When frozen in other types of “cash”, it is hard to free up cash to spend on good causes without losing much value

Sir, I refer to “Debt Collectors” September 16, in which Eric Platt, Alexandra Scaggs and Nicole Bullock search to explain what could happen to the “portfolio of cash, securities and investments worth roughly $840bn, held outside the US by just 30 US companies, because of tax reform designed to … encourage American companies to bring back jobs and profits trapped overseas”.

The article, though it refers to difficulties such as the “repatriation process itself could involve selling bonds” and the impact of that on interest rates, fails to illustrate the whole truth.

The reality is that all that “cash”, as well as all that “cash” held by other wealthy (for instance in Panama) except for the less than 1% that could be in real cash, is in other assets like securities investments, perhaps even in art collections.

So, in order to convert all that “cash” into real cash, those other assets have to be sold to others who are then required to give up their real cash for these. And, in that process, clearly a lot of the value of the “cash” would just change hands or disappear.

Why are these difficulties of converting “cash” into cash not more discussed? Because doing so would be sort of inconvenient for those redistribution profiteers who try to sell their politically beneficial envy, for instance that present in the “one percenters being against all us 99 percenters” theme.

What is a £20 million flat in London or a US$200 million Picasso hanging on a wall but the voluntary freezing of millions in alternative purchase power that could be out there in the economy competing for consumer goods… and generating inflation? Is a lowering of the value of hard-assets the inflation driver central banks want?

PS. Of course the above does not take away one iota of the need to relentlessly pursue those who have accumulated “cash” assets illegally, and might hold these in places like in Panama.

https://teawithft.blogspot.com/2016/04/tett-get-it-whats-stashed-away-in.html

https://perkurowski.blogspot.com/2016/10/i-tweeted-how-do-you-morph-200-million.html

http://perkurowski.blogspot.com/2016/01/the-wealth-of-62-richest-equals-that-of.html

Are taxes on petrol correctly used? Repatriation of what “cash”? End users/payers of infrastructure should be present

Sir, Gillian Tett, discussing the financing of president Trump’s plan for infrastructure writes: “One sensible, overdue step would be to raise the petrol tax to pay for infrastructure; another would be to use proceeds from repatriated overseas corporate cash.” “Private money might yet save Trump’s infrastructure plans” May 26.

First, more taxes on petrol just means that more money goes into the same fiscal pocket to be channeled in often quite non-transparent ways to uses that might or might not include the building of infrastructure. The best use of taxes, such as those on petrol, which by the way constitutes de facto a discriminatory import tax on gas, is to transparently help fund a Universal Basic Income scheme.

Second, “cash”, what cash? Could Ms. Tett believe that high denomination bills stored under corporate treasurers’ mattresses represent that cash? Before opining anything about what “cash” could do, I suggest she finds out how that “cash” is currently deployed. Who knows, it might all be invested in gilts.

Finally, I have witnessed decent privatizations and infrastructure PPPs in my life, but I have also seen those that are only ugly expressions of crony statism. In this respect at the negotiation and executions phases of any privatization, any public infrastructure project, or any PPP, future users, or otherwise payers for the projects or the services, should be present… and their names publicly recorded as having represented the citizens.

Too often most of us see something very wrong that makes us reflect: “This would not have been the case had my grandfather or grandmother overlooked what was going on.”

@PerKurowski

Why refer to “cash repatriation” when you know it is not cash? Are there some should-not-be-named motives for it?

Sir, Gillian Tett writes: “Mr Trump will need widespread Republican support if he wants to enact his promised tax reforms, cash repatriation or $1tn infrastructure spending plan.” “Trump’s stealthy deregulation delights business” March 3.

“Cash repatriation”? When will Ms. Tett, like most other discussants of this, understand that we really should not be talking about “cash repatriation”. All those exiled profits, or at least 99,99% of these, have already been deployed in assets different from cash under the mattress. These assets to be repatriated might indeed already have been repatriated, like if for instance they are held in bonds of the sovereign to which the repatriation takes place. 

So, to refer to “cash repatriation”, can only feed the illusion that this would signify a fundamental way to correct for the world problems, like that of growing inequality. Under some circumstances, if the redistribution recipients exchange inefficiently those repatriated assets, it could in fact worsen some of our problems.

Sir, now why would some like to feed such “cash-repatriation-is-a-solution illusion? You tell me!

Does this mean that I am against the repatriation of assets booked abroad as a result of corporate profits? Of course not! If there is where these, by law or by incentives should go, that’s how it should be.

@PerKurowski

Gillian Tett writes of Apple’s $200bn of cash, as if that money was all stashed away in Tim Cook’s mattress

Sir, Gillian Tett writes that Apple could “repatriate some of the $200bn of cash that it stores overseas”, “It is hard to lure companies’ cash back home” September 9.

And Tett indicates three ideas about what could be done with all that money.

“One, for example, is that tax breaks will only be given to companies that raise employment and investment. Another is that the Federal government should use tax revenues for infrastructure spending. A third, is that companies should store some of their repatriated corporate cash in government-issued infrastructure bonds.”

But that cash is not stashed away in Tim Cook’s mattress, it is invested somewhere somehow, and for the government to lay its hands on a part of it, some assets would need to be sold.

For instance what if all that cash is already invested in US Treasury yielding basically nothing? What if it is invested in shares?

And why should “tax breaks will only be given to companies that raise employment and investment”? It might not be the role of those companies to channel funds to those who could produce jobs. Apple, is not a bank!

Frankly, the strategic plan of our current economic thinkers is as lousy as can be.

It states: With high risk weights, limit the fair access to bank credit of SMEs and entrepreneurs, those who could create the jobs for the future; and with low risk weights increase the possibilities of government bureaucrats building bridges to nowhere.

Is that what you want Sir. If you do, I would then have to ask you: Do you have children and grandchildren? “No?” Ok, that explains it all.

@PerKurowski ©