THE NEW FEASIBILITY

Opel in Receivership and Banks Nationalized: A New Era Begins

By Rosa Goldmann, Berlin

[This article published in a fictional issue of DIE ZEIT, April 2009 is translated from the German on the World Wide Web, www.die-zeit.net/s1-die-neue-machbarkeit.php]


Do you remember last year? The banks still belonged to the shareholders, Afghanistan to the military and streets to big cars. The rich were still rich, the poor poor and no one seriously believed anything could change.

To be sure, a few do-gooders wanted to change everything. A more just society is possible, the end of the flagpole is not yet reached, it was said. If anyone reacted, it was with mockery and indignation. “Unrealistic, unaffordable wish-politics” was the unanimous opinion of editors-in-chief, professors and ministers. But former opinion-makers have become silent. In the past months, their world was turned upside down so that people become dizzy.

Initially all this was harmless. The commerce bank was nationalized while the old bankers determined business policy. However this quickly changed when more banks faced bankruptcy. The old elites were replaced and sweeping nationalizations were mandated. Politics was put to the test. All protests that the banks are a special case did not help when the production economy skidded into an ever-deeper crisis. General Motors went bankrupt; the same fate threatened Opel. But instead of leaving, the employees in Russelsheim took over the firm and organized and improved it in a cooperative way with bridging loans of the government. Together with unions and environmental organizations, a completely new business concept was developed. Last week the first environmentally friendly local streetcar came off the Opel assembly line.

DAY OF RECKONING

G20 states agree on assets tax and minimum global tax

By Harald Schumann

[This article published in a fictional issue of DIE ZEIT, April 2008 is translated from the German on the World Wide Web, carta.info/6945/zeit-der-abrechnung-g20-staaten-einigen-sich-auf-vermoegensabgabe-und-globale-mindeststeuern/]


Under the pressure of the escalating indebtedness of their state budgets, the financial ministers of the G20 states in their latest round of negotiations in the Brazilian capital signed far-reaching agreements on taxation of massive private assets and international businesses. At the same time the governments signed agreements on incisive measures to combat tax evasion in low-tax areas in the Caribbean, Singapore and Hong Kong.

Given the dramatically rising number of unemployed in nearly all economic regions of the world and the related high social spending, enlisting “the winners of the boom” from the time before the global bank crash to finance the social burdens was unavoidable. So the Brazilian minister of finance and current chairperson of the G20 finance committee Guido Mantega defended the resolutions. All participating governments should levy a one-time tax of five percent on private assets of more than a million dollars. In addition the ministers agreed on introducing a minimum tax rate of 25 percent on business profits and capital gains.

To prevent owners of assets and businesses jumping to low tax havens in the Caribbean and East Asia, the ministers resolved to bar access to the international capital markets to all states that allowed tax evasion and banking secrecy. In the case of conflict, as EU finance commissioner Peer Steinbruck explained, banks should either end their business relations with the so-called offshore centers or withdraw their licenses for activity in the euro- and dollar zones. No international bank could exist without an account at the European Central Bank or the US Federal Reserve. Therefore Steinbruck is confident that the measures will be effective. “What critics of pure market-controlled globalization urged for years” became concrete with these resolutions, a spokesperson of Attac explained in Brussels. Tax havens are ultimately “extra-territorial sectors on the hard disk memory of banks in New York, London or Hong Kong.” Switzerland turns out to be the most important tax evasion state. At the turn of the year, the Bern government officially decided to end banking secrecy for foreign account holders and cooperate fully with their tax authorities. The EU governments insisted on this since Switzerland could only preserve the mega-bank UBS from collapse with the help of credits of the European Central Bank and the International Monetary Fund.

Parallel to this, the new conservative government in London under pressure of continuous social protests against the local governments of the Guernsey, Jersey and Isle of Man Islands introduced British tax laws. Tax exemption for the foreign super-rich settled in London was also abolished. The new resolutions should put a stop to the massive capital transfer to Singapore, Hong Kong and the Bermudas. The G20 states expect additional revenues of at least $300 billion annually from the end of organized tax evasion.

The governments expect more than three times as much through the unique assets tax. At first the German government refused but yielded after both Chinese Premier Wen Jiabao and US President Barack Obama intervened. The background of the unusual alliance is the dramatic situation of American public finances. With a budget deficit of more than three trillion dollars in the last and current budget years, raising the necessary money on the capital markets will be increasingly difficult for the US government. The fear of inflating the dollar goes along with that. If a flight from dollar investments occurs, the global currency system and the entire world trade will come to a standstill sooner or later. Simultaneously China and many other threshold states would lose a large part of their currency reserves. So the threatening state bankruptcy teaches governments “what was really clear for a long time,” the economic Nobel Prize winner Joseph Stiglitz commented on the resolutions of Brazil. The extremely unequal distribution of assets and income – one percent of the world population possesses nearly half of global fixed assets or invested capital – is one of the essential causes for the inflation of the financial industry. Now “the day of reckoning has come for these winners of false globalization.”