Reckoning today from Baltimore, Maryland…
Gold down below $1,600! Is the bull market in gold finally over?
Nah…let’s change the subject.
Today, our hearts go out to the poor 1%…
Yes, dear reader, they’re blamed for the crisis…
They’re reviled, calumnied, and criticized…
They’re hunted by the tax men…
And now they are being shunned by the very institutions they most wanted to get to know.
US Millionaires Told Go Away as Tax Evasion Rule Looms
That’s what some of the world’s largest wealth-management firms are saying ahead of Washington’s implementation of the Foreign Account Tax Compliance Act, known as Fatca, which seeks to prevent tax evasion by Americans with offshore accounts. HSBC Holdings Plc (HSBA), Deutsche Bank AG, Bank of Singapore Ltd. and DBS Group Holdings Ltd. (DBS) all say they have turned away business.
Renato de Guzman, chief executive officer of Bank of Singapore Ltd., said in industry meetings of private bankers he attends in Singapore, not accepting US clients is “quite a prevailing sentiment”.
“I don’t open US accounts, period,” said Su Shan Tan, head of private banking at Singapore-based DBS, Southeast Asia’s largest lender, who described regulatory attitudes toward US clients as “Draconian.”
The 2010 law, to be phased in starting Jan. 1, 2013, requires financial institutions based outside the US to obtain and report information about income and interest payments accrued to the accounts of American clients. It means additional compliance costs for banks and fewer investment options and advisers for all US citizens living abroad, which could affect their ability to generate returns.
Most offshore hedge funds will no longer take US clients. Overseas banks don’t want their money either.
Why? Because there are over 400 pages of new regulations in the FATCA legislation. Way too much for a sane person.
Everybody wants to tax the rich, investigate them, crucify them…
But what did they do wrong?
In 1970, the top 10% of California’s taxpayers paid 28.2% of all the personal income tax in the state. Who complained? They were pulling their weight. Paying their fair share.
Now, 78% of all California’s personal income tax comes from these “rich” people.
But what, exactly, happened between 1970 and 2010 that shifted so much wealth and so much tax burden to the top earners? As you can see, it wasn’t just cutting their taxes – they’re paying more now than ever.
So what happened?
The whole system changed. Richard Nixon cut the dollar loose from gold. He may not have upset the world, but he changed the US economy. Instead of being an economy based on real money where real savings and real production increased real wages and profits, it became a smoke and mirrors economy…with money that you couldn’t trust…GDP growth that was largely phony…and zero real growth in wages.
From the ’70s to 2012, US stocks – measured by the Dow – rose more than 13 times. From under 1,000 to over 13,000. Here’s a question: how could America’s companies be so much more valuable…when their customers hadn’t gotten a penny richer?
Follow the money. From 1970 to 2008, the US money supply (M-2) grew from $624 billion to $8.2 trillion. Guess how much that is. It’s 1,314% – almost the same as the Dow.
The feds have the rich where they want them. They’re now pariahs…all over the world. Nobody wants them. Nobody likes them. Banks won’t touch their money.
Now, the feds can squeeze them for campaign contributions and tax money as hard as they want.
for The Daily Reckoning Australia
From the Archives…
Markets and the Aurelius Vision
2012-05-04 – Greg Canavan
How the RBA’s Interest Rate Cuts Cause a Housing Bubble
2012-05-03 – Nick Hubble
How a Cashless Society Promotes Tyranny
2012-05-02 – Dan Denning
2012-05-01 – Dan Denning
Risky Investments in a Market Full of Conmen
2012-04-30 – Bill Bonner