Is Cameron's VAT plan legal?

Much as though I applaud David Cameron’s plan to give struggling small companies a VAT holiday, a rather large obstacle occurs to me. Wouldn’t this be illegal under European Union law? The Sixth EU VAT Directive mandates all states to apply VAT the same way as long as the main rate is a minimum of 15% and the discounted rate at least 5%. Room for manoeuvre was tightened to almost zero two years ago in the EU Recast Sixth Directive. You don’t mess with this, as the Blair government found out when...

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Daily Brief

Andrew Lahde, manager of a small California hedge fund, Lahde Capital, burst into the spotlight last year after his one-year-old fund returned 866 percent betting against the subprime collapse.

Last month, he did the unthinkable -- he shut things down, claiming dealing with his bank counterparties had become too risky. Today, Lahde passed along his "goodbye" letter, a rollicking missive on everything from greed to economic philosophy. Enjoy.

Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of

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Credit: no easy answers

Robert Aliber has a peculiar op-ed in the FT, presenting a TARP plan "that should revive the market in mortgage-related securities, greatly enhance bank capital and earn several tens of billions of dollars for the US Treasury". It's peculiar because just as the world and Hank Paulson is finally coming around to the fact that US banks are facing a solvency crisis rather than a liquidity crisis, Aliber still uses the kind of back-of-the-envelope calculations we saw a lot of in early 2007 to assert that there's no solvency crisis at all.

The distress in the US

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A bit worrying

More than just a bit worrying actually.

Hedge fund managers are paranoid. And they are right to be. The other day I had lunch with a senior financial official whose view of hedge funds was simple. “They were a con. The returns were all due to leverage. And now that the leverage has gone everyone will see they were a con.”

You may disagree with this analysis. You may be convinced that for some hedge funds at least the returns were down to skill. You may argue that their role in the credit crisis has been...

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