No. of Recommendations: 25
Sort of a tangential follow-up to the Gillian Tett article referenced in the prior thread, the recent FT article related to US policy that I found most --concerning?-- is this one. Also by the estimable Ms Tett, somewhat famous for pounding the table about the credit crunch risks before it came.
Today's item:
Tariffs on goods may be a prelude to tariffs on moneyhttps://www.ft.com/content/b1bf0858-d7d5-489d-8d61..."...But the uncertainty could get worse. For amid all the tariff shocks, there is another question hovering: could Trump’s assault on free trade lead to attacks on free capital flows too? Might tariffs on goods be a prelude to tariffs on money? Until recently, the notion would have seemed crazy.
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But some maverick economists, such as Michael Pettis, have long dissented from this orthodox view. Pettis sees these capital inflows as not “just” the inevitable, and beneficial, corollary of America’s trade deficit, but as a debilitating curse.
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But last month American Compass, a conservative think-tank close to vice-president JD Vance, declared that taxes on capital inflows could raise $2tn over the next decade. Then the White House issued an “America First Investment Policy” executive order that pledged to “review whether to suspend or terminate” a 1984 treaty that, among other things, removed a prior 30 per cent tax on Chinese capital inflows. This did not grab headlines, since Trump was “flooding the zone” with other distractions, notably on tariffs. But it spooked Asian observers and probably contributed to recent US stock market falls, as some investors preemptively flee.
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it must be noted that Pettis’s theories provoke outrage among many mainstream economists. But Pettis is unrepentant. And critics should also note that the 2019 Baldwin-Hawley bill was not only applauded by conservative groups like American Compass, but some union voices too. Since it has populist appeal, it might yet fly."In short, there are serious proposals for taxes on inward investment by non-US persons. I suspect that this might also entail related things like US taxes on capital gains from US stocks for non-US persons [in addition to those paid in their home jurisdictions], or other levies. Why tax Americans when you could tax foreigners? That argument is a lot easier to understand than the macroeconomic identities that show why it might not be good for anybody.
For those few of us on the board who don't live in the US, in some ways the writing is already on the wall, though the chances of a bad change are almost entirely impossible to estimate. But as Mr Cheney once noted (paraphrased by Mr Suskind), "Even if there's just a 1 percent chance of the unimaginable coming due, act as if it is a certainty."
Hypothetically speaking, if someone were to move somewhat away from Berkshire (whose earnings are probably about to hit some serious road bumps), what companies in the Nordic countries are the best businesses to invest in? They tend to be known for their predictable and reliable rule of law.
Jim
