I don’t think politicians’ rhetoric yet stands up as evidence in a court of law.

“If Osborne believes the banks ran fraudulent schemes, why hasn’t anyone from the financial services sector been prosecuted? ”

Plenty of people who did run Ponzi schemes have been prosecuted: Bernie Madoff is only the best known. There have been several cases in the UK as well. You know, like that donor to the LibDems?

However, thinking that house prices will continue to rise and then lending people money on that belief does not amount to criminal action.

If any banks ran Ponzi schemes, then by all means they should be prosecuted.

Just as the British State, which has run a Ponzi scheme or two under the guise of pensions, should be answerable to the Courts.

The reality is just that George is a callow, rather thick, twat who shot his mouth off without thinking. No surprise there.

The world’s economy is going into melt down and no one, anywhere, can do better than the shallow, talentless Sixth formers who are running the show.

@3 SMS

Just as the British State, which has run a Ponzi scheme or two under the guise of pensions, should be answerable to the Courts.

Yeeees!

And it goes further. The Brown government was essentially a Ponzi scheme, based on tomorrow’s taxpayers settling today’s bills.

Careful with those ponzi schemes!

http://marginalrevolution.com/marginalrevolution/2011/09/is-social-security-a-ponzi-scheme.html

[How could banks pay for the damage they have done to the economy? One way would to have bankers receive lower pay, and the difference extracted by the state somehow (tax), and used to pay for things that help repair some damage. The difficulty is designing a tax that results in lower pay for senior bankers, and not higher prices for bank customers. A special banker bonus tax might work, or perhaps that idea of making pay above a certain level not a deductible cost of tax purposes. A better idea might be something like this:

http://seekingalpha.com/article/184989-would-a-financial-leverage-tax-limit-bank-risk

Of course, if you are interested in plans to make banks pay, you should not ignore the bank levy:

http://www.bbc.co.uk/news/business-12391532

incidentally, is Osbourn just talking crowd-pleasing nonsense? Can anybody think of anything done by a UK bank that resembles a Ponzi scheme?

“No U.K. banks have been prosecuted for running a similar operation”

Could this be a reason why?

David Cameron’s Conservative party has attracted a surge in donations from London’s Square Mile, with funding from financiers and City firms accounting for more than half of the £22.5m the party pulled in last year.
http://www.ft.com/cms/s/0/132d302c-33c1-11e0-b1ed-00144feabdc0.html#axzz1ZuGGf0kB

or maybe, Bob, because no UK bank has run a Ponzi scheme? Isn’t a Ponzi scheme much more the sort of thing that a hedge fund or some other investment manager is going to run, than a bank? I know that banks to offer fund management services, but I would be pretty surprised if any of them were behaving like a Ponzi.

NB – actually I think pay-as-you-go social security is not a Ponzi scheme – the key difference being that real Ponzi schemes run out of new investors and inevitably collapse, quite quickly, whereas pay-as-you-go only collapses (assuming it is not mismanaged) if you run out of future generations.

http://economistsview.typepad.com/economistsview/2011/09/ssa-research-note-25-ponzi-schemes-vs-social-security.html

“Can anybody think of anything done by a UK bank that resembles a Ponzi scheme?”

If you apply Minsky’s definitions, then some of the finance sector moved from speculative finance to Ponzi finance in the very latter phase of the credit boom. I have seen a number of property deals that could not sustain themselves without a projected increase in value / rental roll. One could look at Northern Rock’s fabled 125% mortgages, or much of Irish residential property market post-, say, 2005.
This comes close to Minsky’s definition of Ponzi finance.

This is not to say laws were broken; that is something else. None of these strategies were intentionally Ponzi schemes; they only appear so with the perspective of hindsight.

The banks and those regulating them believed that … their Ponzi schemes would never collapse [my emphasis]

Weird how Sunny always forgets other people were involved (clue: government ministers).

Anyway, isn’t it a metaphor rather than a claim that banks and those regulating them were literally running Ponzi schemes?

P.S. scams are fraudulent.

thanks AT, that’s a v good point … but isn’t Minsky’s definition of Ponzi Finance a deal that requires asset price appreciation in order to be viable? i.e. very risky. I don’t think that’s the common meaning of Ponzi scheme … although I take your point, in that it requires flows of new money to keep asset prices rising.

In any case, I don’t think Minsky’s Ponzi Finance is a Ponzi scheme in the sense of a “fraudulent scam” that should be prosecuted … because you can be quite open about how the deal is predicated on the assumption of rising asset prices, and investors can invest knowing exactly what they are buying into … although of course I’m sure in practice many investors did not bother to find out and those selling did their best to divert attention from the truth.

A classic Ponzi scheme involves pretending you have invested in assets that are yielding returns, but you are in fact paying out by taking money from new investors – i.e. a very simple case of lying.

@7 Luis:

Lloyds and Barclays have reportedly set aside billions to compensate victims of mis-selling Payment Protection Insurance.

But I suspect the underlying rationale for Osborne’s jibe about the banks running a “ponzi scheme” related to those easy come, 100% and better loan-to-value mortgages which (predictably) led to the house-price bubble that Charles Goodhart and Roger Bootle were warning us about in 2002/03.

The bubble was inevitable if finance for mortgages was outpacing the growth of the housing stock, which it was by a margin. Roger Bootle produced that book in 2003: Money for Nothing, which explained that the bubble was sustainable only if it kept inflating.

The signs were plain enough: “Houses are less affordable than 50 years ago although the quality of homes has improved, according to the Halifax. The lender, now owned by Lloyds Banking Group, said that over the last five decades UK house prices have risen by 2.7% a year, allowing for inflation.

“This was above the 2% annual increase in real earnings over the same period. Prices increased the most in the last decade, and separately lenders warned that lending to first-time buyers would be constrained for ‘some time to come’.” [BBC website]

This was the IMF in 2003:

“The International Monetary Fund has warned the UK it could be facing a dangerous house price bubble.

“The IMF said the UK’s economic prospects were generally good. But it singled out spiralling property prices – and the possibility of a deflationary crash – as an ‘appreciable’ risk..” [March 2003]
http://news.bbc.co.uk/1/hi/business/2814809.stm

The Turner Review (2009) of the Financial Services Authority admitted that the FSA had fallen down on the job of regulating the banks.

Bob …. right, so nothing about UK banks running a Ponzi scheme then. I honestly think that if you are caught running a Ponzi scheme, no amount of political donations is going to save your skin.

You might be right about what Osbourne meant by it – or he could just have thought it sounded good.

@13 Luis

There were many signs that something was fundamentally adrift with the market for houses in Britain – and elsewhere – even before that run on Northern Rock in the autumn of 2007:

“American house prices rose 124% between 1997 and 2006, while the Standard & Poor’s 500 index fell by 8%; half of US growth in 2005 was house-related. In the UK, house prices increased by 97% in the same period, while the FTSE 100 fell by 10%.” Robert Skidelsky: Keynes – The Return of the Master (Allen Lane 2009) p.5.

Divide the average UK house price by the average earnings and you get the ‘Average House Price/Earnings ratio’. This is what you get for the period 1953 to 2006:
http://www.housepricecrash.co.uk/graphs-average-house-price-to-earnings-ratio.php

The graph plot there clearly shows the recent house-price bubble through to 2006 – and those figures were available to government ministers

The banks must have realised that piling money into mortgage loans faster than the housing stock was increasing was bound to create a price bubble which had to keep on inflating or burst once reality set in. The banks were pursuing profits and their agents and staff were chasing those notorious bonuses regardless. The bonuses weren’t going to be recalled if the bubble burst.

Btw everything seems to have gone very quiet about the final report of the Independent Banking Commission published in September. I’ll wait to see whether those financial services donations to the Conservative Party are influential.

Bob, why you are telling me about the housing bubble? I was responding to your suggestion that no UK bank has been prosecuted for running a Ponzi scheme because of political donations. You know what a Ponzi scheme is, right? (I’m sure you do).

Tim W:
Plenty of people who did run Ponzi schemes have been prosecuted: Bernie Madoff is only the best known. There have been several cases in the UK as well. You know, like that donor to the LibDems?

Were you drunk when you posted that? Do you not bother reading over your own comments Tim before you post them? What’s either of those got to do with UK bank ponzi schemes?

Sunny,

you ask: “why hasn’t anyone from the [UK] financial services sector been prosecuted?”

Tim replied “there have been several cases in the UK”

what am I missing?

b.t.w. do you think there have been Ponzi schemes run by UK banks?

here is somebody from the UK financial services being prosecuted for running a Ponzi scheme.

[as I said #8, whilst a fund manager working for a UK bank might be able to run a Ponzi scheme, I'd be surprised if any actually had. I think compliance would have caught it].

actually, the more I think about this, the more I think Another Tom is probably right – maybe Osborne was not claiming UK banks were actually running classic Ponzi schemes, in the straight-out fraudulent scam sense, but they were either selling investments or making investments themselves that had the characteristics of Ponzi Financing, a la Minsky.

I guess the only way you could prosecute a bank for that is mis-selling … such as claiming an investment that is reliant on asset price appreciation is not reliant on asset price appreciation. And I wouldn’t be surprised if some UK banks were guilty of that.

@16: “You know what a Ponzi scheme is, right? (I’m sure you do).”

The question is whether the banks continuing to finance the inflating house-price bubble with easy, 100% and better loan-to-value mortgages, despite many public warnings going back to 2002/03, can be aptly described as a Ponzi scheme?

There are plainly similarities in so far as house prices were likely to crash if the supply of new mortgages fell back. House buyers were buying houses – and banks were eagerly providing the mortgage finance – in the belief that the house-price bubble would continue to inflate. What has curbed a steeper fall in house prices in the financial crisis and ensuing recession is that the construction of new houses has fallen back to levels of the 1920s.

According to this in the Telegraph: “Thousands of house prices could fall by a third or more if Coalition Government proposals to change planning rules in favour of developers become law, knocking hundreds of thousands of pounds off some of the most desirable homes in the green belt.”
http://blogs.telegraph.co.uk/finance/ianmcowie/100012144/government-plans-could-cut-a-third-or-more-off-thousands-of-house-prices/

The realities of the house-price bubble and what has happened to house building are really more important than the label applied to the situation. There were many public warnings going back to 2002/03 that the market for houses was being hugely distorted by the easy availability of mortgage finance from the banks – but the mortgage finance kept flowing out regardless.

Bob,

okay, I see where you a coming from, but I do not think “housing bubble” = “Ponzi scheme” nor do I think “risky mortgage deals” = “Ponzi scheme” in the context of an OP asking why nobody has been prosecuted for running a Ponzi scheme. You can’t get prosecuted for running a metaphorical Ponzi scheme.

[n.b. if anybody is interested, a bit of googling finds plenty of UK ponzi prosecutions, mainly of one-man-band cowboy investment funds, and an article in which the SFO claims to be investigating "a lot" of cases]

Jesus.

Rhetoric isn’t necessarily true.

When Osborne says, “their Ponzi schemes” it doesn’t necessarily mean that their were schemes that fit the definition of Ponzi schemes.

The reason why “no one seems to have picked up on this” is quite possibly because “no-one” is taking it as literally as Sunny appears to.

their^W there

Or maybe Osborne just doesn’t understand what a Ponzi scheme is, rather like his tenuous grip of economics.

IMO hang-ups over the legal definition of “ponzi scheme” are being used to deflect attention away from the mess created by the banks when we had many public warnings as far back as 2002/03 from pundits and the IMF.

Despite the warnings, the banks carried on with their easy 100% and better loan-to-value mortgages. The realities of the house-price bubble – and the aftermath – are hugely more important than arguments about labels. We are now in a situation where houses for new buyers are less affordable than they were 50 years ago and where house building is at a lower ebb than it has been since the 1920s.

@6. Luis Enrique ” Can anybody think of anything done by a UK bank that resembles a Ponzi scheme?”

BCCI, licensed to operate in the UK, qualified as a Ponzi scheme but that was a long time ago. The regulatory changes that followed BCCI’s collapse may perhaps have prevented a repetition, or perhaps they have encouraged more tortuous ruses. Note that BCCI’s scams required so many conspirators that it makes it difficult for us rationalists to argue against conspiracy theories. However, one swallow doesn’t make a summer.

Googling for “HBOS Ponzi” turns up some interesting hits: Vavasseur, Quayside, Heritors. At least one of these (Quayside) has led to a criminal investigation.

Reading between the lines of Robert Peston’s blog

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2011/01/will_fsa_take_action_against_h.html

one has the impression that he thinks that HBOS’s failure wasn’t just down to poor judgement.

The abundance of interest-only mortgages is an example of Minsky speculative borrowers. Interest-only leaves the borrower effectively long the housing market rising. If the market stops rising and falls when new entrants to the market declines, the interest-only borrower is exposed to rolling over principal in negative equity. Therefore, interest-only mortgages are a mild form of Ponzi lending. The relatively small amount of subsequent repossessions in the UK suggests that the banks were not engaging in ever-riskier mortgage loans to sustain a bubble. If there ever was a UK housing bubble, it appears not to have burst. The U.S., Ireland and Spain is what a burst housing bubble looks like. In contrast, the UK just has an expensive housing market with only mild declines. Lending to buy-to-let investors without the borrower putting in much capital was a stronger form of Ponzi lending as Minsky meant the term. Minsky meant the term in relation to speculative excesses and not outright illegal Ponzi scheme frauds.

I think the dot com bubble was more a ‘ Minsky moment ‘ than the 2007/08 financial crisis. A huge amount of retail investors especially in the U.S. were borrowing money to buy tech shares at crazy valuations. Just as Minsky predicted the smart money exited the market leaving the final Muppet Ponzi borrowers to suffer the losses as the market crashed along with institutional money. So the same type of people tended to lose twice with their pensions taking a hit and they lost $trillions of borrowed money. Hence the huge negative wealth effect U,S. households have suffered over the last decade and why they can no longer fulfill the role of world consumer of last resort.

@30: “If there ever was a UK housing bubble, it appears not to have burst.”

In 2003, the IMF warned of an inflating property-price bubble. If there wasn’t a bubble, how come the unprecedented steep climb in the ratio of average house prices to average earnings as shown in the graph linked @15?

What of this news in the Guardian on 3 October 2011? House prices fall for 15th month in a row

What of this from the Telegraph in April?

“But house prices continue to rise at the top end of the market, with an average increase of 3.4pc over the last year among the most expensive fifth of properties. By contrast, the cheapest fifth of properties saw prices fall by 5.1pc over the year, compared to a 1.9pc decline over the same period in Spain.”

What is stopping house prices in Britain from falling further?

(1) The number of new homes completed in England last year fell to its lowest level since 1923, Government figures showed today.

Just 102,570 properties were built in 2010, 13% less than in the previous 12 months, and the lowest level during peacetime since 1923, according to Communities and Local Government. [Independent 17 February 2011]

(2) Thousands of house prices could fall by a third or more if Coalition Government proposals to change planning rules in favour of developers become law, knocking hundreds of thousands of pounds off some of the most desirable homes in the green belt. [Telegraph 24 September 2011]

I could post the links but the anti-spam trap would then block the post.

@9 – Right. The people calling it a ponzi scheme are advocating genocide. Against the poor, usually.

@ 31. Bob B

There is no doubt that the UK has very expensive housing. The reasons why are multifaceted. In fact, housing is so expensive for lots of people that it damages our economy in other unrelated ways. Whether housing is expensive or fairly valued is not really the issue. Just because the price of a good rises does not on its own signify a bubble. Bubbles burst and deflate when the last marginal buyers stop entering the market. For a housing market this would tend to be first time buyers. Well they were severely curtailed from entering the market by the banks increasing deposit requirements. Yet, we still have expensive housing with only mild declines from the peaks. That suggests that there are other factors causing expensive housing beyond excessive credit fueling a bubble. I don’t think anyone would clam that the UK is currently experiencing excessive credit, So why no huge plunges to supposed fair value as the so-called bubble deflated? A housing bubble would see prices fall at least 40-50% as they did in Spain, Ireland and lots of the US, rather than a few per cent here and there like in the UK.

Your 2003 IMF report kind of proves my point. Eight years after the report with a banking crisis, an economic crisis and high unemployment with no housing bust rules out a bubble as a meaningful use of language.

I would expect house prices in most areas to decline as long as the economy is shit. However, that is evidence of a shit economy and not a deflating bubble. You can’t pick and choose some prices rising and some falling when speaking about bubbles. In a bubble situation all prices rise and all decline in a bust.

” Average house prices to average earnings ” is a meaningless metric. For most people housing has no substitute. No matter what their earnings the choice is to rent or buy, not to consume housing or live n a bus shelter. Therefore, the rental yield is a much more meaningful metric because most people if they do not buy have to pay rent. Having no substitute means people faced with expensive housing will continue to consume housing and spend less of their earnings on other things. So average earnings are neither here nor there, they just use more of their income on housing. The rents that private landlords charge in any particular area effectively puts a floor under house prices.

Large price rise undoubtedly happened. Britain is one of the most expensive places in the world. It is shit for young buyers and renters. The government should follow policies to make housing more affordable. I agree with all of that. However, I am a bubble sceptic, which is quite distinct from expensive housing.

@33 – No, the reasons are quite simple.

Insufficient incentive to put brownfield sites into use
The mass sale of council houses at knock-down prices
The opposition to dense population high-rises and the like
The strictly limited amount of affordable housing built, which is going to drop to near-zero under the new planning rules.

It’s certainly NOT been house prices…

“” Average house prices to average earnings ” is a meaningless metric”

Of course it is. It measures *affordability*. If houses are not affordable, then people rent. It’s a good metric for the way wages have been hammered by the rich soaking up the money in society.

@33: ” ‘Average house prices to average earnings’ is a meaningless metric”

Typically, that is unmitigated rubbish. For most home buyers, household earnings is what governs the their capacity to make mortgage repayments.

You’ve not provided any explanation as to why the ratio of average house prices to average earnings reached unprecedented heights by 2006 – or as to why housing is now less affordable than it was 50 years ago.

You are in denial of a stream of documented commentary about the house-price bubble and the housing market as well as the reported official stats on currently falling average house prices, the market consequences of the collapse in house building back to the levels of the early 1920s and what will happen to house prices if the government pushes through mooted reforms of town planning regulations by making a general presumption in favour of housing developments – not to mention the market consequences of any policy initiatives to increase the supply of affordable social housing.

@34: “Insufficient incentive to put brownfield sites into use”

Never mind incentives for development of infill sites for housing, there is often well organised community opposition to such developments led by local Conservative and LibDem activists – even though such developments usually have relatively low additional downstream infrastructure requirements compared with development of greenfield sites. For PR reasons, infill developments for housing are called: “Garden Grabbing”.

This report from the Telegraph in June last year gives an insight to the political pressures to halt infill developments and the government’s response:

Garden grabbing: the rules for homeowners – New government rules to curb building on garden land will be a mixed blessing for homeowners, says Ross Clark . [Telegraph 14 June 2010]

Compound that with the active PR campaign against housing developments on greenfield sites to “protect our beloved countryside” by the CPRE, along with the prospect of further falls in house prices as the house-price bubble subsides, and we can understand why house building has dropped back to levels not seen since the early 1920s.

A few years back there was much local excitement around where I live, with public meetings, circulars and petitions about the closure of a long-standing local chocolate factory and the redevelopment of the site.

I went to the first and well-attended meeting. On passing through the door to enter the hall, I was asked to sign a petition sheet. When I looked at the sheet, there were already many signatures but no actual heading with the petition statement so I asked as to what the petition was: Never mind, that will be filled in later, I was told.

There was no way I was going to sign a blank petition. In the end after much local debate, the site has been mostly redeveloped for huge BMW car showrooms, along with a few small rentable business units tucked away – but no new houses despite this being a predominantly residential area. NIMBY struck again.

Bob B

Please desist from propounding such myths. The Royal Town Planning Institute refuted them years ago:

http://www.rtpi.org.uk/item/912/23/5/3

In case anyone here thinks I’m barmy about falling house prices, try this report in “This is Money” of what the NIESR was saying in May:

House prices in Britain will fall for the next five years in the longest slump for at least half a century, leading economists warn today.

Property values in the UK are set to fall 4.5% this year and 10.5% by the end of 2015, in real terms, according to the National institute of Economic and Social Research (NIESR).

The five-year slump in real terms – after inflation has been taken into account – is the longest period of decline since records began in the 1960s.

It would see house prices consistently fail to beat inflation over the period.
http://www.thisismoney.co.uk/money/mortgageshome/article-1722171/House-prices-to-fall-for-the-next-5-years.html

Unfortunately, there is a substantial subscription barrier to NIESR papers, which I can’t afford so I have to rely on press reports about NIESR research papers. There was a further report about the NIESR assessment of the housing market in: “This is Money”, in July:

The property market in 2015 will be back where it was in 2003 as inflation outstrips flatlining house prices, a leading forecaster said today.

The National Insititute of Economic Research (NIESR) has said that house prices over the next five years will effectively fall 8% when inflation is taken into account.

That means real house prices will have collapsed to 2003 levels. . .

But the NIESR outlook is rosy compared to research from consultancy Capital Economics, which claims that house prices could dive by up to a quarter by the end of 2012.

@Jonathan – Just what are the particular “myths” that you claim I am propagating? I would like to know and think we should be told.

As a matter of general and wider interest I notice that several links to supposed sources of official statistics on the RTPI website return “Not found”. This experience is not particular to the RTPI since manyGoogle searches for official statistics turn up with the same reply when clicked. I confess to being paranoid about this and suspect it is being made especially difficult to track official statistics on sensitive issues.

34. Leon Wolfson

” Of course it is. It measures *affordability*. If houses are not affordable, then people rent. It’s a good metric for the way wages have been hammered by the rich soaking up the money in society. ”

Which is my point, Leon. The choice people face is to buy or rent. Therefore, the rental yield is more meaningful as that is the prices people are paying. Average wages is just an aggregation of all wages. Meaningless unless you earn the average wage.

35. Bob B

” For most home buyers, household earnings is what governs the their capacity to make mortgage repayments. ”

See how you switched from average earnings to ‘ household earnings ‘. Bob? No one is saying that household earnings do not count. The issue is whether average earnings measure anything meaningful in terms of house prices.

Let me explain again Bob, the issue is not whether house prices rose or even whether they are declining. The issue is whether it was a bubble. In a bubble there would be TOO MANY houses. The country would be awash with newly built estates with no one living there because in a bubble housing would be oversupplied. When the government speak about a ‘ housing crisis ‘ here is a little clue, they do not mean that there are too many houses.

In China there are newly built cities with almost no one living there. Millions of homes lie unoccupied in the US. Newly built estates in Ireland are being demolished with the new homes never having anyone occupy the house since it was built. Spain has huge empty completed housing complexes and others half built that will probably never be finished. That is what an oversupplied housing bubble looks like. We have expensive housing because the market is undersupplied. If one restricts the supply of a good the price will go up, but it does not mean it is a bubble. Of course prices will fall if there are major housebuilding projects because that would be correcting the undersupply.

Bob providing links to people making forecasts is only evidence of someone making a forecast. Just because someone predicts something does not make it true. It would only be valid evidence after the event if the prediction came true. Hopefully housing will become more affordable and building more houses should help that process. However, there is a massive difference between something being expensive and being in a speculative bubble.

Richard W

Just write to the NIESR and to Capital Economics – both of which are predicting significant real decreases in house prices over the next few years as the bubble subsides, according to reports in This is Money – and tell them that they are both up the creek.

“The issue is whether it was a bubble. In a bubble there would be TOO MANY houses. The country would be awash with newly built estates with no one living there because in a bubble housing would be oversupplied. ”

Not so. There’s a house-price bubble because additional monetary demand for houses, fuelled by easy mortgages, exceeded the numbers of additional new houses coming on to the market – in other words, excess monetary demand for houses.

As a fact, house building is currently running at levels last seen in the early 1920s (excepting the war years). The collapse in new house building could be for various combinations of reasons

(1) house building is constrained by land availability – this is what the government is claiming, which is why the government wants councils, in applying planning regulations, to make presumptions favouring sustainable development. In fact, Conservative and LibDem activists are often campaigning against new planning approvals for house building on infill sites (garden-grabbing) and on greenfield sites (to protect the countryside). As recently announced by Cameron, the government is intending to release government-owned sites for early housing developments.

(2) house builders are not building houses for fear they won’t be able to sell the houses profitably, perhaps because the builders are pessimistic about general economic prospects and expect buyers to hold back until prospects are more certain, perhaps because the builders expect house prices to fall in real or nominal terms over the next few years and believe that will cause prospective buyers to hold back from buying until prices have levelled out.

@9 Luis,

That article you linked to claims that as long as population stays stable then state pension schemes are not a ponzi scheme. What this totally ignores is whether the amount of taxes paid by the population is sufficient to cover all benefits including future benefits and healthcare.

Unfortuantely thanks to increased longegivity pension and healthcare costs are increasing substantially. Have taxes increased sufficiently to cover these increased costs?

Also with greater mobility for workers there might well be a lack of future generations. If in future taxes need to be considerably higher in developed countries to pay for the pensions and healthcare of our generation, future generations may well choose to move elsewhere to avoid 50%+ taxes.

No doubt Leon will now claim I am planning genocide against the poor.