Companies & Regulation

When reflecting on the causes of the current economic and financial crisis, the huge upsurge in private debt is one of the most cited reasons. Some people insist on blaming the private sector for this. According to them, the sustainability of its behavior has been clearly put into question by the recent events. But, what lies behind this exorbitant private indebtedness? This article is focusing on the Spanish case, with some references to the United States.

For the first time since 2002, the credit rating of Japan has been downgraded to AA-. By doing this, the Standard and Poor’s rating agency has placed Japan on the…

According to various Internet sources, Irish banks would have borrowed €51bn from the Irish central bank by the end of December, under an obscure program listed in the balance sheet as “other assets”. That is, the Central bank has electronically printed up new currency units for Irish commercial banks, without issuing debt behind these actions. The actions of the Irish central bank are not ignored by Germany, but fall out of the area of official monetary policy and appear to involve money creation outside the normal control of the European Central Bank.

According to the 2011 Index of Economic Freedom released by the Heritage Foundation and The Wall Street Journal, European nations continue to enjoy a great degree of economic freedom. But while three of the 10 freest economies in the world are European, only one – Switzerland, at No.5 – is rated as truly “free.”

While governments are tempted to raise taxes on capital gain in order to reduce their public deficits, the study realized by the London based Adam Smith Institute explains why the temptation should be resisted. Based on clear economic reasoning and on evidence from the US, Australia and Canada, they show that there is a Laffer curve effect at work; one that is probably stronger than in the case of personal income tax. In other words: higher capital gains tax rates are very likely to give lower tax revenues.

Philipp Bagus, a young Spanish scholar and one of the prize winners of the IREF Essay Contest, recently published a very interesting book on the European monetary system. Using the…

This is the cumulated budget deficit of the OECD countries in 2010. On average, it represents 7.5 GDP points.

While some states, departments and cantons around the world are struggling for more fiscal autonomy, the Scottish government is hesitating to grasp at the opportunity offered by the UK government. The proposal of the new Scotland bill is to allow the Scottish government to increase or cut income tax rates by up to 50% for basic rate taxpayers, and by 20% at the highest rate. In exchange, the central government in Westminster plans to cut a part of its transfers to Scotland. It makes sense, since “autonomy” usually goes with “responsibility”.

The low fares airline Ryanair announced the closure of its only French base in Marseille from January 2011. As a consequence, 13 Marseille routes will be closed, cutting the city from important flows of tourists. The closure is following the commencement of legal proceedings against Ryanair’s Marseille base, where all of its 200 pilots and cabin crew work on Irish aircraft (i.e. Irish territory) and pay their taxes and social insurance contributions in Ireland where they receive their Irish pay.

The new US$600 billion round of “quantitative easing” by the Fed announced by Ben Bernanke is undoubtedly a topic to be discussed during the coming G20 meeting in Korea. Indeed, the reverse side of a cheaper dollar is a more expensive euro, Japanese yen, Chinese yuan etc. Exporters in those countries are likely to find themselves in a disadvantageous position to US firms in global markets. The Fed move is also likely to generate massive losses to the largest dollar holders such as the People’s Bank of China and the Bank of Japan.