April 15th, 2009
07:20 PM GMT
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Today is Tax Day in the US, the day when tax returns and payments have to be made by midnight tonight. It's always a hoopla. It doesn't matter how long people have had, there is that pathetic scramble to beat the deadline. It got me thinking about the whole issue of tax....There is nothing pleasant about paying taxes. And it the more we pay the less pleasant if seems. To be sure, those of us who earn more expect that we will have a greater burden. But whastever we pay, we want value for money. And today many are seriously questioning what we get for what we pay.

IN some parts of the world taxes have been traditionally high, but then there has been sterling provision of education, health care and social services. In other places, the taxes are low and you are expected to pay for everything else.

Which is the best ? that depends on where you stand politically and I make no comment about that.

What I do know is that the current mega bailouts to be paid for someday and somehow. And we will ALL be paying more in taxes in the years ahead. Whether through high sin taxes on liquor and tobacco or directly through income.

Don't be fooled dear friends. This crises is neither pain free now nor in the future. We had a very good party. The hangover will last longer.

Now then – over to you..... are YOU happy with the taxes you pay and the value you get. Here are some that came via @richardquest on twitter – add more of your own.


JonTrygveH@richardquest in norway, it's not unusual to pay 50%incometax. We ALSO have a few % fortunetax. Bad for the retired without much income!

mcsilly@richardquest I make some$ online.Don't live more than 4months in any country(=no benefits in paying taxes)! Should I pay to random country?

bizzz2bizzz@richardquest here in ESTONIA we all) pay way too much in taxes and that I don't ever feel like I get my money's worth from the federal,

mihai_1@richardquest Germany again! I'll get married next week; I'll pay 500 eur less, she'll pay 300 less on taxes. +800 on our net income! Cool

squawkbox@richardquest Countries with higher rates of tax appear to have a much better quality of life (Denmark, Sweden etc.) maybe its not so bad!

robohamster@richardquest I would pay more tax in th UK if they would renationalise our 19th Century public transport system!

winterwhitefox@richardquest I live in one of the smallest states in the USA and i pay $8,000.00 bucks a year on property taxes,no,the house/land isnt big

klaaserikzimmer@richardquest I´m German, recently moved to argentina. NOW I esteem the value I get in Germany for my taxes which actually is really good.

danmsonda@richardquest In the Netherlands, we pay our taxes happily and the services we get from government in return are just superb!

Rikki_ND@richardquest Taxes are necessary & I don't think we pay too much in taxes right now. Small price to pay for freedoms we enjoy in the US

rahulvarshneya@richardquest taxes in india, there's scope for a big reduction!

milhealth@richardquest You are kidding right? (:-)

March 27th, 2009
11:39 AM GMT
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Spring has sprung, and of course that brings with it the inevitable claim that the "green shoots of recovery" are upon us.

This was emphasised by Larry Kantor of Barclays Capital writing in his latest client note that he saw signs of "green shoots."

His argument is that expectations are so low, the market is beaten and the prognosis so grim, that it is time to start being more aggressive in investment decisions to take advantage of the situation. He believes a turnaround starts in Asia and quickly moves to other markets not so badly affected by financial collapse.

In other words, countries like Britain and the U.S. which are at the center of the financial meltdown are going to be amongst the last to recover.

There is solid common sense in Kantor's views. There has been so much unprecedented action by policy makers on the monetary, fiscal and regulatory front that recovery is inevitable. It is just a question of when and how strong.

Are you seeing the green shoots of recovery in your economic life yet ?

March 25th, 2009
10:58 PM GMT
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Tonight's Profitable Moment....from Quest Means Business

So with what is the road to recovery paved ? We certainly know rose petals aren't being strewn in our path. But is it right to say we are on a road to hell as the Czech prime minister described Obama's economic policy.

No one doubts the road has deep pot holes. The evidence of a hard journey ahead is everywhere. Large budget deficits that will be millstones round our necks for decades are piling up. Homes are being lost, there is virtually no economic cheer – and the best we can hope for is a tepid growth later in the year. This much we already know.

But what makes the journey hellish ? Is it the fear of the unknown, or the near certain fact that our standards of living are going to fall. Perhaps we are now so much in love with the latest gadget and mobile gizmo that the thought of anything else sends us into despair. I find that hard to accept. We can do better than define our journey being consumed by the latest consumer trinket.

Whether it's the road to recovery or hell – there are many twists, turns and cul de sacs. We won't always agree on the best route to get us home. There is no Satnav to economic nirvana.

March 25th, 2009
06:54 AM GMT
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The cat is out of the bag in Britain in a big way. The warning by the governor of the Bank of England AGAINST a further large stimulus package was a slap in the face to Gordon Brown's government .It is in the very nature of Central bankers to be cautious – to proceed ponderously when others wish to rush, but Mervyn King left no doubt as to his views. ""Given how big these deficits are", King said, "I think it would be sensible to be cautious about going further in using discretionary measures to expand the size of the those deficits."

In Quest-speak Whoa....time to start worrying about how we are going to pay the bills when this is all over.

The Gov. was speaking before a parliamentary committee and would have been well aware of the bomb he was dropping on the UK governments head. Normally he would never be so blunt. Coming just a week before the G20 meeting it is an explosion indeed.....giving Gordon Brown's European counterparts Angela Merkel and Nikolas Sarkozy good ground for saying "hang on, even your own central bank chief believes enough is enough !"

The issue isn't more needs to be done: The problem is so much has been done already, in such a short period of time, and not just in the UK.

We have had record breaking cuts in interest rates (in less than two years they have fallen 5.25 per cent !) to record breaking lows. We have had record breaking Stimulus Packages and Bailout packages and we have seen central banks embark on record breaking printing of money known as Quantitative Easing. All of which will create record breaking budget deficits ! That's a lot of record breaking, even in record breaking times !

There is a tsunami of money slowly, but inexorably working its way through the economy. And all the Governor was saying was.....er....maybe it's time to watch and wait and see the effect of all of this stuff before doing anymore.

Let there be no doubt – all this record breaking stuff will have an effect and we will see it, albeit later rather than sooner. By which time it may be too late.

Which is why the Governor made his, almost, record breaking comments.

March 18th, 2009
02:27 PM GMT
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The AIG bonus issue has me on the defensive – and all because I was silly enough to open my mouth in support of the rule of law. I opined out loud that it seemed very heavy handed for any government, let alone the US Federal Government to try and overturn existing contractual arrangements – a true slippery slope argument if ever I saw one.And then the flood gates opened. Most of you thought I was wrong. The malfeasance at AIG being so great that anything short of the Public Stocks of Victorian England would be too good for the executives who got retention bonuses.

So let me clarify – I agree that the way AIG was run into the ground is amongst the most heinous of corporate acts. I don't believe retention bonuses should be paid, or indeed any bonuses. But if you were lucky enough to get some sucker to agree to such a term in your contract then it has to be honoured.

I am pleased that the US government appears to have found a way out – by deducting the bonus amount , $160m, from bailout funds being paid to AIG. After all, it is the US government money keeping the company afloat and it is entitled to say what should be done with it. The old phrase He who Pays the Piper...comes to mind.

A simple solution that preserves the rule of law – decisions have consequences and the result of this one leaves the mess where it belongs: With AIG and its ill-deserving employees.

March 14th, 2009
11:38 AM GMT
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HORSHAM, England - I am sitting in the press tent at the G20 Finance Ministers, having just watched the "family photo" being taken. (What is the collective noun for such a group? A stimulus  of ministers? - thanks to craigeyles on Twitter for that.  A Recovery of Financiers?)

There are of course actually 26 groups in the room - the IMF, World Bank, ECB all come along, as well as Spain and the Netherlands as the special invitation of the hosts.

Actually there seems to be a great deal more people everywhere, and it is upon their shoulders and those of their political bosses, that rests the future course of this "Great Recession" - a phrase coined this week by the IMF Managing Director, Dominique Strauss-Kahn.

And I doubt few of them every believed they would find their economies in the horrible position they are today.

Here in the rural West Sussex countryside, at a grand looking country house hotel, they are attempting to sort out the very real differences that exist between them. Despite the world economy facing the first recession since the 1940s, they do not have a common view on how it should be handled.

The U.S. (with the UK in tow) wants other nations to provide greater stimulus packages. The Europeans along with some Asian economies want agreement on better regulation.

Everyone agrees on giving the IMF more money to help bail out distressed countries, but some, like Brazil, will only sign on the dotted line if they get greater power within the Fund.

There is nothing new about any of these issues, positions taken or disagreements, except the seriousness of the situation.

Bob Zoellick the president of the World Bank described the economic conditions this year as "dangerous."

So even though it was all smiles at the group photo taken outside this magnificent period hotel - those inside can't escape the fact that what they are deciding will influence the course of this recession for months to come.

Are they upto the job ? That's a moot question. They are the only ones we've got, so whether we like it or not, our financial future is in their hands

March 6th, 2009
04:50 PM GMT
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"PRINTING MONEY" scream the newspaper headlines. Not surprisingly many of you are getting worried about the possiblities of inflation. We have all been taught printing money is a recipe for economic calamity.

The Bank of England has decided to introduce quantitative easing.
The Bank of England has decided to introduce quantitative easing.

Remember Weimar in Germany; the wheelbarrows of cash required to buy a loaf of bread? Or Mugabe's Zimbabwe, where inflation is running at 230 million percent because the central bank has printed so much cash? You can stop worrying. Now.

There is a world of difference between the so-called quantitative easing being introduced by central banks like the Bank of England, and running the money printing presses willy-nilly thus stoking hyperinflation.

First and foremost, inflation in major economies like the U.S. and EU is falling Today the fear is deflation. The money being printed is actually trying to turn that around. There is little danger of sudden hyperinflation before we have a chance to do something

Secondly, the money is being used to buy government and corporate bonds. It is being channeled through the banks, and hopefully onto consumers. It is not being handed to the government to pay everyday bills with no thought to how or where. In previous disasterous cases the money was used to pay wages, and there was no end in sight. It was out of control.

Finally, this is all being done in the full glare of the markets and transparency. We know how much has been approved and when. Government and central bankers have a firm hand on what is being done and why. We also know that there is an exit strategy for when the economy does turn around.

For those who are worried about the environmental effects of all this printing (well, of course, they are not actually going to print bank notes): Commercial banks have accounts with the central bank. Those accounts will be topped up automatically and electronically. Literally, the accounts will suddenly be much healthier and richer.

Yes, this is new territory for most countries, and the bankers admit they don't know quite how it works, but they are doing it carefully and with thought.

Are you still worried ?

March 5th, 2009
07:57 PM GMT
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Richard uses a cocktail fountain to explain how quantative easing might work.

February 27th, 2009
01:46 PM GMT
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Should Sir Fred, the former CEO of RBS, voluntarily return part of his million dollar pension?

Sir Fred was granted a £16 million pension pot as part of an agreement to leave the bank last year. This generates a pension worth in excess of $1 million a year.  But RBS is now majority owned by the British Government, and on Thursday declared the largest corporate loss in UK history.

The Prime Minister, Gordon Brown wants to claw some of that money back. There are icy letters between Sir Fred and the government minister Lord Myners setting out their "You agreed to it" and "Oh no I didnt" argument.

Legally? The money is probably Sir Fred's to keep. He can't be blamed if government and bank foolishly didn't read the small print, allowing him to fill his boots with cash. Morally? Ahhhh, now we enter a different world.

Sir Fred agreed to take a smaller payoff when he left RBS because it was the right thing to do – he called it a gesture. And now he says he has made enough "gestures." He is keeping his pension "entitlement."

Lord Myners puts his view bluntly: "I hope that on reflection you will now share my clear view that the losses reported today by the bank which you ran until October cannot justify such a huge award."

So there you have it. "We want the money back" shrieks one side. "You aint getting it" shouts the other.

Let me go out on a limb here – if I were Sir Fred, would I give the money back? If I honestly believed the government knew about the pension, and had agreed to it? I will forever be known as one of the worst bankers in the world. My place in financial history is unfortunately secured. So why not just take the money ... I can live in luxury whatever people maybe saying.

What would you do?

February 24th, 2009
02:26 PM GMT
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The last few days have been turbulent on the market. Not surprisingly, ordinary investors are wondering what on earth is going on.

How can it be, after so much time and money has been spent on the economies of the world, that the market still won't show any signs of recovery?

The answer is because the crisis has moved into another phase. We have gone from a sub-prime collapse in the U.S. housing market, through to a general banking crises based on highly exotic financial instruments - and now into a deep industrial recession in the world's major economies. And it is this part that is now causing markets to fall.

On average, there was a 33 percent fall in Q4 earnings for the 394 companies in the S&P that reported since mid-January according to Bloomberg.com.

So it is clear that the market believes many stocks to be overpriced, based on the companies' existing and future earnings. With downgrades in economic growth for economies like the U.S., Germany and the UK, it's a wonder investors haven't sold even harder. Perhaps they now are catching up

For investors, these are simply horrible days. What to do? Sell into a falling market? Take a risk and buy cheap (I assure you this isn't a case of "Buy on the dips... you may be buying at the top of the next down section of the rollercoaster).

In short - no-one knows. And that's the problem.

Sorry. If you had hoped I would tell you whether to buy or sell, then you are fuming right now. "Not much good Quest," I hear you say.

So tell me then, what should we do?

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