TJN-USA in The American Interest
The article is subscription-only but the preliminaries pose this question:
"Liechtenstein reports having 161 billion in Swiss francs (equal to about $158 billion at current rates) on deposit in 2006. The Bahamas reportedly has about $200 billion in deposits. By contrast, the Cayman Islands boasted that it had over $1.9 trillion on deposit as of September 2007. . . . Total deposits in the Caymans now amount to four times the total deposits in all the banks in New York City.
Now, most Americans, I think, would be amazed at numbers like these, despite having become a bit jaded by the large bailout sums disbursed over the past year or two. How did these numbers get so large? Is this an old problem that has lately gotten much worse, and if so why?"
"There’s no way to make sense of the offshore problem without getting your head around the numbers you mentioned. And those numbers leave out financial assets held by corporations and trusts. Trying to understand the role of offshore secrecy and regulatory havens in the financial crisis is like the problem a doctor has treating a metabolic disease with multiple symptoms. Diabetes, for instance, causes high cholesterol, high blood pressure and all sorts of other problems. You can treat several symptoms and still not cure the disease.
Similarly, there are plenty of discrete aspects of the meltdown to talk about and many possible treatments for symptoms, but offshore is at the heart of this metabolic disorder. Its roots reach back decades, in bankers’ attempts to escape regulation and taxation and make banking a highly profitable growth business that mimics the industrial economy."
TJN has (obviously) seen the full article but this blogger doesn't have it to hand right now; suffice to say that it's very worth getting hold of if you can.