Crisis First, FX Controls Next

[The Machine]

 

 

Get ready for currency controls; they look a certainty as liberty recedes...

 

IT'S A WISE MAN, writes Doug Casey, publisher of International Man, in The Daily Reckoning, who doesn't allow himself to be limited by an accident of birth.

 

It's most unfortunate (for them, anyway) that most people have a peasant mentality. They're idiotically indoctrinated into thinking that their country is the best place in the world, simply because that's where they were born. It makes sense in a way; their ancestors rarely ventured more than a day's walk from the village where they were born. After all, there were stories of dragons and demons over the hill.

 

Things haven't changed much, except people have exchanged the mud hut for a McMansion. But they've retained that medieval serf worldview. And the CNN and BBC newscasts on their widescreens only reinforce the notion that things are dangerous outside their borders; they're probably even more scared than their primitive ancestors. Assuming they watch anything beside sitcoms and sports.

 

It's certainly possible to be happy living your whole life in the place you were born and grew up. But unless you were born a member of the lucky sperm club, it's almost always suboptimal, and sometimes it can be disastrous. I suspect now is one of those unhappy times.

 

We're of the opinion that the world at large, and the US in particular, is heading into some seriously turbulent times. The diminution of personal and financial freedom looks like a hyperbolic curve, at first with an almost unnoticeable slope, then one that gets steeper and steeper, at an accelerating rate. I think an excellent case can be made that the current crisis is an inflexion point, beyond which it goes vertical. As one of Obama's closest counselors (and he's a very scary guy) has said, "One can't let a good crisis go to waste."

 

A crisis (and this will be a very real one) always draws exhortations from the authorities to "unite" and "pull together" – which usually boils down to following orders and turning in those who don't. People will want, and will get, "strong leadership". This does not bode well for libertarians, classical liberals, and free thinkers, in general.

 

As the crisis deepens, it's likely to be dangerous for someone who doesn't agree with groupthink. Things are likely to be much mellower if you're living somewhere they consider you a tourist, than to stay on your home turf where questions will be asked if you don't join the hooting and panting chimpanzees that will surround you. You can absolutely plan on unwelcome social pressure in the years to come, especially as the wars expand.

 

Coincidental with this is going to be the near destruction of the US Dollar; I just don't see any realistic way around that eventuality at this point. The consequences of that are going to be disastrous, but it's possible to insulate yourself from many of them. The biggest problem, and also the one most people just don't see, is political. There is almost no way you can effectively insulate yourself if a government, and society as a whole, goes crazy.

 

You might argue that really tough times in the US are a long shot; the US is "different" from other countries. It's certainly true the US has been particularly blessed for most of its existence, because it actually was different. The problem is that what made the US different from every other country – a Constitution that expressly limited the powers of the state, and an explicit acceptance of property rights and the free market – has evanesced. It's why I refer to it as the US, which is just another country, rather than America, which was a unique and excellent concept.

 

In any event, I suggest you at least consider the possibility of transplanting yourself, or at least start by transplanting some assets. Don't look at it as a negative thing. The world is your oyster. Make the most of it. This is directed not only at Americans, but at everybody, everywhere. It just seems a little more urgent for Americans, as well as for Europeans, at this point.

 

In many ways the world seemed to turn over a new leaf in the '80s. Not just with the election of Reagan and Thatcher, but with the appearance of many more like them, almost everywhere.

 

Whether it's the "hundredth monkey" hypothesis, or whether there really is such a thing as the "spirit of the century", the majority of people tend to hold similar views at the same time. It's strange. From about 1980-2000, all over the world, tax rates went down, regulation was relaxed, markets were freed up. The Soviet Union collapsed, apartheid in South Africa nonviolently disappeared, New Zealand fired two-thirds of its government employees, China liberalized. Even the constipated continents of Europe and South America loosened up. It looked like freedom was in the ascendant. But it couldn't last.

 

Now, certainly since September 11, 2001, the tenor of the world has changed again – radically. And the negative new trend has been supercharged by the financial crisis that began to unfold in 2007. Now practically everywhere, much higher taxes, onerous new regulations, border controls, and capital controls (to prevent the make-believe crime of money laundering), among other things, are the new order. It seems as if the clock has been turned back to the 1930s, but much worse, in that governments are much more powerful. And I fear a redux of the 1940s is in store. 

 

The whole world acted pretty much the same in the '30s and '40s as well, you'll recall. One thing I think you can plan on is foreign exchange controls. A government turns to FX controls during a currency crisis, to prevent its citizens from swapping the local currency for something foreign – transactions that would further weaken the local currency. FX controls, in effect, force people to stay with a sinking ship. But they are politically popular, for a number of reasons. They allow the government to "do something" during a crisis. They appeal to the average yahoo, partly because he doesn't travel abroad and tends to question the patriotism of those who do. Only the rich (especially the "unpatriotic" ones) have assets out of the country, and it's now time to eat the rich.

 

We're heading into a currency crisis for the record books, and I think you can plan your life around some type of FX controls. If you don't get significant assets out of your home country now, you may soon find it costly and very difficult to do so. Already, very few foreign banks and brokerage firms will take accounts from US persons. But although there are reporting requirements, there's currently no law against Americans having overseas accounts, and no laws against foreign banks and brokerage firms accepting American business. Many institutions find that it's simply not worth the aggravation and worry to deal with Americans.

 

At a bare minimum, you should have a meaningful amount of gold bullion in a foreign safe deposit box. In addition, you should own some foreign property, preferably in a location where you would enjoy spending some time. It would be impractical for the government to get you to repatriate that capital.

 

The ideal scenario, of course, is to have your main residence in one country, your assets in another, your business in a third, and your citizenship in a fourth. That isn't practical for most.

 

But you can certainly get assets abroad. And you may want to consider acquiring a second citizenship, which can considerably expand your options. The International Man has a lot on this topic. It's not necessary, and often not even desirable, to establish official residency in the country where you'd like to spend time, because that risks getting stuck in its tax system. It's usually smarter just to leave every 90 days to renew your tourist visa and not spend more than six months per year in any one country. That way you'll be treated as a valued tourist, who should be courted, rather than as a citizen, who can be milked like a cow.

 

Once you do acquire another passport, the next question is whether you should renounce your US citizenship, which could give you huge tax and regulatory benefits. As everyone knows, the US is one of the few countries in the world that taxes its citizens regardless of where they may live – although it must be said that other governments seem to be moving in this direction.

 

The problem with renouncing your US citizenship is that the US assesses what amounts to an exit tax on Americans who do so. Since 2004, any high-net-worth individual who renounces his citizenship is automatically assumed to have done so for tax reasons. And any individual deemed to have expatriated for tax reasons is deemed to have sold all his assets at fair market value on his last day as a US citizen. And, if the expatriate spends more than 120 days per year in the US, he can be taxed on his worldwide income and potentially is subject to estate tax.

 

In the near future, however, even that option may not be feasible. So let's plan ahead.

 

An essential element of planning ahead is finding the best place for your wealth to go outside your home country, as well as what form it should take: gold bullion, offshore bank account; real estate; an offshore trust; and a foreign limited liability corporation are a few of the possibilities. And of course, internationalizing your life is something you'll want to research as well.

 

These subjects can be overwhelming to consider, but their importance means that your research must not be delayed. That's why Casey Research created a free webinar titled Internationalizing Your Assets; in it, I and other internationalization experts will share what they've done and what they see as the best options for those beginning to internationalize now. Watch the presentation and start on your road to greater freedom for your wealth and yourself today.

 

[BIGSKY1]

Machine- you put some good stuff on here, another good source for this type thinking is Sovereign man confidential, he not only tells you where things are good to do, he gives you names, phone #, email etc. Did you know and this was last time I checked, the banks in Mongolia were very well capitalized and paying 14% interest!! When this thing RVs, along with Adam's input, I've got a list of places to put stuff.

[waterman13]

Financial / Political Corruption is rampant worldwide:

http://www.bbc.co.uk/news/world-europe-23526439

Spanish PM Mariano Rajoy admits 'mistake' over scandal

Prime Minister Mariano Rajoy: "I was wrong in maintaining trust in someone who today we know didn't deserve it"

Continue reading the main story Related Stories

• Q&A: Rajoy party scandal in Spain
• Spain's Rajoy on offensive over scandal
• Clashes over Spain corruption claims

Embattled Spanish Prime Minister Mariano Rajoy has admitted to MPs that he made a mistake in trusting a disgraced former colleague.

But he told MPs claims he was corrupt were "lies and manipulations", and again defied calls for his resignation.

Mr Rajoy is appearing in parliament to answer claims over illegal payments from a slush fund run by the Popular Party's ex-treasurer, Luis Barcenas.

The claims sparked widespread anger and anti-government protests.

Revelations of apparent corruption have touched a nerve in Spain, hit by a double-dip recession and high unemployment.

Clashes erupted between anti-government protesters and police in mid-July after more than 1,000 people gathered outside the Partido Popular (Popular Party, PP) headquarters calling on the government to quit.

'Lies and manipulations'

Mr Rajoy appeared before MPs after threats of a no-confidence vote.

In opening remarks, he said he was appearing to rebuff the "lies, manipulations and malicious insinuations encouraged by certain political leaders" over the scandal.

Continue reading the main story Analysis

Guy Hedgecoe BBC News, Madrid

The prime minister was in combative mood as he addressed the members of parliament. He flatly denied any wrongdoing and accused the political opposition of treating parliament "like a courthouse".

But to the surprise of many, he did discuss the Barcenas scandal in some detail and in telling the chamber "I made a mistake", he presented himself as the victim of gross deceit by his party's former treasurer.

Mr Rajoy was frequently applauded by his own party as he spoke, but during a tense and sometimes rowdy debate, the opposition barracked many of his declarations.

It was an unusually forthright performance by the prime minister, who is not known for his abilities as a public speaker. His Popular Party's congressional majority means that for the moment, at least, he should be able to survive this political crisis.

But with most Spaniards doubting his version of events prior to the congressional appearance, it may not be enough to win over public opinion.

He suggested that the Spanish economy was beginning to recover from years of crisis, and expressed concern that a continued focus on the scandal was damaging Spain's image.

For the first time, he admitted making a mistake by putting trust "in someone who we now know did not deserve it". But he denied "committing the criminal offence of covering up for someone who is alleged to be guilty".

Mr Barcenas is in custody while being investigated over other corruption allegations.

Mr Rajoy repeated that he would not resign, and said Spaniards should await the outcome of judicial investigations into the affair.

"Justice will show there was nothing illegal in my own behaviour or that of my party," he said.

In response, the leader of the country's main opposition Socialist Party, Alfredo Perez Rubalcaba, said Mr Rajoy was not in the chamber to debate the state of the Spanish economy.

He said it was Mr Rajoy's "resistance" to answering parliament that was causing damage to Spain, and said the PP had won elections over 20 years on the back of a system of illegal financing.

He refused to withdraw a motion of censure against Mr Rajoy.

Even if Mr Rajoy did not respect parliament, he said, "he should respect the intelligence of Spaniards".

"You must go, Mr Rajoy," he said.

Pressure on PM Rajoy and his ruling party has intensified in recent weeks

Representatives of other parties later denounced the president's claims that he knew nothing of wrongdoing by Mr Barcenas, saying their relationship was too close to make such a claim credible.

Text messages

The scandal originated in a 2009 judicial investigation into corrupt payments involving PP members.

In January this year, El Pais newspaper published an list of alleged illegal payments within the party.

The list was signed off by Mr Barcenas, who is currently in custody on corruption and tax fraud charges, with his role in the scandal still being investigated.

He originally denied allegations that he wrote documents, but later admitted they were in his handwriting.

Continue reading the main story Scandal timeline

• 31 January: El Pais newspaper publishes handwritten ledgers attributed to two former Popular Party treasurers
• 27 June: Ex-treasurer Luis Barcenas placed in custody, charged with tax evasion
• 15 July: El Mundo newspaper publishes friendly text messages from PM Mariano Rajoy to Barcenas
• 1 August: Rajoy tells parliament he made a mistake in trusting Barcenas

• Q&A: Rajoy party scandal in Spain
• Key players: Spanish 'slush fund'

The former party treasurer now says he made numerous bonus payments - in cash - to Mr Rajoy and other senior party members, out of the party slush fund of donations by businesses.

Mr Rajoy and other PP members have repeatedly denied that they received illegal payments and have accused Mr Barcenas of trying to blackmail them.

The PP's deputy leader, Maria Dolores de Cospedal, has been summoned to appear before investigating judge Pablo Ruz on 14 August.

Calls for Mr Rajoy to resign intensified after private text messages published by El Mundo newspaper suggested that he had friendly ties to Mr Barcenas from May 2011 to March 2013.

Mr Rajoy admitted sending messages of support to Mr Barcenas.

However, throughout the scandal, Mr Rajoy has at no point given any indication he would resign, says the BBC's Tom Burridge in Madrid.

The PP was handed a clear mandate by Spanish voters at the end of 2011 and as a result Mr Rajoy and his party enjoy a clear majority in parliament.

The corruption allegations coincide with Spain's worst economic crisis for decades, and have threatened to destabilise government attempts to shore up public finances and bring the recession to an end.

 

http://www.bbc.co.uk/news/world-asia-23528331

Kazakh opposition oligarch Ablyazov arrested in France

Mukhtar Ablyazov has said the allegations against him are politically motivated

Continue reading the main story Related Stories

• Italy political storm over Kazakhs
• Kazakhstan's independent media under fire
• Kazakhstan profile

French police have arrested Kazakh fugitive opposition oligarch Mukhtar Ablyazov, who is accused of embezzling billions of dollars, officials say.

He was detained in a village near the southern city of Cannes on Wednesday.

The former energy minister and head of BTA bank is wanted in Kazakhstan, Russia and also reportedly in Ukraine.

The 50-year-old denies the allegations, saying they are designed to eliminate him as a political rival to Kazakh President Nursultan Nazarbayev.

Human rights campaigners have accused Mr Nazarbayev of silencing independent media and persecuting political opponents, as well as using the police and courts to keep a tight grip on power.

'Personal vendetta'

Mr Ablyazov was detained in Mouans-Sartoux on Wednesday, the officials said.

BTA has filed a lawsuit in Kazakhstan, accusing him of siphoning off billions of US dollars from the bank.

The bank has won numerous court judgments to recover some $4bn (£2.6bn) of Mr Ablyazov's assets.

Separately, Russia has been seeking his arrest through Interpol on charges including "large-scale fraud", money laundering, abuse of authority and document forgery.

The Kazakh prosecutor general's office said on Thursday that Interpol had informed it of the arrest.

Mr Ablyazov was jailed in 2002 in Kazakhstan for abuse of power - a year after he set up an opposition party. He was pardoned in 2003 and spent the next two years in Russia.

He then returned to his native country where he led BTA until 2009. He fled Kazakhstan in 2009 after his bank was nationalised.

In 2011, he was granted political asylum in the UK, but later left the country after being sentenced to jail for contempt of court.

Mr Ablyazov's son, Madiayar, has recently accused President Nazarbayev of waging a "personal vendetta" against his father, according to Reuters.

In July, the Italian interior minister's chief-of-staff resigned amid a political storm over the deportation of Mr Ablyazov's wife and six-year-old daughter.

Italy has since admitted that the expulsion was illegal and asked Kazakhstan to return them.