Guest Post: Guess Who Folded Now

Tyler Durden's picture

Submitted by Simon Black of Sovereign Man

Guess Who Folded Now

Banking privacy is dead. Completely, totally dead. Murdered, really. The US government is the assailant, and FATCA is the murder weapon.

We’ve talked about this a few times before– FATCA is the heinously insidiously piece of legislation that the Honorable Barrack Hussein Obama passed into law in 2010 as part of the “Hiring Incentives to Restore Employment Act”.

There were no hiring incentives, and there was no restoration of employment. But any vestiges of banking privacy were destroyed.

In brief, FATCA has two key concepts. First, it requires an additional (and completely unnecessary) layer of reporting from all US taxpayers who have ‘foreign financial accounts’ at ‘foreign financial institutions.’ Though as we have discussed before, both of these critical terms are ridiculously and flagrantly ambiguous, putting the onus entirely on the taxpayer.

Without clarifying what constitutes foreign financial accounts and institutions, Congress has effectively created decades of debate in tax court… a move that will undoubtedly ruin the lives of the unfortunate folks who get dragged into the fight.

The second key issue is that FATCA puts a burden on ALL foreign financial institutions worldwide to enter into an information-sharing agreement with the IRS; this essentially obliges every bank on the planet to submit reports and customers’ private data to the IRS.

Banks who don’t enter into this information sharing agreement will have a 30% tax withheld on funds that originate from, or go through, the US banking system. Further, banks who enter into the information sharing agreement are obliged to withhold the 30% tax on transfers to other banks who do NOT enter into the agreement.

Such provisions are absolutely, 100% impossible. And it’s becoming clear that FATCA was passed with no intention of being enforceable. It’s inconceivable that every institution on the planet could enter into an agreement. And it’s inconceivable that every institution on the planet could possibly know whether every other institution has entered into the agreement.

The only thing FATCA has accomplished is scaring the living daylights out of non-US banks. So much so that foreign banks have approached their governments to ask for help.

As I wrote last week, in order to dull the effect of FATCA in their countries, the governments of Spain, Italy, Germany, France, and the United Kingdom recently announced that they were entering into inter-governmental information sharing agreements.  Individual banks will no longer have to comply with the IRS, but instead share all with their home governments.

In other words, French banks will report to the French government, US banks will report to the US government, and the two governments will swap data.

It’s no small coincidence that the first signatories to such an inter-governmental sharing agreement are five of the largest (albeit most insolvent) countries on the planet, forming the core of the OECD. Now it’s only a matter of time for smaller nations to fall in line.

Last Friday, Isle of Man became the first. Treasury Minister Eddie Teare announced that “the inter-governmental partnership approach announced by the US, France, Germany, Italy, Spain and the UK should be explored by the Isle of Man Government” and that a “high-level FATCA working party has already been formed.”

With Isle of Man laying down, we can expect places like the Channel Islands, BVI, Cayman, Bermuda, Mauritius, and other popular offshore banking jurisdictions to sign up next.

There are two key points I’d like to make here-

1) There is no such thing as banking privacy. Do not trust your banker to keep secrets for you, and definitely do not trust a government-regulated banking system to keep secrets for you. If you have undeclared income that’s been nestled offshore, it should be obvious at this point that such arrangements will soon unravel.

Voluntary disclosure is always better than getting caught by your home government’s tax authorities. And, especially if you’re a US citizen where tax noncompliance is a criminal offense, paying hefty penalties is a much better outcome than going to court and ending up in a day-glow orange jumpsuit.

2) Most people who are interested in financial privacy tend to use cash. But since carrying large amounts of cash is more and more being criminalized (and confiscated), this is no longer a viable option.

The best form of financial privacy at the moment is physical gold, at least until a better option for digital currency hits the market. Gold may not be useful for day-to-day transactions, but as a store of value tucked away in an anonymous offshore facility, there is no better way of maintaining financial privacy.

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non_anon's picture

alot of guessing posts today, but alas, the culprit is the same

Pladizow's picture

This is helping to accomplish exactly what it was designed to do - Help bring America to its knees by economically crushing it!

There can be no NWO with a super power in it.

The USSR collapsed without a shot being fired and the US will face the same fate.


JW n FL's picture



Even Humble Pension-Holders Are In The FATCA Net, Tech Firm Warns Tom Burroughes
Group Editor in London

27 February 2012

News Analysis

The US tax compliance net will spread to catch people with pension portfolios, highlighting the extent to which financial businesses need to get their client details in order as deadlines approach, a technology firm has warned.,_Tech_Firm_Warns_&id=44595

JennaChick's picture

An interesting commentary I read at Armada Markets website on EURCHF and SNB's reactions:

1). The closer EUR/CHF gets to the said 1.2000 floor (it's not a peg...thats different) the less the SNB will have to least in theory . How many here would add to their long positions at 1.2020?

2). If the floor is broken, so many stops would be triggered that the SNB would have to spend incalculable funds just to counteract the squeeze, and would have to bust their butts just to get the pair back to the 1.2000 floor.

3). The SNB is playing a very dangerous game, as they have left very little room between the existing rate and the floor. If we get a EUR shock (i.e. Greece blows up or CDS are activated etc..) the SNB will be caught between a rock and a hard place...with no room to wiggle.

4). The floor will not be raised. The SNB will however defend the 1.2000, because if they do or can, the EUR/CHF has the best chance to organically go higher, which will negate the need to defend a higher floor, which just would cost them even more.

5). The shorts are just Hedges and normal inflows, because thats the way things work.

Pancho Villa's picture

If the US government didn't tax offshore earnings, then it wouldn't need information on foreign holdings.

There are a number of tech companies that have huge hoards of offshore cash that they cannot invest in the US because taxes would be excessive. So they are starting to invest it in overseas branches at the expense of the US economy.

brokenclock's picture

There are too many ZHer's posting bullish (sarc) on almost every quote now. With that said I'm official going short. When the most negative financial blog has too many bullish indicators even though the fact show us differently. It has to be close to a top. Hedge accordingly or be very careful on the long side.


Good luck


donsluck's picture

ZH is a lousy contrarian indicator. When half your friends buy gold, that's a contrarian indicator.

Widowmaker's picture

Jon corzines bet on greece aint over yet.

zh an pm's are joined at the asshole.

slaughterer's picture

Fuck no, you are making a big mistake shorting now.  Wait until SPX 1380-1400.  We have it all figured out here at ZH.  Just listen to us.  Timing is everything.  

algol_dog's picture

I just want to move some where, any where, away from all this ...

Waffen's picture

Forget Mars.  Lets all pool our resources and move to the Moon.   Then if the Earth gets out of line, we threaten to launch huge boulders at them.  Heinlein approved.

lemonobrien's picture

i know a great place to move where a lot of us could get out. but, i don't know you, don't trust you, and don't want you to shit all over my plans.

d_senti's picture

Speaking of moving somewhere to get away, I live in North Dakota, which is actually doing alright, but I worry that all this will eventually catch up to us even here. I've been thinking about going back to school for a while now, and I consulted all you fellow ZHers about it and got some really good advice. I want to be as prepared as possible for the coming mess, and to be able to support my family. I've got all the usuals: food, guns, metals, community. Got my wife to start gardening and canning food, got a job way closer to home, all that.

I had decided not to go back to school, as (I'm sure you're all aware) taking out student loans is a nightmare. The market is massively inflated and due for a crash, and so the price of an education is way higher than it should be. After talking with you guys, I decided to wait. But two days ago, my grandfather generously offered to pay for ALL my school expenses, which means no student loans!

So I have a question for all you guys: what do you think I should go for? It's free, but I don't want to waste this opportunity on some job that won't be here in 3 years. Many people here have suggested accounting (I'm good with numbers), but they don't have a clue as to where the world is today so I don't trust their opinions very much. You guys do. Accounting may still be an okay choice, but probably not. So what's your advice? I appreciate any help you can give.

Oh, and if you're annoyed by my post, sorry. Just ignore me, no biggie.

slaughterer's picture

I advise every student to either go into structured finance or data mining.   If you want to have a future, that is.   

d_senti's picture

Probably profitable. Definitely evil. :) Thanks though.

Real Money Wins's picture

IMHO you should take a long view of the future. If the the whole monopoly money system collapses, where will there be a need for workers or entrepreneurs. If there is nothing to account for visa vie worthless fiat. How much of a need will there be for accountants with all those who will be out of work. The focus should be in the area of things people need and can't do without. I.E.- Energy, food, medicines etc. Just give it some extended though you will find the answer and it may be to be an Entrepreneur rather than a worker.

d_senti's picture

That's my primary concern about accounting. You never know when it's gonna go boom, or how bad the collapse is gonna be (bad recession? Great Depression II? Mad Max? No idea). Entrepreneur is a bit of a problem since I have virtually no working capital and little in marketable skills (hence going to school). But I agree that energy/food/medicine is probably a safer way to go, thanks. I'd like something that will be there whether things get bad or not, so those are pretty good bets.

lemonobrien's picture

something real. When i was in school, i was poor, and a journalism student; i switched to comp-sci; now i make money, have a job, been around the world; bullshit all day on ZH. can understand the math behind it all.

1. Accounting/Finiance

2. Computer science (applied)

3. Auto-repair (2-year, vocational school)

you have to get a real skill; any of the sciences, like biology, physics, are nice; but need a Phd for a job. Art, architecture; are cool, but you need to be the type, and go to the right school; like RSID.

To be honest, you can lie on your resume and still probably get a job if you could teach yourself. no one checks. take your grandfathers money and buy gold, chevron, and philip Morris international (GOD, gold, oil, drugs).

d_senti's picture

Yeah, my grandpa would pay for a 2 or 4 year, but no way he'd hand over enough cash to get a Phd. I actually think it'd be a good idea to try and learn multiple skills like the above, just to cover my bases. My second idea, instead of finding that "perfect" choice, is to find a "business as usual" skill and a "SHTF" skill/s. And yeah, I could lie and teach myself, and it's tempting at times, but I don't lie.

Obadiah's picture

Learn how to be an small business owner and mechanic and farmer  you cant go wrong

Vlad Tepid's picture

The first and last are just rape targets for the gov't/corporate complex.  The knowledge of how to make, build or fix will always trump.

UP Forester's picture

.... and a butcher, logger and wood-gasifier builder....

d_senti's picture

Not bad ideas, and a small business would be nice, but I agree with Vlad frankly. I don't see how I wouldn't get massively shafted by either the govt or my corporate competitors. I've watched plenty of small businesses dry up in the area as the bigger dogs moved into town (including my dad's own small business), and it's pretty heartbreaking.

twotraps's picture

di senti, Obadiah has some good points.  General business skills, farmer are not bad skills to have should the world unfold the way you speak of.  Computer Science, I'd not bother.  There are 100,000's of computer scientists running around making computer/tech applications so easy my 20 mo. old daughter can look at pictures and play 'find the fish' on her ipod.  Therre may be more of a need for thinkers/business owners/entrepreneurs than writing computer code.  There is no way to tell what will happen or what you will have an interest in so get started with the basics and align yourself with people that are successful in their fields, see what its like.   Unless you go to school for something so specific like Brain Surgery.......get the basics and get out, you never know what you'll come up with.  Good luck.

Vlad Tepid's picture

You might also consider mining engineering.  It is an underpopulated field with an excess demand.  People will be paying millions for someone to tell them where to find phosphates and how to get them out of the ground in the not too distant future.

kiwidor's picture

1) ask your grandfather for the money up front..  buy silver and gold bullion with 1/3 the money, and take delivery.

2) you need at least TWO trades.  i don't mean certified this or that by a piece of paper.  I mean skills for an earn, which competently executed will be your best advertisement.  some other poster said build or fix stuff. damn right.



welder/BLACKSMITH (never know when shoeing horses will make a comeback)






and learning how to grow your own food ain't a bad idea either

btw, lead paint will make a comeback.  it's great for stopping rot.  and if you're prepared for a little lead poisoning later in life, you could make a good earn as a painter.


3) with another third of the money, buy distressed properties with arable land near where you live.  make sure you have a good lawyer who can put nice riders on those contracts in case the disposing bank ends up not having clear title.

4) the final third is startup capital.  you'll need spare cash, tools, a truck, etc. make sure your truck can run on anything from reboiled ear wax to peanut oil.

5) don't ever give credit. "i'm not a bank, ma'am"

6) if they don't have cash, make sure you can sell whatever at ++ 1/6th of the value of what they give you to cover the transaction/barter costs you're incurring.

7) become involved with your community.  be a sheriff or magistrate or mayor or something.  helps tip the scales in your direction.


by the way, if you do what i suggest, you will have something for your money straight away, not the empty promise of something in the future.

also, if you're school fees would cover most of the cost of a suitable dwelling and land, then having that out burden out of the way makes you a rich man overnight.

good luck.

d_senti's picture

Thanks, I hope it all works out.


Frankly I think your plan is awesome, and I'd probably do something similar if it were my money, but I know my grandfather. He comes from the old school line of thinking where "college = good" and that's the end of it. I won't see a dime of it unless it goes to getting that fancy piece of paper.

tabasco71's picture

Come on, are you serious?  This is an obvious TROLL.  Were you the kind of personality to hoard metals, can foods the last thing you would be interested in is a college education.  You're probably building a bunker too right?

Although your stereotypical circumstance (which I know you have invented) did get me daydreaming, so if I had the choice (and the assumed abundance of space in N.Dakota) I would spend the money on livestock (horses or cattle or deer or turkey) and start breeding and selling them.  Looking forward 4 years, I could have either a piece of paper that says I can add numbers (well, I can already kinda do that?) or I could have ownership of a business which would have real value if/when the infrastructure collapses and be earning real margins.

If by some miracle you are serious, then please consider this: if you have to ask people what you should study, then maybe study is not for you?

francis_sawyer's picture

no shit...

I was about to suggest he study alchemy...


d_senti's picture

Zero Hedge: The only website where you can come, politely ask for advice, and immediately be accused of trolling (or being a psyops agent).

Love this site and most of the people, but there's always a few of you guys.

d_senti's picture

Not a troll at all, actually. If you don't believe me, fine, but you can go read my posting history. If this is trolling, it's one incredibly drawn-out plan with zero payoff...

Like I replied above, the money isn't mine. My grandpa won't just hand it to me. He'll pay for a college education or I won't get any money at all.

It's rather ridiculous of you to suggest that, because a person likes to prepare for (likely) bad outcomes, they therefore couldn't possibly have an interest in getting an education for free. I don't even see how you come to that conclusion, frankly. I don't have a lot of money and never have, but I'm not a frivolous spender. The money that we've saved up has gone into resilience, as we see the real possibility going forward that tomorrow will be much worse than today. Anyone who DOESN'T make such preparations and instead buys their fifth iPod is plainly an irresponsible idiot. And it's not as though I have 250k worth of food, guns, and gold stashed away, just the little I can afford to prepare myself.

As to your last question, that's legit. I started college right after high school years back solely because of pressure from my family, but I had no interest in pursuing it. I blew it off and eventually just dropped out and got a job.

Now I'm married, have one child and another on the way, a (good) mortgage, and make just enough money to get by. My wife wants to be a stay-at-home mom because we don't want to put our children into public school (as I know first-hand how crappy it is), instead homeschooling them. We can't save anything really, make any preparations, afford any luxuries, or spoil our kids even a little. My wife worries about money a lot. I've spent the last year and a half pounding pavement, trying to find a decent job so she could even just work less, or we could bring in a little more money. I've found nothing. We don't get government handouts, even though we qualify, because we don't need them and I don't believe in them (Ron Paul supporter). I can't do manual labor for a living because I'm partially disabled.

Then my grandfather offers me a "get a 4 year degree free card." With apparently zero other options, why wouldn't I take it? I'm just trying to do what's best for my family.

He_Who Carried The Sun's picture

The best form of financial privacy at the moment is physical gold, at least until a better option for digital currency hits the market.


Nope, if one really needs to protect wealth in tough times, one should consider buying a piece of art. Gold will be taken away from you by greedy governments like in the 30ies, but they know not a thing about art ....

Real Estate Geek's picture

Then I guess my blowtorch and I are going to create some really shitty avant-garde art.

Ace Ventura's picture

Interesting point.....but good luck carving up that priceless Van Goh when you need to barter for food or anything else. There is quite simply no substitute for gold and silver when it comes to transporting, dividing, and using value.

The goobermint will not confiscate anything it doesn't know you have. And if we DO reach the stage where they are rolling around confiscating metal, then I'd bet dollars to donuts that a priceless Van Goh would also make the list, particularly once your local 'magistrate' is made aware that you have such things in your possession.


dannyboy's picture

Gingrich is that you?

TuesdayBen's picture

Easter Island. BTW, heard today that population of the planet increases by 200,000 per day. Got me thinking about going somewhere remote. Easter Island.

UP Forester's picture

I would go there, but I'm no good at chiselling Obama heads out of stone....

X86BSD's picture

I was thinking of Iceland personally. When the world implodes and no one has fuel Iceland has plenty of geothermal power and lots of tasty reindeer and fish to eat. Most other places are going to burn to ashes when the oil stops powering them. Iceland will be just fine.


BurningFuld's picture

Actually Beautiful British Columbia is totally self sufficient with its Hydro Power as well. If the lights go out here...the World has just ended.

merizobeach's picture

Take your pick.  Living amongst a bunch of Canadians doesn't mean the world has ended; it just means that hell has arrived.

UP Forester's picture

Unhh, I think Iceland has a better chance of burning to ashes than even Hilo....

grid-b-gone's picture

Electronic financial surveilance is getting pretty sophisticated. This is the first year that most cost basis calculations can be downloaded.

PayPal and Amazon now have monthly statements. Expect annual totals to be reported to capture state sales taxes being missed by states and hurting brick and mortar stores.

For those who already claim, it's convenient to download the data right into TurboTax or some other program, and it will help the U.S. avoid the tax evasion problem that helped take down Greece.

But it feels a little like being watched through a peephole - just a little creepy.

Rainman's picture

Anytime gubmints try to regulate commercial choices, some underground criminal industry is born to circumvent and defy it. Money monitoring will be no different.

Hugo Chavez's picture

I see more gold shows in our future, like gun shows.

This is a way to add liquidity and volume to small time purchasers and sellers of gold.

Don Birnam's picture

Alas, and have a new corps of "mobile revenue agents" descend upon every show -- a "gold speakeasy" industry is more likely to blossom in its stead.

Widowmaker's picture

Clueless chavez, go try to purchase a gun at a gun show without paperwork. All vendor sales have their FFL (firearms license) to even get in the door, and they aint gonna risk losing that for a couple cash and carry sales.