Tuesday, October 06, 2009

Britain's conservatives: the offshore party?

The City of London is at the very centre of the regulatory black hole in global finance, so British politics is of special interest to those interested in offshore issues. Currently, Britain's (nominally) left-leaning Labour Party is deeply unpopular, and, barring some spectacular turnaround, the opposition Conservatives look like they will be in power by the middle of next year.

The Conservatives, substantially funded by the offshore-steeped Lord Ashcroft of Belize Bank fame and stuffed with offshore denizens such as John Maples MP of "Maples and Calder" in the Cayman Islands (which U.S. President Barack Obama called "the biggest tax scam on record") has long been considered the party of offshore - and, given Labour's capitulation to the City of London, that is really saying something.

This morning Boris Johnson, the clownish Conservative Mayor of London (not to be confused with the Lord Mayor of London, an even more deeply implicated character), has been quoted in the papers, defending the "leper" bankers against what he called "banker-bashing."

But we are delighted to see not all of Britain's Conservatives have been captured by the bankers. Kenneth Clarke, an influential if controversial figure in the party, had something altogether more sensible to say:

"We must avoid British arrogance in going along and saying to the French and Germans that we are the only people who understand about the regulation of financial markets,” Mr Clarke told a fringe meeting. “British . . . and American regulation of financial markets was a catastrophic failure.”

Adding this:

"If the government had tried to regulate the markets “properly” five years ago, there would have been “some of the hysteria that you predictably get from all the people in banking, hedge funds, private equity, whatever”.

He characterised these claims as “this is the end of the world as we know it: they’re all going to move and set up their businesses under palm trees”, adding: “Do not believe it.”

Calling for a “sensible” pan-national regulatory regime, Mr Clarke stressed his belief that the UK could not afford to sacrifice influence in Brussels. “We must have proper regulation in which the British above all must engage,” he said."

Well said (though we don't hold out much hope that his party will follow him). Clarke might also do well to see TJN's Sol Picciotto's comment article in the Financial Times, entitled How Tax Havens Helped to Create a Crisis, and read this TJN web section for a number of other pointers on the links between offshore and the crisis.


Blogger Physiocrat said...

Tax havens may have helped to create a crisis but the underlying cause was the use of credit to finance the purchase of land titles. This was recognised at the start of the crisis but quickly forgotten.

The problem will recur if this underlying cause is not addressed. No amount of regulation will prevent that. I would expect this to happen around 2026.

2:29 am  

Post a Comment

<< Home