Monday, 29 June 2009 05:00

How quickly protectionisim erodes the gains of global commerce when thing get rough!

An economic war has broken out between Switzerland and the rest of the world after the crackdown on Swiss banking secrecy, according to one of Geneva's leading private bankers.

Yves Mirabaud, a managing partner at Swiss private bank Mirabaud, told the Financial Times that nothing was easier than dodging tax in the US and UK.

In rare public comments, the Swiss private banker said: "There is a feeling in the banking community, and also in the population . . . that we are in an economic war.

There is nothing easier than doing tax evasion in the US. Look at Delaware companies or trusts in the Channel Islands."

Mr Mirabaud portrayed Switzerland as a country picked on by bigger rivals: "It is more than simply fighting against tax havens. Switzerland is a small country. It is not powerful."

Swiss private banks have come under pressure after countries, led by the US and Germany, made Switzerland agree to ease its strict bank secrecy laws this year. The situation was exacerbated by the plight of UBS, the world's largest wealth manager, which is involved in a legal fight with US authorities over alleged assistance in tax evasion.

Mr Mirabaud said that UBS had "behaved poorly" and had not "helped the Swiss financial centre". He added that discussions on bank secrecy had "cost us all a lot".

...

"We understand that we are in an economic war and we have our own weapons," he added.

On a different, but comical note: China Shows Signs of Asset Bubbles: Gov't Researcher -

China is showing signs of asset price bubbles as a surge in new lending pushes up prices in the stock and real estate markets, the official Shanghai Securities News quoted a government think tank official as saying. Hmmm! Didn't a surge in US government lending push up the US stock market 40% in 3 months while simultaneously push up the prices of toxic assets that heretofore "couldn't be priced"?

Wei Jianing, a senior researcher at the State Council Development & Research Centre, was quoted as saying that nearly half of China's newly created liquidity has been circulating in the financial system instead of flowing into the real economy to support growth, thus pushing up asset prices. Doesn't this sound familiar???

"There have already appeared some new early indications of asset price bubbles in China," Wei was quoted as telling a conference. The newspaper also quoted Cheng Siwei, an influential former Chinese lawmaker, as saying that about 2.4 trillion yuan ($351 billion) of new lending in the first quarter of this year was used for investment purposes, including stock and property investment.

Last modified on Monday, 29 June 2009 05:00