From Switzerland With No Love - Wegelin Bank Says Goodbye To The U.S.

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DrKrbyLuv's picture
DrKrbyLuv
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From Switzerland With No Love - Wegelin Bank Says Goodbye To The U.S.

  Link to the Complete Commentary

Farewell America

The agreement between the USA and Switzerland under which Switzerland is to provide administrative assistance with regard to 4,450 UBS clients suspected of tax fraud is, in our view, remarkablein three ways. Firstly, we note the way both parties are dressing it up in the aftermath of the battle. Everyone is talking of a “success”. The IRS, the American tax authority, surely rightly, for it has got what it wanted, namely access to alarge number of specific client names, combined with persisting uncertainty on the part of all the others as to whether they are among those names.

It is astounding, and this is the second interesting observation, how completely naturally those who claim the moral high-ground rush to join forces with the authorities and their financial requirements.  At the risk of once again winding up certain specialists in business ethics, let us briefly recall the sort of tax authorities we are dealing with, and the sort of state they serve: a country that, over the last 60 years, has unquestionably been one of the most aggressive nations in the world.

The USA has fought by far the largest number of wars, sometimes with, but mostly without a UN mandate. It has broken the international laws of war, maintained secret prisons, and fought an absurd war against drugs, with serious consequences both abroad (Columbia, Afghanistan)
and at home (according to reliable sources, the tentacles of the narcotics mafia now reach well into political circles).

With breathtaking moral duplicity, the USA maintains enormous offshore havens in Florida, Delaware and others of its states. The moralizers have joined sides with a nation that still makes extensive use of the death penalty, and that has a legal system under which lawyers can get rich on the misfortunes of their clients. Liability cases often end in verdicts with exorbitant damages, which makes business activity extremely risky, for medium-sized enterprises in particular.

The moralizers provide intellectual support for a country that allows its infrastructure to collapse, and then stuffs convicts into hopelessly overfilled jails, after what are not infrequently dubious proceedings. They fund a nation that tolerates – or rather, causes – regular crises in the global financial system that it manages.  A country whose underclass enjoys neither the benefits of an adequate education, nor a halfway
functional healthcare system; a country whose economic system is increasingly inclined to overconsumption, and in which saving and investing have increasingly become alien concepts, a situation that has undoubtedly been one of the driving forces behind the current recession, with all its catastrophic consequences for the whole world.

The USA's Achillies heel

A look at who are the most important creditors of America’s highly indebted public finances reveals something truly remarkable. It is the public authorities themselves!  A study by Sprott Asset Management, a Canadian asset management firm distinguished for its intelligent macroeconomic analyses, showed that in 2008 over 4 trillion of the total outstanding public debt of some 10 trillion, or around 40 percent, was in the hands of socalled “intragovernmental holdings”.

These holdings include social welfare institutions, whose assets, accumulated in order to be (halfway) able to meet future liabilities, are invested in special Treasury debt instruments, known as “intragovernmental bonds”. In other words, the paying recipient of, say, Medicare, the American health service, is an indirect source of finance for the Treasury.  Unusual, remarkable, or rather, alarming?  Debtors are now simultaneously creditors.

It is obvious that, forabout 30 years now, additional growth has only come at the cost of ever-higher debt. Today, every dollar of growth comes with about 4 dollars of debt.  And nota bene: we have not yet discussed the quality of the growth.  Over the last 15 years it has, as we know, increasingly come mainly from consumption and state expenditure; investment in the USA is extraordinarily weak. Far too little potential for the future is being created.

The financial crisis has given momentum to anticapitalist, and thus anti-market forces in the USA (and elsewhere).  That promises little good for this part of the world, but it makes it somewhat easier for investors to take their leave. Our bank is in the process of recommending our clients to exit from all direct investments in US securities.

The USA will remain the unquestioned military power and also an enormous repository of debt and other problems. Because they are painful, and there is always an inclination to shift the blame for them onto third parties, redimensioning processes always harbour the potential for aggression. Switzerland is currently experiencing just this. But it won’t end there.

Which is why we are well advised to take a general farewell of America.  This will be painful, for the USA was once the most vital market economy in the world.  But for now, it’s time to say goodbye.

 

LogansRun's picture
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Re: From Switzerland With No Love - Wegelin Bank Says ...

Is this a letter sent to a paper?  Or to clients?  How large is this bank?  Are they not allowing US Citizens to have accounts there any longer?  This letter is OUTSTANDING!!!!  I'm absolutely astounded by the balls of this bank to print something like this!  Astounded in a positive way BTW!  Can I be a client?  If so, I may give them a call tomorrow and transfer all of my "funny money" to their keeping.  

Thanks Larry!

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Re: From Switzerland With No Love - Wegelin Bank Says ...

Hello LogansRun,

The letter was sent to their clients.

Here's what Swiss Info.ch had to say about the story:

Wegelin bank to pull out of US

Swiss private bank Wegelin announced on Tuesday that it is to stop doing business in the United States.

The St Gallen-based bank, Switzerland's oldest, said the decision had been taken in response to stricter measures introduced in the US against tax dodgers and planned changes to estate tax, which would make some non-US citizens liable to tax if they inherited US securities.

In a letter to investors it said Swiss banks were likely to find themselves in an untenable position, as they would be expected to know which clients were liable to pay US tax – "an impossible undertaking", given the lack of clear definitions in the matter.

It added that it believes the US overestimates its attraction as a financial centre, and is advising its clients to get out of all US securities.

I agree with you, I don't blame them but I wonder if others will follow their lead.  I think the U.S. government is making it as difficult as possible for foreign banks to accept American clients.  The first several pages of the letter is tedious reading but it explains how complicated the new agreement is.  They contend that the agreement could affect even non-U.S. citizens, holding U.S. securities, to be liable under U.S. taxes.

The U.S. government is aggressively making it harder and harder to get money out of the country, unless you are Goldman Sachs or a big hedge fund, then you may hide all the money you want in the caymans and elsewhere in the Caribbean.

Our government knows the economy is tanking and they don't want the little people to escape a thorough looting by leaving.  As the U.S. continues to move towards tyrannical fascism many will want out and many others hold money off-shore in case an emergency exit is needed.

Welcome to the prison nation.

Larry

 

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Re: From Switzerland With No Love - Wegelin Bank Says ...

Looked them up - They're not really a big bank. 530 employees spread over 10 facilities, only managing some 20 billion US dollars worth of financial assets, but they are officially Switzerlands oldest bank, and have an outstanding reputation for being "Quality over Quantity", as they run and create various pensionplans and specialized funds for various client-defined purposes, as well as having a large IT infrastructure.

I don't know if it sounds strange, but when I read up about them, I don't feel like I'm reading about a bank, nor a hedgefund for that matter, more of a capital-management-fund. They are also officially called "Wegelin & Co", not Wegelin Bank, even if they do describe themselves as a private bank.

What is not mentioned in the OP is that they mention the US inheritance-tax as being a major cause of the small "decoupling" (What I'm calling this). The new laws passed by the US government states that if any person on the planet dies, even if not a US citizen, they have to pay inheritance-tax on any US assets (Treasuries, stocks in private companies like apple, google, etc......). In order for there to be absolute clarity about these issues to prevent fraud, the US IRS would have to gain complete access to all banking-information world wide.

It also doesn't mention all the massive slander against the US in the full article, with mentions of Madoff, publicly run Ponzi-Schemes and the likes for pages on end.

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Re: From Switzerland With No Love - Wegelin Bank Says ...

Well I disagree it's "slander against the US."  It's the truth.  If only americans would wakeup to it instead of reflexively defending what has become one of the great corrupt empires of world history.  

LogansRun, generally Swiss banks require $1M minimum, your personal presence (with all proper IDs/documentation in-hand), and a Swiss intermediary to open an account.  Check with safewealth group if you want an introduction to a bank.  They have non-bank options for less than $1M.

 

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Re: From Switzerland With No Love - Wegelin Bank Says ...

Spilldenmark,

Thanks for the clarification on the tax situation. 

strabes said:

generally Swiss banks require $1M minimum

Any ideas on how this could affect keeping PMs in a Swiss vault?

Larry

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Re: From Switzerland With No Love - Wegelin Bank Says ...

I think there are plenty of ways to keep PM in Swiss vaults....no $1M requirement.

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Re: From Switzerland With No Love - Wegelin Bank Says ...

This whole letter is kinda like the pot calling the kettle black, yes? I mean the last time I looked, the Swiss banks were in serious, self-inflicted trouble.

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Re: From Switzerland With No Love - Wegelin Bank Says ...

strabes said:

I think there are plenty of ways to keep PM in Swiss vaults....no $1M requirement.

Sorry strabes, I didn't phrase my question correctly.  I know that you may use Swiss vaults for PM accounts that are well below $1M, I hold an account with a lot less.  My question should have been could this new agreement affect Swiss vaults?

JAG said:

This whole letter is kinda like the pot calling the kettle black, yes? I mean the last time I looked, the Swiss banks were in serious, self-inflicted trouble.

UBS certainly has problems but I think Wegelin has weathered the storm well as mentioned by Spilldenmark:

Spilldenmark said:

they are officially Switzerlands oldest bank, and have an outstanding reputation for being "Quality over Quantity", as they run and create various pensionplans and specialized funds for various client-defined purposes, as well as having a large IT infrastructure.

Spilldenmark also hit on a key with the following:

The new laws passed by the US government states that if any person on the planet dies, even if not a US citizen, they have to pay inheritance-tax on any US assets (Treasuries, stocks in private companies like apple, google, etc......). In order for there to be absolute clarity about these issues to prevent fraud, the US IRS would have to gain complete access to all banking-information world wide.

In my opinion, the IRS has no business demanding world wide compliance to help them watch their captive citizens.  The IRS is the collection arm of the non-Federal Reserve.  They collect the money that citizens owe on the national debt.

BTW, is the IRS a government agency?  Why was it formed in 1913 along with the non-Federal Reserve?

Larry

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Re: From Switzerland With No Love - Wegelin Bank Says ...

Larry, no I don't think that would ever be effected.  US may outlaw NEW purchases in Switz, but there'd be serious trouble if they tried to confiscate legal assets from Switz.  Swiss vaults may stop doing business with new customers because the US is so fascist, but I can't imagine them asking existing US clients to pull out (assuming they're confident of the client's legality and have documentation indicating it).

Jeff, you're right about the global banks that happen to be domiciled in Switz because they are really just the same multi-national machines that our banks are.  But the true Swiss banks (some of the smaller cantonal banks) are in the best shape in the world.

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Re: From Switzerland With No Love - Wegelin Bank Says ...
JAG wrote:

This whole letter is kinda like the pot calling the kettle black, yes? I mean the last time I looked, the Swiss banks were in serious, self-inflicted trouble.

To the tune of 12 figures in crap Eastern European high-risk venture loans?

DrKrbyLuv's picture
DrKrbyLuv
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Re: From Switzerland With No Love - Wegelin Bank Says ...
Morpheus wrote:
To the tune of 12 figures in crap Eastern European high-risk venture loans?
You got that right Morpheus.  Massive loans were irresponsibly and fraudulently made.  But it may work out very well for the mega-banks; we're absorbing all the losses.  They quickly shredded the largest insurance company in the world, AIG, which we now own.  AIG wrote policies on lot's of bad paper that was masqueraded as AAA.
Anyways, they got their money and now we and future generations will pay the losses.
 
Larry 
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Re: From Switzerland With No Love - Wegelin Bank Says ...

Gold: Separation Before Liftoff

http://www.financialsense.com/fsu/editorials/willie/2009/0903.html

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Re: From Switzerland With No Love - Wegelin Bank Says ...
DrKrbyLuv wrote:

In my opinion, the IRS has no business demanding world wide compliance to help them watch their captive citizens. 

The evidence that the people behind the Fed are global players, who consider themselves above national sovereignty, could not be more obvious.

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