Wednesday, May 01, 2013

The warning

The powers that be are now openly telegraphing (pun intended) the risk of remaining part of the financially and morally bankrupt system over which they preside:
European politicians will take the "easy option" of taking money from the rich rather than raising taxes and cutting spending to deal with the continent's debt problem, Lars Christensen, the head of Saxo Bank, said.
Asked if the raid on uninsured savings in Cyprus would be repeated, he told City AM: "There will be future bail-ins [loss of deposits] and other types of confiscation of wealth in the eurozone, without a doubt.
"There's no other realistic way forward if politicians continue to fail to deal with the basic indebtedness problem across Europe. They will either have to raise taxes and cut spending, or politicians will take the easier route and take money from the rich."
It's so easy to use that term: "the rich."  I grant there are plenty of Paris Hiltons in the world who have done exactly nothing productive with their life, and yet enjoy financial security simply because of a fluke of birth.  Those are the kinds of people politicians and technocrats want the public to envision when they propose their confiscation programs.

And yet it's the Paris Hiltons of the world who tend to be LEAST affected by faux Robin Hood programs.  Well-connected and with access to paid advisory staff, such people simply adjust their strategies and move on.  Whatever the new policies cost them usually doesn't have a serious impact on their day-to-day routine.

Not so for the 'rich' entrepreneur whose wealth is often inextricably linked to their industry.  Financial "haircuts" and special taxation aimed at folks simply because of their balance sheets are extremely disruptive... not just to the owner, but to the employees of the enterprise who suddenly find their livelihood at risk.  This macroeconomic impact is largely ignored, drowned out by the political class warfare rhetoric.

We're also at a point where so few people are able/willing to save money, that ANYONE who has assets can be tarred as "rich."  It's time to reread Aesop's tale of the ant and the grasshopper, and consider what the outcome would have been had the grasshopper, perhaps with several of his buddies, been able to tax the "wealthy" ant by force.

If you're an ant, you'd be wise not to store much of the product of your labor in the grasshopper's bank.  Possession may indeed soon become "9/10ths of the law."

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