Will Repatriation Of The Offshore Cash Hoard Lead To A Dollar Surge: Goldman's Take On A Second Homeland Investment Act

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Fri, 01/21/2011 - 19:04 | 894761 buzzsaw99
buzzsaw99's picture

If I saw this coming it is priced in already. Even if they repatriat all that cash to the usa tax free the people won't see one thin dime. Debt repayment, bonuses, stock buybacks, advertising, political bribes, m&a. That money won't create one working class job nor will it do jack shit for anyone below CFO.

Fri, 01/21/2011 - 19:15 | 894786 unky
unky's picture

Thats not the point. The point is to keep the ponzi going for a while...

Fri, 01/21/2011 - 19:28 | 894802 buzzsaw99
buzzsaw99's picture

true dat.

Fri, 01/21/2011 - 19:43 | 894819 TheProphet
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Not the point. This money is not stored overseas in dollars. They will need to convert it into dollars and out of something else in order repatriate it.

If the amount is as high as $1T, this will certainly drive a short term demand for dollars.

I am sure The Bernank will take credit, saying this was his plan all along.

Fri, 01/21/2011 - 21:15 | 894999 DosZap
DosZap's picture

According to the article IT is in USD's.(Bulk)

My question,is repatriatng this many notes, would play holy hell with the M3 #'s.

How is that NOT Inflationary as all get out?.

Fri, 01/21/2011 - 21:51 | 895062 oygevalt
oygevalt's picture

If more is not being printed solely to meet demand, would it, really?  It is a kind of genius if this could actually work... run the presses, and just when dollar supply was overwhelming dollar demand, introduce billions in EUR/JPY/ whatevs that want to buy dollars to repatriate at comparatively low tax rates - which by definition will feed the Treasury's receipts.  This makes sense to me.  Whether it's a sustainable long-term policy is quite another question.

Fri, 01/21/2011 - 22:19 | 895104 JohnG
JohnG's picture

"However, most firms that might repatriate funds under HIA2 are Dollar functional and tend to keep the vast majority of cash assets in USD, regardless of tax juristiction."

Not according too this analysis.  I should think that would be the case for US concerns in any case.

Sat, 01/22/2011 - 08:30 | 895545 pcrs
pcrs's picture

you would say that if these companies hold these dollars abroad, but invested in US treasuries, all a tax holiday would do is that they sell the treasuries for dollars, repatriate the dollars and buy treasuries in a domestic vehicle, waiting for the tax rates to be increased again for that vehicle.

This is no extra demand for dollars and no extra demand for treasuries. Only when these companies had their foreign held money lend to foreign governments or invested in foreign companies, and they were waiting for an opportunity to borrow it to uncle Sam or invest it in an american company, only then would a tax holiday create extra demand for dollars. Otherwise it would just shift the title papers from a non US entity to a US entity.

Fri, 01/21/2011 - 19:00 | 894763 nope-1004
nope-1004's picture

USD strength?  Sure.... could happen.  In relation to what?  Some other failed currency?  I guess that's where Goldman is coming from.


Fri, 01/21/2011 - 22:22 | 895111 Quinvarius
Quinvarius's picture

I don't know why everyone has such a hardon for a strong Dollar.  Simple math tells me it is going to lose another 50% of its value based on what we did last year alone.

Fri, 01/21/2011 - 23:54 | 895240 cxl9
cxl9's picture

50% of its value relative to what?

Sat, 01/22/2011 - 06:44 | 895493 Chappaquiddick
Chappaquiddick's picture

The error account of humanity - PMs 

Fri, 01/21/2011 - 19:08 | 894773 plocequ1
plocequ1's picture

I dont know, Will it? 

Fri, 01/21/2011 - 19:10 | 894777 Dr. Doom
Dr. Doom's picture

I'm pretty sure the story about the "Great State" of California declaring a fiscal emergency never made news today.



Fri, 01/21/2011 - 19:15 | 894785 pslater
pslater's picture

Didn't make the news because its old news....

Fri, 01/21/2011 - 19:29 | 894804 buzzsaw99
buzzsaw99's picture

yep, heard it all before.

Fri, 01/21/2011 - 19:47 | 894824 Rockfish
Rockfish's picture

Now let the stealing begin in earnest.

Fri, 01/21/2011 - 19:34 | 894809 Atomizer
Atomizer's picture

IMF pitchman made another two year credit extension offer to Poland. FYI http://www.leap2020.eu/GEAB-N-51-is-available-Systemic-global-crisis-201...

Fri, 01/21/2011 - 20:31 | 894903 gwar5
gwar5's picture

Strength in dollar should be dip in PM. Buy the dip

Fri, 01/21/2011 - 20:35 | 894914 Cdad
Cdad's picture

My guess is that you will see a perfect USD buying dip on Monday  morning...based on some totally ginned up nonsense headline...which will be nothing short of the perfect lie.

This is one trade that is going to be, dare I say, very easy to put on.


Fri, 01/21/2011 - 20:33 | 894909 Cdad
Cdad's picture


This is so spot on...it is scary.  I was going to initiate the short Euro position at 1.36 per USD stud man.  However, the perfect catalyst is there...so the volatility will be perfectly clear.

This is good stuff....much obliged.


Fri, 01/21/2011 - 20:34 | 894913 Drag Racer
Drag Racer's picture

Social-networking company Facebook Inc. said it raised $1.5 billion, a transaction that included a controversial private placement led by Goldman Sachs Group Inc. (GS) that values the company at $50 billion.


Fri, 01/21/2011 - 21:09 | 894983 DosZap
DosZap's picture

one way or another, the Obama administration will need to get the $1+ trillion currently offshore.

As the USD's are currently being converted, into other currencies, and assets, I am SURE, that any fool would be more than happy to repatriate those dollars.

Plus, bringing  them home, would allow for future seizure,a fact we all expect to happen now.

The Swiss fiasco, tipped the US Gvt's hand to me,if they are strong arming foreign banks to get info on Americas deposits abroad,I just KNOW I would trust them, if they came home.

What would be the purpose of this?, A Grand Mall Seizure?.

We still have not been body slammed on the 401k's, and IRA's yet.


Sat, 01/22/2011 - 09:57 | 895580 living on the edge
living on the edge's picture

It's ironic that the multinational corporations are desperately trying to bring this cash back to the USA while I am trying to get mine out of the USA. Does that make me a contrarian?

Fri, 01/21/2011 - 22:15 | 895097 Quinvarius
Quinvarius's picture

The Dollar dead enders are really grabbing at straws.  China, the EU, and Japan got wise to our beating on the Euro to paint the DXY trick.  It is over.  You had your unsustainable bounce. 

Fri, 01/21/2011 - 22:17 | 895100 beastie
beastie's picture

This guy gets paid for this shit? Although he convolutes his sentences unecessarily if you boil this down it's no better than a high school essay.

Does he know how much the corporations hold in dollars outside the USA?

Does he know how many of those are likely to repatriate hold dollars?

Does he think it's likely that those who hold other currencies would buy US Dollars or stay where they are?

Unless he can tell us those answers then it could be either inflationary or deflationary.

He is correct in thinking that repatriation is likely. Is there any other reason Steve Jobs was meeting the the Prez.The Prez wasn't asking Steve for tech support on his iPad. He was asking what would it take to bring that money home and invest it.

God Damn this is fucking rubbish.

Grade: D-









Fri, 01/21/2011 - 22:17 | 895101 TheProphet
TheProphet's picture

The reason they are talking about it right now is because the dollar is weak against the Yen and even against the Euro and if the EU raises interest rates the dollar will become even weaker. Favorable exchanges and favorable tax provisions meet to produce a sudden urge. My guess is that they will scramble to get this together before the Euro finally collapses.

Fri, 01/21/2011 - 22:21 | 895108 Buck Johnson
Buck Johnson's picture

There's another reason also, If the Euro collapses and other countries are in dire straights what happens to those billions sitting in those foreign accounts?  They may either get repatriated or get taxed 90% to keep the money in the country.  The businesses want to get their cash out in order to protect it in the US.  Because they know that the US govt. is bought and paid for.

Fri, 01/21/2011 - 23:27 | 895200 the grateful un...
the grateful unemployed's picture

i would like to see the Tea Party bust their balls, wanta repatriot that money, pay up Steveie boy

Sat, 01/22/2011 - 08:53 | 895560 grey7beard
grey7beard's picture

>> i would like to see the Tea Party bust their balls,

Big money owns the Tea Party.

Sat, 01/22/2011 - 11:44 | 895680 Printfaster
Printfaster's picture

Big money owns the Tea Party.

Bigger money owns Obama, Reid, and Pelosi.

Sat, 01/22/2011 - 13:30 | 895823 grey7beard
grey7beard's picture

>> Bigger money owns Obama, Reid, and Pelosi.

So that makes whatever the Koch brothers do ok, eh?  The Tea Party was corrupted from the day Santelli's scriped act brought it all on.  The fact that those you mentioned are beholden to big money doesn't negate the fact that the Tea Party are corruped also. 

Fri, 01/21/2011 - 23:28 | 895206 Oh regional Indian
Oh regional Indian's picture

The thing to pay attention to is the strange naming.

Homeland Investment. Read that again. Homeland Investment. Homeland Security.

Fatherland would have been too much of a give-away.

Be very aware of the fascist wording. It always begins that way. 

And companies, look at their free lunch. First, you get to keep a lot of un-taxable money outside, gettign all kinds of benefits from Host governments. Then you arm-twist the Homeland government to give you tax breaks to bring it all back in.

Perfect. Perfectly sickening that is.



Fri, 01/21/2011 - 23:40 | 895223 JW n FL
JW n FL's picture

why should anyone pay a tax on the way back in?

it was taxxed going out...

it was taxxed offshore...

then re-taxxed coming back in?

why not just fucking take it all then?

Sun, 01/23/2011 - 00:56 | 896747 RockyRacoon
RockyRacoon's picture

Perfect plan! That combined with all the 401Ks will solve the deficit crisis.

Fri, 01/21/2011 - 23:41 | 895226 Miles Kendig
Miles Kendig's picture

Nice snack Tyler.  Thanx

Sat, 01/22/2011 - 02:37 | 895334 Grand Supercycle
Grand Supercycle's picture

As mentioned numerous times - US dollar strength keeps recurring because USD larger time frames are bullish and continue to warn of a significant dollar rally.

My proprietary indicators can identify trend changes before they occur.


Sun, 01/23/2011 - 00:57 | 896749 RockyRacoon
RockyRacoon's picture

I predict that what you predict will always predict what you predicted.

Sat, 01/22/2011 - 07:41 | 895523 snowball777
snowball777's picture

Doesn't create any jobs here and encourages more offshoring of same...too fucking stupid for words.

Sat, 01/22/2011 - 10:44 | 895618 Jonathan E
Jonathan E's picture

Wouldn't another HIA (coincidentally) tip China over the edge?

ie. As US companies repatriate, China's hefty $ reserves deplete because a massive swathe of those dollars belong to US companies, therefore the PBoC has to reduce the corresponding RMB liabilities (the results of maintaining the $ peg) by removing RMB from the system, cue cash hoarding, credit collapse, defaults, chaos, big trouble in big China.

Or not?

Sat, 01/22/2011 - 16:18 | 895690 Printfaster
Printfaster's picture

Just how are dollars going to be repatriated from China?  As I recall, there is now no way for businesses to convert.  Unless China sells them their hoard of Ts.  Hmmm.  The perfect deal.  Bernanke will finally be able to end QEII and take a vacation.

Just where are all those overseas dollars?

Inflation is just money printing by another name.  Dollar liquidity is created by creating dollar debt instruments, whether they be greenbacks or Ts.  Dumping stores of Ts onto the market is another way of increasing dollar liquidity.  In the end, it just causes the dollar to drop in value, since it is being rejected (China) and more (Ts) are being circulated.

Sat, 01/22/2011 - 13:39 | 895832 Augustus
Augustus's picture

The problem with the "repatriation" scenario is that the companies have no use for the funds in the US.  Why send more money into the roach trap that is being created.  Everyone with a half brain is trying to figure out how to get it out, not in.


Sat, 01/22/2011 - 14:25 | 895900 banksterhater
banksterhater's picture

ACQUISITIONS with ZIRP. Take over the competition. It actually cuts jobs.

Sat, 01/22/2011 - 14:23 | 895896 banksterhater
banksterhater's picture

Bush did it and attached an "American Jobs Act" name to it, pure bullshit, it's like Obama to pull the same crap. They were told they couldn't use it for stock buybacks, that's wher it went. They paid 3.5-5% corporate tax on it. It will goose the market just on buybacks alone. They won't create one fucking job. And most is not in China I suspect, it's in countries like Vietnam, in shell corporations they created in cheap labor tax havens. They are also using it for acquisitions, as Tyler posted here about the drug companies.

Sat, 01/22/2011 - 14:32 | 895912 Sudden Debt
Sudden Debt's picture

Unless there is a major incentive, the repatriation will not happen. Just look to the China investments.

Also, by repatriating all the money, they would put all their hopes on the dollar, something that isn't that smart these days.

Sat, 01/22/2011 - 18:29 | 896308 topcallingtroll
topcallingtroll's picture

You can count on a corporate tax holiday of some sort. A kinder gentler version of qe.

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