One of the unintended consequences of gathering the world’s leaders together is that they’ll inevitably redress issues others hadn’t even thought of. While statesmen converged on London to discuss the economic crisis at this week’s Group of Twenty meeting, they also, oddly enough, came down hard on tax havens.
To be fair, this was a good move. But at first thought, what do tax havens have to do with this financial crisis?
While tax havens seem tangential from the larger recession, they do raise a pressing issue: Financial transparency, especially in the thicket of this crisis, is crucial.
Indeed, when we think about what got us into this mess, opaque financial practices fall squarely in the bull’s eye. Inscrutable derivative models and repackaged mortgage-backed securities surely fuelled severe overvaluation, excessive leveraging and an eventual bust.
Tax havens, too, skirt financial transparency. So, is it any wonder the world leaders would discuss them in a conference about the crisis?