Europe’s Gong Show at Work: Back Taxes and Busted Banks
The EU is doing everything it can to paper over the fact that its policies have turned the banks into what David Stockman likes to call “Roach Hotels”, where bad investments enter and never leave. I particularly like the concluding paragraph about how the EU has added the likely economic value of drugs and prostitutes to its GDP:
“The best part is that everyone’s falling over one another to assure us that the new accounting methods, which include drugs and prostitution, have nothing to do with this madness. But isn’t it just great to ponder that Britain has to fork over an additional billion only because the French have cheaper hookers?”
Earlier in Mr. Meijer’s essay he offers us this quote:
There is also disagreement over how certain assets may be classed. In weaker economies like Portugal, Greece, Spain and Italy, the governments have passed laws allowing banks to convert deferred tax assets (DTAs), which are tax payment deferrals generally awarded during times of weaker profitability, into more capital-enhancing deferred tax credits (DTCs).
Now I interpret this statement as saying that previous loans to weak banks in Portugal, Greece, Spain and Italy have bee classified as assets. What? How can a loan be an asset? Yet now these governments are going to allow the banks to keep the money and classify it as capital.
To update Shakespeare, there’s something rotten in more European countries than Denmark. Patrick Barron