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What caught my eye this week.

I went to a chilling talk this week by Oliver Burroughs, the author of Moneyland. The book is a tourist’s guide to that murky realm where offshore finance and spurious shell companies meet kleptocracy and tax-dodging Belgium dentists.

When did you last change your mind about something big? We all know it’s rare.

Well, I went into that talk thinking that super-rich tax avoidance was in large part a handy bogeyman for politicians to trot out, and that onerous anti-money laundering procedures were quite possibly an overreaction to several miserable developments of recent years, such as terrorism and the ill-judged War against it.

And I came out temporarily terrified.

Of course I want rich people to pay their taxes like anyone else.

I’m also against the looting of poor nations – who wouldn’t be, bar the looters?

But the big picture Burroughs paints is of a world where wealth everywhere is inexorably moving out of reach of the State and the tax man. This has already crippled the budgets of developing nations and it could eventually threaten our own.

From his award-winning book, which is just out in paperback:

“…this means Moneyland has neutered the core functions of democracy – taxing citizens, and using the proceeds for the common good – which in turn has disillusioned many people with the democratic experiment altogether.

In despair they have turned to strong men … who have further undermined democracy in a vicious cycle that benefits no one but the rich and powerful.”

Burroughs is right that this has crept up on us. For example, we’ve all read stories about the dubious money behind London’s luxury high-rise boom – and then turned the page to the sports section.

Perhaps some of you will call me naive in the comments and point out other such stories. But what impressed me from the talk wasn’t the existence of these dubious channels but the sheer scale – 10% of global GDP and rising.

Who watches the Watchmen?

By coincidence, the day after the talk I heard Paul Lewis bemoaning the high cost of financial regulation in an FT podcast. Lewis estimates it costs £1.7bn in the UK, and rightly points out that it’s ultimately paid for by us honest consumers.

In the FT‘s printed version, he notes [Search result]:

“…the good guys will continue to pay compensation for the bad guys. And everyone who uses financial services — just about all of us — will continue to stump up for the nearly £2bn a year we spend enforcing the rules, fining those who break them, and compensating those who have been cheated.

The most expensive lawful industry in the world. Probably.”

Lewis is no cheerleader for a trodden-down financial services industry. His inference is that the sector should be doing more to police itself.

Just be honest, guys!

Well maybe. But if we can’t get a grip on the off-shoring of not just money but accountability – and even in one case Burroughs highlighted, legal vulnerability, shielded against by paid-for diplomatic status – then those billions spent each year will seem trivial.

Especially compared to the price we may ultimately pay.

From Monevator

Trust life assurance to do the right thing – Monevator

From the archive-ator: I, Robot – The benefits of automatic investing – Monevator

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1

Bank of England finds poor practices across UK challenger banks [Search result]FT

A review of the progress of the Help to Buy scheme – National Audit Office

Woodford: The fallout for investors [Search result]FT

Think tank says small minority responsible for missing £8bn of self-assessment tax due – SMF

Property market looks “slightly more stable” according to RICS survey – ThisIsMoney

UK commits to ‘net zero’ CO2 emotions by 2050 – BBC

The Playing With FIRE doc is moving north to screen in Birmingham on 5 July – via Twitter

Economists’ hilariously off-base consensus as to where US rates should be right now is your latest reminder that forecasting – like many things – is more art than science – The Irrelevant Investor

Products and services

Four Marcus-challenging 1.5%-paying savings accounts compared – ThisIsMoney

Online holiday booking scams and how to avoid them – Guardian

Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter

Real test for smart beta products still to come as their usage rises [Search result]FT

Understanding what Shepherd Friendly’s 2.85%-paying ‘savings bond’ really offers – ThisIsMoney

Why the next cycle in Bitcoin pricing could be a tamer ride – Bloomberg

Hargreaves Lansdown pulls £45m from remaining open Woodford fund – Guardian

FIRE second thoughts mini-special

Back from Cyprus and early retirement, and back to work – Retirement Investing Today

Mid-life crisis – Indeedably

What Sam would do differently if he could retire early all over again – Financial Samurai

Comment and opinion

What are the chances of finding an active manager with skill? – Behavioural Investing

How to win any argument about the stock market – Fortune

Bog-standard target wealth funds have bested Yale’s endowment fund over 10 years – Morningstar

How to make better (and quicker) shopping decisions – Get Rich Slowly

The case against small caps [Research]CFA Institute

Put as many money decisions on autopilot as you can – Abnormal Returns

How to deal with suddenly coming into life-changing money – The Financial Bodyguard

Diversify your perennial pasture portfolio – The Real Wealth Farmer [via AR]

A quant’s investing lessons shared with his former self – Validea

How to become a duration detective [Deep dive on bonds]Morningstar

An attempt at valuing the high-flying growth company Beyond Meat – Musings on Markets

Value investing probably isn’t dead – Alpha Architect

It takes 7-10 years to see returns come in for an early-stage venture portfolio – Fred Wilson

Brexit

Boris Johnson pledges [i.e. fantasizes about] dropping Irish backstop in ‘orderly’ Brexit plan – Guardian

Johnson is the Howard Hughes of this leadership race – Marina Hyde

Rory Stewart’s leadership bid speech is worth watching [Video, starts c.25m in] – via Twitter

Kindle book bargains

The Millionaire Next Door by Thomas J. Stanley – £0.99 on Kindle

How to Make a Living with your Writing by Joanna Penn – £0.99 on Kindle

The 80/20 Principle: The Secret of Achieving More with Less by Richard Koch – £0.99 on Kindle

Bean Counters: The triumph of the accountants and how they broke capitalism by Richard Brooks – £2.59 on Kindle

Off our beat

The race to replace Viagra – Guardian

And finally…

“We balance probabilities and choose the most likely. It is the scientific use of the imagination.”
– Arthur Conan Doyle, Sherlock Holmes: The Definition Collection [Read by Stephen Fry, this audio book is a 72-hour delight. Expensive to buy – but it costs just one monthly credit via Audible. Probably the greatest bargain on Amazon!]

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  1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”.

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