UK tax rises loom: Oh, dear, what will BHP, Rio and their media mates in the Murdoch media say about this? They are all moaning about the inequity of the federal government’s resources tax, saying there’s no other country in the world doing anything so disgraceful, or words to that effect. Well, they are wrong. Take a look at the UK where the new Conservative Chancellor, George Osborne, is about to widen the country’s capital gains taxes quite dramatically. The Telegraph, which is conservative and supported the party at the May 6 poll reported this morning: “The Chancellor is to increase duty on capital gains even though the plan was not included in the Conservatives’ election manifesto. CGT on ‘non-business assets’, including second homes, buy-to-let properties and shares, could rise from the current 18 per cent flat rate to a top rate of 40 or even 50 per cent, to fall in line with the higher rates of income tax. The move could double tax bills for hundreds of thousands of investors and has been denounced as ‘legalised theft’. There has been speculation that the changes may be backdated to stop a ‘fire sale’ of second homes and other assets. It is estimated that 250,000 families own a second home and that there are one million buy-to-let properties. One in six families, a total of 3.75 million people, also own shares.” Suddenly, Australia isn’t so bad, after all. Only big miners will pay the proposed tax here, hundreds of thousands of people in Britain will pay more under this plan.
GM back in the black: No wonder the US government is starting to think about flogging its shares in 57%-owned car maker General Motors. The fallen giant is back in the black with production rising. So GM overnight revealed a net profit of $US865 million, compared with a loss of $US5.98 billion a year before as it ramped up production by nearly 57% from the depressed levels in the same quarter of 2009. GM in the US and internationally (mostly China) were profitable. It still lost money in Europe.
China’s still wants US bonds: China is still helping finance America’s huge deficit. Its purchases of US debt (government and agency) rose for the first time since last September. According to figures from the US Treasury, China purchased a net $US18 billion worth of Treasury bills, notes and bonds in March. That brings its total holdings to $US895 billion. Japan was also a big buyer, grabbing $US16 billion worth of Treasuries in March to bring its total to $US785 billion. The biggest increase in Treasury holdings from the UK, where purchases of $US66 billion brought the total holdings to $US279 billion. Many of those are understood to be held for China, Japan and other countries by banks. All in all, foreigners bought a net $US158 billion of Treasury debt in March – three times February’s level.
That’s confidence: Europeans and Americans are united in one thing, despite their many differences. According to an opinion poll, people on both sides of the Atlantic see a plausible chance of their governments defaulting in the next decade, with the French the most nervous. According to the FT, 53% of those polled in France thought it was likely that their government would be unable to meet its financial commitments within 10 years. Just 27% thought it was unlikely. Americans were only slightly less worried, with 46% saying default was likely, against 33% who saw it as unlikely. France hasn’t had a balanced Budget for 30 years, while America’s deficit this year is heading for a record $US1.4 trillion
Poms relaxed: Believe it or not, the Poms are fairly laid back, despite a deficit that will hit 12% of GDP this year or about a crippling £163 billion. A poll shows that about a third of the British people thought a government default was likely in the next 10 years. The new government has announced £6 billion of cuts are to be made by next Monday and a full fledged Budget is being announced June 22. Despite their country’s appalling position, Spaniards were also fairly relaxed, with about 35% thinking default. The proportion of Germans (deficit more than 8% of GDP this year) was 28%.
If China grows? Can Hong Kong’s economy be far behind? Yes it can. The special autonomous region says GDP grew 8.2% in the first quarter (China’s was 11.9%). That was up from a 7.8% contraction a year ago, which made the rebound this year look a lot better than it actually was. But growth is growth. GDP was up 2.4% from the previous quarter, seasonally adjusted. The government is forecasting growth of 4%-5% over 2010, which is still solid.
Japan grows something: Thursday sees Japan’s first-quarter economic growth forecast released and there were more promising signs yesterday. So-called core machinery orders rose 5.4% in March after a 3.8% drop in March, (they exclude volatile one-off items, such as ships and planes) and manufacturers expect further increases in the coming months. That suggests business is becoming more confident about investing. But (and there’s always a but with Japan these days), wholesale price rises were still negative in April. Rising commodity prices slowed the annual rate of fall to 0.2%. Despite that, it was the eighth month of deflation at the wholesale price level.
Americans still going broke: US bankruptcy filings resumed their climb in the first quarter, nearly equaling their highest level since 2005. There were 388,148 filings between January and March, up 17% from 330,394 a year earlier, according to figures from the Administrative Office of the US Courts. Consumer filings rose 18% to 373,541, while business filings rose by just 2% to 14,607. Filings were up 4% from the December quarter. For the 12 months ended March 31, there were 1.53 million filings, up 27% from a year earlier and the most since 2006. Arizona and Nevada were among the worst states. Thanks to the continuing record levels of foreclosures, bankruptcy is the only growth industry in the US at the moment.