We are in probably the most turbulent times the offshore financial industry has ever seen. Almost daily, new events come to light and new initiatives are unveiled. The pen is no sooner dry, than the commentary is out of date, so I apologise if that is the case here. I hope not, as I have tried to look over the horizon.
Cayman has taken just such a permissive approach to certain forms of financial regulation and has reaped the benefits. Extending that approach into other areas might well enable the island to become a hub for other entrepreneurial activities, to the benefit of islanders and to the world.
If the Cayman financial industry were faced with extinction or only the potential of a diminished role, we would not bother providing you with the third edition of the Cayman Financial Review, which you are now reading. Cayman can continue to grow as a financial centre, provided both the new government and the financial industry do more to protect it from the financial imperialism of foreign governments, and provided the private sector – with the support of government – develops new products and continues to improve existing financial services.
The great curse of democracies is that eventually a majority of the people become addicted to and demand ever more government benefits that cannot be funded by the diminishing numbers of taxpayers or through borrowing.
Unfortunately, many jurisdictions rich in natural resource deposits are poor in rule of law.
An explosion of prosperity around the world has followed the increasing liberalisation (globalisation) of trade and investment.
The apocryphal Chinese proverb, “May you live in an interesting age”, describes the current international financial environment – from the US FATCA to the various “me too” versions being hastily put forward by European governments, the world’s financial plumbing is being reworked.
At age 19 there was no doubt in my mind that I did not want a career in criminal law. I chose the much more objective (and enjoyable) commercial law. So much for that!
Warren Buffett famously explained to his shareholders in 2004 that investors “should try to be fearful when others are greedy and greedy when others are fearful".
The world’s financial infrastructure remains in flux. The United States’ FATCA, Britain’s “son of FATCA,” France’s “mini-FATCA,” the dozens of intergovernmental agreements (IGAs) being entered into by governments around the world with the U.S., and calls by many EU member states for IGA-like agreements of their own are changing the rules of international financial transactions.
Just as natural science developed out of a natural philosophy we are hopefully moving toward a science of regulation, both in the sense of being well-established knowledge and drawing on political science and quantitative economics.
The global debt crisis is leading to increased money chaos. Europe is in the worst shape, but the debt and money problems are to be found almost everywhere on the globe. As an economist who has often written about money, I feel a bit of embarrassment about how little progress we have made with “money”.
We need a tax system which asks the billionaire class to pay its fair share of taxes and which reduces the obscene degree of wealth inequality in America.