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 Broë, 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

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!

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.