Strange times

Republicans (and two Democrats) in the US Senate last week managed to block a $60bn bill to renew some of the country’s fading infrastructure (including roads, dams, bridges, energy and water systems). The reason? Funding was to have come from an additional 0.7 per cent tax on earnings over $1m. (This implies that total earnings by individuals earning over $1m/year is $8.5 trillion.) Instead, the time that would have been spent on this bill will now be spent reaffirming that the national motto remains “In God we trust.” The US needs to spend $2,000bn over the next five years just to maintain its existing infrastructure.

Following the collapse last week of broker-dealer MF Global (and new questions as to how the firm was ever picked to join the ‘Wall Street elite’) CME Group and Intercontinental Exchange have temporarily relaxed their rules for how much collateral speculators must hold. On the one hand this is understandable: while firms’ positions (with MF Global) have successfully been transferred to other brokers, a US bankruptcy judge has ordered that 40 per cent of their deposits be held back. But the rules were there for a reason, and while they are eased, risk is higher.

Retail landlords in the UK are also relaxing rules — in some locations retailers are being asked to pay only £1 in rent so long as they also pay the business rates (which would revert to the landlord if the shop stood empty). The situation applies only to a small number of premises, but the change indicates that the situation is still worsening rather than improving. And the business rates system looks set to make things worse.

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