankers just laugh and rake in the cash. They know they're untouchable. They've been bailed out once and if the markets crash again they'll be bailed out again, with the taxpayer paying the bill, i.e. the poor who now face swinging cuts in public services to pay for the bankers.

I'm not a conspiracy theorist but the UK MPs expenses scandal starts to make more sense. It's purpose - brilliantly launched and co-ordinated by a right-wing newspaper - was to further neuter the political class so they wouldn't have the self-confidence or political will to regulate the City. Even if they wanted to.

[Zeitblom]

Originally Posted by Philidor

LOL The London bankers have won. They're regarded by the British political class as too big to regulate. Sure, the politicians, faced with public disgust, will huff and puff and publish 'consultation documents' but the bankers just laugh and rake in the cash. They know they're untouchable. They've been bailed out once and if the markets crash again they'll be bailed out again, with the taxpayer paying the bill, i.e. the poor who now face swinging cuts in public services to pay for the bankers.

And they're rubbing the rest of our noses in it:

http://www.guardian.co.uk/business/2...s-goldmansachs

The point is that a year ago the Government really had no choice - we were within days of the cashpoints no longer working. But the failure was to extract anything out of them in return.

[Héctor]

Federal deficit: who owns what?

[Chilperich]

Maybe I missed something on this thread (since I've been to-ing and fro-ing in and out of England for the past few weeks, and haven't always had Internet access), but I'm surprised, apropos these public bail-outs of improvident, reckless private banks, that nobody has mentioned the name Chomsky.

The kind of nationalisation of (the consequences of private) risk that we are witnessing is surely the locus classicus of the supposedly free-market system which currently operates, and which Chomsky very aptly terms "socialism for the rich".

[Héctor]

What exactly is the function of the financial sector in our society? Simply this: Its sole function is supplying capital efficiently to aid the real economy. The financial sector is a tool to help those that make real tools, not an end in itself. But five fatal flaws in the financial sector's current structure have created a monster that drains the real economy, promotes fraud and corruption, threatens democracy, and causes recurrent, intensifying crises.

William K. Black, How the Servant Became a Predator: Finance's Five Fatal Flaws

[Scott Good]

Originally Posted by Héctor

What exactly is the function of the financial sector in our society? Simply this: Its sole function is supplying capital efficiently to aid the real economy. The financial sector is a tool to help those that make real tools, not an end in itself. But five fatal flaws in the financial sector's current structure have created a monster that drains the real economy, promotes fraud and corruption, threatens democracy, and causes recurrent, intensifying crises.

William K. Black, How the Servant Became a Predator: Finance's Five Fatal Flaws

excerpt:

"Forty years ago, our real economy grew better with a financial sector that received one-twentieth as large a percentage of total profits (2%) than does the current financial sector (40%). The minimum measure of how much damage the bloated, grossly over-compensated finance sector causes to the real economy is this massive increase in the share of total national income wasted through the finance sector's parasitism."

40%!!!!

What insanity.

[haydnguy]

You know that capitalism has taken a hit when the far right decides to eliminate the word 'capitalism' from the textbooks in Texas and replace it with the term "free markets".