Self-Serving Recommendation of the Day: Visa Asks Spain to Lower Limit on Cash Transactions

Spain's underground economy is reportedly 19% of GDP. Is it? Who knows? Whatever it is, Visa has its eyes on transaction fees while holding a carrot in front of the Spanish government regarding more taxable income.

Via Mish-modified translation from Libre Mercado, please consider Visa recommends Spain further limit the use of cash transactions.

The black market economic activity is beyond the control of the Treasury, and is one of the major objectives of the government during the current crisis to try to raise tax revenues. In 2010, Spain decreed the obligation to report all transactions greater than $ 3,000. In 2012 a ban was placed on cash payments in excess of 2,500 euros.

Visa Europe now recommends that the Government of Mariano Rajoy further restrict the use of cash to combat the underground economy and, thus, increase tax collection. Visa suggests a measure similar to that adopted in Italy, where the limit is set at 1,000 euros.

Why Does the Black Market Exist?

Step back for a second and ponder why there is a black market. Is it because taxes are too low? Of course not.

The black market exists in size because people are fed up with government confiscation of their hard-earned money that the government then goes on to waste on ridiculous pet projects and to bail out banks that are in trouble.

There will always be some fraud and corruption, but 19% of GDP, if true, is one hell of a black market. Rather than crack down on the taxes purportedly lost, I suggest eliminating the economic conditions that created such a sizable black market in the first place. The place to start is with an overhaul of the preposterously high VAT scheme.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

UKIP's Godfrey Bloom Blasts Fractional Reserve Lending as Fraud; Says Central Bankers Should be Tried for Financial Crimes

Here are a pair of interesting You-Tube videos on fractional reserve lending sent by reader Magnus who lives in Sweden.

Godfrey Bloom Blasts Fractional Reserve Lending as Fraud



"The problem that we have is a flawed banking system, a fractional reserve banking system where bankers can lend money they don't have. If you go back in time in the United States to the 1850s, that was a capital offense. You could hang for that." 

Link if video does not play: Money-Printing Scam - Godfrey Bloom MEP

Central Bankers Should be Tried for Financial Crimes



Godfrey Bloom on Cyprus: "In the great Cypriot bank heist, of course the big boys got their money out early, didn't they? It's always the little people who get shafted, isn't it? We now have a sick system, a situation, which the previous speaker alluded to quite rightly where the Fed, the Bank of England, the ECB, the Bank of Japan, all completely bankrupt, holding mountains of junk bonds bought with counterfeit money. Let's all blame the retail banks but it's the central banks where the cancer starts. Politicians, bankers, and lackey bureaucrats should be arraigned in an international financial tribunal, in the Hague, in the same way as war criminals." 

The end is rather humorous, please play it.

Link if video does not play: Central bankers and lackey bureaucrats should be tried for financial crimes   

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com  

When All Else Fails, Blame Your Staff, Not Yourself

President François Hollande's popularity has sunk to a new low of 24%. Rather than blame his own policies for the huge rise in unemployment and the lack of competitiveness in France, Hollande pins hopes of fresh start on cabinet reshuffle.

In an interview with the French magazine Paris Match published on Wednesday, Mr Hollande warned that none of his ministers were indispensable and that all would be judged on their results.

“At some point, choices and adjustments will have to be made,” he said. “No one is protected in the government. No one has immunity,” he stressed, hinting that even his close ally Jean-Marc Ayrault, prime minister, was at risk.

Many people who voted for Mr Hollande a year ago have recently joined protests against his government, complaining that the French president has failed to stand up to Germany’s pro-austerity dictat in Europe.

At a leftwing rally in Bastille in Paris on Sunday protesters repeatedly attacked Mr Hollande’s decision to delay the retirement age, cut child benefits and reduce capital gain taxes to finance the country’s looming €20bn pension system deficit.

“A big lesson from my first year is that the legislative process is too slow for the needs of the French people and the demands of companies,” said Mr Hollande. “We must act more quickly.” 

Judging by Results 

Hollande wants to judge his appointees by their results. How about the big point? Hollande should point a finger at himself.

And just look at the socialist clowns complaining about lengthening of the retirement ages and cuts in untenable pension benefits. 

Supposedly more taxes is the answer, but that has the wealthy fleeing the country. More importantly, French businesses are already burdened with inane work rules that make it nearly impossible to fire anyone.

France Unemployment Rate

France Unemployment Rate

Are Hollande's ministers responsible for the appearance of the above chart or is Hollande's socialist agenda?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com 

Reader Comments on "Are We Spending Enough on Education?"

Reader Michael from Northglen, Colorado chimed in on my article Is the US Spending Enough on Education?

Michael writes ....

Hello Mish

I went through one of numerous searchable databases put together by Natalie Menton to see where Jefferson County, Colorado is spending money on education.

I ran some searches and discovered that of the more than 100 highest paid employees in the district none of them is in a classroom, and all of them are making more than $100k.

Many of the titles are mystifying. Even if I presume these people are very good at whatever it is that they do, I'm hard-pressed to believe that the people of Jefferson County are getting their $11 million worth of service per year.

Allow me to cite some interesting examples from the 2010 school year.

The 102 highest salaries in the district were all paid more than $100,000 per year. That  works out to about $11.4 million every year. There were no fewer than fifteen senior principals with salaries ranging from $101,367 to $126,768.

Why does a school district need to compensate an Executive Director for Public Engage/Communications to the tune of more than $119,000? I have the same questions about Executive Directors of/for School Management, four of which make between $105,000 and $121,000 each.

I'm no less curious about the four "Community Superintendents" ranging from $121,000 to $130,000 each. Of course, those are just base salaries that do not include benefits or pensions.

Lastly, let's turn our attention to the Superintendent of Schools, who we are told is underpaid at a salary of over $200,000.

For comparison purposes, Hillary Clinton, the Secretary of State of the United States of America, has national security responsibilities. Love her or hate her, she is responsible for representing this country to every other sovereign nation on the planet. Hillary makes $186,000.

Last fall, during the general election, Jefferson County managed to get Ballot Questions 3A and 3B passed following a fearmongering campaign. Taxes went up. So where did the money go?

Just thought I'd share those bits and bytes with you, not that they'll come as any surprise.

Cheers,

Michael
Northglenn, CO

Where did the money go? Clearly, it's all "for the children", as it always is.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Senior Eurozone Official: "As Spain Goes, So Goes Slovenia"

The spotlight is once again on Slovenia. Olli Rehn, the European commission’s economic chief is unhappy with economic progress in Slovenia and is threatening to put the country into an "excessive imbalances procedure" by the end of the month.

The problem is, Spain is in a similar "excessive imbalance" state prompting an unnamed eurozone official to state "As Spain Goes, So Goes Slovenia".

Please consider Brussels trains its sights on Slovenia.

The European Commission is being pushed to take a tougher line with Slovenia amid mounting concerns that infighting is hampering the country’s ability to overhaul its banking sector and avoid becoming the next rescue target in the eurozone crisis.

According to two senior eurozone officials, concerns have focused on “non-cooperation” between Slovenia’s finance ministry and central bank, which is responsible for supervising the financial sector. One of the officials said the central bank was being “obstructionist” towards the new government’s clean-up efforts.

The central bank’s role could prove particularly problematic because the three largest Slovenian banks – most in need of a rescue – are state owned, raising questions about the supervisor’s ability to evaluate their needs impartially. “T

Concerns about Spain, however, are hampering the commission’s decision. Madrid was formally warned about its economic imbalances last month and some believe it may not be possible to impose new controls on Slovenia without doing the same for Spain – a move that commission officials worry might spark wider market unease.

“As Spain goes, so goes Slovenia,” a senior eurozone official said. The country has a governance problem of major proportions,” the official added.

Backwards Statement

The senior official has things backwards. Here is the correct statement "As Slovenia Goes, So Goes Spain". And Slovenia is going the same way Cyprus, Ireland, Greece, and Portugal went.

There is no hope for Slovenia or Spain, at least inside the eurozone.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Nigel Farage Jubilant After UKIP Soars in Local Elections; Cameron's Impossible Carrot

Nigel Farage, Founder of the UK Independence Party, claims a "sea of change in British politics" as UKIP Makes Big Gains in local elections.

The UK Independence Party has made huge electoral gains and declared itself the "official opposition" - largely at the expense of the Tories - as Prime Minister David Cameron vowed to win back Conservative voters who had defected.



With UKIP averaging 26% of the vote in county council polls, leader Nigel Farage said he was "astonished" by the party's breakthrough, and put it down to what he described as the "total disconnect" between the "career politics" of Westminster and ordinary people on the streets.

Speaking in his Oxfordshire constituency, Mr Cameron said he would "work really hard" to win back voters who switched support.

Asked if he stood by his "fruitcakes" attack on UKIP, Mr Cameron said: "Well, look, it is no good insulting a political party that people have chosen to vote for. Of course they should be subject and they will be subject to proper scrutiny of their policies and their plans.

Cameron's Impossible Carrot

UKIP wants one thing right now and that is a yes-no vote on whether the UK should stay in the EU. So, it's very simple. All Cameron has to do is hold a referendum.

Instead he has promised a referendum only if he wins the next election for prime minister, and then only if he negotiates certain changes in the treaty that Europe is not going to go along with.

Thus, Cameron has attempted to satisfy UKIP with the pledge of a carrot that cannot possibly be won.

Earth to Cameron

Those voting for UKIP left the appropriate message that Cameron's blatant lie is unacceptable.

His promise to "work really hard" to win back voters has me wondering what planet he is on.

If Cameron is still in this solar system and still on planet earth, then he can prove it by putting the matter to a vote. And I am pretty sure how that vote would go: The UK will rightfully kiss the EU goodbye, shedding the shackles of the nannycrats in Brussels at long last.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

If the Shoe Fits, Don't Wear it; Instead Buy Two, Return One

Shoe stores are increasingly fed up with customers trying on pair after pair of shoes and not buying any of them.

Worried shopkeepers are increasingly frustrated by people they dub “fit-lifters” who use stores to find the best-fitting shoes before buying them online at a lower price says the Financial Times in Shoe stores sock it to online buyers.

If the shoe fits . . . but you don’t buy it, you could soon be tarred with the same brush as shoplifters by shoe store owners.

Bricks-and-mortar shops have higher salary and rental costs than internet rivals and store owners say some online buyers are freeriding on their resources. “You’ve come in and stolen that service basically,” said Richard Napier of Idaho Mountain Trading, an outdoor sports store in Idaho Falls, who calls fit-lifting unethical.

“It’s not that the salesperson didn’t have somebody else to serve who would have bought something. So not only have you stolen the wages. I have a loss of revenue that he would have collected from another customer.”

It is common for online shoppers to research products in stores in other retail sectors such as bookselling – a practice named “showrooming” – and smartphones make it possible to buy online even while still in a store. But the trend is particularly contentious in footwear because staff spend so much time fetching boxes and advising customers on comfort.

Gary Weiner, owner of Saxon Shoes in Virginia and a board member of the National Shoe Retailers Association, said shoe-sellers were “very concerned” about fit-lifting.

“We also hear ‘My mother sent me in to get my size fitted so she can buy them online’. Those exact words,” he said. “We’re a polite people. So we give them the time of day.”

Zappos, an online shoe-seller owned by Amazon, encourages shoppers to order two or more different sizes, which they can return for free, in an effort to overcome customer reluctance to buy without trying.

Making Sense of It All

What does it say when it is cheaper to buy two pairs of shoes and return one rather than to buy a pair of shoes at a shoe store?

Three-Part Answer

1. The price of labor and benefits is too high. 
2. The price of rent is too high
3. For consumers, the convenience of having it now is not worth the extra cost

Given the above, raising minimum wages is not the answer. Nor is the Fed policy that attempts to raise asset prices of real estate.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com