Thursday, April 14, 2011
The US Underground Economy
Ominously, the underground economy (UE) in the United States has kept growing especially during recent years following the great depression of 2007. It is a ubiquitous problem and like other economic ills it has no definitive cure.
For the most part, cash transactions or illegal enterprises such as drug trafficking, prostitution, and gambling constitute the lion's share of an underground economy; it is not, however, limited to such activities. Legal transactions may also take place under the table to dodge payment of taxes.
According to a report in Washington Times on 12/09/09, the UE accounts for as much 13% of the GDP of the U.S. economy, a sum of about $1.8 trillion annually. While these numbers might be a bit overestimated, the findings of one credible study show in 2006 the size of the UE was about 6% of the U.S. economy, up from 3.4% in 1973 and it is still the same.
What is worse, it seems unlikely that unwanted but currently legal transactions are fully included in the above statistic.
Typically of recent dealings, one instance is a $220 million loan made to the wives of two Morgan Stanley execs, who had no visible investment experience. The money was then invested in securities. These securities -- mortgages, student loans and so on -- have paid out handsomely for their new owners, but they have still not repaid $150 million of the tax money they were given to buy them. The magazine "Rolling Stone" recently had an article outlining some of the many similar failings of major banks and bankers.
Academics claim: "The political debates should address this issues related to UE with attention to the strengthening of American households, especially those in middle class, and the overall good of the economy rather than on politics and personal self-interests".
IMO: At least India seems to have taken a a few steps in the right direction. In India, A. Raja who is alleged to have scammed $39 billion dollars, now complains he is "hungry" in jail. And in the UK, a bent Doctor (Shipman) was allegedly hanged in prison, (the claimed 'suicide' sounds highly unlikely). Cannot the US take the hint and at least prosecute the crooked bankers ? But no - the US simply wants to hang whistleblower Assange. Mr Louis Farrakhan might understandibly have said: "This is all the US can expect if their wretched country is run by a house nigger. We know which house - the banking house". But Farrakhan probably would not say that as Obama and his banker friends would then try to send him to GITMO, or just murder him anyway. Why did 9/11 occur ? Some may soon claim that the only reason to wonder may soon likely to be - "Why didn't they aim for Wall Street ?".
For the most part, cash transactions or illegal enterprises such as drug trafficking, prostitution, and gambling constitute the lion's share of an underground economy; it is not, however, limited to such activities. Legal transactions may also take place under the table to dodge payment of taxes.
According to a report in Washington Times on 12/09/09, the UE accounts for as much 13% of the GDP of the U.S. economy, a sum of about $1.8 trillion annually. While these numbers might be a bit overestimated, the findings of one credible study show in 2006 the size of the UE was about 6% of the U.S. economy, up from 3.4% in 1973 and it is still the same.
What is worse, it seems unlikely that unwanted but currently legal transactions are fully included in the above statistic.
Typically of recent dealings, one instance is a $220 million loan made to the wives of two Morgan Stanley execs, who had no visible investment experience. The money was then invested in securities. These securities -- mortgages, student loans and so on -- have paid out handsomely for their new owners, but they have still not repaid $150 million of the tax money they were given to buy them. The magazine "Rolling Stone" recently had an article outlining some of the many similar failings of major banks and bankers.
Academics claim: "The political debates should address this issues related to UE with attention to the strengthening of American households, especially those in middle class, and the overall good of the economy rather than on politics and personal self-interests".
IMO: At least India seems to have taken a a few steps in the right direction. In India, A. Raja who is alleged to have scammed $39 billion dollars, now complains he is "hungry" in jail. And in the UK, a bent Doctor (Shipman) was allegedly hanged in prison, (the claimed 'suicide' sounds highly unlikely). Cannot the US take the hint and at least prosecute the crooked bankers ? But no - the US simply wants to hang whistleblower Assange. Mr Louis Farrakhan might understandibly have said: "This is all the US can expect if their wretched country is run by a house nigger. We know which house - the banking house". But Farrakhan probably would not say that as Obama and his banker friends would then try to send him to GITMO, or just murder him anyway. Why did 9/11 occur ? Some may soon claim that the only reason to wonder may soon likely to be - "Why didn't they aim for Wall Street ?".
# posted by uv : 4:41 PM
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