Where has all the money gone? .....Sequel

  Wilham 00:46 04 Apr 2009

When this question was posted by laurie 53 28/10/08 in the forum I thought it the most penetrating thread query I had ever seen. It happened at a time when an answer was evident in Germany. A worker could bank his/her savings just across the border in Liechtenstein and keep the details 100% private.

I posted ....

"Liechtenstein is picking up up the lost trade, and is now absorbing a chunk of evaded tax from Germany. Teutonic thoroughness will not let this rest....Watch this space."

This followed...

After two weeks Angela Merkel, German Chancellor, visited Downing St. The next week, Gordon Brown announced he had set up a team to determine if the Channel Isles and Isle of Man were making excess profits through their tax concessions.

I think GB was short sighted with this. The effect is to deflect funds away from our door step.

Today on front page D. Tel. I am heartened to read Mr Sarkozy threatened to walk out of the G20 talks unless he got action on tax havens. He now appears to have been fobbed off by an agreement that ten of the many tax havens concede they will submit details on deposits to governments in cases where evidence suggest there has been tax evasion.

France fobbed off? I believe the traditional numbered a/c's are less used nowadays, but investors can adopt user names and/or be party to independent trusts. This contrasts to the requirements of UK banking. Yesterday I made my £3600 transfer into an ISA, and I was asked my National Insurance Number,- for the first time after 50 years as a customer. It was last year at another bank I was asked to fill in a government multiple choice sheet on source of some funds. I have to look on the fuss as a necessary tool for the UK Inland Revenue. Yet they have no such power off shore.

In answer to laurie 53, I think the bulk of the missing money is in the tax havens, and just now they are in boom time. In my opinion it was a combination of hunger for profit and herd instinct thatdirected tax haven power to reign back prime funding in spring/summer 2008. What a scoop it made for them,-and now another $1 trillion on the way!

I wonder what form Mr Sarkozy would wish action and regulation against tax havens to take?

What do you think?

  jack 09:11 04 Apr 2009

The various Governments have been dishing out
funds like there is going to be no tomorrow.
Now the world financial organization wants a top up.
Where does all this dosh come from?
It can only come from taxes.
And we [the tax payer- well not me I am a pensioner]
are all broke,
This merry go round will come to a stop with an awaful shudder soon.
But some folk have it all- somewhere.
So Sir Shred and his ilk are due for a shredding.

  Wilham 12:40 04 Apr 2009

jack: "It can only come from taxes."
Yes, you are right. To be paid by our grandchildren.

fourm member: You are spot on. The tax haven ready capital is active in world trade with advantages over other funding that is restricted by a variety of government controls.

Liechtenstein (from memory) also has population about 30 000.

  birdface 20:37 04 Apr 2009

Not knowing a great deal about banking I just wondered,Very near every country in the world has lost billions of Pounds in the great banking fiasco.I was just wondering if they have lost it who has got it.

  PalaeoBill 22:45 04 Apr 2009
  WhiteTruckMan 23:19 04 Apr 2009

that all the money lost by the banking system ever existed in the first place.

Here is the direction my thinking takes me. One of the causes of our current predicament is the so called toxic debt, where bankers have made a fast buck by selling on poorly assessed mortgages to other banks. Say for example a bank lends 100k for a mortgage to someone to buy a house (leaving aside the 'ninja' aspect). Over the lifetime of that mortgage, if serviced correctly, it may bring in 300k to the bank. So it (the mortgage)counts as one of the banks assets. If subsequently the mortgage collapses for whatever reason, does the bank write off 100k or 300k? I think they are doing the latter. I realise that the real world situation is serious orders of magnitude more complex than my scenario, but that is only to be expected from people -bankers- who have such a vested interest in maintaining such a hideously complicated system that it was only a matter of time before they stepped on their own crank.


  jack 10:01 05 Apr 2009

All those huge losses- Real Money or what the institutions thought they lost.
Taking it to a personal level
Your house- purchased [say] ten years ago for WTMs 100k its market value may be -150k- you may have paid off £xxx capital in ten years- how much to clear the debt? [ setting aside the cost of replacement]
My property a new build estate house purchased for £2185[that's right -52 years ago] may be worth £2185k now- so what! If I sold it- it will have to be replaced - for how much?[plus the cost of doing it]

Your car purchased 2 years ago - now worth half what you paid for it if you chopped it in.
how much have you 'Lost'
My car purchased as a 1year old for 6k 8 years ago and will run until it is a smoking ruin[as all its predecessors] in may be another 5 years[If I live that long] in 8 years it still is shy of 30k miles
and I do about 5/6 k miles a year.
It seems a lot of people live in a make believe world and believe it is real

  GANDALF <|:-)> 10:59 05 Apr 2009

'My property a new build estate house purchased for £2185[that's right -52 years ago] may be worth £2185k now- so what! If I sold it- it will have to be replaced'..not necessarily, you could sell, down size and use the difference to go on a world cruise or buy a yacht. The profit could also pay for your time in a care home if needed.


  WhiteTruckMan 11:05 05 Apr 2009

is whether or not the 'lost' money ever really existed in the first place as anything other than a theoretical construct.


  Wilham 13:40 05 Apr 2009

buteman. "Who has got it?"
Answer is those who have investments in tax havens.

PalaeoBill. Your link is excellent. It gives me a frame of reference to show (later) where the tax havens come in.

GANDALF. I think you are tongue-in-cheek that jack values his house over £2million. I think he's made a slip, and he will need more than the house-downgrade return for long term comfortable care.

WTM. "The Point"
I have to go out, but your philosophical query teases me to suggest we can bypass your theoretical difficulty by treating the construct simply as a device that has converted original cash somewhere in tax havens to gold (troy oz) and other tangiable assets at an unbelievably advantagious rate of exchange.

Indeed, your comment is good thinking,- I am circumventing, not ignoring that difficulty.

  spuds 18:52 05 Apr 2009

In response to the point WTM as made, I think you may well find that most of the money never existed in the first place, because most financial deals are based on trust and theory. You borrow off me, you pay me, then I pay them (whoever them might be)!.

A number of years ago, I purchased by cheque a nearly new Ford Cortina Mk5 for a little below market value from a 'respectable' company. The company at the time was in a re-organisation and relocation process.

Two years (yes 2 years) down the line I was informed that a well known finance house (who I had never dealt with in the UK) investigation team was trying to contact me.To cut a long story short, the 'respectable' company's directors had sold all the company's equipment and assets including leased items, then vanished. The vehicle that I had made a genuine purchase, was not my actual property, but belonged to the leasing-finance company. Eventually everything was sorted out very amicably, and I (in theory) paid a very low fee, so as to take legal possession of the vehicle. The thing at the time (as was explained to me), was that the leasing company use to 'write-off' many similar and very regular occurring transactions of bad debts on a large scale.

Now that money had to come from somewhere!.

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