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Tuesday, December 6, 2011

Standard Chartered: The bank of cowards!

A picture of SCB in Hong Kong, I took while there.

Recently, It has been called to my attention that Standard Chartered Bank will no longer accept US citizens, US green card holders, and US residents as clients. To go a step further, these cowards are basically telling current and even long time clients with  US ties, to take their money and stick it where the sun don't shine. This is being done with very little warning and under false pretenses.

Of course Standard Chartered is making the claim that the bank is shifting toward the target markets of Africa, the middle east, and the Asia Pacific region. And that clients who are not a part of this demographic will no longer be welcomed at Standard Chartered. This of course is a lie. The real reason for this forced exile stems from The Foreign Account Tax Compliance Act (FATCA), which was passed in 2010 and set to take effect in 2013. FATCA has systematically turned US citizens into banking and investment pariahs the world over.

To refresh your memory, this little gem, FATCA, is a new tax law that will require overseas institutions (such as financial institutions, investment entities, and many other organizations that operate on a global basis) to report their American clients to the IRS. The cost of complying with FATCA carries a steep price tag which is estimated to be around $100 million for a large sized bank. Mind you, I am speaking of compliance cost only, what I am neglecting from this figure is the forced 30% withholding that must be levied from non-declared accounts of American citizens. This action would essentially turn a private banking institution into an arm of the IRS at the further expense of the banking institution.

Of course here is Standard Chartered's solution for this problem: show US clients the door and tell them "don't let it hit you on the ass on the way out!"

The Standard Chartered treatment of US clients
Now I will share with you the story of a man who I will call Mr. X. Mr. X is a dual national of America and an Eastern European country, where he currently resides. Mr. X was also a client of Standard Chartered's private bank and had been banking with them for 20+ years until he received a letter to move all of his assets elsewhere. Mr. X was given 90 days to do so. Bewildered, Mr. X had written to his banker Ms. Y, only to have the director of the branch reply.

In the email written by Mr. X to his banker, he asks "I have had this account at your bank for over 20 years! May I ask why this is being done now?" In response, the director of the branch replied "As detailed in my letter of XX/XX/XXXX, In order for the Bank to continue to focus on delivering appropriate services and products to its clients, we periodically conduct reviews of our client base to ensure that our clients remain aligned to the Bank’s strategy of Asia, Africa & the Middle East.  Given that you are based between Eastern Europe and the United States, these areas are not target market for Standard Chartered."

Let me translate what this director really means, "even though you are a good, high net worth client, because you have ties to the United States, you have become not only an undesirable but a liability to our bank. Don't go away mad, just go away!"

What bothers me the most about this situation is the fact that Standard Chartered knuckled under like a bunch of cowards needlessly. Standard Chartered Bank kicked loyal clients to the curb when they were one of the few banks in a good enough circumstance to fight such draconian measures being perpetrated by the United States government against its citizens at the expense of banks the world over. The outcome of fighting these draconian measures could be come quite profitable for the bank as well.

FATCA: Making you bank in the US, whether you like it or not.
Here is what I mean:

Firstly, Standard Chartered has only a small token presence in the United States. Hell, there are only 6 Standard Chartered Banks in the whole entire country of America. Most of Standard Chartered's clients with ties to America use branches outside of the US. This is done in order to take advantage of outside investment opportunities not available in the US. Further, over 90% of its profits come from Africa, Asia and the Middle East.

Being in such a protected position against the penalties of the IRS and other American authorities, Standard Chartered Bank could have said "we will not comply as FATCA is in direct violation of the privacy policies of the respective countries we operate in. Also, our bank is not an arm of any government, thus we refuse to spend OUR MONEY to act as an arm on the behalf of any government." With this statement, Standard Chartered could have sold its US presence to another bank in America who would be happy for the market share.

The next move would have been for Standard Chartered to no longer offer US investments. The bank has been divesting in the US since 1987 anyway, so this move would be nothing new. Plus Standard Chartered has made it clear anyway that it's target is to stay "aligned to the bank’s target markets of Asia, Africa & the Middle East." So I am sure the hottest investments they offer are in these markets anyway.

The IRS: punishing the successful since 1913
Also Standard Chartered would have to be protected from the 30% withholding of their US dollars supply. This is because all dollars begin life with a US bank some where down the line. Which means whatever dollars the bank receives could be subject to this withholding. Thus the solution is that Standard Chartered would have to stop offering dollar denominated accounts. This is would be a pretty ballsy move for any bank. However, the ballsy-ness would merely be symbolic. A good alternative for clients who want to hold dollars but can't for this reason, would be to offer accounts denominated in Hong Kong Dollars. This is because HK dollars are easily converted into dollars as they carry a HK$7.75 to $1 USD direct peg to the US Dollar. Thus the values of the currencies move in tandem.

However, there would always be the added benefit of a possible revalue of the Hong Kong Dollar in case the US wishes to further debase it's own currency so that other pegged currencies go down with the ship. This would be a bitch move on the part of the US but it has already started to some degree. By this I am referring to America's on going currency war being waged against China in order to force the Yuan to revalue as to make American goods look attractive once again, but this is another story for another time.

Lastly, think of all the high net worth clients with American ties who would flock to Standard Chartered under the current exile Americans are facing from other foreign banking institutions. In the ranks of those no longer serving American clients we have:

HSBC, Deutsche Bank, Bank of Singapore, DBS, Hang Seng, Julius Baer, Wegelin & Cie, Bank Sarasin, Pershing and Williams de Broƫ, Barclays Wealth, and even those Judases at UBS are no longer taking clients with American ties. What is even funnier is the European division of Morgan Stanley, which is an American company for fuck's sake, are also turning away American clients. Not to even mention many American financial institutions in Hong Kong, like JP Morgan, have not accepted US clients in YEARS!

Yep, flies on shit! This could have been you SCB!
Wow, talk about a huge piece of market share! If Standard Chartered had the balls, all of those wealthy US clients would be all over Standard Chartered like flies on shit! However, this is the real world, and in the real world Standard Chartered knuckles under like every other cowardly bank even though they are in the best position to do the opposite. Well, on the bright side, at least they are not rolling over on clients like those Judas Swiss banks!

Solution? A second citizenship or possible expatriation,  perhaps. One could also form a company that of course is not majority own by American citizen... LOL Hang on tight, the next few years is going to be a bumpy ride... :-D

Thursday, September 8, 2011

Europe's war on free speech claims new victim, designer John Galliano.

PETA hates him, another great reason to buy Galliano

A few days ago I was in Tria one of our local malls here in the city of Burgas. Among all the restaurants, cafes, jewelers, and stores offering the latest in Eastern European fashion, I came across a store selling a dress I really liked. The dress was sort of a yellowish color which had a newsprint superimposed on it. It was also made of silk. The dress had a low plunging drape style neckline I really love. The dress was made by flamboyant yet genius designer John Galliano.

Of course seeing this dress, I really loved it and went to try it on. The front of the dress was absolutely fantastic, plus I have a pair of Jimmy Choo's that would look great against the print. However, when I looked at the back of the dress, I was under impressed with the way this dress sat. This factor coupled with the cost, I opted not to buy the dress. However, I was left with the feeling I should have bought it and taken it in for tailoring. There is still time to do so. In the end, I will probably wind up buying the dress and taking it to a tailor.

No, this blog is not going to be about me yammering on about some dress that I should or should not buy. If you wanted to hear about this subject, you could just as easily strike up a conversation with your wife or daughter then wait for your eyes to glaze over. I am simply setting the mood for what I really want to talk about, FREEDOM OF SPEECH!

Many people back in the US, really don't think too much about freedom of speech. I guess it is one of those things like money, if you got it, its just not something you talk about much and you assume everyone else has it too. However, the reality is much different. Most countries do not have freedom of speech enshrined as a right to citizens. Many developed western nations pretend to have free speech. Yet, these same countries have laws against so called "hate speech" that are punishable by criminal prosecution! Prosecution that is punishable by fines and incarceration.

Fortunately for me, considering I am a tad uncouth and many times offensive, Bulgaria, a former communist country, where in the past you could simply "vanish" for saying the wrong thing, now enjoys the same free speech that we have back home in the US, yet, most of Europe has laws against. Viva Bulgaria! :-D

Similar to the dress I mentioned
So how is my rambling about the dress relevant to the topic of free speech? John Galliano, the designer of the dress I want, knows why. Today a French court just convicted the designer for making anti-Semitic comments in a Paris cafe! Hate speech, not just a fashion crime anymore in Europe! Now, it is now a real crime just like theft or destruction of property.

Fortunately, the judge in Galliano's case, just handed out a token sentence. The French court gave him a suspended fine of 6,000 euros ( about $8,415) but he was not sentenced to jail time. The victims (if you can call them that) were awarded one symbolic euro each. Yes, I know what you are thinking because I am thinking it also, "hands across France, justice was served by making this man who is a millionaire, with his bad words, pay a whole euro to each of these victims. What a waste of government money!" LOL

All jokes about this stupid sentence aside, Galliano could have had the book thrown at him! A first offense of hate speech in France is punishable by a maximum of six months in jail and a fine of 22,500 euros ($32,410). A side from that, this guy now has a criminal record in France because of this conviction. Now, Galliano, because he used some awful and unpopular words, now shares the likes of a thief, batterer, or even a rapist.

I am not saying I think it is a good thing to go around saying hateful things to people. Hell, John Galliano was fired from Christian Dior for saying these things. Which is fine, if Dior doesn't want an anti-Semite representing their brand, then they shouldn't have him on their team. I also think people are just in shunning someone who says things like this, that's perfectly fine also. Plus, there is also the option of boycotting Galliano completely based on these terrible statements. However, criminalizing these statements, or any statements, is just madness!

Plus, there is a little thing I would like to call "person responsibility" of the so called victim. If someone is making offensive statements in a place like a cafe, you can always ask the manager to tell the offender to leave. If the manager does not, then leave the cafe and do not pay the check. Why would you stay in an establishment only to listen to awful words you find offensive? This is something I never understood. 

Free speech is so last season in Europe!

Galliano is not the only person who has been convicted of such non-sense. Like for instance, Brigitte Bardot, has been charged with the same thing and convicted 5 times! Each time she received a fine, the last fine alone was 15,000 euros ($20,837). Also, France is not the only country in Europe that has laws against hate speech. Laws against this type of speech in Europe exist in Belgium, Croatia, Denmark, Finland, Germany, Iceland, Ireland, Netherlands, Norway, Poland, Serbia, Sweden, Switzerland, and United Kingdom. This is even failing to mention the countries that also have laws against denying the holocaust and ban books like Mein Kampf. Plus, The European Union's Framework decision on Racism and Xenophobia states that all of these things "should be crimes in EU member states"!

 I wish people who agree with these hate speech laws, would think long and hard for a minute. If certain speech offends you, get the hell away from it so it no longer bothers you. If a you find a book offensive, do not buy it and get like minded people to boycott it. The second you advocate for laws against hate speech, you advocate against any speech. Once you ban one type of speech, where will it end? Who is to say that laws will not be created to make it a crime to criticize your government? Who is to say that laws will not be created to ban any offensive content and who will be the one to decide what is considered offensive?

Things always start out with good intentions, like making laws against certain types of speech so someone's feelings don't get hurt. However, the road to hell is paved with good intentions too.

Thursday, August 4, 2011

Russian PM Putin calls the American economy "Parasitic": How is this incorrect?

Can someone please tell me how Putin is incorrect on any of this? As a person who is an American who lives off of American money in a foreign country, I truly feel the ill effects of the US not keeping its shit house in order. Every time I buy anything here in Bulgaria, everyday it becomes more and more expensive due to the decline of our currency.

To put this into perspective for you, I was in Switzerland almost last summer. During this time I was there, 95Cents US could get you 1 Swiss Franc. Which was favorable. Now, because of the decline of the US currency and irresponsible Federal Reserve policies, if I were to go back to Geneve today, it would cost me $1.30 to buy 1 Swiss Franc. This means the dollar is worth one third less than it did only one fucking year ago!

Russia currently own $120 billion in US treasuries. This is a lot of money for Russia considering this is 3.37 Trillion Rubles. With the decline of the currency and the low interest rates on treasuries, Russia is actually losing money at this rate. Plus, with The Federal Reserve considering further easing of the money supply (printing more money and making treasury purchases), the treasuries that Russia and other countries own, will be worth less than they paid for them.

Right now, yields on short term treasuries are negative. Meaning it actually cost money to own short term US Treasuries. This is because of the awful interest rate and the downward decline of the currency.

This is why I think the statement of calling the US economy parasitic is VERY CORRECT, because of these long standing lies about the US and its economic practices. Such as, the lie that the US has a triple A credit rating (When it actually should not because debt to GDP is over 100% yet there has been no real measures to curb deficit spending. No other triple A rated country has as high of a debt to GDP ratio as America.). The second terrible lie is the phony rule stating that if one is looking for stability, US Treasuries are among the surest of things. This is false and the negative yields on short term US Treasuries in indicative of this.

These lies are parasitically spread by American propagandist who want to keep other nations lending so America can keep on living way above its means.

Sorry, but Russia is owed money. Like anyone who is owed money or has made a substantial investment, they demand a return! Let's say YOU owned some shares in a company. Let's say this company has been losing a lot of money and your shares are worth a lot less than you bought them for. Wouldn't you also be at the share holders meeting telling the company to get there shit together? Yes, you and everyone else would be doing this. No one wants to lose money. So how can you blame Putin?!

And do not even think for a second what I am saying is anti-American. I am so proud of being American and I am VERY NATIONALISTIC! However, I am a realist, who knows that American economic policy in its current state, is completely asinine and just plain backwards! Can we please get back to our old economic glory by not borrowing trillions which puts us at the mercy of shit hole nations like Russia and China?!

Also on a side note, Fox News lost some of my respect from this piece! Instead of making a rational argument they pull immature crap by showing a shirtless picture of Putin with his horse trying to make him look bad. Who gives a shit about the fact he has a horse and does not have a perfect body? This is the same immature crap liberal news outlets perpetrate towards conservatives because they have nothing to argue against something that is completely true. How sickening and childish that they would stoop to these levels!

Wednesday, August 3, 2011

Will the real Mitt Romney please stand up?

Mark your calendars as RINO season is only 6 months away! Oops, sorry, I mean The Republican Primaries. Of course, already many have thrown their hats in the ring. I could write about which candidates I am favoring so far, but I am not. Those who know me best already know who I like and for those who don't, I have a much more important message that needs to be addressed. This message is who you should NOT even consider voting for and why.

Many candidates would make my list of who not to vote for. However, today I am going to single out the worst one.... Mitt Romney! What is funny is that if you first look at Romney on the surface, he seems like a natural choice as a Republican candidate.

Romney and his cronies, I mean supporters,  would like to portray Romney as a successful business man with the political experiences to put America on the right track. They would also like to portray him as a religious man, with strong conservative, pro-family values, yet, a guy who is a hipster. A cool guy who wears skinny jeans from The Gap and even knows the words to the coolest songs of our times like "Who let the dogs out?" (Lord, help me, I can not say that while keeping a straight face. LOL) They even go further to claim Romney as a man's man, who is an avid hunter, lifetime NRA member, and a guy who attends NASCAR events.

Wow, sounds like a real conservative dreamboat, right? :-D Well, this would strongly depend on which incarnation of Mitt you are getting, because there are many. Some like to refer to Romney as "Multiple choice Mitt", or even a flip-flopper. I believe it was Edward "Ted" Kennedy who coined the term "multiple choice" when referring to Mitt. Kennedy said, "I am pro-choice. My opponent is multiple choice." Whoa, the pot calls the kettle black. As funny as names like "Multiple Choice Mitt" are, they are not too far from the truth.

Let us further examine this "multiple choice" using words straight from the RINOs mouth. Oops, I did it again, I mean HORSES mouth.

Mitt Romney on bail outs:

  • "The TARP program... was nevertheless necessary to keep banks from collapsing in a cascade of failures."
  •  "When government is... bailing out banks... we have every good reason to be alarmed."

Okay, so which is it Mitt?

Mitt Romney on stimulus:
  • "The all-Democrat stimulus that was passed in early 2009 will accelerate the timing of the start of the recovery..."
  • "The all-Democrat stimulus passed in early 2009 has been a failure."
Interesting, so did this stimulus accelerate the recovery or did it result in a failure?

Mitt Romney on "Don't ask, don't tell":
  • "When I first heard of the Don't Ask, Don't Tell policy, I thought it sounded awfully silly."
  • ''Don't Ask, Don't Tell has worked well."
Hmm, he seems unclear on DADT also...

Mitt Romney on raising children:
  • "It does take a village."
  • "It takes a family."
Gee, with flexible morals like this, I hope you have very little part in raising children. They may grow up to be as confused as you.

Mitt Romney on capital gains tax:
  • "I believe the tax on capital gains should be zero."
  • "It's a tax cut for fat cats."
Sorry Mitt, but not everyone is a rich, fat cat, business man like you. May who own businesses are far from being fat cats.

Mitt Romney on his "Romney Care", his government run, state health care mandate (the one Obama Care was modeled after):
  • "...the costs of health care will be reduced."
  • "We were unable to deal with... health care costs in Massachusetts."
I am confused on this one also, did it reduce health care cost or make them sky rocket?
  • "If Massachusetts succeeds in implementing it, then that will be a model for the nation."
  • "What works in one state may not be the answer for another."
So how is this a model for the nation exactly if it works only in some places?

Mitt Romney on The National Rifle Association (NRA):

  • "I don't line up with the NRA."
  • "I'm a member of the NRA."
So you became a lifetime member of the NRA in 2006 but yet you don't line up with them? Am I missing something here???

Mitt Romney on Osama bin Laden:
  • "It's not worth moving heaven and earth spending billions of dollars just trying to catch one person."
  • "He's going to pay, and he will die."
Mitt Romney on Ronald Reagan:
  • "I'm not trying to return to Reagan-Bush."
  • "Ronald Reagan is... my hero."
Why would someone not want to be like their own hero?

Mitt Romey on defending his actions of strapping his dog in a kennel on the roof of his car while driving:
  • "This is a completely airtight kennel mounted on the top of our car."
  • "They're not happy that my dog loves fresh air."
That's right, you tell 'em Mitt! Everyone loves the fresh air of an AIRTIGHT compartment!

Mitt Romney on stem cell research:
  • "I will work and fight for stem cell research."
  • "In the end, I became persuaded that the stem-cell debate was grounded in a false premise."
Maybe you just meant you will work and fight to end stem cell research? Should I give you the benefit of the doubt here?

Mitt Romney on Roe VS Wade:
  • "Roe versus Wade has gone too far."
  • "I believe that since Roe versus Wade has been the law for 20 years we should sustain and support it"
Roe V Wade has gone too far! Perhaps this is in reference to how expensive an abortion is these days. Yes, I am sure this is exactly the reason why your state health care law offers abortions at a $50 co-pay? Yay, abortions for all at affordable prices, right Mitt?

Mitt Romney on carbon emissions:
  • "These carbon emission limits will provide real and immediate progress."
  • "Republicans should never abandon pro-growth conservative principles in an effort to embrace the ideas of Al Gore."

Mitt Romney on immigration:
  • "Those... paying taxes and not taking government benefits should begin a process toward application for citizenship."
  • "Amnesty only led to more people coming into the country."
Okay, I really think I understand Mitt on this one. So the illegal immigrants who would cut your lawn should receive citizenship as long as they pay their taxes and not take benefits... So long as they to not talk any of their buddies into coming over. Yes, Score one for multiple choices!

Mitt Romney on his hunting experience:
  • "I've been a hunter pretty much all my life."
  • "Any description of my being a hunter is an overstatement of capability."
Okay, not sure where to begin with this one...

Mitt Romney on minimum wage:
  • "I think the minimum wage ought to keep pace with inflation."
  • "There's no question raising the minimum wage excessively causes a loss of jobs."
I think I understand here, let's raise minimum wage at the expense of jobs!

Mitt Romney on being a flip-flopper:
  • "I'm a strong believer in stating your position and not wavering."
  • "I changed my position."
By golly, I think I got it, in other words, you do not waver from being a flip-flopper!

Mitt Romney on gun control:
  • "I will not support any gun control legislation"
  • "I supported the assault weapons ban.'
Okay enough already, I am getting sea sick from all this swaying!

Another thing about Romney that makes me want to throw up in my mouth was when he was recently in my native Florida on June 16. This is something I completely find indicative of Romney's character also.....

On June 16th, Romney was in Tampa which is close to my other home in the Orlando area. Romney was at a Buddy Brew Coffee shop sitting at the head of the table talking to unemployed Floridians about the difficulty they are having. (Unemployment in my home state of Florida is very high. It is over 10% statewide and in many counties it is over 13%!) After these people finished with their tales of woe, Romney chimed in “I should tell my story,” Mr. Romney said. “I’m also unemployed.... I have my sight on a particular job... I may be unemployed for longer than I’d like.” (Obviously, this is a reference to him running for president.)

So, 5 days later on the 21st of June, Romney is again out on the campaign trail. A little boy walks over to Romney and hands him a $1 bill folded in some type of origami shape. The little boy tells Romney this is for good luck. Romney not wanting to take the little boy's money gets his wallet out. Then, our "UN-EMPLOYED" Mitt Romney has so many hundreds in his wallet that he could not even find a small bill to give to the boy. One of Romney's aids found a $5 bill and gave it to Romney to give to the little boy.

Boohoo, for our "unemployed" millionaire who has a wallet full of hundreds. OMG, what a schmuck!

Sunday, July 31, 2011

Debt ceiling: Why it is making me bat shit crazy.

Recently, there has been all this hullabaloo over increasing the debt ceiling in the US. I have honestly been trying to avoid this like an infectious disease. However, the debt ceiling sickness has spread to pandemic levels thus it has become impossible to avoid.

Everywhere you turn, no matter what news outlets you read/watch, everyone, everywhere is talking about the debt limit pseudo-crisis in the U.S. So I figure the best defense to this sickness, is falling victim to it (or in my case talking about it), in the hopes I will build up immunity and never catch it again.

I do understand the concern over increasing or not increasing the debt limit, this concern is natural. However, what bothers me the most over the debt ceiling debate is the propaganda and scare tactics used not only by the media but by our own leaders. When I say by our own leaders, democrats are not the only culprits!

Let me start by saying first and foremost, America has a spending problem, not a revenue problem. Currently, gross domestic product in the US is around $14.55 trillion. Not too shabby considering the GDP of the U.S. is the highest of ANY single sovereign nation. If you wish to lump together the European Union's combined GDP, then U.S. would be the second highest. As of today, July 30th, 2011, the national debt stood roughly at $14.66 trillion. This means U.S. national debt is 99.25% of GDP. Though honestly, many estimates have concluded that debt in actual terms is well over 100% of GDP.

Currently in fiscal year 2011, total annual revenue is project as roughly $4.5 trillion. For this same year, total government spending amounts to about $6.2 trillion, This would mean the annual budget deficit for 2011 is some where in the neighborhood of $1.7 trillion. Wow, expensive stuff that can add to our nations debt quickly. With debt like this left to it's own devices, would absolutely require an increase to the debt ceiling.

Boehner and Reid have both proposed bills to help with the nation's debt and debt ceiling dilemmas. Both Boehner and Reid's bills suck. In my opinion they are hardly a drop in the bucket. Honestly, both bills are practically identical. To me voting on either would be like voting, would rather contract Syphilis or Herpes? They both are equally awful, both are STDs but are different diseases. Here is what I mean:

[1] When excluding spending on both wars, both bills roughly cut spending by $900 billion. Boehner's cuts- $917 billion, Reid's cuts- $927 billion.

[2] To break this down further, Boehner's bill would cut discretionary spending by $756 billion and save $156 billion in interest on the debt. Reid's bill are $752 billion and $153 billion. Not much of a difference here either.

[3] Both Reid and Boehner are supporting similar increases in the debt ceiling. Boehner's bill would increase the ceiling by $2.5 trillion with a total of $2.7 trillion in cuts. Reid's bill would raise the debt ceiling by $2.4 trillion, with $2.2 trillion in debt reduction. Again, not one is not too far off from the other.

Okay, now for what makes Syphilis different from Herpes:

Boehner's bill would only raise the debt ceiling twice. A first debt limit increase would be $900 billion. The second debt limit increase, and the real doozy, would only occur after congress enacts a balanced budget amendment.

Reid's bill would immediately raise the debt ceiling by $416 billion. Then the debt ceiling would be raised two more times after this both at $1 trillion each.

Solution? Yes, I have one and it does not even require a debt limit increase at all. My annual budget would be as follows:

  • Social Security- $0.7 trillion
  • Medicare- $0.6 trillion
  • Education- $0.7 trillion
  • Defense-  $0.5 trillion
  • Welfare-  $0.3 trillion
  • Miscellaneous- $1.1 trillion 
  • Total government spending for the year- $3.9 trillion

I can hear the moans and groans now. "This is peanuts, in which one could almost equate this to an austerity budget." Austerity budget you say? Wow, I wasn't informed of these austerity measures back in 2003 when this was our actual government spending. :-D Government spending in which was FUNDING 2 WARS, just as we are today.

 I mentioned earlier that direct government revenues are currently at $4.5 trillion for 2011 without any tax increases. If we applied the spending levels I mentioned, which were the same levels from 2003, we would have a budget surplus of roughly $600 billion dollars for the year. If we managed to maintain this surplus for 24 years, and if we stopped borrowing which would keep our national debt the same, we could completely pay off the whole $14.66 trillion national debt, without doing a anything additional.

Also, to speed up the process of paying off the national debt, the government has tons of assets it could sell. For starters, the Strategic Petroleum Reserve has almost 727 million barrels of crude oil. The current price of crude oil as of today is $95.86 a barrel. If these barrels were to be sold today, the sale would total around $70 billion.

Also, the Outer Continental Shelf has an estimated 59 billion barrels of crude oil. I know obtaining this oil would be very costly and would require a lot of effort. However, the government could sell this land for a substantial amount to companies who would love to drill for this oil. This should surely produce a lot of revenue.

Another thing, the U.S. government has a ton of property and buildings. I read a report in Reason that the federal government owns 14,000 buildings and structures that were simply considered excess. There are even 55,000 that were underutilized, or simply not utilized at all! Those can also go. ;o)

Debt ceiling debate, so many common sense solutions, yet, so little common sense to implement them.

Wednesday, June 15, 2011

IRS to expats and foreign account holders : "Freeze! This is a stick up!"

Recently, the IRS has announced a new voluntary disclosure program targeting foreign account holders. This piece of crap is called The 2011 Offshore Voluntary Disclosure Initiative (OVDI) which expires August 31, 2011. This is the second program of this type in recent years. This disclosure program was "designed to bring money back into the U.S. tax system and help people with undisclosed income from hidden offshore accounts get current with their taxes." How generous of the IRS to take time out of their busy schedule to "help" US citizens. :-D

Here is the low down on OVDI: By August 31st, US citizens who hold foreign accounts are being allowed to disclose them, paying penalties that are lower than if the IRS had caught them "red-handed". The "new lower penalties" include of course payment off all back taxes, interest for up to 8 years, and standard delinquent fines. Also as a gesture that the IRS is attempting to help you, they will take ONLY an additional penalty of 25% of the highest annual balance you had for any one year between 2003-2010.

OVDI also is targeting Americans who live outside of the US with foreign income in which taxes have not been filed in the US. The US is one out of only 2 other countries who requires its citizens who work outside of the country, to pay taxes in the country they are a citizen of, yet do not live in!

When I bring this topic up, usually some anti-wealth, moderate socialist tries to fight me tooth and nail. Generally they say things like, "This is a good thing as it will scare these greedy fat cats into paying their fair share! These are rich people who are just trying to avoid paying taxes anyway, so really the punishment is too generous!" Here is the fallacy of this argument:

For instance, let's say you are some Joe "six pack" American from ANYTOWN, USA. Joe is not a fat cat, he is a truck driver who makes $35,000 a year. About 7 years ago Joe's grandmother died. Joe's Grandmother was born in and lived in Italy, where she had a bank account. After her death, Joe was lucky enough to inherit grandma's Italian bank account. An account which contained $55,000 of money grandma earned, saved, and paid taxes on throughout her life. Joe being the simple guy he is, knows he has this account, but doesn't really know how to access this account, so he let's it sit. The bank the account is in is a very stable bank in Italy and gains very little interest.

Joe hears the IRS is making some changes and is about to go after foreign account holders. Then he hears about OVDI and figures "well, gee, let me declare this account before I run the risk of going to jail." So using this new "generous" disclosure program, with back taxes paid, 25% penalty paid on the highest annual balance, interest for the 7 years, and standard delinquent fines, Grandma's dying gift to her grandson Joe, is completely gone!

What else I find disgusting is a story I had read in The Financial Times about an American expat by the name of Cindy living in Germany. Cindy had heard about the disclosure program being offered before the IRS was going to hunt full-force for American's with foreign income and accounts. Mind you Cindy has lived in Germany for 30 years.

After disclosing her information voluntarily to the IRS, Cindy was informed that because her foreign income was under $91,500 a year, she did not actually owe any taxes. However, since she did not file a tax return for all these years, even though she did not owe any taxes AND has not lived in the US for 30 years, she must pay a LARGE penalty. Cindy was so frustrated over this, she turned in her US citizenship.... And I can't say I blame her based on principle.

Clearly both our Joe "six pack" and "expat" Cindy are not rich fat cats. Nor were they trying to "evade" taxes.

The 2011 Offshore Voluntary Disclosure Initiative is really just the calm before the storm......

Last year, The Foreign Account Tax Compliance Act (FATCA) was passed. This little gem is a new tax law that will require overseas institutions (such as financial institutions, investment entities, and many other organizations that operate on a global basis) to report their American clients to the IRS.

I know most people are thinking "Yeah, don't hold your breath. You can't enforce American laws in other countries where they have no jurisdiction..." In most cases, this would be correct. However, the US government will force institutions to comply by withholding 30% of any US source income including gross sale proceeds. This law will take effect in 2013.

Many foreign institutions are fighting this new law tooth and nail. Hell, Canada is already asking for an exemption to this new law. Chinese institutions have simply responded by saying, "don't talk to us, go talk to government...." :-D And who can blame them? Searching their records for addresses, citizenship documents, etc proving citizenship of any account holders with more than $50,000 is very expensive. In Germany alone, if all German banks were to comply, it is expected that the costs to implement FATCA will reach €10 billion! Plus, in many countries the implementation of FATCA would conflict with current privacy laws.

Wow, that sounds like a real no brain-er... Let's put on our logic hat for a second and ask: Why would ANY institution spend a large amount of money to do something that will not just make them lose money but clients too? Why would any institution spend a large amount of money to be in violation of local laws but compliant in laws of a country that they do not have a large presence in?

The consequences of these actions would be dire, not just to these institutions but to America itself. The reason why is that many of these overseas institutions will pull out of the US market in order to avoid the 30% withholding for non-compliance. To further combat the withholding, these banks will probably stop offering US dollar accounts. This is because all US dollars that go into a bank, even a foreign one, must originate from a US bank somewhere down the line... Which means that the 30% withholding could still be applied. Could you imagine what kind of consequences would arise from foreign banks in mass dumping their US dollars?!

Plus, think of the actions of the US clients... First thing any US client of an overseas bank or investment entity would do is move on over to a foreign bank that offers only foreign investments. The next thing these US clients would do is dump all American investments to avoid this law. Sorry but US investors may be patriotic but not when it come to their money. People will protect their assets at all cost even if it risk doing damage to the US economy by opting out of American investments. People are concerned with what is theirs first, these are the facts of life.

As a person who spends a great deal of time out of the US on what has become a consistent basis, I ask the question, why would a government alienate the very people that help keep the economy afloat the most? Americans who make money outside of the US, generally put that foreign money into the US economy because that is the land that we have a home at!

If the US economy is a person struggling to keep its head above water, alienating foreign institutions and US citizens with foreign assets, will become the water that drowns it.

Friday, June 10, 2011

Security Concern: iCloud the big Cumulonimbus!

In case you have been living under rock or in a cave recently, Apple champion of the iPad, iPod, and iPhone, is now pushing it's new (well not so new, but more of a re-package of something existing) "hard drive in the sky," iCloud. Apple boasts:

"iCloud is so much more than a hard drive in the sky. It’s the effortless way to access just about everything on all your devices. iCloud stores your content so it’s always accessible from your iPad, iPhone, iPod touch, Mac, or PC. It gives you instant access to your music, apps, latest photos, and more. And it keeps your email, contacts, and calendars up to date across all your devices. No syncing required. No management required. In fact, no anything required. iCloud does it all for you."

As usual for anything Apple makes, people say things like "Wow! It's so wonderful. This product will revolutionize the industry if not the world." And if you are an Apple junkie, that is fine, keep on eating from the orchard.

People who know me best generally know I hate Apple. And why shouldn't I? Apple is rotten to the core. This is because anything Apple is always proprietary, thus if you buy one thing from them, you must buy everything from them. This makes you a slave to your device because it limits you in your options of what you can buy for your device. So you can either get rid of your Apple device and buy something not Apple thus being out more money, or keep it, then by default you must buy everything from them. Not very "free market" now is it?

Let me spare you my anti-Apple politics and talk about what my real concern is over the iCloud, SECURITY.

Now "cloud computing" is nothing new. For years, computer users have been storing data online for later retrieval when needed. The difference with iCloud and current "cloud computing" is that instead of simply downloading this data, you can use it and modify it live with out the timeliness of actually downloading it to your tablet, cellphone, computer, etc. Plus, iCloud automatically syncs the data from your device to the cloud.

Functionally, this sounds like a fantastic idea! However, we are all aware of the common stories we hear/read of data being intercepted or of data stored online being hacked/compromised.

We have all received those emails before of "being emailed by our email provider" asking that we email back our username and password or our accounts will be deleted. Obviously a phishing scam, most of us are smart enough to catch this, many are not. Also, social engineering is another very popular means to steal usernames and passwords.

These tactics could easily be used to steal your log in info for your iCloud. However, the iCloud being compromised is much worse as one could have all kinds of private files and documents sitting in the computing cloud for the picking. Where as your email being compromised may at worst have spam sent from it or prove you have been ordering Viagra online. :-D

I know that we all run the same risk of being hacked online as we do with the iCloud. However, most websites we log into to use tell you this, offer advise on being more secure, and even attempt to protect your security themselves. Apple is not offering this same courtesy. Andrew Storms, Director of Security Operations for nCircle, warns:

"Apple's iCloud announcement is missing enterprise security content, and we saw the same thing with the iPhone introduction. They left almost all of the enterprise level security and compliance questions about iCloud unanswered."

He continues:

"It's all too easy to imagine a Sony-scale enterprise attack that leaves IT security teams holding the bag while iCloud ‘grows into' enterprise security requirements."

Wow, scary stuff!

What about businesses who keep sensitive data? I am not saying that these businesses will be using the iCloud themselves, but more and more businesses allow employees to use personally owned devices for work. A question that any business should ask is what assurances are being given that business data is not being sent up and stored in the cloud during a sync?

The convenience of having documents automatically sync to your iCloud aside, what happens when the business wants to delete that information? If the file is removed on one platform, what assurances does the organization have that the file is also eradicated on other devices, and from iCloud itself?What happens if an iCloud users' account is compromised with these documents on it? This could be real trouble for businesses!

Okay everyone, it is time to get out your tin foil hat, it's conspiracy time!

We all know we live in a world where certain nations, ( cough, cough, CHINA, cough!) sometimes monitors, censors, and even persecutes it's own citizens. In case some are not familiar, recently an attack was launched on Google's Gmail which has originated from China (including several other high profile attacks one of which on the Canadian government). During the attack on Gmail, many usernames and passwords were compromised. It was believed to be an attempt from China's government to monitor and censor citizens.

In China, many citizens have been jailed for leaking information about the country's censorship activities. China recently jailed a journalist who leaked information about China's attempts to censor coverage of the anniversary of the Tienanmen crackdown. Mind you, Google created a censored search engine for China. Inside China, if you google Tienanmen Square, only tourist images of Tienanmen Square and the Forbidden City across the street pop up.

So if these are common tactics of China, think of the repercussions to citizens once China now not only has access to personal email, but all the data from devices stored in the iCloud. So with these automatic iCloud syncs, can you imagine what kind of "evidence" China will find and use to persecute citizens?

The scary thing is China is not the only nation with these practices!

iCloud has the possibility to be a fluffy cute little Cumulus, or a big stormy, lightening producing Cumulonimbus.