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DOJ's Latest "Beat Down" on Swiss Banks

Bruce Krasting's picture




 

DOJ's Latest "Beat Down" on Swiss Banks

Courtesy of Bruce Krasting

 

 

Wow! The Department of Justice took an extraordinary step yesterday. It indicted Swiss private bank, Bank Wegelin, for aiding and abetting in US income tax fraud. 

This is a big deal. 


I’ll try to keep this fascinating story brief.

Bank Wegelin (W) has been around for 270 years. In Switzerland, it is referred to as a “Private Bank”. There are dozens of Private Banks in the country (less every week). 

 

 

Private Banks do private things and charge big fees. Up until four years ago, the Swiss Private Banks were doing private things for private clients from all over the world, including many US names.

The DOJ sued the big Swiss bank, UBS, over this private business. UBS folded when the DOJ threatened a criminal complaint. (UBS would have had to close all its US businesses had a criminal complaint prevailed.) It ended up costing the bank $780 large and, for the most part, the DOJ got the “names” it was after.

Having blown UBS to smithereens, the DOJ set its sights on the other Swiss Banks. It targeted eleven Private Banks. W was on the list.

Talk of a settlement, including big buck fines and the release of more "names", has been in the press for a few months. Treasury Secretary Geithner met with Eveline Widmere-Schlumpf (Swiss Finance Minister) in Davos last week. It seemed like progress was being made on the thorny problem of the private banks:  

 

 

 

Widmere-Schlumpf:

“We’re hoping that we’ll reach an agreement with the U.S. within the next couple of months”

 

 

I was surprised when the non-USA assets of W were “sold” to Notenstein Private Bank on January 27. Notenstein is 100% owned by Raiffeisen Bank (R). This sale should have been a tip off that the conversation between Geithner and Widmere-Schlumpf was not as friendly and optimistic as the public comments suggested.

 

The Senior Managing Partner of W, Konrad Hummler (KH), commented on the sale of his bank: (Apparently he was surprised too)

 

 

 

I never could have imagined that we, as owners of Switzerland’s oldest bank, would have ever considered selling”

KH was clear that the sale was a reaction to the pending DOJ hammer blow:

“The extraordinarily difficult situation and threat to the bank brought about by the legal dispute with the US”.

With the non-US assets stripped out of W, the DOJ suit is functionally against a dead person.

Note: Wegelin had no physical assets in the USA. It did have a bank account in the US holding $16.2mm. That was seized yesterday. But that amount is peanuts. The DOJ wants much, much more.

There's an unusual part to this which I find curious. W had an ‘old school’ way of doing business. To give assurances to its private customers that the bank was solid, and their money was safe, the Board of Directors of W assumed personal liability for the affairs of the bank.

No one has lost a Franc in the account transfers from W to R, so it would appear that those directors are now free from any liability. However, the DOJ has named EXECUTIVE X as a plaintiff in the charges files yesterday. So it would appear that Konrad Hummler’s (KH) problems are not over.

It just so happens that KH is also the Chairman of the Neue Zuricher Zeitung (NZZ), an influential Swiss rag. KH has a long history in Swiss banking. He used to run Swiss Bank Corp., which he later sold to UBS. He was the former head of the Swiss Private Bankers Association. He was an adviser to the Swiss National Bank for seven years!  (He lost that job in April, 2011 as the DOJ noose was getting tighter.) This guy is wired.

The DOJ might also pursue the former assets of W. This could be problematic. The timing (and the surprise) of the sale of W's non-US assets to Raiffeisen Bank (R) might have pissed off the folks at the DOJ. There are (unconfirmed) reports in the Swiss press that the sale price for W's non-US assets was CHF 700mm ($725mm). That might explain the actions DOJ took. That’s a lot of loot.

Will the DOJ go after R? This would seem unlikely. R has a very big presence in Switzerland. It is a retail bank with three million customers and branches all over. It is affiliated with Raiffeisen Bank International (RI).  RI is a very big bank in Eastern Europe with 13mm customers . Of further interest is that both R and RI are part of Unico Banking Group. 

 

 

 

This consortium includes the big Dutch bank, Rabo and also the French bank, Credit Agricole. Maybe I’m nuts, but I don’t see the DOJ messing with a hornets' nest this size.

I think the DOJ's steps yesterday were just “shock and awe”. This puts more pressure on the remaining Private Banks. The DOJ blew up W in a rather spectacular fashion. Other Swiss bankers in the DOJ's cross-hairs must be crapping in their pants. Many of them are gathering up client dossiers - and getting ready to write big checks.

The DOJ is like a Rhinoceros. It's not very good looking, and when it puts its head down and charges into the brush, it tramples anything in its way. Nothing can stop it.

This matter will come to a head pretty soon. If it doesn’t, the DOJ will knock off the next Private Bank on the list. 

Fines will get paid. Names will be turned over. Some individuals will be prosecuted. The “names” have some explaining to do. At the top of this list is the good old IRS. Other interested parties will include creditors, wives, ex-wives, ex-wives’-lawyers, current-wives’-lawyers, business partners, employers, the press, relatives and friends.

After a while, this will all be forgotten. Sort of. The door for Americans to hide money away from the IRS is closed. Sort of. The foreign banks won’t want American customers; it’s too much of a hassle. If you do find a Banca di..... outside of the USA, you will have to plunk down a SS card, and agree to have info given to the IRS. 

The door is closed for all electronic money. But the door is not completely closed. This story is as old as the Egyptians. Folks have been cheating their partners, wives and the taxman forever. It’s not likely to stop. 

I understand that cash boxes are filling up with bills in some locations. In a zero interest rate environment, that makes some sense. Sort of. It makes infinite sense if rhinos are around. 

On second thought, this episode will not be forgotten. Many people have already been trampled. More are in harm's way. Such is life. It has left a scar on the US image in some of the financial centers. The US played hardball and won. You don’t win many friends playing hardball. But this had nothing to do with friends. (Switzerland was once a friend of the USA.) It was always about the money.

There are many pieces of this story that would make for a good movie. For the life of me, I can’t figure out who are the good guys. Maybe that's the point.

.
Note: Tyler Durden sent me a note with a link to a ZH piece from 2009.
This is a rant by Konrad Hummler, the "Boss" at Wegelin. ZH was three years ahead of the curve on this one.
 

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Sun, 02/05/2012 - 14:14 | 2128894 Zero Govt
Zero Govt's picture

of course the US authorties have sooooo much to teach the world about prosecuting illegality

4 years and counting on mass mortgage fraud by WS bankers, credit rating agencies and more legal practices than have a right to exist... and they've only just got onto the political hot potato of Senators insider trading, how will John Kerry survive on mere public wages alone?

then there's a $Trillion lost by Bush & Blusfeld (never prosecuted)

and another $300m lost by the US military, money for bribes, sorry 'rebuilding' Iraq (not prosecuted)

You'd think the US Govt would be more worried about losing what it had and its own inherent crimnality than a few stragglers (there's certainly vastly more being lost by the US Govt than it could gain from persuing taxpayers)

..i'm not holding my breath to see if millions of MBS fraud ever get prosecuted, billions lost in Iraq or a Trillion by Rumsfelds Dept (anyone even sacked yet?) then had to add another one (MF Global) to the loooong list too ...and my popcorns ready for the Senatorial insider trading, it's going to be a tight vote Turkeys voting for Christmas

 

Sat, 02/04/2012 - 23:15 | 2127756 honestann
honestann's picture

These people in other countries who give a rats butt about the federal government of the USSA are STUPID.  The USSA has ZERO jurisdiction over them or their business.  They shouldn't even hire a lawyer, they should simply say "you have no jurisdiction over us, and therefore we have no comments and will have no comments".  End of story.

It angers me that these wimps, especially in secure places like Switzerland, pay ANY attention to the predators in DC.  They survived the nazis next door, but run like frightened sheep when these hot air balloons across the ocean open their mouths.  STUPID.

This behavior simply proves what so many people here in ZH know.  NOBODY else will take care of your assets, and NO paper asset is worth the tainted paper it is printed on.  This will simply convince more and more people to convert their assets to real, physical gold, silver, platinum, palladium, rhodium and dozens of other real, physical goods and secure it themselves (not at home where the predators can find it).

Humans today are dumber than rocks.

Sat, 02/04/2012 - 21:34 | 2127554 flyonmywall
flyonmywall's picture

Why would a Swiss bank with no assets in the US really care about US law? They have no jurisdiction in Switzerland, other than blackmail and political arm twisting. Those only go so far. What are the Swiss going to do, give up their independence and obey US laws? You have got to be kidding me.

Sat, 02/04/2012 - 20:07 | 2127402 Waterfallsparkles
Waterfallsparkles's picture

I MEAN REALLY.  Crazy they are cracking down on the few so called "Rich" People.  What about all of the American Corporations that keep their Money overseas without taxation?

But you do have a point, even for us poor folks.  Better to keep your Money in the Mattress than the Bank.  Not getting any interest on it any way.  So, keep it close at hand and that way the Banks cannot leverage it 50 to 1.


Sat, 02/04/2012 - 20:39 | 2127475 Kiss My Iceland...
Kiss My Icelandic Ass's picture

DOJ seems to have a lot of resources to go after Swiss banks with no US presence.

Why aren't they going after the Wall Street criminals ??

Oh, I forgot. Sorry .

Sat, 02/04/2012 - 20:15 | 2127419 The Alarmist
The Alarmist's picture

Unless you are sleeping on gold bars, you will end up owning a set of linens worth more than your mattress.

When we cleaned out my grandmother's house, we found the "fortune" she had stashed under carpets and sewn in curtains during GD1.0 .... Would have bought a mansion in 1932; was barely enough to buy a car in 1994.

Sat, 02/04/2012 - 23:17 | 2127763 honestann
honestann's picture

What?  She didn't hide gold coins in 1932?  That was before gold confiscation.  Had she stashed away gold coins like any rational being, you guys would be set now.

Sat, 02/04/2012 - 19:42 | 2127365 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

If they took all of the PE guys and HF guys paying 15% carried interest for tax and raised that to the marginal rates like everyone else (like the normal everyone elses) has to pay, that would be a lot more coin than what's in numbered accounts.

Sat, 02/04/2012 - 17:05 | 2127114 SAT 800
SAT 800's picture

I'm sorry to hear that you have trouble deciding who the good guys are. It's completely clear who the good guys are. The good guys are the Swiss Banks who are providing privacy for their clients as is the custom in all rational banking systems; and in Swiss Federal Law. The Bad guys are the completely un-principled bullies working for the "Empire de jure"; who confisticate earned value from citizens in order to waste it utterly and futilely in their games. Actually, I'm amazed that there's any doubt about this striking moral polarity in your mind.

Sat, 02/04/2012 - 20:32 | 2127462 masterinchancery
masterinchancery's picture

Yes, the US is getting quite a reputation as an unprincipled thug and bully.  As a matter of law, since when do US tax and banking laws have extraterritorial application under international law? Answer: never until sheer threats and thievery took the place of law in the US--essentially the last 25 years.  If the US ever needs friends in many of these countries, it won't have them.  All over relatively small amounts of money that the IRS, not any court, has decided it should have; amounts that won't pay the deficit for more than a day or two.

Sat, 02/04/2012 - 23:20 | 2127773 honestann
honestann's picture

Not only are any funds they could steal "small potatoes", they are fiat.  And the predators-that-be can create infinite fiat out of thin air at zero cost, so obviously the entire point is to play "top-dog predator of planet earth".

Sat, 02/04/2012 - 17:03 | 2127111 ConfederateH
ConfederateH's picture

Whats going on here is the SNB has sold out Swiss financial privacy.  There will soon be nowhere on the planet where you can hide any wealth from the globalists.  The SNB is tied to the worldwide financial fiat system, and there is no escape for their bureaucry except compliance.  Like the rest of us they have become compliance slaves to the globalists.  Like us they were captured long ago.

Mon, 02/06/2012 - 07:44 | 2130054 Urban Redneck
Urban Redneck's picture

The Swiss have some cultural problems, beyond the arrogance- it's the land of "No, Kein, Non, No" and they are not risk takers, which is why the wealthiest people in Switzerland are expats.  Furthermore, their posture of defensive neutrality is entirely geared towards symmetric military threats- and they are utterly unprepared to recognize, much less defend themselves against asymmetric non-military aggression.

The SNB is functionally equipped and capable of shutting down the US Treasury's advances in under one week, and could do so in a fashion which would strengthen, as opposed to weaken its own position, but given the cultural obstacles- a consensus couldn't be reached to move beyond the starting gate. 

With 270B in worthless foreign fiat burning a hole in the SNB balance sheet and 1000 tons of gold for a tiny population of 8 million, they could simply drive the price of gold up $250 per day until the US backs down, it would be over in about a week and the US would be forced to retreat in order to defend its banking/Crimex flank.

Mon, 02/06/2012 - 08:00 | 2130072 Ghordius
Ghordius's picture

UR, IMO it's funny that you find the Swiss arrogant, to whom are you comparing them? The Germans? The French? The Italians?

Neutrality is not "geared toward symmetric ... threats", Neutrality is an international political stance, a bit like the Golden Rule.

I thought you were not that knowledgeble about the Swiss security forces? In regard to asymmetric warfare?

;-)

Mon, 02/06/2012 - 09:56 | 2130283 Urban Redneck
Urban Redneck's picture

I think arrogance is a universal trait, but it tends to increase in direct correlation to wealth and comfort.  I'm just back from the Banana Republics and even there- the "haves" are infinitely more arrogant than the "have nots"  My main competition, the Chinese, are matched by few in their arrogance, but they are willing to adapt and accept innovation are circumstances dictate, to pursue their own ends, especially in regards to securing natural resources and physical commodities. 

 

Since wars tend to be fought by foreign ministries and treasuries for years before the respective militaries get involved to finally settle them, those ministries need the mentality and intellectual openness to exploit innovation and circumstances to their advantage.  In the Swiss case, they have the physical infrastructure, but it appears to be a largely under-utilized or non-performing asset, but since I spend significantly more time on foreign military bases, there are certain insights I lack in regards to the Swiss specifics. 

 

However, I recently came across an under-utilized asset of my own which could be used to finance Swiss research and innovation, even bridging the huge political chasm between the SVP and the GPS, but overcoming the intransigence in the political establishment is going to be more time-consuming than I would like.  The banking establishment here is just as obstinate, they were slow followers in the insane race to TBTF in both the M&A mania of the 90's, and the derivatives explosion of the last decade, which ironically worked to their advantage, but if they can't get ahead of the curve on the transition from fiat to hard assets they will be bag holders that they feared becoming when they finally joined the TBTF race.  If the open-mindedness and innovation is lacking the political and banking establishments, I can't imagine that it is thriving in the military establishment.

 

I say all this as an arrogant SOB myself, but since I am in the innovation business, I usually accept that there are alternate methods to reinvent the wheel or get from point A to point B, sometimes even better methods, but sitting on one's ass is almost never a successful method.

Sat, 02/04/2012 - 23:21 | 2127777 honestann
honestann's picture

That's just pure BS.  They can say "drop dead, we are not in your jurisdiction", and NOTHING would happen.  They're MORONs.

Sat, 02/04/2012 - 15:48 | 2126978 Bansters-in-my-...
Bansters-in-my- feces's picture

"aiding and abetting" US tax fraud.....?

Huh...???

U.S Tax...is a fraud.

Sat, 02/04/2012 - 13:58 | 2126696 Stax Edwards
Stax Edwards's picture

Another fine piece of reporting BK.  I share your sentiment about not knowing who the good guys are anymore, lol.

Somewhat OT: I have been thinking that maybe the reason that we now have TBTF as a pillar of our society is that in such a highly interconnected global economy that our banks must be able to compete with other banks who have varying degrees of regulatory scrutiny/allowable leverage in their domicile countries.  Whether this thinking is correct or the 'right thing' is really far above my paygrade. Certainly the TBTFs want to keep it this way.

I can say from my little window on the world that moral relativism is unfortuantely the order of the day.  Honesty and Integrity has been replaced with game theory to the nth degree, to the detriment of our societies.  Ultimately when no trust is to be found anywhere any longer, I suppose that is the definition of fiat collapse. 

Who are the good guys anymore anyway? I think that unfortunately there are a smattering of them on all sides intermingled with men of very low moral character and we are probably all wondering the same thing.  So IMO this means TJ was probably correct when he said that the government that governs least governs best.  Time to get back to the constitution and our roots.  The system is so full of debt and dishonesty it will eventually collapse under its own weight.  We can each do our part in our local communties and lead by example, hoping that our leadership inspires those around us to do the right thing also.  Sorry if I got preachy, just its just depressing anymore.

Ron Paul 2012

Sat, 02/04/2012 - 20:34 | 2127467 masterinchancery
masterinchancery's picture

I would say that it is exceedingly clear who the bad guys are here, unless you think that the IRS should be running every country in the world.

Sat, 02/04/2012 - 12:33 | 2126482 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

It is about the money, but are the tax revenues going to add up enough to mean the hundreds of billions of dollars the US Tresurie burns every month will keep America from going bankrupt?

Nevermind the freindship; will this tactic actually net the US enough money to justify the beatdown?

Sat, 02/04/2012 - 11:59 | 2126426 stant
stant's picture

when they get done with the wealth stored overseas they will come after us who have few crumbs stashed away

Sat, 02/04/2012 - 11:57 | 2126421 DeadFred
DeadFred's picture

I loved reading the earlier post and KH's analysis from three years ago, a gloom and doom scenario predicting that US debt to GDP may pass 100% by 2014! No wonder they quit the US and no wonder DOJ zeroed in on them to attack. The ponzi falls apart in a few months to a few years. (Until then party-hardy nano-second bull market!)

Sat, 02/04/2012 - 11:54 | 2126417 Elvis is Alive
Elvis is Alive's picture

Harlequin, you are so wrong it hurts.

"They are not desperate for US cash, they are desperate for any cash. That is a normal function of a fiat collapse, and is precisely what happened in the run up to the Weimar collapse, but this time by orders of magnitude."

The Weimar Republic collapsed because of an overabundance of cash and currency devaluation. The problem with Europe today is a lack of cash, and an overvalued currency PRECISELY beause the Germans don't want Weimar 2. They are fighting the problems of 1920 Germany not Europe today.

That is why it costs at least twice as much to book a comparable hotel in Rome or Lisbon than NYC. Europe needs to devalue its currency. Once Europe becomes cheaper, investors like myself will pile in with both fists.

But the Germans are being dumb... again. They take the Fed's currency to keep the Euro strong and dollar weak allowing U.S. exports to undercut European ones. Furthermore, the U.S. is using Fed loans to undercut European soverignty.

Instead of Europe devaluing its currency and printing on its own, it is relying on the Fed's printing press to keep the Euro strong. Europe has become a U.S. colony because of European bungling. As an American, I don't cheer this on but am rather disgusted by the conduct of both the leadership of the U.S. and Europe.

Sat, 02/04/2012 - 17:26 | 2127164 SAT 800
SAT 800's picture

An important understanding; I reflect on it often; I never expected to see it in an internet blog. The Euro and it;s partially built financial system is a bungle; and the alert predators in Washington are running them around like headless chickens.

Sat, 02/04/2012 - 11:50 | 2126412 toadold
toadold's picture

Well the number of people who are renouncing their US citizenship especially those who earn their money abroad keeps increasing. It is telling that the State department is raising the fee to do so.  More and more foreign banks are refusing to have accounts with US citizens becasue they don't want to have to deal with the expense of IRS reporting.  I leave it to your imaginations what this is doing to US businesses with an overseas presence.  They'll hire foreign nationals rather than US citizens and they are also moving even more of their assets overseas. The IRS in its efforts to collect more revenue are choking off even more revenue stream from the future.....of course this short term thinking is no surprise to those who have watched the IRS and this Administration over the years.  Also I expect an increase in the number of dirty financial secrets by US agencies and government officials will start leaking out. Also co-opereation with the US about terrorists money moves  is likely to dry up.  The Gnomes have secrets and the means to acquire them, they'll keep yours as long as it is profitable...look for underwear to be stolen. 

Sat, 02/04/2012 - 13:53 | 2126687 Bruce Krasting
Bruce Krasting's picture

Well said.

You say there will be reprisals and consequences. I agree.

You think the CIA has been running money in and out of Swiss Banks the past 60 years?

I do.

Sat, 02/04/2012 - 12:29 | 2126484 The Alarmist
The Alarmist's picture

There are a lot fewer US nationals in positions of responsibility with foreign firms these days for the reasons you cite ... It is becoming a pain in the ass to be a US citizen working abroad. One can only wonder how much business did not get steered to the US because of that.

Sat, 02/04/2012 - 13:08 | 2126590 ConfederateH
ConfederateH's picture

Big US multinationals provide tax services for US expats working offshore.  SOFA agreements with host contries exempts military personel and all contractors from local taxes.  All other expats are blessed with having to navigate 2 conflicting tax laws.

Sat, 02/04/2012 - 10:30 | 2126357 mind_imminst
mind_imminst's picture

Not sure who the good guys are? Me neither. I do know that the DOJ is not the good guy, that is for sure.

Sat, 02/04/2012 - 09:47 | 2126319 GeneH3
GeneH3's picture

To everyone who speaks out here against tyranny: they know where to find you. They will own all of the information on the Internet. They will identify all of the dissidents on ZH (and elsewhere), not only authors but also those who post comments prejudicial to good order and discipline. Then when the Holder types conduct a roundup of the usual suspects, their list will be ready and you will be on it. If they can review all of the telephone Sconversations in any language and extract suspicious comments to identify possible terrorist (and they can and do), you know they have the technology to find you anywhere. You can run but you cannot hide.

You have two choices, and they need to be made and implemented now. Get into the public arena, gain adherents, and work actively to stop the madness or join those who do. Or, you can drop out and become a nobody, not a person of interest, and walk around with your head low until everyone else realizes that it can't be fixed and the system falls by its own weight like the USSR. It's a Hobson's choice. The former is frustratingly difficult, disruptive and against overwhelming odds -- and it requires perpetual vigilance and popular support. The latter will take a century or more (Ayn Rand's fiction that the system will implode rapidly was just that: fiction). And then what? And where will you be?

Sat, 02/04/2012 - 12:33 | 2126469 The Alarmist
The Alarmist's picture

Nah, I was probably on the lists and their radar twenty years ago when they closed off Pennsylvania Ave and when I commented that a Republic of free born men does not cower behind concrete barricades. It may be a quaint notion, but I will keep exercising my right to free political speech as an individual and free born man.

Sat, 02/04/2012 - 13:48 | 2126673 GeneH3
GeneH3's picture

Now that's the right attitude. We definitely will not change the direction if we shrink from the task. The above comment was intended to sound the alarm to those who are just sitting around hoping that the Republicans will free up the system and reverse the descent into a police state. Everyone who cares needs to get up off his bohuncus and actively defend his freedoms or they will be lost. Too many merely talk the talk. If they don't walk the walk, we are doomed.

Sat, 02/04/2012 - 14:19 | 2126295 Widowmaker
Widowmaker's picture

Free markets my ass.

Sat, 02/04/2012 - 09:03 | 2126275 The Alarmist
The Alarmist's picture

It starts with so-called "tax enforcement." Down the road it will then become demands to surrender fund and records of "financial criminals" regardless of nationality, because the US seems to enjoy being the world's cop these days.

The other nations, heretofore reluctant to pierce the veil of Swiss banking secrecy (after all, where do you think their elite keep their retirement funds), now see no downside to joining in on the "beat down" to get at their problem children.

The Swiss may have mortally wounded their best business franchise by rolling over so easily.

Sat, 02/04/2012 - 06:33 | 2126209 ViewfromUnderth...
ViewfromUndertheBridge's picture

Way to go Bruce, great stuff and please keep it up.

What chance The Peg (floor/ceiling, whatevah)was a chess move in this game?

IMHO, the US has declared war on the Euro....they encourage it seeing the weakness (no fiscal harmony), then the spending bender knowing that the 60% of the USDX was going down ze toilette. GS took out the soft underbelly and here we are...a "Flight to Quality" gives USTs a bid short term with Operation Twist II just cover for the collapsing foreign interest in the Long Bond. Talk about through the Looking Glass, Alice.

Got gold? Aaand the smack down at Fibonacci technical levels, confirmed by the plunge to and pause at $1725 during Globex so everyone can geddit over the weekend...

If anyone hasn't read Liquiat Ahmed's (sp?) The Lords of Finance, (an historical account of central bankers the last time they were household names), get it, read it and understand that they will lose control just like they did last time.

Sat, 02/04/2012 - 05:36 | 2126193 falak pema
falak pema's picture

Schweizer thieves and bigger thieves disguised as rhinos. A farewell to bare arms, ski charms and hello to capital wars. Achilles heels and stiletto ones with Prada bags, in Davos and St Moritz, or WS and Monaco; who cares. When capital dries up and assets become debts, its every man for himself and may the devil take the hindmost, slowest pair of stilettos; Prada or no Prada, its now excess baggage. 

Sat, 02/04/2012 - 04:39 | 2126170 Tao 4 the Show
Tao 4 the Show's picture

Lyndon Johnson, former U.S. President made an interesting comment after he was out of office (it was in an interview with Walter Cronkite):

"the fellow who has power is the one who uses it sparingly because you can throw it away very quickly with arrogance and autocracy and without consultation and you can dissipate it..."

I'm not an LBJ fan, but the statement is perceptive. It looks like we are watching the "dissipating" phase now.

Thanks for sharing you thoughts on this, Bruce. It obviously signals far more than gathering tax funds. The major products in this case are the signals and messages sent, and signs of turmoil underneath the surface that we are not privy to. With unlimited liability to customers, the Wegelin directors did what they had to to save their own skins as well as their customer funds. Net effect, however, was a scorched earth strategy.

It was so much nicer when we could read about major historical change rather than watch it unfold blow by blow.

Sat, 02/04/2012 - 06:01 | 2126146 the tower
the tower's picture

 

I'm confused...

So, US citizens with Swiss bank accounts need to disclose their assets in order to pay taxes in the US... So far the official story goes.

But rich Americans pay less taxes than the average American... or nothing. Compared to their wealth US tax is peanuts so there is no need for a rich American to have a Swiss account.

What is the DOJ really after? Why not start taxing rich Americans in the USA? Or will Delaware become the new Switzerland?

 

Sat, 02/04/2012 - 10:05 | 2126297 Widowmaker
Widowmaker's picture

Crime Inc. from top to bottom. My guess is they are trying to get to the bodies before the public. Self interest has a big role, results the public will never see.

Sat, 02/04/2012 - 03:22 | 2126120 q99x2
q99x2's picture

Here come the scapegoats.

Sat, 02/04/2012 - 02:28 | 2126093 OmPonzi_PonziOm
OmPonzi_PonziOm's picture

But wait, isn't this an astoundingly pure and brilliant Chicago style political hit?  Those tax records are are chuck full of potential political contributors.  Guess what, O and H have the figurative your-politics-or-your-freedom gun to their heads.   There seems to be a lot of blow-back for the money is free speech affectionatos. Ya think?   You can't touch this donation just got served up some new Donkey style 'restraints' before the election season goes totally 'Daddy Warbucks'. These Chicago guys are making W's team look like a bunch of amateurs! Pass the popcorn......   

Sat, 02/04/2012 - 09:36 | 2126311 Widowmaker
Widowmaker's picture

Ws team was a bunch of amateurs. How is that not patently obvious?

Sat, 02/04/2012 - 01:59 | 2126067 Vlad Tepid
Vlad Tepid's picture

I have found this episode to be an outrage that has really got my hackles up.  

This is nothing short of a declaration of financial war by the US against Switzerland and the Swiss way of life.  There are alot of plusses to that way of life that I don'tvthink I'd be willing to trade those for Super Bowl Sunday and a chili dog.

I'm really starting to understand how Dietrich Bonhoeffer felt when he was abroad....

Sat, 02/04/2012 - 14:19 | 2126301 Widowmaker
Widowmaker's picture

If everybody played by the rules there would be no need for the heavy hands.

Sat, 02/04/2012 - 00:13 | 2125922 Bansters-in-my-...
Bansters-in-my- feces's picture

"DOJ"...Now theres a three letter joke.

Sat, 02/04/2012 - 04:18 | 2126160 jeff montanye
jeff montanye's picture

and the headquarters building named after j. edgar (tutu) hoover.  not that there's anything wrong with wearing tutus.

http://www.collegefashion.net/fashion-tips/fashion-challenge-wear-a-tutu/

Sat, 02/04/2012 - 00:12 | 2125917 Elvis is Alive
Elvis is Alive's picture

Now that the Fed is bailing out Europe. They are bullying the snot out of the Europeans. First, there was the Iran fiasco where European banks couldn't get lines of credit with the Fed if said banks gave lines of credit to anyone buying Iranian crude.

Now we see the U.S. bullying Switzerland. Given how leveraged Swiss banks are and how desperate they are for cash, the Swiss have to put up with this crap.

Because of the enourmous amount of debt the European nations and banks have, they are completely desperate for U.S. cash and will do whatever the Fed/U.S. government wants. For all intents and purposes, Europe has become a U.S. colony.

Sat, 02/04/2012 - 02:36 | 2126099 Harlequin001
Harlequin001's picture

'For all intents and purposes, Europe has become a U.S. colony.' What is it wth you people? As soon as you think you have some influence abroad by threatening a private institution with criminal charges back in the US you think you have some kind of a fucking empire?

Stop deluding yourself, empire comes when you impose government. Threatening a private bank doesn't cut it. It just makes the US sound desperate to justify it's armaments spending...

'they are completely desperate for U.S. cash' They are not desperate for US cash, they are desperate for any cash. That is a normal function of a fiat collapse, and is precisely what happened in the run up to the Weimar collapse, but this time by orders of magnitude..

It has nothing whatsoever to do with US imperialism.

Sat, 02/04/2012 - 10:51 | 2126370 thewhitelion
thewhitelion's picture

FYI, empire isn't something that most here would brag about.  It would more commonly be considered a disgrace.

Sat, 02/04/2012 - 12:01 | 2126428 Harlequin001
Harlequin001's picture

Bullshit.

The Commonwealth exists because of empire. It is the end result of the most successful mutually beneficial trading empire on the planet. And membership is also voluntary.

Not something the US can lay claim to in any way shape or form...

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