Tett, get it! What is stashed away in offshore centers, is mostly titles of ownership to onshore assets

Sir, Gillian Tett writes: “Four years ago, activists’ group… claimed that some $21tn-$32tn was being stashed in offshore centres, but it had no real way of verifying the numbers. With the Panama Papers being studied, more precise figures could emerge — and with that the ability to compare them with the overall picture of global banking.” “Our mental map of the banking world may be about to flip” April 16. 

Does Tett really think that $21tn-$32tn could be stashed in offshore centers? Has she ever heard of banks in offshore centers to be jointly as large than perhaps all the 15 largest non-Chinese banks put together? Does she not realize that Mossack Fonseca is just a big law firm?

In truth, save perhaps one apartment here, or some yacht there, nothing real is stashed away in Panama or other offshore centers. What is stashed away there though, are titles of ownership over assets stashed away primarily in the developed world. It could be deposits at Citibank, a title over a flat in London, stock certificates or whatever.

The whole affair reminds me of the confusion about Eurodollars that made many sudden-experts believe in the existence of some autonomous dollars traded in Europe. What was traded, were all dollar deposited in the USA. That had started in the late 50s when Russia, scared of the possibilities of having their dollars confiscated, had a British chartered bank take over its dollar deposits in the USA, against a “Eurodollar” deposit of Russia in the British bank.

But does it all not sound nice? Over there are $21tn-$32tn stashed away, and so if only we got it back, we would all be so much better off. Sir, Tett is unknowingly helping to feed that cheap populism that has all redistribution profiteers salivating. I truly think we all deserve better.

PS. Does this mean I condone less than anyone else those criminal activities that might often be behind the hiding of the real ownership of assets? Of course not! And you know it!

PS. Redistributing wealth is not as straightforward as redistribution profiteers want us to think.

@PerKurowski ©

Do Gillian Tett and other really believe that ever-growing offshore cash piles, is cash stashed away under mattresses?

Sir, Gillian Tett writes: “overseas profit piles have swelled — to more than $2tn”; and from there she jumps to: “in the real world introducing a repatriation deal — even at a mere 10 per cent — would almost certainly be better than the dismal status quo: a world of ever-growing offshore cash piles, transatlantic tax battles and lousy infrastructure does not suit anybody.” “The clampdown on tax inversions is only a start” April 8.

But Vanessa Houlder informs: “Over $1tn of cash has been booked offshore, even if the money is held in US banks or Treasury bonds.” “Tax havens seen as ‘grease on wheels’ of cross-border trade” April 8.

All those “overseas profit piles” have, in some way or another, already been deployed and so, to redeploy these, means having to liquidate their current positions.

What if the “more than $2tn” had all been invested in public debt and you repatriated all of it and the government got a 10 percent cut on it?

Then of course governments would owe ‘more than $200bn’ less, but if they for instance wanted to better any “lousy infrastructure”, then they would have to sell fresh public debt in the market. And, since the stockpile-holders have been diminished, that would most certainly imply having to pay higher interest rates. That is of course, unless governments are not assisted by banks holding it against zero capital requirements, or central banks buying up public debt for the governments own “stockpiles of cash”.

It is amazing the kind of demagoguery that is floating around. It is dangerously divisive. At the end of the day what it really comes down to, is who is going to decide on how any accumulated wealth is to be redeployed, whether the private or some government bureaucrats.

I truly believe that current governments waste, represents much more lost value than what is inappropriately or illegally diverted into these oh-so-horrible “stockpiles of cash”. And so I would like to see the expected repatriation profiteers kept at bay. Perhaps all citizens in some Universal Basic Income/Wealth scheme could share the governments’ cut of any repatriated assets?

And by the way, what are we to do with Putin’s “stockpiles of cash”, those that might be fully invested in the US? Send it back to Russia to Mr Putin?

Do these comments mean that I condone what distorts or what is illegal? Of course not! All tax systems should be improved and all taxes should be paid! There are occasions though in which I find it quite relevant to ask: How much failed nation or tyrannical government is needed for citizens’ capital to be granted immediate asylum?