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| US Protesters Seek New Anti-War Movement Demonstration follows President's Nobel speech www1.voanews.com |
Madagascar protesters tear-gassed Security forces fire tear gas at opposition supporters and leaders as Madagascar's power struggle continues. news.bbc.co.uk |
Volcano erupts in eastern Congo, official says KINSHASA, Congo (AP) -- A government official says a volcano has erupted in eastern Congo, sending lava toward a national park.... hosted.ap.org |
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Britain must back Obama's stand against the money bullies | Polly Toynbee It's high noon for the global economy, but malign market forces are running rings round LabourHere comes the great global fight for democracy. Who's in charge, banks or elected governments? President Obama puts up his fists and every other democracy had better stand with him. He is taking a colossal risk, as Goldman Sachs and the rest thumb their noses at mere governments. Someone had to take on the bully power of money – and only America has the clout. The world's economy depends on it, so Europe must stop pussy-footing and back his plans to dismantle "too big to fail" banks.In Britain this comes to lift the spirits after a week that saw a government powerless against malign market forces – forces it has too often extolled. The hostile takeover of Cadbury by Kraft, financed by RBS, is a deal that stands to be a loser for all but the deal-makers. Not even Kraft's biggest shareholder, Warren Buffett, could stop what he called "a bad deal", as financiers creamed off $390m in fees. Cadbury's CEO cried crocodile tears and flaked out for £12m. Mergers and acquisitions mania is back, despite Âvoluminous evidence that takeovers often fail and only benefit the fixers. Think Sir Fred Goodwin crashing RBS with his macho capture of ABN Amro.The government bleated slightly over the loss of the Quaker Curly Wurly maker, but it was Labour in 1998 that removed the last vestige of a public interest clause in competition law that might have given the government some leverage. Employees in Bournville fear the same fate as when Kraft gobbled up Terry's in York and closed it down: it's easier to close factories furthest from their owners. Lord Mandelson started out warning the bidders not to think they could "come here and make a fast buck", but ended up whimsically hoping Kraft would make "perfectly formed Creme Eggs". He told parliament it was "not my place to say which mergers or takeovers should take place".What is the government's place? It helped turbo-charge private equity takeovers when Gordon Brown in 1998 cut capital gains tax from 40% to 10%. Ostensibly, this was to encourage entrepreneurs to set up a business. But Apax, Permira and the rest used it not to Âcreate new value, but to destroy the value of old companies, buying them with top-heavy leveraging, asset-stripping and returning them to market laden with debt, with earnings taxed as capital gains at just 10%. Debenhams, the AA, Boots and EMI went the same way, burdened with debt. Much of what Adair Turner calls a "socially useless" activity is designed to avoid tax.If for no better reason, tax loss makes this the concern of government. Companies that paid corporation tax now offset their debts against tax liabilities and pay none. Consider the banks that used to pay tax, but now offset their losses: RBS, Northern Rock, Lloyds, HBOS. The taxpayer pays to save them, then allows them not to pay tax on big profits.But it's worse than that, as exposed last year by the Guardian's Tax Gap series on company tax avoidance. After the takeover, Cadbury need no longer pay any tax since it can offset its hefty new debt into the distant future. But check their taxes and something else emerges: in 2006 Cadbury paid £205m in tax – though only a token £1m was paid in Britain, while 14% of its turnover is here. Why was that allowed to happen? Cadbury won a court ruling saying it could relocate its tax affairs to Dublin provided the transaction was at least "not wholly artificial".Gordon Brown boasted that Britain was open for business, and now most of Britain is sold. As the tax expert Richard Murphy points out, the Anglo-Saxon model has left few Anglo-Saxon businesses: France and Germany do things differently. Brown would take no action without international agreement, but G20 regulation proceeds at the pace of the slowest of its snails. However, now Obama is taking the lead, victory should lead to better international regulation. Tax havens so far only mildly rapped could be shut down, with people and companies fairly taxed where they genuinely reside. The "too difficult" box springs open once America engages.At the start of this bank-bonus week there was much head-shaking that no lessons had been learned from the crash, amid warnings that another crash was inevitable that could destroy everything. Only such an Armageddon seems likely to stop business as usual: the stock market soars, house prices rip away, bailed-out banks smirk at government pleas for restraint, mergers are back and all's wrong with the world. Goldman Sachs's Lloyd Blankfein took a swing through London recently on an un-charm offensive that only reminded listeners that he inhabits a hostile asteroid on collision course with Earth. Nothing learned, no introspection, only the same breathtaking arrogance and ignorance as the investment bankers that I encountered in focus groups last year when researching the book Unjust Rewards. Boris Johnson, banker defender, warns that 9,000 bankers will flee London to avoid bonus tax and the 50p top rate: let them go. But if Obama can unite the major financial centres, there will be nowhere worth running to.This is not about individual greed: people will take what they can. Government failure allows financiers to cream monÂopolistic rent off every transaction, mostly by churning pension funds at the loss of billions. Richard Murphy points out that the London Stock ÂExchange churns vast numbers of shares daily to the dealers' short-term benefit, while Warren Buffett makes higher profits sitting on his shares long term. The under-regulated system pays bankers and CEOs like Cadbury's to take their booty and run. Nor will delaying bonuses by a year or two make much odds. Talking to Revenue & Customs this week, I found them busy hunting down a host of very clever new schemes the banks are devising to avoid the bonus tax: some are backdating salary increases to disguise new bonuses. Other wizard wheezes include paying bonuses into trust funds to be cashed in later: "We are closing them all down," claims the taxman – but you can bet the tax avoidance industry is cashing in.This is the shameless culture of Âdefiance that Obama is taking on. This is high noon, and the good guy fights without the weapon of his Senate super-majority. If he loses, the Âbankers' next crash may be non-Âsurvivable. ÂBritain and the rest of the world must back him: no niggling over whose Âregulation is best.Financial crisisObama administrationBankingMergers and acquisitionsExecutive pay and bonusesKraftCadburyPolly Toynbeeguardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds guardian.co.uk |