Oh dear oh dear Polly

It is to snigger.

Hurrah! says Polly, Obama\’s going to do something about the banks!

And then goes on to list a whole series of things which will change: absolutely not one single one of them has Obama even hinted at changing.

There\’s also a few lovely misunderstandings:

But check their taxes and something else emerges: in 2006 Cadbury paid £205m in tax – though only a token £1m was paid in Britain, while 14% of its turnover is here. Why was that allowed to happen?

Because it\’s the law perhaps? If you pay tax somewhere else (for example, you manufacture somewhere else, make profits somewhere else and thus pay tax somewhere else) then you don\’t pay tax again on the same profits here. This really isn\’t rocket science.

Cadbury won a court ruling saying it could relocate its tax affairs to Dublin provided the transaction was at least \”not wholly artificial\”.Gordon Brown boasted that Britain was open for business, and now most of Britain is sold. As the tax expert Richard Murphy points out, the Anglo-Saxon model has left few Anglo-Saxon businesses: France and Germany do things differently.

And as R. Murphy never quite manages to point out, France and Germany do not do such things differently. For the rules on corporate relocation are not made by nation states. Here, they\’re made by the EU. Tax residency for a company is where the brass plate is. Companies have the same right to move their tax residency as people do or this is one of the fundamental building blocks of the Single Market. Free movement of people, goods and capital and yes, \”legal persons\” such as companies have the same freedom of movement as \”natural persons\” like you and me.

Richard Murphy points out that the London Stock ­Exchange churns vast numbers of shares daily to the dealers\’ short-term benefit, while Warren Buffett makes higher profits sitting on his shares long term.

And Richard Murphy, when he designs his new and wondrous system of using bonds as investment vehicles, finds that he has to design a secondary market in them as well even if he does bury it in one throwaway sentence.

I\’ve actually warned Polly before (directly as it were) that she really shouldn\’t be relying upon Ritchie as a source of analysis of the capital markets. For sadly, he knows very little about them and near nothing about the economics of them.

3 thoughts on “Oh dear oh dear Polly”

  1. Richard Murphy points out that the London Stock ­Exchange churns vast numbers of shares daily to the dealers’ short-term benefit, while Warren Buffett makes higher profits sitting on his shares long term.

    I do wish Polly would make her mind up. Does she think that short-term dealing is bad because it’s profitable or because it’s less profitable than buy-and-hold?

    Tim adds: Another thought occures: of course, what Warren Buffett is doing is private equity which is also a no no, isn’t it?

  2. TOMA: I think the terrible two were referring to Berkshire’s business m.o. I’m sure you know what it does: buying companies whole and on the cheap and turning them round through good management. As Tim says, it really is very much the private equity business, it’s just no-one thinks of St. Warren of Buffett as being involved in anything so filthy as p.e.

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