The Eurozone crisis : Thu Nov 10, 2011 10:05 pm
So we are now entering the dangerous phase of the crisis with Italian bond yields reaching unsustainable levels. If I recall correctly, the UK is estimated as being exposed (via banks, etc) to the tune of ca. Euro 70 billion plus and France is exposed to the tune of a massive ca. Euro 440 billion. France's ability to raise funds cheaply will start to suffer. It seems that the Euro-politicians have now let things drift too far and things will now get very dangerous as I don't think they have the will or fire-power to stop the contagion.So, is their an "easy" way out? It seems to me that if investors are unwilling to put their money into European soverign bonds one way out is a massive increase in tax take (ie take investors money if they won't offer it). However, that won't work on a country by country or even Eurozone wide basis - it'd just make those countries even more uncompetitive and poor. So, we need a Gordon Brown figure to get worldwide consensus on "recapitalising" nations. My suggestion is a worldwide agreement to levy and channel into a World Emergency Fund a one-off capital tax. I would start with a gentle 30% charge on gross assets held in designated tax havens (that would attack the megarich, the tax avoiding big businesses, large scale organised crime and corrupt developing world politicians!). Tax could be levied on assets held on say 1 December with a special 75% withholding tax on withdrawls in the interim. As a further anti-avoidance measure any one found to have avoided the levy can be arrested and tried in any jurisdiction in which they travel - that would put the wind-up the internationally mobile megarich and oligarchs or at least confine them to their homes, where they wield their power.
I'm sure the world would not agree to such a scheme and it would be hard to impose but I reckon it would do the trick!
Oh, and the EZ should be broken up in an ordetly fashion asap rather than waiting for reality to cause a disaster.
