Justice served

Normally it is considered bad manners to ridicule someone for the way they have killed themselves, but I can't help feeling some satisfaction with this Darwin award: a metal thief dies when trying to steal 240 VAC electricity for his power jigsaw using snap-on cables designed for 12 V.

The emergence of metal theft is a sign of a disintegrating society in West Europe. Some of these audacious thieves have appeared also in Finland, disassembling e.g. copper and iron from roofs and garden fences. In a rather amusing episode, the organised and tax-funded supporters of illegal migrants ended up having parts of the copper roof of their social center stolen.

In England, metal thieves are a much bigger problem, now "recycling" everything from electric and communication cables (disused or active), railways (the rails, I mean), church bells, garden gates and even plaques from war memorials. England built a welfare society before us, and is now reaping the harvest before us. Sweden's there, too.  But we are catching up. And so is Austria, where someone stole the organ pipes from a church to sell as scrap metal.

Sure, metal theft has been a problem all the time in Russia, for instance, up to a 200 tonne bridge vanishing overnight. But that I see is more "normalnaya situatsiya", to be expected in post-Communist countries. We know the societies somewhat collapsed and public and private property was for anyone to grab if you just could. Why do we allow that to happen in formerly prosperous Western societies?

The sentences these people get for theft are generally laughable. They are no deterrence. The inability of our justice system to react to this kind of intolerable insolence is a partial explanation for why China and other emerging economies are catching up and overtaking. Sure, there is corruption there as well, but it isn't tolerated like here.

The coroner's comments for the demise of our jigsaw hero tell us how difficult it is for the officialdom to understand how deep we are:

''I very much hope that anyone who has been here today or reads the reports gives cause to consider the perils of trespassing unlawfully on to a property and then engaging in an activity like this.
''It is an absolute tragedy that this has happened. It is a senseless waste of a young life.''

No, it wasn't an absolute tragedy. It was a rather logical consequence of having a society where schools fail and the justice system is no longer capable of delivering justice. And I think this coroner is misguided in his belief that the metal thieves are going to read coroner's reports. I very much doubt they read absolutely anything.

There's one thing I wonder. Why aren't the metal recyclers, who buy obviously stolen material, prosecuted? Is recycling and material re-use such a holy cow that it's above any and all investigations?


Why banks fail

Europe is in the middle of huge economic trouble. The European states promise more to their voters than they can afford. Banks and financial institutions get much of the blame, but the real reason is simply public and private overspending in practically all of the countries, except those who are selling lots of raw materials (usually oil and natural gas).

However, there are some real problems in banks as well, and they have contributed to the situation. Politicians like to blame banks, investors (or "speculators"), rating agencies, etc. This allows them to shift the blame that simply belongs to politicians and voters. EU leadership wants to control rating agencies. This is a bit like when you are flying an airplane and you get very many warning lights in your cockpit that tell you about to hit the ground,  you react by reaching for a hammer and start smashing your instruments for incorrect operation. Yes, there may be faults in those indicators, but the time to do service is on the ground, not in flight. And not by the pilot who doesn't like what the lights say. Not when the rest of us are aboard this flight.

But what is really wrong with the banks? It is not that they make profits (if and when they do). It is not that they pay dividends. It is not that they pay huge sums of money in salaries and bonuses to their managers (although the latter is a symptom of the upside the banks had here: in the build-up of this governmental and inter-generation Ponzi scheme, they made fortunes.).

The problem is that the traditional separation between investment banking (which issues securities) and commercial banks (which accept deposits) was removed. This has created banks that have taken huge investment risks - such as investing in Greek government bonds. The same banks are also important for commercial operation of  the daily economy - basically they have bank accounts, yours and mine, and mortgages for homes, your and mine.  These banks are "too big to fail", but now they may actually collapse.

That is what makes the current economic crisis so much more difficult to handle: you can't easily just let the Greeks default and leave those evil, greedy vulture capitalists without their money. We have the deposits and pension savings of everyone at play, and our homes are mortgaged with funny money.

It looks like the U.S. effective repeal of Glass-Steagall Act - sponsored by Republicans, approved by a vast majority of Republicans and Democrats in the last years of Clinton administration with a Republican House majority - is the most serious blunder of the U.S. Republican party. It's not the Iraq war, it's not whatever spending or whatever tax cuts that Bush did. It's what they did in 1999 when Clinton was president. They messed up the financial markets.

In Europe, some similar development was done through the adoption of a single market in financial services, started 1987 and completed 1996. Now we see what it leads to in a dozen years.

Nevertheless, we shouldn't forget that the trouble of banks and other financial institutions is just a symptom. The fundamental problem in Europe is that politicians promise too much to their voters, and the result is that everyone is in debt. Public sector is in debt, and much of private spending is based on this debt as well. Europeans work much less than e.g. the Chinese, and it is difficult to understand how European leaders can expect poor, hard-working Chinese people to continue "lending" (i.e. donating) money to European central bank in order to keep up the frivolous spending practices of European welfare states where people can feed themselves without working. This is something where even North Korean news is more crebible than the eurocrats.


Will rich Greeks be repatriated?

It's been obvious for a long time that Greece will default; with Georgios Papandreu's silly referendum idea this week the way we arrive at this inevitable outcome is becoming more apparent. Greece will exit euro.

What will be done is something along the lines of Argentina's default some 10 years ago. It's not a disaster - sure, there is an economical shake-up, but it won't be that hard. It's not exactly a World War.

Not many people will be killed (although some riots and political activism along the lines of to Brigate Rosso may actually cause some deaths). Masses of Greeks won't be starving. They'll eat just fine, and people will continue to live in rather nice homes, they will continue to have a level of heath care that is marvelous when compared to historical levels, and they will continue to have TVs, mobile phones, entertainment and all the benefits of modern technology.

The austerity is long due and will do good to the people everywhere in Europe, not just Greece. But one question puzzles me. Greeks will have to start collecting taxes (let alone complete construction of all those houses that were left unfinished because an unfinished house is not eligible to pay property tax) .

The country has had a few super rich. And they have left, and their fortunes with them. The money will now be stored in bank accounts in Switzerland and Liechtenstein and UK and USA and even Germany, and other assets like shares and stocks will continue to be listed in the name of Greek nationals.

So, the question: Greece will probably make laws that say that its richest people will have to pay up much more in their taxes. The new government, when one is formed, will want to repatriate some of the earnings of the super-rich, who'll be living in other EU countries and North America. This will involve court cases about tax evasion and wealth transfers, and the outcome will be that Greek courts will ask other countries to send back people and their money. Will other EU countries and the USA really do this?

Some really rich people in Greece will have taken their winnings with them and they will try to stay out of the reach of Greek taxes, and keep their money. Will the other countries hand over these people and their money? Will rich Greeks and Greek riches be repatriated? Or will each and every one hosting these people try to attract as many of these expats as they can, because the money and wealth will be a benefit to the local economy?

My bet is that the super rich expat Greeks will keep their money. It's sad, but that's the most likely outcome: the hoarders will keep what they hoarded.