Yesterday it was reported that some of the largest banks in the world were slammed with yet another stiff fine by the United States government.
This time it amounted to roughly $5.7 billion, after the likes of JPMorgan, Barclays, Citigroup and RBS admitted to criminal wrongdoing in years of manipulating currency markets.
The word “crime” is derived from the Latin word crimen. In their day, Romans were incredibly creative at dealing with their own criminals: crucifixion, torture, beheadings, were all commonplace. Some people were put into sacks with wild animals and then thrown into the river.
The bankers being charged now had spent years abusing the public trust.
They traded against their own customers for personal gain; they used sensitive information entrusted to them to manipulate markets; and now, all they’re going to get is a fine and a slap on the wrist.
It’s unlikely that anybody is going to go to jail, or that any individual will be held accountable—except for potentially a token scapegoat.
What’s even more interesting is that after defrauding the public for so many years, the fine that they pay goes to the United States government.
How much of that $5.7 billion did you get? Because I didn’t get any, and I’m not going to hold my breath waiting for my share.
It’s so ironic that after years of admitted criminal wrongdoing, the banks stroke a check to the government that will ultimately end up right back in their pockets.
Remember, when the US government borrows money to indebt future generations, the Federal Reserve then conjures money out of thin air to loan to the banks for free.
The banks then turn around and—through the “primary dealer system”—loan that money to the US government at interest.
The US federal government paid $430 billion just in interest last year on its prodigious debt.
Commercial banks own a huge chunk of that debt, and thus earn a huge chunk of that interest. So rather bizarrely, when the government writes them their interest checks, the bankers will get their entire fine right back.
Or they’ll get it when the taxpayers have to step in and bail them out yet again.
Even if neither of those things happen, Uncle Sam is would still blow this money on more bombs, more drones, and more destructive wars overseas.
All while the people who were robbed by the banks never see a penny of it.
How did such abuses of the public become tolerable? I invite you to click below to tune in to today’s podcast, in which I discuss this complex, corrupt, and self-serving system.
In one simple click you can help make sure that protection for whales, dolphins and porpoises in Europe remains in place!
Investors Europe Stock Brokers's insight:
The EU Birds and Habitats Directives exist to protect wildlife species and habitats in the UK and Europe. However, these laws are under review by the European Commission and are at serious risk of being weakened. We need to ensure this doesn't happen.
I generally try to record a podcast each week, but I fell off the wagon recently because of the big event we just hosted in Cancun.
I thought there would be no better way to get back on track than to ask famed investor Dr. Marc Faber to join me for today’s episode.
If you haven’t heard of Marc Faber, he’s a professional investor who runs the site GloomBoomDoom.com, and was probably most aptly described by the Sunday Times as “a blunt-spoken Swiss who says the things nobody wants to hear…”
(to which I would add, “and happen to be entirely true.”)
Marc was kind enough to fly halfway across the planet to come to our Global Offshore and Investment Summit two weeks ago.
And now that we’re both back in our respective corners of the world, I called him up for a quick interview.
As usual, his insights were spot-on.
We talked about the distinct possibility of wealth taxes and capital controls, which in many respect are already with us.
The ongoing and dangerously escalating war on cash is nothing more than a form of capital controls—a despicable tactic to trap people’s savings in an failing system.
That’s one of the biggest reasons why Marc is an advocate for owning precious metals and diversifying internationally.
This is a centuries-old tactic. The idea of keeping a portion of your assets abroad is nearly as old as the concept of government itself.
And it used to be something only available to the mega-rich.
But in this day and age the tactics are open to everyone.
We can now move money abroad with the click of a mouse.
We can establish foreign accounts without leaving town... and store precious metals overseas while sitting at home in our underwear.
And these steps are important. When you consider all the different risks out there, it’s incredibly foolish to keep everything you’ve worked for, and everything you’ll achieve in the future, in the hands of a desperate, bankrupt government.
I invite you to listen in to this quick interview. Marc’s insights are invaluable, and he has some great recommendations for what investors should be looking at right now.
La commissaire européenne à la Concurrence a annoncé mardi que, contrairement à ce qu’elle prévoyait, elle ne serait pas en mesure de clore d’ici la fin du deuxième trimestre son enquête sur les accords fiscaux conclus notamment par Apple, Starbucks, Fiat et Amazon avec certains pays de l’Union européenne.
'Everyone is presumed to be an evil criminal mastermind, tax evader, or worse, until proven otherwise. With all the new regulations and compliance requirements, many international banks and brokers have simply thrown their hands up in the air. They’ve put up the shutters and now refuse to accept customers that aren’t clearly residents of the same jurisdiction in which they operate. The long-arm of Uncle Sam and his recently implemented FATCA legislation, the incredibly ill conceived Dodd-Frank rules, combined with the original Securities Exchange Act of 1934, which governs the U.S. securities industry, all mean that U.S. Persons in particular are being given the cold shoulder by nearly all international brokerage houses.This is a very typical reaction. We all tend to fear what we don’t understand. And most banks and brokers around the world simply don’t have the resources to devote to fully understanding and complying with all Uncle Sam’s crazy regulations....'
Investors Europe Stock Brokers's insight:
'6. Both online and phone access for placing trades. It’s your choice. You can place the trade yourself online, or you can order by phone and have one of the firm’s brokers execute for you. You can even place orders via Skype. Please do bear in mind that, as we explain below, this is a fairly small shop. So placing trades through the phone regularly might not be your most convenient option.
7. No conflicts of interest with clients and assets protected under UK law up to GBP 50,000. This firm is purely an agency brokerage. This means that all they do is execute trades for clients. They don’t trade for their own accounts. The firm has no proprietary trading book, never trades against clients, and doesn’t manage or hold client funds.
There is therefore no co-mingling of the firm’s assets and client assets. When you wire money to them to fund your account, it is immediately sent on to your own individual account at their custodians in London. This is important to emphasize—the firm executes trades for their clients, while the underlying assets – your cash and securities – are held in individually segregated custodian accounts...'
The apparently deliberate act of a German pilot that caused the deaths of 150 people in France is leading to a broad reexamination of international airline security rules, which allowed the pilot to lock his more senior crew member out of the cockpit.
Investors Europe Stock Brokers's insight:
“This is now an issue of how we keep mass murderers out of the cockpit.”
Sen. Rand Paul called on ex-Secretary of State Hillary Clinton to return donations made to the Clinton Foundation by the Saudi Arabian royal family. The FBI will investigate Aaron Schock's sketchy financial dealings.
Some traits to watch out for when choosing an offshore/internationalization company or agent:
The biggest red flag is one who purports to understand the critical importance of moving your assets as well as your person offshore, and ASAP, but remains, along with their families, behind the curtain themselves. Although not a sure indication of governmental involvement, there’s certainly something to be said for walking the walk. Staying in the USSA indicates a lack of real commitment. People like us, who have lived offshore for decades, actually know what it takes, and can better anticipate and serve your needs.
Likewise if an offshore adviser asks you to make a payment through a US or EU bank, you should become immediately leery
Based upon blogs published and other public statements made, one can ascertain that the person is obviously not the sharpest tool in the shed, but can follow orders, and get a security clearance.I think you know what I mean here
Display an obvious lack of morals, and blatant willingness to do anything to get your fees.It’s the same mentality that bureaucrats display when seizing your assets in the name of maintaining power, and protecting “national security”
They might utilize social media to carry out that oldest governmental tactic, the unfounded smear campaign, against obviously transparent, and therefore better, people, who make an easy target. You don’t want to trust your financial privacy to such a person.How many of you have been the victim of one? How much of it was accurate, and how much a spun web of misinformation? When you see someone trying very hard to attack another, individually, and directly, take heed. Start asking questions about the source, and looking very critically at where the slime is coming from. One who resorts to such tactics is either trying to hide their own glaring faults, or is an undercover fed. Either way, it isn’t an honorable way to do business, and reflects more upon the character of the character assassin, than the intended victim.
They may go against the grain of others in the offshore industry by using innuendo in order to create fear of implementing strategies which don’t fit the statist plan.In other words, strategies which are contrary to governmental power.
They may even show support for such human rights abuses as FATCA, and spread propaganda to the effect that its implementation is imminent and unavoidable so you’d best rat yourself out and comply fully. We definitely recommend legal compliance, however, in the face of such blatant tyranny, as is the current environment, an expat must be practical and make self-preservation a priority.We’re in process of being able to offer a vehicle which is similar to those utilized by Congressman and Supreme Court judges which will legally protect your personal privacy despite current attempts to make privacy illegal.We’ll also continue to point out the impracticability of FATCA implementation, and the insidious nature of its conception to begin with.
Although this is very generalized, one should be wary of those who spread repeated propaganda that supports world-wide US hegemony. Hegemony—An indirect form of government and of imperial dominance in which the hegemon rules geopolitically subordinate states by means of its implied power - by the threat of force, rather than by direct military force.See the previous point on FATCA propoganda..'
“If you knew what’s good for you, you’d buy risk-free US Treasury bonds for your IRA and 401(k). Just in case you don’t understand that, we’re making an investment in US Treasuries mandatory for your retirement account.”
One of the many experiences uniquely endured by Americans is having to confess your sins once a year to the federal government.
Specifically, Uncle Sam requires most individuals with foreign bank and financial accounts to fess up and disclose on an annual basis.
In fact, these offshore account disclosures must be submitted not once, not twice, but three times, and sent to two different departments.
This is classic government thinking.
For anyone with a foreign financial account, the first form you need to know about is Schedule B of your IRS form 1040.
In fairness, this one’s pretty easy. You check the appropriate boxes in part III of the form and list the foreign countries where you hold financial accounts.
The second is the relatively new IRS form 8938, which came out of the 2010 FATCA legislation (often misspelled as FACTA).
This one is more comprehensive; you’ll need to provide more details on a wider variety of foreign financial assets in addition to bank and brokerage accounts.
For example, shares of private foreign companies, foreign partnership interests, and foreign hedge funds must be reported on form 8938.
Both of these two forms are filed with your taxes to the IRS each year, typically by April 15th.
The last one is FinCEN 114-- the Report of Foreign Bank and Financial Accounts, commonly known as the FBAR. This must be filed by June 30th each year.
The FBAR is required by any US person or domestic entity if the total value of their foreign financial accounts exceeded $10,000 at any time during the previous calendar year.
Example: Let’s say last year you had a bank account in Hong Kong whose maximum value during the year peaked at $15,000.
Last year you also had a Canadian brokerage account whose maximum value was $7,500, and some precious metals at GoldMoney which maxed out at $9,000.
ALL of the accounts would need to be reported on the FBAR by June 30, 2015.
(Note- if any of your accounts were denominated in a foreign currency, the government provides an official FBAR exchange rate to convert to US dollars.)
The FBAR is submitted electronically, and you now have two options to file.
The first option is to register at a government website and fill out the form online.
The second way is even easier-- it's a brand new option they just released a few days ago.
Now you can simply download this form, fill it out at your leisure, and upload it whenever you’re ready.
Remember, though, the FBAR is not submitted to the IRS.
Even though the information is similar to the other forms, the FBAR goes to an entirely different department-- the Financial Crimes Enforcement Network.
This has always struck me as bizarre-- even though it’s perfectly legal to hold money abroad, it must be reported to an agency that specializes in financial crimes.
It really gives you a sense of how the US government views people who don’t have confidence in their failed system.
Naturally, they do treat it as a crime if you don’t file the form.
The severity of the penalties is absurd. They’ve thrown senior citizens in jail and levied enormous fines, simply for failing to file.
And it gets worse every year. This is one of the greatest indicators of how bankrupt and desperate the US government is becoming.
You don’t see wealthy nations doing this sort of thing. Hong Kong doesn’t incarcerate its residents for some innocuous financial oversight.
Only broke countries have the need to threaten people with imprisonment and force them to disclose the precise whereabouts of their savings.
Yet despite the reporting inconvenience, moving at least a portion of your funds offshore is one of the best financial insurance policies there is, particularly when there’s so much risk in the system.
Tomorrow I’ll share some official data to explain why.
Il s’agit la plus grosse enquête réalisée par la Commission depuis celle qui l'a opposée à l’américain Microsoft. La Commission européenne compte mettre en cause Google pour abus de position dominante dans la recherche sur internet en Europe, rapporte jeudi le Financial Times.
La nouvelle commissaire à la Concurrence Margrethe Vestager transmettra mercredi ses griefs à Google concernant les pratiques du moteur de recherche, qu'elle juge anticoncurrentielles, indique le FT.
Le moteur de recherche est la cible depuis cinq ans d'investigations des services antitrust de l'Union européenne. S’il est reconnu coupable, le géant américain pourrait être condamné à une amende de 6,6 milliards de dollars (6,2 milliards d'euros).
The US is a tax haven and let's be thankful because it helps offset Obama's bad economic policies.
Investors Europe Stock Brokers's insight:
What is the world’s largest tax haven?
[T]he United States can lay claim to that title.
[T]he United States would not be able to maintain its economy without large inflows of foreign capital.
Foreign investors can invest in the United States virtually tax free — in structures that are legally protected from risks and, currently, with secrecy.
With fairly simple planning, a foreign investor can avoid tax on interest as well as gains from sale of securities — all protected by the legal system…
As for secrecy, Delaware or Nevada are quite accommodating. In these states, a foreign company or individuals can form a limited liability company and open a bank account, but if the investor does its or his business outside the United States, there is no U.S. tax or reporting.
Oil companies continue to get burned by low oil prices, but the pain is bleeding over into the financial industry. Major banks are suffering huge losses from both directly backing some struggling oil companies, but also from buying high-yield debt that is now going sour.
The Wall Street Journal reported that tens of millions of dollars have gone up in smoke on loans made to the energy industry by Citigroup, Goldman Sachs, and UBS. Loans issued to oil and gas companies have looked increasingly unappetizing, making it difficult for the banks to sell them on the market.
To make matters worse, much of the credit issued by the big banks have been tied to oil field services firms, rather than drillers themselves – companies that provide equipment, housing, well completions, trucks, and much more. These companies sprung up during the boom, but they are the first to feel the pain when drilling activity cuts back. With those firms running out of cash to pay back lenders, Wall Street is having a lot of trouble getting rid of its pile of bad loans.
Robert Cohen, a loan-portfolio manager at DoubleLine Capital, told the Wall Street Journal that he declined to purchase energy loans from Citibank. "We've been pretty shy about dipping back into the energy names," he said. "We're taking a wait-and-see attitude."
But some big investors jumped back into the high-yield debt markets in February as it appeared that oil prices stabilized and were even rebounding. However, since March 4 when oil prices began to fall again, an estimated $7 billion in high-yield debt from distressed energy companies was wiped out, according to Bloomberg.
The high-yield debt market is being overrun by the energy industry. High-yield energy debt has swelled from just $65.6 billion in 2007 up to $201 billion today. That is a result of shaky drillers turning to debt markets more and more to stay afloat, as well as once-stable companies getting downgraded into junk territory. Yields on junk energy debt have hit 7.44 percent over government bonds, more than double the rate from June 2014.
An estimated $1 trillion in loans were provided to the energy industry over the past decade, with most of that passed off to other investors. The practice is common, but starts to fall apart when the quality of loans starts to deteriorate. Banks like Citi have been sitting on bad loans, hoping for a rebound. But with oil prices dipping once again, big banks are starting to eat the losses. Some bad loans were sold off in mid-March at 65 cents on the dollar, the Wall Street Journal reported on March 18.
Souring debt comes at a time when oil and gas firms are also issuing new equity at the fastest pace in more than a decade. Drillers are desperate for cash, and issuing new stock, while not optimal because it dilutes the value of all outstanding shares, is preferable to taking on mountains of new debt. An estimated $8 billion in new equity was issued in the first quarter of 2015 in the energy sector, the highest quarterly total in more than ten years. But, falling oil prices have caused share prices to tank, reducing the value of new shares sold, and ultimately, the amount of cash that can be raised.
Big Finance's struggle to unload some bad energy loans will ripple right back to the energy industry. If financial institutions cannot find buyers, they will be a lot less likely to issue new credit. That means that oil and gas companies in need of new cash injections may have trouble finding willing partners. Once access to cash is cut off, the worst-off drillers could be forced into a liquidity crisis.
'An estimated $1 trillion in loans were provided to the energy industry over the past decade, with most of that passed off to other investors. The practice is common, but starts to fall apart when the quality of loans starts to deteriorate. Banks like Citi have been sitting on bad loans, hoping for a rebound. But with oil prices dipping once again, big banks are starting to eat the losses. Some bad loans were sold off in mid-March at 65 cents on the dollar, the Wall Street Journal reported on March 18. '
The murder of Boris Nemtsov, even more than previous assassinations of journalists and other figures deemed unhelpful to Vladimir Putin's regime, feels like a moment of grim significance. It represents…
Investors Europe Stock Brokers's insight:
'In its suppression of opposition, in its thuggish aggression, in its capricious and rigged “justice”, Russia is crossing the line that differentiates between democratic authoritarianism and outright dictatorship. Indeed, Putin crossed that line some time ago...'
At the end of September 2011, just days before his passing, the company that Steve Jobs founded had a $25 billion cash hoard. Nearly half of this was stashed overseas.
What’s more, Apple was running billions in profit through multiple Irish subsidiaries, neither of which were taxable by the US government.
Steve Jobs departed this life owning 5.5 million shares of Apple (and another 138 million shares of Disney, which employed similar offshore practices).
So his personal share of the untaxed offshore booty was obviously substantial.
Did this make him ‘unpatriotic’?
Was the guy who revolutionized five industries and touched the lives of billions of people some nefarious traitor because he held so much money offshore?
Of course not.
Despite all the absurd, highly negative media attention centered on shaming companies and individuals who go offshore, it’s one of the most sensible, rational steps anyone can take.
Every taxpayer on the planet looks for legal ways to reduce way they owe, or at least claim every deduction and exemption they’re entitled to.
No one files a 1040 saying, “Yeah, I’m not going to claim the child tax credit or medical expenses this year...”
Arranging one’s affairs for tax optimization is normal.
People shop at duty free stores specifically to save money and not pay sales tax.
Others live in one place (New Hampshire, for example) and commute to another (Boston) to save on state income tax.
Doing the same thing for a company is hardly different.
Apple started its shift by moving its profit center from California to Nevada, thus saving the company 8.84% in California state income tax.
From Nevada, the company then set up its Irish subsidiaries, saving the lion’s share of the federal corporate tax rate.
People blast Apple (and Microsoft, Google, GE, etc.) as unpatriotic for taking advantage of the legal options available to them.
This is simply an ignorant assertion. Critics have completely forgotten that the pretext of the American Revolution was largely motivated by taxation.
I would suggest that it is US politicians who are unpatriotic. They penalize productive citizens and businesses with one of the highest tax rates in the world.
At 39%, the United States of America has a higher corporate tax rate than Norway (27%). Or ‘Communist’ China (25%). And yes, even Russia (20%).
Moreover, I would suggest that going offshore is actually patriotic.
You see, these tactics aren’t just available to Apple and Microsoft. Even small businesses can legally take advantage of comprehensive tax treaties and offshore sales companies, especially if you are operating an online business.
Legally reducing your tax bill means putting less money in the hands of people who have an uninterrupted track record of destruction and failure.
They have an abysmal history of managing other people’s money. They blow it all on bombs, drones, wars, and unsustainable social welfare programs.
People in the Land of the Free grow up being taught that voting is a patriotic duty.
If you believe this to be true, then note that the most powerful votes you can cast are the ones you make with your feet... and your money.
Every single day you are essentially ‘voting’ for the products and services that you value. If you buy an iPad, this is like casting a vote for Apple with your dollars.
This market-based approach is much more powerful than standing in a booth and being forced to choose between two complete idiots.
In the market, the best products and services receive the most votes, and hence, stay in business.
The worst companies don’t receive enough votes to stay in business, and they ultimately go under (but not before getting a $536 million loan guarantee from the Department of Energy).
Politics can work the same way.
Rather than vote in the booth for new people, we can simply vote with our money and actions to restrict the resources they have available.
This isn’t scandalous, shameful, or even remotely unpatriotic.
Rather, using legal means to slash the amount of tax that you pay is the most powerful, conscious way you can cast a vote that really matters: a vote of No Confidence.
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