Author: JanMusschoot

Criminals, banks and criminal bankers

How do you move millions of dollars from one place to another?

Obviously, you use a bank.

But what if the money is dirty?

The Organized Crime and Corruption Reporting Project (OCCRP) has documented several laundromats, e.g. the Troika Laundromat.

A laundromat is a scheme of shell companies and bank accounts to move money – often Russian money – offshore. The investigations read like a spy novel, full of criminals, politicians, lawyers and bankers.

For example, this article explains how Moldovan judges enabled flows out of Russia by authenticating guarantees on “defaulted loans” between shell companies.

Sometimes, bankers looted their own institutions, see The Vienna Bank Job for details.

Fascinating stuff, involving major Western banks as well.

How should authorities respond to these illicit activities?

In the EU, several countries have jointly proposed to create a centralized anti-money laundering (AML) supervisor.

Joshua Kirschenbaum has pointed out that the U.S. could counter malign financial activity by targeting banks that facilitate organized crime.

Besparen of belasten? Er is een pijnloos alternatief!

Je hebt misschien al gemerkt dat ik op vrijdag afwisselend schrijf over geldweetjes en de belastingen.

Deze week wijk ik af van dit schema door de actualiteit.

Volgens gouverneur Wunsch van de Nationale Bank moet België de begroting snel op orde krijgen.

Iemand die iets kent van economie weet dat dit niet waar is. De Amerikaanse economie groeit sneller dan de Europese, dankzij grotere begrotingstekorten.

Maar goed, laten we er van uitgaan dat de volgende federale regering een begroting in evenwicht wil. Dan doet men altijd alsof er maar twee opties zijn: besparen in de uitgaven of extra belastingen. Bijvoorbeeld Voka-econoom Bart Van Craeynest: “Hogere belastingen of verdere besparingen, de bevolking zal het sowieso voelen”.

Er is echter een derde piste waar niemand over spreekt, namelijk profiteren van de negatieve rente.

Hierbij dus nog eens mijn plan: België moet zoveel mogelijk obligaties uitgeven met een negatieve rente. Steek het geld bij onze goudvoorraad. Op de vervaldatum moeten we minder terugbetalen dan we geleend hadden. Miljarden euro gratis geld!

Hoe blind zijn onze politici? Ze pesten liever hun kiezers dan te kiezen voor de pijnloze optie. Waanzin!

Ik ben voor alle duidelijkheid ook voor lagere belastingen en een efficiëntere overheid. Maar in tegenstelling tot de televisie-economen heb ik wel een realistisch plan.

Less is more

Don’t you hate it when books go on and on?

I sure do.

That’s why, from the very start, I decided that Bankers are people, too should focus on the basics.

Therefore, I chose to leave out many financial products and services.

If you want to learn more about things like cash pooling, discounting, factoring, leasing, securitization or structured products1, Bankers are people, too is not the book you’re looking for.

If, on the other hand, you want a 200 page introduction to money, banking and macroeconomics, I promise you will love it.

The Owl of Frankfurt: Lagarde discovers her powers

Big shoes to fill

Christine Lagarde took over the ECB from Mario Draghi in 2019. Draghi was widely respected as the man who saved the euro. He promised to do ‘whatever it takes’ when prices for bonds of large euro countries were unsustainably low. Furthermore, Draghi introduced monetary policy tools that were considered radical at the time, such as quantitative easing (buying bonds) and targeted refinancing operations (lending to banks).

Critics suspected that Lagarde would be no match for her predecessor. Indeed, Draghi was an economist and former banker. By contrast, Lagarde was ‘merely’ a lawyer and politician.

Maybe that is why her opponents would systematically underestimate Lagarde. Time and again during her presidency, she followed the same strategy. Instead of trying to come up with new ideas herself, she listened to all options. Not just those of an inner circle of old central bankers and professors, but especially the alternatives suggested by junior staff and independent thinkers. Once Lagarde made up her mind on the right course to follow, she used her political skills to win the day.

The 2020 review

But let’s return to the start. Although Draghi’s ECB had performed better than under the disastrous Trichet, all was not well. Unemployment in the euro area was high. The ECB’s interest rates were negative. Inflation in the euro area was below the two percent target. The contemporary consensus said that the central bank was out of ammo.

It was in this context that Lagarde launched a monetary policy review. She wanted to know how the ECB could boost economic growth and fight climate change.

The policy review set in motion the bureaucratic cogs of the ECB. Meanwhile, Lagarde was subtly consolidating her power. She kept a tight grip on meetings and did not tolerate leaks. She also improved communication with national leaders and the European Parliament.

But most importantly, Lagarde read the Internet. And what she read did not make her happy. Lagarde’s advisors had assured her that the ECB’s hands were tied. They claimed that the institution was powerless in the current macroeconomic environment and that fiscal stimulus was needed.

But online, she discovered that central banks had historically used instruments that none of the very serious people were talking about. It was as if everybody suffered from amnesia.

In the spring of 2020, Lagarde held a secret meeting with three outsiders. The quartet of conspirators hatched a plan…

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Next episode: the conference of the long knives

First episode: Paris, 2076

Niet alles is plat belast

De totale belastingen in België zijn hoog. Toch is niet alles plat belast. Zeven zaken waarop je geen cent belasting betaalt:

  1. Winsten van de Lotto
  2. Bijverdiensten in je vrije tijd
  3. De rente op je spaarrekening1
  4. De fietsvergoeding om naar je werk te rijden
  5. De fietsbelasting bestaat niet meer
  6. Het kijk- en luistergeld is afgeschaft (in Zwitserland moet een gezin jaarlijks meer dan 300 euro betalen)
  7. Cocaïne en andere illegale drugs. Ter vergelijking, de prijs van een pak sigaretten bestaat voor drie vierden uit accijnzen en btw.
Dit soort fietsplaatjes zie je niet meer, omdat de fietsbelasting afgeschaft werd.

Een hoge staatsschuld is een teken van succes

Wat doet Luxemburg tussen landen als Zimbabwe en Oezbekistan?

Antwoord: het zijn allemaal landen met een lage staatsschuld.

Het is één van die dingen waar iedereen het over eens is: de Belgische staatsschuld moet omlaag.

Maar is dat wel zo? Ook Japan en de Verenigde Staten, niet bepaald ontwikkelingslanden, hebben een hoge schuldgraad.

Over het algemeen kunnen landen met weinig schulden moeilijk geld lenen omdat investeerders hen niet vertrouwen. Een permanent hoge staatsschuld is dan weer een teken van succes. Luxemburg is de uitzondering die de regel bevestigt.

Lees ook: De staatsschuld is veel te laag.

Bedankt banken!

Ik zag onlangs dit filmpje van één van mijn ex-collega’s op Facebook. Jill legt erin uit waarom de spaarrente laag is.

Jammer genoeg stonden de reacties onder het filmpje weer vol met negatieve opmerkingen.

Banken doen nochtans hun best om het leven van hun klanten aangenamer te maken.

Paul Volcker zei ooit dat de geldautomaat het enige nuttige is wat banken de voorbije decennia uitgevonden hebben. Maar dat is wellicht omdat Volcker geen klant was bij een Belgische grootbank.

Betaal je je boodschappen met Payconiq? Log je in op overheidswebsites met itsme? Gebruik je Zoomit om je facturen af te handelen? Koop je je ticket voor bus of trein met je bank-app?

Het zijn allemaal oplossingen ontwikkeld door de banken.

De nieuwe CEO van bankenfederatie Febelfin weet wat te doen, want de vorige “heeft niet zo veel gedaan voor de sector“, volgens een bankier.

Spijtig, want er zijn best wel zaken waar onze banken trots op mogen zijn.

The Owl of Frankfurt: Paris, 2076

Eulogy by Aya Sissoko, President of the ECB, 8 January 2076

It is with great sadness that we say farewell to our honorary President and dear friend Christine Lagarde today.

Madame Lagarde will be fondly remembered as the fourth President of the European Central Bank, the predecessor of the Euro Central Bank.

Christine became President during a protracted malaise in the euro area. By throwing off the yoke of false dogma, she revitalized the ECB. Her curiosity, vision and political prowess changed the course of history.

Owl of Athens on Charon’s piece

Under her leadership, the ECB showed the world how to handle the climate transition. At the same time, the euro economy grew at a rate previously believed to be impossible.

Ask any of the Seven Bankers, and they will all agree: Christine was the first modern central banker. Her autobiography, published 30 years ago, is still a must-read.

Christine’s career set the gold standard for our profession. Not just for what she did during her presidency, but also for what she didn’t do.

Her resignation in the wake of the Crisis of 2033 was a clear statement against the all-powerful central banker. During her retirement, Christine refrained from commenting on current events.

Christine, Madame Lagarde, you were born Lallouette – the lark – but you will always be The Owl of Frankfurt.

On behalf of the 1.4 billion people who use the euro every day,

Bon voyage!

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Next episode: Lagarde discovers her powers

Hoe duurzaam zijn jouw beleggingen?

Duurzaam beleggen zit in de lift. Beleggers willen dat hun geld maatschappelijk verantwoord en ethisch geïnvesteerd wordt.

Maar ben je zeker dat je geld naar ‘propere’ bedrijven gaat?

In sommige duurzame fondsen zitten oliebedrijven, tabaksfabrikanten en belastingontduikers

Fondsenbeheerders verwijzen vaak naar de ESG (environmental, social and corporate governance) score om aan te duiden dat hun beleggingen verantwoord zijn. Helaas zijn er geen eenduidige regels om die score op te stellen.

Continue reading “Hoe duurzaam zijn jouw beleggingen?”

Germany’s export-led economy and the consequences for its banks

In the thread below, Benjamin Braun explains Germany’s political economy. More specifically, he and Richard Deeg studied the interaction between the financial and non financial corporate (NFC) sectors.

Let me try to summarize the argument.

The German NFC sector has high profits (1) and runs a trade surplus (2).

(1) enables companies to finance their own investments. They don’t need to borrow money from banks.

(2) leads to an inflow of reserves and deposits at banks. As a result, German banks lend to foreign entities.

This seems a sensible story.

However, I don’t agree with the conclusion:

First of all, I highly doubt any policymakers really want to help German banks. If that were the case, the monstrosity of publicly owned, unprofitable banks would have been cleaned up by now.

But even if German politicians cared, it’s not clear that stronger unions or higher wages would be more than a drop in a bucket.

A higher demand for credit would have an immediate positive impact on German banks. And there is a lot of room for growth.

Home ownership in Germany is low compared to non-German speaking countries, as you can see in this picture from Eurostat.

Stimulating home ownership would boost the demand for mortgages.

More investment by the government, as called for by industry and labor unions, would also increase the domestic supply of assets for banks if it’s funded by bonds instead of taxes.

If Angela Merkel wants some more advice, she can leave a comment 🙂