No 969 “En mi opinión” Junio 6, 2015
“IN GOD I TRUST” Lázaro R González Miño Editor
Zona conservadora política e
irreverente.
AIR FORCE ONE
Unbelievable. Watch this - Only 3 minutes, and please send it on!
AIR FORCE ONE
Unbelievable. Watch this - Only 3 minutes, and please send it on!
AMENPER: El mensaje que les estoy enviando es una copia de un
mensaje de un Rabino Judìo a sus paisanos judìos que votan en boque Demòcrata.
Pero
es un mensaje universal porque muchos que no son judìos se dejan llevar por el
“truco” judìo que es el que diò las elecciones a Obama contra Ronmey como dice
el Rabino.
El
punto que ofrece es que a todo el mundo le gusta recibir algo por nada, y el Sistema
de cosas gratis a muchas personas es un mensaje difìcil de
contrarrestar. Pero lo que hay es que aunque hay veces que recibimos
regalos personales de personas allegadas, cualquier otro regalo trae cola, o
sea que hay un motive ultierior para el regalo que traerà consecuencias, o sea
que realmente no resultarà un regalo.
Los
judìos inventaron en el comercio un concepto que menciona en el Segundo pàrrafo
el Rabino y que se los marquè en verde. Este concepto es el “lider perdedor”
el “loss leader”. Con este concepto se revolucionò la
venta al detalle. La idea es vender cierta mercancìa perdiendo
dinero. Parecìa absurdo pero es efectivo.
Piensen
en una farmacia, que usted tenga un bebè que tiene que usar pañales diariamente
y que encuentre una farmacia en que los pañales sean varios dòlares màs barato
que en otra. Usted se harà cliente de esa farmacia, pero cuando
usted compre el antibiòtico que el pediatra le recetò al bebè, la farmacia
recuperarà lo que le “regalò” en los pañales. Lo mismo pasa con la
insulina en los diabèticos,o productos ètnicos en ciertas
àreas, Es simplemente el usar un product muy usado perdiendo para atraer al
cliente y ganarle en la otra mercancìa.
El sistema trabaja segùn la ingeniosidad del comerciante
El sistema trabaja segùn la ingeniosidad del comerciante
Hay
un dicho Americano que dice que en la vida no existe el almuerzo gratis, que
uno tiene que pagar para recibir, que hay que tener cuidado cuando te ofrecen
algo por nada.
De
eso se trata el escrito y de eso se trataron las elecciones
Please take a moment to digest this provocative
article by a Jewish Rabbi from Teaneck , N.J. It is far and away the most
succinct and thoughtful explanation of how our nation is changing . The article appeared in The Israel National News,
and is directed to Jewish readership. 70% of American Jews vote as Democrats.
The Rabbi has some interesting comments in that regard.
PLEASE MAKE CERTAIN THAT YOU AND ALL YOUR RELATIVES
AND FRIENDS VOTE IN THE 2016 ELECTIONS.
Rabbi Steven Pruzansky is the spiritual leader of Congregation Bnai
Yeshurun in Teaneck, New Jersey.
"The most charitable way of explaining the election results of 2012 is that Americans voted for the status quo - for the incumbent President and for a divided Congress. They must enjoy gridlock, partisanship, incompetence, economic stagnation and avoidance of responsibility. And fewer people voted.
But as we awake from the nightmare, it is important to eschew the facile explanations for the Romney defeat that will prevail among the chattering classes. Romney did not lose because of the effects of Hurricane Sandy that devastated this area, nor did he lose because he ran a poor campaign, nor did he lose because the Republicans could have chosen better candidates, nor did he lose because Obama benefited from a slight uptick in the economy due to the business cycle.
Romney lost because he didn't get enough votes to win.
That might seem obvious, but not for the obvious reasons. Romney lost because the conservative virtues - the traditional American virtues – of liberty, hard work, free enterprise, private initiative and aspirations to moral greatness - no longer inspire or animate a majority of the electorat
The simplest reason why Romney lost was because it is impossible to compete against free stuff.
Every businessman knows this; that is why the "loss leader" or the giveaway is such a powerful marketing tool. Obama's America is one in which free stuff is given away: the adults among the 47,000,000 on food stamps clearly recognized for whom they should vote, and so they did, by the tens of millions; those who - courtesy of Obama - receive two full years of unemployment benefits (which, of course, both disincentives looking for work and also motivates people to work off the books while collecting their windfall) surely know for whom to vote. The lure of free stuff is irresistible.
The defining moment of the whole campaign was the revelation of the secretly-recorded video in which Romney acknowledged the difficulty of winning an election in which "47% of the people" start off against him because they pay no taxes and just receive money - "free stuff" - from the government.
Almost half of the population has no skin in the game - they don't care about high taxes, promoting business, or creating jobs, nor do they care that the money for their free stuff is being borrowed from their children and from the Chinese.
They just want the free stuff that comes their way at someone else's expense. In the end, that 47% leaves very little margin for error for any Republican, and does not bode well for the future
It is impossible to imagine a conservative candidate winning against such overwhelming odds. People do vote their pocketbooks. In essence, the people vote for a Congress who will not raise their taxes, and for a President who will give them free stuff, never mind who has to pay for it.
That engenders the second reason why Romney lost: the inescapable conclusion that the electorate is ignorant anduninformed. Indeed, it does not pay to be an informed voter, because most other voters - the clear majority – are unintelligent and easily swayed by emotion and raw populism. That is the indelicate way of saying that too many people vote with their hearts and not their heads. That is why Obama did not have to produce a second term agenda, or even defend his first-term record. He needed only to portray Mitt Romney as a rapacious capitalist who throws elderly women over a cliff, when he is not just snatching away their cancer medication, while starving the poor and cutting taxes for the rich.
During his 1956 presidential campaign, a woman called out to Adlai Stevenson: "Senator, you have the vote of every thinking person!" Stevenson called back: "That's not enough, madam, we need a majority!" Truer words were never spoken.
Obama could get away with saying that "Romney wants the rich to play by a different set of rules" - without ever defining what those different rules were; with saying that the "rich should pay their fair share" - without ever defining what a "fair share" is; with saying that Romney wants the poor, elderly and sick to "fend for themselves" - without even acknowledging that all these government programs are going bankrupt, their current insolvency only papered over by deficit spending.
Similarly, Obama (or his surrogates) could hint to blacks that a Romney victory would lead them back into chains and proclaim to women that their abortions and birth control would be taken away. He could appeal to Hispanics that Romney would have them all arrested and shipped to Mexico and unabashedly state that he will not enforce the current immigration laws. He could espouse the furtherance of the incestuous relationship between governments and unions - in which politicians ply the unions with public money, in exchange for which the unions provide the politicians with votes, in exchange for which the politicians provide more money and the unions provide more votes, etc., even though the money is gone.
Obama also knows that the electorate has changed - that whites will soon be a minority in America (they're already a minority in California) and that the new immigrants to the US are primarily from the Third World and do not share the traditional American values that attracted immigrants in the 19th and 20th centuries. It is a different world, and a different America . Obama is part of that different America , knows it, and knows how to tap into it. That is why he won.
Obama also proved again that negative advertising works, invective sells, and harsh personal attacks succeed. That Romney never engaged in such diatribes points to his essential goodness as a person; his "negative ads" were simple facts, never personal abuse - facts about high unemployment, lower take-home pay, a loss of American power and prestige abroad, a lack of leadership, etc. As a politician, though, Romney failed because he did not embrace the devil's bargain of making unsustainable promises.
It turned out that it was not possible for Romney and Ryan - people of substance, depth and ideas - to compete with the shallow populism and platitudes of their opponents. Obama mastered the politics of envy – of class warfare - never reaching out to Americans as such but to individual groups, and cobbling together a winning majority from these minority groups. If an Obama could not be defeated - with his record and his vision of America , in which free stuff seduces voters - it is hard to envision any change in the future.
The road to Hillary Clinton in 2016 and to a European-socialist economy - those very economies that are collapsing today in Europe - is paved.
For Jews, mostly assimilated anyway and staunch Democrats, the results demonstrate again that liberalism is their Torah. Almost 70% voted for a president widely perceived by Israelis and most committed Jews as hostile to Israel . They voted to secure Obama's future at America 's expense and at Israel 's expense - in effect, preferring Obama to Netanyahu by a wide margin.
A dangerous time is ahead. Under present circumstances, it is inconceivable that the US will take any aggressive action against Iran and will more likely thwart any Israeli initiative. The US will preach the importance of negotiations up until the production of the first Iranian nuclear weapon - and then state that the world must learn to live with this new reality.
But this election should be a wake-up call to Jews. There is no permanent empire, nor is there an enduring haven for Jews anywhere in the exile. The American empire began to decline in 2007, and the deterioration has been exacerbated in the last five years. This election only hastens that decline.
Society is permeated with sloth, greed, envy and materialistic excess. It has lost its moorings and its moral foundations.. The takers outnumber the givers, and that will only increase in years to come.
The "Occupy" riots across this country in the last two years were mere dress rehearsals for what lies ahead - years of unrest sparked by the increasing discontent of the unsuccessful who want to seize the fruits and the bounty of the successful, and do not appreciate the slow pace of redistribution.
If this election proves one thing, it is that the Old America is gone. And, sad for the world, it is not coming back."
The problems we face today are there because the people who work for a living are outnumbered by those who vote for a living.
"The most charitable way of explaining the election results of 2012 is that Americans voted for the status quo - for the incumbent President and for a divided Congress. They must enjoy gridlock, partisanship, incompetence, economic stagnation and avoidance of responsibility. And fewer people voted.
But as we awake from the nightmare, it is important to eschew the facile explanations for the Romney defeat that will prevail among the chattering classes. Romney did not lose because of the effects of Hurricane Sandy that devastated this area, nor did he lose because he ran a poor campaign, nor did he lose because the Republicans could have chosen better candidates, nor did he lose because Obama benefited from a slight uptick in the economy due to the business cycle.
Romney lost because he didn't get enough votes to win.
That might seem obvious, but not for the obvious reasons. Romney lost because the conservative virtues - the traditional American virtues – of liberty, hard work, free enterprise, private initiative and aspirations to moral greatness - no longer inspire or animate a majority of the electorat
The simplest reason why Romney lost was because it is impossible to compete against free stuff.
Every businessman knows this; that is why the "loss leader" or the giveaway is such a powerful marketing tool. Obama's America is one in which free stuff is given away: the adults among the 47,000,000 on food stamps clearly recognized for whom they should vote, and so they did, by the tens of millions; those who - courtesy of Obama - receive two full years of unemployment benefits (which, of course, both disincentives looking for work and also motivates people to work off the books while collecting their windfall) surely know for whom to vote. The lure of free stuff is irresistible.
The defining moment of the whole campaign was the revelation of the secretly-recorded video in which Romney acknowledged the difficulty of winning an election in which "47% of the people" start off against him because they pay no taxes and just receive money - "free stuff" - from the government.
Almost half of the population has no skin in the game - they don't care about high taxes, promoting business, or creating jobs, nor do they care that the money for their free stuff is being borrowed from their children and from the Chinese.
They just want the free stuff that comes their way at someone else's expense. In the end, that 47% leaves very little margin for error for any Republican, and does not bode well for the future
It is impossible to imagine a conservative candidate winning against such overwhelming odds. People do vote their pocketbooks. In essence, the people vote for a Congress who will not raise their taxes, and for a President who will give them free stuff, never mind who has to pay for it.
That engenders the second reason why Romney lost: the inescapable conclusion that the electorate is ignorant anduninformed. Indeed, it does not pay to be an informed voter, because most other voters - the clear majority – are unintelligent and easily swayed by emotion and raw populism. That is the indelicate way of saying that too many people vote with their hearts and not their heads. That is why Obama did not have to produce a second term agenda, or even defend his first-term record. He needed only to portray Mitt Romney as a rapacious capitalist who throws elderly women over a cliff, when he is not just snatching away their cancer medication, while starving the poor and cutting taxes for the rich.
During his 1956 presidential campaign, a woman called out to Adlai Stevenson: "Senator, you have the vote of every thinking person!" Stevenson called back: "That's not enough, madam, we need a majority!" Truer words were never spoken.
Obama could get away with saying that "Romney wants the rich to play by a different set of rules" - without ever defining what those different rules were; with saying that the "rich should pay their fair share" - without ever defining what a "fair share" is; with saying that Romney wants the poor, elderly and sick to "fend for themselves" - without even acknowledging that all these government programs are going bankrupt, their current insolvency only papered over by deficit spending.
Similarly, Obama (or his surrogates) could hint to blacks that a Romney victory would lead them back into chains and proclaim to women that their abortions and birth control would be taken away. He could appeal to Hispanics that Romney would have them all arrested and shipped to Mexico and unabashedly state that he will not enforce the current immigration laws. He could espouse the furtherance of the incestuous relationship between governments and unions - in which politicians ply the unions with public money, in exchange for which the unions provide the politicians with votes, in exchange for which the politicians provide more money and the unions provide more votes, etc., even though the money is gone.
Obama also knows that the electorate has changed - that whites will soon be a minority in America (they're already a minority in California) and that the new immigrants to the US are primarily from the Third World and do not share the traditional American values that attracted immigrants in the 19th and 20th centuries. It is a different world, and a different America . Obama is part of that different America , knows it, and knows how to tap into it. That is why he won.
Obama also proved again that negative advertising works, invective sells, and harsh personal attacks succeed. That Romney never engaged in such diatribes points to his essential goodness as a person; his "negative ads" were simple facts, never personal abuse - facts about high unemployment, lower take-home pay, a loss of American power and prestige abroad, a lack of leadership, etc. As a politician, though, Romney failed because he did not embrace the devil's bargain of making unsustainable promises.
It turned out that it was not possible for Romney and Ryan - people of substance, depth and ideas - to compete with the shallow populism and platitudes of their opponents. Obama mastered the politics of envy – of class warfare - never reaching out to Americans as such but to individual groups, and cobbling together a winning majority from these minority groups. If an Obama could not be defeated - with his record and his vision of America , in which free stuff seduces voters - it is hard to envision any change in the future.
The road to Hillary Clinton in 2016 and to a European-socialist economy - those very economies that are collapsing today in Europe - is paved.
For Jews, mostly assimilated anyway and staunch Democrats, the results demonstrate again that liberalism is their Torah. Almost 70% voted for a president widely perceived by Israelis and most committed Jews as hostile to Israel . They voted to secure Obama's future at America 's expense and at Israel 's expense - in effect, preferring Obama to Netanyahu by a wide margin.
A dangerous time is ahead. Under present circumstances, it is inconceivable that the US will take any aggressive action against Iran and will more likely thwart any Israeli initiative. The US will preach the importance of negotiations up until the production of the first Iranian nuclear weapon - and then state that the world must learn to live with this new reality.
But this election should be a wake-up call to Jews. There is no permanent empire, nor is there an enduring haven for Jews anywhere in the exile. The American empire began to decline in 2007, and the deterioration has been exacerbated in the last five years. This election only hastens that decline.
Society is permeated with sloth, greed, envy and materialistic excess. It has lost its moorings and its moral foundations.. The takers outnumber the givers, and that will only increase in years to come.
The "Occupy" riots across this country in the last two years were mere dress rehearsals for what lies ahead - years of unrest sparked by the increasing discontent of the unsuccessful who want to seize the fruits and the bounty of the successful, and do not appreciate the slow pace of redistribution.
If this election proves one thing, it is that the Old America is gone. And, sad for the world, it is not coming back."
The problems we face today are there because the people who work for a living are outnumbered by those who vote for a living.
LAME @SS
MEDIA: Brings Up Rubio’s Speeding Tickets While Ignoring #Hillary’s Crimes
& Lies
I’m pretty sure the only reason Hillary
hasn’t had any speeding tickets we know of is because the dead broke politician
hasn’t driven a car in so many years.
Marco Rubio’s race to the White House
may be on full-speed, but it seems both the Republican presidential candidate
from Florida and his wife like to go even faster on the streets.
Rubio, 44, and his wife Jeanette have
had a combined 17 traffic citations since 1997, getting tickets for speeding,
running red lights and careless driving, according to Miami-Dade and Duval
County court dockets.
Thirteen of those citations belonged to
Jeanette and Rubio was responsible for four, according to the New
York Timesreport on the couple’s records.
Rubio received his first citation in
1997 for careless driving. He paid a fine and attended voluntary driving
classes.
Obama’s Dirty
Secret Is Out: Leaked Document Shows Top-Level Support For America’s Enemies
The secret document
was leaked to the Washington Times...
It’s a
well-established ploy practiced by conniving liberal strategists — point to or
present an extreme position or ultra-left candidate in order to make a
“moderate” position or “slightly left” individual seem acceptable by
comparison. In other words, propose a policy that’s way out in left field, then
agree to “compromise” on one that’s not so radical but still moves the
political agenda or course of history in a distinctly leftward direction.
Given a new report by
Bill Gertz in The
Washington Times, it appears that sort of tried and true progressive ploy is in full
play with the Obama administration’s continuing support of the Muslim
Brotherhood. Gertz pulls back the curtain on President Obama’s backing of the
Brotherhood as outlined in a “secret directive” called PSD-11:
RELATED STORIES
President Obama and his administration continue to
support the global Islamist militant group known [as] the Muslim Brotherhood. A
White House strategy document regards the group as a moderate alternative to
more violent Islamist groups like al Qaeda and the Islamic State.
The secret document
was leaked to the Times, as efforts to use the Freedom of Information Act to
pry it loose have reportedly been unsuccessful.
The White
House-favored Muslim Brotherhood has been classified as a terrorist
organization by several Middle Eastern nations, including Egypt, Saudi Arabia,
and the United Arab Emirates (UAE). “The UAE government also has labeled two
U.S. affiliates of the Muslim Brotherhood, the Council on American-Islamic
Relations (CAIR) and the Muslim American Society, as terrorist support groups,”
says the Times article.
And as WND just reported, CAIR
has once again been “slapped down” by a federal judge in Michigan because the
Muslim Brotherhood front group engaged in what’s come to be known as lawfare:
“…the use of legal maneuvers to threaten, intimidate or overwhelm critics of an
Islamic agenda…” This particular case that saw CAIR sanctioned by the court had
to do with the construction of a mosque.
Barack Obama’s
outreach to, and support of, the Muslim Brotherhood is nothing new. As Western
Journalism reminded readers in April of this year, Obama’s
address in Cairo during his worldwide “apology tour” saw prominent Muslim
Brotherhood members sitting in the front row. During that speech, the newly
elected president declared:
[The] partnership between America and Islam must be
based on what Islam is, not what it isn’t. And I consider it part of my
responsibility as President of the United States to fight against negative
stereotypes of Islam wherever they appear.
Hillary
goes ugly early with racism claims
How is it liberals are taken seriously when they say
it is racist to require an ID to vote? It is amazing to me the insanity that
liberals are able to make the masses believe.
Check it out:
Check it out:
If Hillary Clinton is concerned enough about her
candidacy to already be making accusation of racism against her potential
Republican rivals, this is going to be a long election cycle for her and for
the rest of the country.
Down in Texas for a campaign event aimed at restoring
her relationship with black Democrats who rejected her 2008 candidacy, Clinton
said that laws requiring voters to show identification at polls were part of “a
sweeping effort to disempower and disenfranchise people of color, poor people
and young people from one end of our country to the other.” Note the language
here. It’s not a misguided effort with an unfortunate result, it is a
deliberate effort to prevent minorities from voting. That’s not just racist,
that’s evil.
Clinton even made it personal, saying potential
general election foes Jeb Bush, Scott Walker and Rick Perry were “deliberately
trying to stop” minority voters from participating. It’s language that might
even give voter-ID opponent President Obama some pause, but Clinton tore into
her topic with evident relish. In this candidacy, Clinton has seemed at times
uncertain and usually vague. When it came to racially charged, partisan
attacks, however, she was imbued with a new vitality and was nothing if not
direct. In an ironic turn, Clinton accused Republicans of “fear-mongering about
a phantom epidemic” as she intoned against urgent dangers to civil rights.
Why would a politician go so bananas over policies
that are supported by something like seven out of 10 Americans? The standard
media take on Clinton’s overheated rhetoric is that she is still determined to
avoid her 2008 fate by pandering to, one by one, each of the parts of the
Democratic coalition. It’s been rolling out at the rate of about one group and
one policy reversal or expansion a week. And that is surely the biggest part of
this.
Read more at http://conservativebyte.com/2015/06/hillary-goes-ugly-early-with-racism-claims/
Read more at http://conservativebyte.com/2015/06/hillary-goes-ugly-early-with-racism-claims/
McCain slams Obama veto threat: 'Misguided and
irresponsible'
Greg Nash
The White House's veto threat of a defense policy bill that will
authorize funding for the military in 2016 is "misguided and
irresponsible," Senate Armed Services Committee Chairman John McCain
(R-Ariz.) said Friday.
"With global threats rising, it simply makes no sense to oppose a
defense policy bill — legislation that spends no money but is full of vital
authorities that our troops need — for a reason that has nothing to do with
national defense spending," he said.
Although the bill would authorize $612 billion in defense spending,
which amounts to what the president has requested for next year, it does so
through the infusion of money into a war fund known as Overseas Contingency
Operations (OCO).
Obama has rejected the use of the fund, instead calling for Congress to
lift the spending caps that have been placed on government spending under
sequestration.
“The White House threat to veto this legislation over OCO spending and
the desire for increases in non-defense spending is misguided and
irresponsible," McCain said.
Although the Obama administration has threatened a veto on the defense
policy bill in the past, current and former officials say the president is not
bluffing this time.
The White House reissued the veto threat on Tuesday evening before the
Senate took up the bill, and again during a press briefing on Thursday.
In addition, the White House has reached out to Senate Democrats
to ask them to uphold a veto, should Obama take that step.
Senate Democrats, leery of filibustering a bill that has passed for 53
years with bipartisan support, say they will take a stand on the defense
appropriations bill instead.
McCain has been on the defensive this week, warning the administration
not to treat the bill, which his committee crafted, "as a hostage in a
budget negotiation."
He said the administration's statement on Tuesday "makes clear that
the true basis of the administration’s veto threat has nothing to do with
defense."
McCain and other Republicans say the veto has more to do with raising
non-defense spending than it does with putting extra money into the war fund.
"In objecting to the use of $38 billion in Overseas Contingency
Operations funds, or OCO, to meet the President’s request of $612 billion, the
statement said the President ‘will not fix defense without fixing non-defense
spending,'" McCain said.
"It is simply incomprehensible that as America confronts the most
diverse and complex array of crises around the world since the end of World War
II, that a President would veto funding for our military to prove a political
point."
1-
“Snopes” PENSIONS AND INVESTMENTS.FATCA's good, bad, ugly choices
Foreign institutional investors face new
extraterritorial oversight
BY DON
SEYMOUR | APRIL 14, 2014
July 1 this year
marks the dawn of the FATCA new world order. Giving the U.S. Internal Revenue
Service unprecedented extraterritorial powers to gather information on foreign
financial institutions and their underlying account holders, the Foreign
Account Tax Compliance Act represents the U.S. Treasury Department's efforts to
prevent U.S. citizens and institutions from evading their tax obligations by
holding financial assets abroad.
RELATED
CONTENT
That's the textbook
definition, at least. In practice, what foreign financial institutions, or
FFIs, are likely to see is the U.S. — nostalgic for its more hegemonic days —
leveraging its still considerable might to impose a new dichotomy on the
financial world growing beyond its borders. That errant world will simply be
divided into those who comply with FATCA and those who don't. And FATCA's scope
is enormous and almost all-encompassing.
FATCA is estimated to
affect 300,000 FFIs, according to the IRS. This number is in addition to the
estimated 10,000 banks, custodians and transfer agents, more than 4,000 hedge
funds and a similar number of private equity funds that will be affected by the
legislation. The market consensus, however, is that these numbers are vastly
underestimated.
Even non-U.S. pension
funds have been caught in FATCA's broad reach and are generally deemed as FFIs
because of their investment activities. However, there is a small measure of
solace for some categories of FFIs that might be exempt from registering and
reporting. These include most governmental entities, most non-profits and
certain retirement entities, such as corporate pension funds. Such retirement
funds include those established in a country with which the U.S. has an income
tax treaty in force and which are generally exempt from income taxation in that
country. Pension plans or other retirement arrangements that are established in
the U.K., for example, are excluded as FFIs.
U.S. pension funds
and individual retirement accounts often have financial accounts with FFIs such
as foreign-based investment management firms, banks, hedge funds and private
equity funds. FFIs will not be required to report on U.S. pension funds and
individual retirement accounts that certify their exemption from FATCA
reporting on the new IRS Form W-9. This exclusion would be on the basis that
the account holder is exempt from taxation under section 501(a) of the U.S.
Internal Revenue Code.
FFIs that are set up
to provide retirement or pension benefits under the law of the country in which
they are established and whose contributions are from the employer, government
or employee, which are limited by reference to earned income, and in which no single
beneficiary has a right to more than 5% of the FFIs assets, might also be
exempt.
But as is often the
case with sweeping regulatory upheaval, FATCA is likely to cause collateral
damage. An estimated 6 million American citizens who reside and work outside of
the U.S. could be affected by FATCA.
Enforcement actions
against those deemed non-compliant with FATCA's regulations and requirements
will be severe, and ignorance of the law will be no excuse.
Hedge funds, private
equity funds and other investment fund structures, as well as many investment
managers operating in jurisdictions outside the U.S., are given three choices:
Comply; don't comply; and avoid.
The good choice: Comply.
FATCA was enacted
into law in March 2010. Since then, international jurisdictions have begun the
work of creating their own intergovernmental agreement-enabling legislation,
regulations and regulatory framework to facilitate a continuing exchange of
information between FFIs and the U.S.
According to the U.S.
Treasury, intergovernmental agreements “are a crucial component to FATCA
implementation. ... Treasury has signed nine IGAs and is engaged in related
conversations with more than 80 jurisdictions.”
Each FFI will need to
comply independently with FATCA, including securing a unique global
intermediary identification number for the entity, appointing a
FATCA-responsible officer, establishing a compliance program, monitoring the
effectiveness of the compliance program and the service providers involved in
FATCA compliance, and reporting to the IRS or local tax authority.
FATCA casts a wide
net. All foreign depositories, custodians, investment entities and specified
insurance companies fall under its purview. “Investment entities” include
organizations participating in investing, or administering financial assets for
or on behalf of a customer. Entities that are customers of yet other financial
institutions are no exception.
Foreign entities
operating as a collective investment vehicle, mutual fund, exchange-traded
fund, private equity fund, venture capital fund, leveraged buyout fund or
similar vehicle will be deemed an FFI by the IRS and obligated to comply with
FATCA. Hedge funds, whether established as corporations or limited
partnerships, generally fall into the FATCA regime and will have compliance
requirements to meet. Investment management companies, master funds with U.S.
feeders, general partners and even trusts also will be affected.
And while it might
seem logical to leave funds and holding companies with no U.S. investors and
funds sponsored by non-U.S. managers alone, no such luck. These, too, will be
bidden into compliance. Under FATCA, long-only funds with non-U.S. investors
might be subject to a 30% U.S. withholding tax on U.S.-sourced dividends,
unless there is an applicable treaty in place that reduces or eliminates this
tax.
FATCA even has the
potential to negatively affect non-U.S. pension fund returns, if the fund or,
in some cases, its ultimate beneficial owners are non-compliant.
Complying is rewarded
with huge benefits. FFIs that demonstrate their commitment to FATCA compliance
will be granted uninterrupted access to the world's leading global financial
institutions, major currencies and securities markets as well as
over-the-counter trades. Furthermore, they will not suffer the withholding
penalties on U.S.-sourced income.
The bad choice: Don't comply.
FFIs that willfully
or even unknowingly break FATCA rules will be subjected to a number of ugly
penalties, including a 30% tax withholding on U.S.-sourced income and withholding
on gross proceeds FFIs could face regulatory enforcement action and sanctions,
which will vary depending on the FATCA regime in which the FFI operates.
Should compliance not
be addressed, the FFI could lose institutional credibility and be treated as a
non-participating FFI by the IRS and by the rest of the FATCA-compliant world.
Suffering this type of reputational damage will almost certainly result in loss
of account holders. In fact, organizations and counterparties might restructure
to prevent non-participating FFIs from interacting with them.
The ugly choice: Avoid.
Avoiding the
FATCA-compliant financial world has ugly consequences. In the short-term, it
might be theoretically possible to find a counterparty willing to fly in the
face of the IRS and even a few account holders willing to pay the high ticket
price to go along for the ride, but we all know how this story ended for
certain banks in Switzerland.
Partner jurisdictions
can be expected to enact intergovernmental agreement-enabling legislation,
which makes it illegal for non-participating FFIs to continue operating from or
within the jurisdiction. Non-participating FFIs must prepare for closure of any
account they have in their own name or for customers.
Non-participating
FFIs will have limited, if any, access to the U.S. dollar and will be shut out
of the securities markets of the FATCA-compliant world.
The choice facing
FFI's, therefore, isn't much of a choice at all. Non-compliance, it seems, is
asking for the rope. n
Don Seymour is George Town,
Cayman Islands-based founder of DMS Offshore Investment Services, whose focus
includes hedge fund governance and other services for financial companies
worldwide. He is a member of the Financial Services Council of the Cayman
Islands government, a Cabinet-level appointment to provide strategic advice on
the financial industry.
2- “Snopes” Collapsing Currency
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Claim: The U.S. dollar will officially collapse after 1 July 2014 due to the implementation of H.R. 2847.
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Examples: [Collected via e-mail, April 2014]
Write Down This Date:
July 1st, 2014
On this date, U.S. House of Representatives Bill "H.R. 2847" goes into effect. It will usher in the true collapse of the U.S. dollar, and will make millions of Americans poorer, overnight. You now have just several months to prepare ...
July 1st, 2014
On this date, U.S. House of Representatives Bill "H.R. 2847" goes into effect. It will usher in the true collapse of the U.S. dollar, and will make millions of Americans poorer, overnight. You now have just several months to prepare ...
Origins: This item about the passage of H.R. 2847 causing the U.S. dollar to collapse as of 1 July 2014 is another example financial scarelore put out in conjunction with an investment come-on, in this case an ominous sales pitch put out by the folks at Stansberry & Associates Investment Research LLC.
This latest panic piece
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is offered in a Stansberry &
Associates presentation featuring a number of scary-sounding
statements about how we in the U.S. are soon to experience a
"near-complete shutdown of the American economy," will see "the
savings of millions wiped out," will be living under the imposition of
martial law by the federal government, and will be struggling in the aftermath
of a number of other apocalyptic financial scenarios.
And according to Stansberry & Associates, this remarkable, radical collapse of the United States monetary system and "our normal way of life" is going into effect in a mere matter of months (just like a similar recent conspiracy scare about the federal government's plan to eliminate 16 states from the U.S. in the very near future).
But wait ... all one needs in order to avoid suffering from this devastating national calamity, one that will collapse our entire monetary system and spell doom for the American way of life, is a little information. Information that can be yours if you'll just shell out $149 for a one-year subscription to Stansberry's Investment Advisory newsletter. Or, as one wry commentator put it:
And according to Stansberry & Associates, this remarkable, radical collapse of the United States monetary system and "our normal way of life" is going into effect in a mere matter of months (just like a similar recent conspiracy scare about the federal government's plan to eliminate 16 states from the U.S. in the very near future).
But wait ... all one needs in order to avoid suffering from this devastating national calamity, one that will collapse our entire monetary system and spell doom for the American way of life, is a little information. Information that can be yours if you'll just shell out $149 for a one-year subscription to Stansberry's Investment Advisory newsletter. Or, as one wry commentator put it:
Every stansberryreearch link I've ever
know has eventually led me to one of those endless, non-navigable videos that
tells me the world is about to collapse and to keep watching because after
maybe an hour or three the video is going to eventually reveal a tidbit of
information that is going to keep me from collapsing along with the rest of the
world. After about a half hour I will inevitably determine myself to not have
the time or interest to watch long enough to reach the carrot at the end of
their schtick.
In other words, if a financial company
spews a bunch of stuff that sounds sufficiently alarming, and then promotes its
product as something that will help protect people against this horribly scary
thing, it might be able to lure gullible folks into believing that a
"fairly easy and inexpensive to protect themselves" against losing
their money is for them to send their money to that company instead. And,
unfortunately, such schemes work often enough to keep these types of schemers
in business.
So what is this all really about?
H.R. 2847, also known as the Hiring Incentives to Restore Employment Act (or HIRE), was a Congressional bill passed into law in March 2010 that sought to provide payroll tax breaks and incentives for businesses to hire unemployed workers. A section of that bill, the Foreign Account Tax Compliance Act (known as FATCA), sought to eliminate the non-compliance of U.S. taxpayers who hold foreign accounts by requiring those taxpayers (including those living outside the U.S.) to report certain foreign accounts and offshore assets to the government, and by requiring foreign financial institutions to report information about the ownership of overseas assets held by U.S. taxpayers to the government:
So what is this all really about?
H.R. 2847, also known as the Hiring Incentives to Restore Employment Act (or HIRE), was a Congressional bill passed into law in March 2010 that sought to provide payroll tax breaks and incentives for businesses to hire unemployed workers. A section of that bill, the Foreign Account Tax Compliance Act (known as FATCA), sought to eliminate the non-compliance of U.S. taxpayers who hold foreign accounts by requiring those taxpayers (including those living outside the U.S.) to report certain foreign accounts and offshore assets to the government, and by requiring foreign financial institutions to report information about the ownership of overseas assets held by U.S. taxpayers to the government:
[H]ubbub is being created worldwide by a
new U.S. law that is virtually unnoticed within our borders. It is the Foreign
Account Tax Compliance Act of 2010, or Fatca.
The problem originates in U.S. government efforts to prevent future offshore-banking tax scams like the UBS one in 2009. To keep better track of the flow of assets owned by U.S. citizens, Fatca requires bankers in other countries to send the IRS information about transactions by any of their customers who are Americans. Similarly, U.S. banks have to report to the IRS info on their non-U.S.-citizen customers, so the IRS can send it on to their home countries.
You can understand the motivation behind the rule. It's a big connected world economy, huge sums can be transferred anywhere in an instant, and much as INTERPOL or the World Health Organization have a legitimate interest in sharing data, so too might taxing authorities. In principle, everyone should pay his or her fair share, somewhere.
The problem originates in U.S. government efforts to prevent future offshore-banking tax scams like the UBS one in 2009. To keep better track of the flow of assets owned by U.S. citizens, Fatca requires bankers in other countries to send the IRS information about transactions by any of their customers who are Americans. Similarly, U.S. banks have to report to the IRS info on their non-U.S.-citizen customers, so the IRS can send it on to their home countries.
You can understand the motivation behind the rule. It's a big connected world economy, huge sums can be transferred anywhere in an instant, and much as INTERPOL or the World Health Organization have a legitimate interest in sharing data, so too might taxing authorities. In principle, everyone should pay his or her fair share, somewhere.
FATCA requires foreign financial
institutions (FFI) of broad scope — banks, stock brokers, hedge funds, pension
funds, insurance companies, trusts — to report directly to the IRS all clients'
accounts owned by U.S. Citizens and U.S. persons (Green Card holders).
Starting July 1, 2014, FATCA will require FFIs to provide annual reports to the Internal Revenue Service (IRS) on the name and address of each U.S. client, as well as the largest account balance in the year and total debits and credits of any account owned by a U.S. person.
If an institution does not comply, the U.S. will impose a 30% withholding tax on all its transactions concerning U.S. securities, including the proceeds of sale of securities.
In addition, FATCA requires any foreign company not listed on a stock exchange or any foreign partnership which has 10% U.S. ownership to report to the IRS the names and tax I.D. number (TIN) of any U.S. owner.
FATCA also requires U.S. citizens and green card holders who have foreign financial assets in excess of $50,000 (higher for those who are bona-fide residents abroad) to complete a new Form 8938 to be filed with the 1040 tax return, starting with fiscal year 2011.
Starting July 1, 2014, FATCA will require FFIs to provide annual reports to the Internal Revenue Service (IRS) on the name and address of each U.S. client, as well as the largest account balance in the year and total debits and credits of any account owned by a U.S. person.
If an institution does not comply, the U.S. will impose a 30% withholding tax on all its transactions concerning U.S. securities, including the proceeds of sale of securities.
In addition, FATCA requires any foreign company not listed on a stock exchange or any foreign partnership which has 10% U.S. ownership to report to the IRS the names and tax I.D. number (TIN) of any U.S. owner.
FATCA also requires U.S. citizens and green card holders who have foreign financial assets in excess of $50,000 (higher for those who are bona-fide residents abroad) to complete a new Form 8938 to be filed with the 1040 tax return, starting with fiscal year 2011.
FATCA has been the subject of criticisms on a number of fronts (which the Treasury
Department has attempted to counter in its own "Myth
vs. FACTA" write-up), among them that the costs of
implementing it may outstrip the additional revenues it will bring in, that it
may prompt "capital flight" in the form of foreign financial
institutions divesting themselves of U.S. assets, that foreign relations may be
strained by the U.S. requiring foreign governments to gather and report (at
their own expense) information on U.S. citizens, and that the law may make it
difficult or impossible for U.S. citizens living and/or working abroad to open
accounts in foreign banks:
Passed by Congress in 2010, FATCA is
designed — using a controversial dragnet-like method — to catch those Americans
thought to be evading taxes by hiding their wealth in foreign bank accounts.
The way FATCA does this is by requiring that all non-U.S. financial
institutions pass along detailed information about American account holders, or
potentially face steep penalties.
But casting such a wide net is producing unintended consequences for some Americans who faithfully pay their taxes from afar.
Banks around the world are suddenly rejecting Americans as clients or customers, because they don't want the reporting and bureaucratic hassles, plus the potential exposure to draconian penalties. Non-Americans are pulling their assets out of U.S. banks. I get emails every day from American expats who say they are facing all kinds of problems bringing their long-standing foreign-based banking life into compliance with this new law. Some of them say they're getting ready to renounce their citizenship. Over the years I've had accounts with banks in England, Japan, Malaysia, China, and now Australia when living or working in those places, and I'm wondering what I have to worry about to make sure the remaining ones "comply."
"I have always filed my U.S. taxes just as I am supposed to," says Brian Dublin, 47, an American businessman now based in Zug, Switzerland, who has lived overseas for many years, including stints in Russia.
"However, as a result of FATCA, in the past year I have been kicked out of a Swiss bank that said, 'Hey, we love you, but we won't work with Americans.' I have also been kicked out of a Swiss pension fund. They told me they don't want any Americans in the fund. They don't want to work on behalf of the IRS," he says.
"And on top of that, I spend many hours and many dollars each year filing U.S. taxes when I sometimes turn out to have zero liability for that year because I have paid a lot of tax somewhere else," Dublin adds.
Dublin, a New York City native, says he will be eligible for Swiss nationality in the next few years and that if the situation has not dramatically changed he will give serious consideration to renouncing his U.S. citizenship.
But casting such a wide net is producing unintended consequences for some Americans who faithfully pay their taxes from afar.
Banks around the world are suddenly rejecting Americans as clients or customers, because they don't want the reporting and bureaucratic hassles, plus the potential exposure to draconian penalties. Non-Americans are pulling their assets out of U.S. banks. I get emails every day from American expats who say they are facing all kinds of problems bringing their long-standing foreign-based banking life into compliance with this new law. Some of them say they're getting ready to renounce their citizenship. Over the years I've had accounts with banks in England, Japan, Malaysia, China, and now Australia when living or working in those places, and I'm wondering what I have to worry about to make sure the remaining ones "comply."
"I have always filed my U.S. taxes just as I am supposed to," says Brian Dublin, 47, an American businessman now based in Zug, Switzerland, who has lived overseas for many years, including stints in Russia.
"However, as a result of FATCA, in the past year I have been kicked out of a Swiss bank that said, 'Hey, we love you, but we won't work with Americans.' I have also been kicked out of a Swiss pension fund. They told me they don't want any Americans in the fund. They don't want to work on behalf of the IRS," he says.
"And on top of that, I spend many hours and many dollars each year filing U.S. taxes when I sometimes turn out to have zero liability for that year because I have paid a lot of tax somewhere else," Dublin adds.
Dublin, a New York City native, says he will be eligible for Swiss nationality in the next few years and that if the situation has not dramatically changed he will give serious consideration to renouncing his U.S. citizenship.
Writing in the New American, Alex Newman
argued the more dire side of FATCA, speculating that it could potentially
result in a large-scale movement by foreign investors to pull out of U.S.
assets and markets:
One of the underreported but major risks
to the U.S. economy stemming from FATCA is the potential for wide-scale
disinvestment from the United States by foreign institutions seeking to avoid
the IRS, penalties, and huge compliance costs. In fact, countless analysts and
financial giants have said the 30-percent FATCA "withholding tax'
represents a powerful incentive to get out of U.S. markets entirely. The
implications for the stock market, bonds, the dollar, and more could be
monumental.
Estimates suggest there is currently more than $21 trillion of foreign capital invested in American assets and markets, with about $10 trillion of that in the stock market. However, that could change as FATCA enforcement begins later this year — possibly quickly. The Japanese Bankers Association, the European Banking Federation, the Institute of International Bankers, and others, for example, have all openly warned in recent years that some of their members could decide to ditch U.S. assets and markets in response to FATCA.
Luxembourg Bankers' Association CEO Jean-Jacques Rommes, speaking to Democrats Abroad, warned that the best way for banks to lower compliance risks was simply to reduce the amount of American assets they hold. "In other words, divest from the US market, in general," he explained, as summarized by the Luxembourg Bankers' Association.
Multiple reports have suggested that small and medium-sized firms, unable to bear the compliance costs or the crippling withholding taxes, would be especially likely to ditch American markets. "On the institutional side, the cost of becoming FATCA compliant may be prohibitive for some foreign institutions, and therefore they will divest from their American holdings," explained Douglas Goldstein, author of The Expatriate's Guide to Handling Money and Taxes and director of Profile Investment Services Ltd. Indeed, compliance costs borne by the private sector are expected to dwarf the amount of additional U.S. tax revenue — perhaps by hundreds of times.
Goldstein explained: "Faced with the choice between paying to implement the new rules or divesting from U.S.-based assets, smaller foreign banks that can't afford to shoulder these costs may choose the latter," Goldstein added. "After all, there are plenty of promising new markets in which to invest."
Needless to say, if foreign institutions started fleeing U.S. markets, the economic damage would be massive — potentially apocalyptic, especially considering U.S. trade deficits and America’s outsized reliance on foreign investment and outside credit just to function.
Estimates suggest there is currently more than $21 trillion of foreign capital invested in American assets and markets, with about $10 trillion of that in the stock market. However, that could change as FATCA enforcement begins later this year — possibly quickly. The Japanese Bankers Association, the European Banking Federation, the Institute of International Bankers, and others, for example, have all openly warned in recent years that some of their members could decide to ditch U.S. assets and markets in response to FATCA.
Luxembourg Bankers' Association CEO Jean-Jacques Rommes, speaking to Democrats Abroad, warned that the best way for banks to lower compliance risks was simply to reduce the amount of American assets they hold. "In other words, divest from the US market, in general," he explained, as summarized by the Luxembourg Bankers' Association.
Multiple reports have suggested that small and medium-sized firms, unable to bear the compliance costs or the crippling withholding taxes, would be especially likely to ditch American markets. "On the institutional side, the cost of becoming FATCA compliant may be prohibitive for some foreign institutions, and therefore they will divest from their American holdings," explained Douglas Goldstein, author of The Expatriate's Guide to Handling Money and Taxes and director of Profile Investment Services Ltd. Indeed, compliance costs borne by the private sector are expected to dwarf the amount of additional U.S. tax revenue — perhaps by hundreds of times.
Goldstein explained: "Faced with the choice between paying to implement the new rules or divesting from U.S.-based assets, smaller foreign banks that can't afford to shoulder these costs may choose the latter," Goldstein added. "After all, there are plenty of promising new markets in which to invest."
Needless to say, if foreign institutions started fleeing U.S. markets, the economic damage would be massive — potentially apocalyptic, especially considering U.S. trade deficits and America’s outsized reliance on foreign investment and outside credit just to function.
The full implementation of FATCA may, as
some critics have maintained, ultimately prove more harmful to U.S. business
interests and U.S. citizens living and working abroad than its benefits will
merit. But no credible source that isn't an investment firm trying to scare
potential customers into forking over money for a newsletter subscription is
seriously maintaining that a law passed five years ago will collapse the entire
U.S. economic system, destroy the American way of life, and lead to the
imposition of martial law.
Last updated: 23 March 2015
Last updated: 23 March 2015
Urban Legends Reference Pages ©
1995-2015 by snopes.com.
This material may not be reproduced without permission.
snopes and the snopes.com logo are registered service marks of snopes.com.
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snopes and the snopes.com logo are registered service marks of snopes.com.
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Sources:
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Fallows, James. "Fatca: The
Menace You'll Hear About in 2012."
The Atlantic. 31
December 2011.
Graffy, Colleen. "How to
Lose Friends, Citizens and Influence."
The Wall Street Journal.
17 July 2013.
Hjelmgaard, Kim. "Americans
Abroad Find Citizenship Too Taxing to Keep."
USA Today. 8 March 2014.
Newman, Alex. "The Dark
Road: The Worst Tax Law You've Never Heard About."
The New American. 8
April 2014.
Read more at http://www.snopes.com/politics/conspiracy/hr2847.asp#zlCkuCPwEXMkKxTt.99
Is Recent Rally in Oil Prices Sustainable?
Moral Capitalism… , by David Bahnsen
Executive
Summary
Market “corrections” of 5-10% happen all the time; market corrections of 20% or more are almost always valuation-driven or recession-driven. We do not believe the 5% variety are: a) avoidable), or b) concerning; we defend against the malignant kind with asset allocation and valuation awareness. The U.S. dollar is the primary catalyst right now both in terms of cause and effect – big, short-term impact in commodity and rate markets. QE in Japan IS not going away any time soon, but is no substitute for organic growth. Invest for organic growth, and validate that growth through dividend practices. Yields in Europe are modestly up despite QE, and this should be no surprise to us here in the states. Floating Rate bank loans have appreciated in value 36 of the last 42 times that interest rates rose .2% or more. Energy markets face political catalysts, particularly around crude oil export restrictions and liquefied natural gas exports. Oil prices have rallied a lot, and people are stunned that U.S. producers didn’t die. Their resilience can be explained by the strongest capital markets in the world. For contrarians, recent stock market outflows from retail investors are a bullish sign.
Market “corrections” of 5-10% happen all the time; market corrections of 20% or more are almost always valuation-driven or recession-driven. We do not believe the 5% variety are: a) avoidable), or b) concerning; we defend against the malignant kind with asset allocation and valuation awareness. The U.S. dollar is the primary catalyst right now both in terms of cause and effect – big, short-term impact in commodity and rate markets. QE in Japan IS not going away any time soon, but is no substitute for organic growth. Invest for organic growth, and validate that growth through dividend practices. Yields in Europe are modestly up despite QE, and this should be no surprise to us here in the states. Floating Rate bank loans have appreciated in value 36 of the last 42 times that interest rates rose .2% or more. Energy markets face political catalysts, particularly around crude oil export restrictions and liquefied natural gas exports. Oil prices have rallied a lot, and people are stunned that U.S. producers didn’t die. Their resilience can be explained by the strongest capital markets in the world. For contrarians, recent stock market outflows from retail investors are a bullish sign.
What is
your strategy for dealing with the next “market checkback”?
It depends on what one means by “market checkback." The drops of 5-10% or so, for example, are what most people mean, and each time such a period happens the media (and many investors) do respond as if the black plague has come upon us. A mathematical fact, though, is that over the last six years we have had twelve (that is not a typo) separate incidents of a 5-20% drop (all but two of those being 5-10%), and yet the market is up 258% (also not a typo) in that time frame. The 5-10% type drops are: a) Never going to go away, b) as untimeable and unavoidable as weather, and c) of no threat to a single client’s carefully constructed portfolio. Therefore, I do not “deal” with a market checkback other than celebrating the reduced entry point they provide us via our dividend reinvestment. Now, if one means more severe “checkback” (the 20-50% variety), my “strategy” is to be very valuation conscious, to be contrarian, wary of bubble formations, concerned by risk complacency, and a research hawk around potential recession causation. “Black swan” events though – the very rare market drops out of simply invisible issues in the marketplace – are, by definition, unseeable. History tells us that a focus on risk and valuation is the best defense.
It depends on what one means by “market checkback." The drops of 5-10% or so, for example, are what most people mean, and each time such a period happens the media (and many investors) do respond as if the black plague has come upon us. A mathematical fact, though, is that over the last six years we have had twelve (that is not a typo) separate incidents of a 5-20% drop (all but two of those being 5-10%), and yet the market is up 258% (also not a typo) in that time frame. The 5-10% type drops are: a) Never going to go away, b) as untimeable and unavoidable as weather, and c) of no threat to a single client’s carefully constructed portfolio. Therefore, I do not “deal” with a market checkback other than celebrating the reduced entry point they provide us via our dividend reinvestment. Now, if one means more severe “checkback” (the 20-50% variety), my “strategy” is to be very valuation conscious, to be contrarian, wary of bubble formations, concerned by risk complacency, and a research hawk around potential recession causation. “Black swan” events though – the very rare market drops out of simply invisible issues in the marketplace – are, by definition, unseeable. History tells us that a focus on risk and valuation is the best defense.
What is
the most important SHORT-TERM catalyst in market action right now (bond market,
rate market, stock market, and even overseas markets)?
I don’t see how anyone could answer anything other than the U.S. Dollar. That actually isn’t a very helpful answer, because it begs the question as to what actually drives the U.S. dollar, but from commodities to the Euro to interest rates to equities, there is a lot hinging on what the Dollar is doing (either as cause or effect). Is the Dollar inversely correlated to the U.S. stock market as many would have you believe? The answer is an emphatic no. Note the large rally in the Dollar in the chart below and the more recent selloff – both periods have included large U.S. stock market moves to the upside. The longer term “inverse relationship” is even more fictitious. We want a strong U.S. Dollar as American investors, and yet we also know that the Dollar and its relationship to commodity prices (oil among them) and global markets (the Euro among them) is a major factor in Fed thinking and risk markets. One thing you should know as much as you know anything: The Dollar will confound you if you try to expect a logical relationship to world events.
I don’t see how anyone could answer anything other than the U.S. Dollar. That actually isn’t a very helpful answer, because it begs the question as to what actually drives the U.S. dollar, but from commodities to the Euro to interest rates to equities, there is a lot hinging on what the Dollar is doing (either as cause or effect). Is the Dollar inversely correlated to the U.S. stock market as many would have you believe? The answer is an emphatic no. Note the large rally in the Dollar in the chart below and the more recent selloff – both periods have included large U.S. stock market moves to the upside. The longer term “inverse relationship” is even more fictitious. We want a strong U.S. Dollar as American investors, and yet we also know that the Dollar and its relationship to commodity prices (oil among them) and global markets (the Euro among them) is a major factor in Fed thinking and risk markets. One thing you should know as much as you know anything: The Dollar will confound you if you try to expect a logical relationship to world events.
Source: Bloomberg Economic News, May 2015
Why do
you believe quantitative easing will continue in Japan for the foreseeable
future?
One could make the argument that this logic I am about to present could be applied to a lot more places than Japan. But Japan is sort of the poster child for fiscal policy run amok, and I would argue the poster child for what happens to no-growth societies regardless of fiscal and monetary policy. Japan, like most developed countries, runs large deficits. In Japan’s case, if interest rates were to rise a very modest amount (say 2%), they would be spending 100% of tax revenues on mere debt service. So, they can’t see rates rise – period. However, it isn’t that easy to keep rates down. You have to control the demand (by being the buyer) and this is what QE is all about. It is a way to keep rates down. That’s it. The idea is that if they monetize their own debt long enough eventually they can let rates rise. This assumes they get their fiscal budget under control, and the only way to do that is by raising revenue and/or cutting expenses. Too much expense-cutting means decreasing GDP which means you’re back to where you started; increasing revenues by tax increases means decreasing GDP which also undermines the point. So, whether you are Japan, Europe, or the United States, the single variable by which all of this can be improved (not completely solved, but improved) is the idea of organic growth. Real, old-fashioned, wealthbuilding, innovation-based growth. Readers may decide where that growth is most likely to come from – I am unwilling to posit that it will come from Japan or Europe – but all the fiscal talk, monetary talk, QE talk, and Fed talk in the world is not going to replace this basic reality: Growth will be the antidote, or there will not be an antidote.
One could make the argument that this logic I am about to present could be applied to a lot more places than Japan. But Japan is sort of the poster child for fiscal policy run amok, and I would argue the poster child for what happens to no-growth societies regardless of fiscal and monetary policy. Japan, like most developed countries, runs large deficits. In Japan’s case, if interest rates were to rise a very modest amount (say 2%), they would be spending 100% of tax revenues on mere debt service. So, they can’t see rates rise – period. However, it isn’t that easy to keep rates down. You have to control the demand (by being the buyer) and this is what QE is all about. It is a way to keep rates down. That’s it. The idea is that if they monetize their own debt long enough eventually they can let rates rise. This assumes they get their fiscal budget under control, and the only way to do that is by raising revenue and/or cutting expenses. Too much expense-cutting means decreasing GDP which means you’re back to where you started; increasing revenues by tax increases means decreasing GDP which also undermines the point. So, whether you are Japan, Europe, or the United States, the single variable by which all of this can be improved (not completely solved, but improved) is the idea of organic growth. Real, old-fashioned, wealthbuilding, innovation-based growth. Readers may decide where that growth is most likely to come from – I am unwilling to posit that it will come from Japan or Europe – but all the fiscal talk, monetary talk, QE talk, and Fed talk in the world is not going to replace this basic reality: Growth will be the antidote, or there will not be an antidote.
How is
this applicable to our portfolio management?
Central bank experiments, episodes of quantitative easing, discussions of deficit expansions and deficit reductions – these all create volatility and market movements and warrant understanding and preparation. BUT longterm investors should be focused on where growth can and will come from. Profits create growth, and growth creates profits. It is the most non-vicious cycle in all of economics. And it is at the heart of our investment worldview at The Bahnsen Group.
Central bank experiments, episodes of quantitative easing, discussions of deficit expansions and deficit reductions – these all create volatility and market movements and warrant understanding and preparation. BUT longterm investors should be focused on where growth can and will come from. Profits create growth, and growth creates profits. It is the most non-vicious cycle in all of economics. And it is at the heart of our investment worldview at The Bahnsen Group.
So are
rising rates in Europe these last three weeks a good thing or bad thing?
It depends on your perspective, but I will say this: The Mario Draghi-led European Central bank embarked on an all-in quantitative easing type program this year to systemically save the Euro and avoid European collapse by creating negative interest rates while key Euro countries attempt to find their footing. Yields did collapse (part of their objective) and the Euro currency did crater (part of their objective). My above paragraphs would indicate that all of this is for naught if they do not create organic growth in the years ahead, but no one would disagree that they are at least trying to can-kick now with lower interest rates and a weaker currency to stimulate growth and keep the world turning. I don’t agree with the policy prescription, but that doesn’t mean it isn’t the policy prescription – it certainly is – and if they prove unsuccessful at keeping rates down even with unprecedented low yields, I would suggest that European markets are in for a world of hurt.
It depends on your perspective, but I will say this: The Mario Draghi-led European Central bank embarked on an all-in quantitative easing type program this year to systemically save the Euro and avoid European collapse by creating negative interest rates while key Euro countries attempt to find their footing. Yields did collapse (part of their objective) and the Euro currency did crater (part of their objective). My above paragraphs would indicate that all of this is for naught if they do not create organic growth in the years ahead, but no one would disagree that they are at least trying to can-kick now with lower interest rates and a weaker currency to stimulate growth and keep the world turning. I don’t agree with the policy prescription, but that doesn’t mean it isn’t the policy prescription – it certainly is – and if they prove unsuccessful at keeping rates down even with unprecedented low yields, I would suggest that European markets are in for a world of hurt.
What do
you believe is in store for energy markets from a political standpoint?
This is a great question, as so much of what we focus on in terms of energy sector impact is economic (global growth) and currency related (dollar movement), when in fact so much of the impact on the asset class comes from political activity. There is talk right now that the proposed deal the Obama Administration has on the table with Iran would free up Iran to export as much as 500,000 barrels of oil per day on world markets. I am not convinced this would happen, and frankly not convinced the whole deal will happen. I would suggest that a very interesting 2016 election issue which is highly unlikely to be a headline issue but will have a lot of weight behind the scenes is the state of future crude oil exports here in the states. Should there be a growing swell of interest in one party or the other (or one candidate or the other) in lifting and/or easing the ban on exporting crude oil, the implications could be profound. Beyond Iran and crude exports, I would point to the perpetually significant fact that the exporting of liquefied natural gas (not banned legislatively but regulated by the Department of Energy directly) is becoming more and more frequent. Approvals are not being provided quickly enough, but they have accelerated quite a bit (and this is very positive for infrastructure related gas investments). Finally, I am paying attention to chatter about how Congress and the President address Master Limited Partnership (MLP) structures. Earlier attempts in this administration to lessen the tax benefits of MLPs for oil and gas pipelines didn’t go anywhere, and bipartisan support shot them down. I am now reading that rather than try to damage the tax structure of MLPS benefits to oil and gas, there is a political effort to offer an MLP type structure for alternative sources of energy. Could be interesting.
This is a great question, as so much of what we focus on in terms of energy sector impact is economic (global growth) and currency related (dollar movement), when in fact so much of the impact on the asset class comes from political activity. There is talk right now that the proposed deal the Obama Administration has on the table with Iran would free up Iran to export as much as 500,000 barrels of oil per day on world markets. I am not convinced this would happen, and frankly not convinced the whole deal will happen. I would suggest that a very interesting 2016 election issue which is highly unlikely to be a headline issue but will have a lot of weight behind the scenes is the state of future crude oil exports here in the states. Should there be a growing swell of interest in one party or the other (or one candidate or the other) in lifting and/or easing the ban on exporting crude oil, the implications could be profound. Beyond Iran and crude exports, I would point to the perpetually significant fact that the exporting of liquefied natural gas (not banned legislatively but regulated by the Department of Energy directly) is becoming more and more frequent. Approvals are not being provided quickly enough, but they have accelerated quite a bit (and this is very positive for infrastructure related gas investments). Finally, I am paying attention to chatter about how Congress and the President address Master Limited Partnership (MLP) structures. Earlier attempts in this administration to lessen the tax benefits of MLPs for oil and gas pipelines didn’t go anywhere, and bipartisan support shot them down. I am now reading that rather than try to damage the tax structure of MLPS benefits to oil and gas, there is a political effort to offer an MLP type structure for alternative sources of energy. Could be interesting.
Do you
believe this recent rally in oil prices is sustainable?
I definitely do, but that is very different than saying that oil prices will not drop further. The recent increase to $60 off a low $40s price was quick and dramatic, but it also has left oil still 40% off 2014 highs. The reality is that Saudi manipulation of supply still has a profound effect on where oil prices can go and it remains to be seen whether or not Saudi Arabia has had enough of the forced pain on oil producers (themselves amongst that group). If one believes that their intention was to inflict pain upon U.S. producers so as to force a drop in production (and that was never my theory, as you know), it doesn’t seem to have worked much. U.S. energy profits are way down, obviously, and at least the oil services sector has seen some layoffs, but strong capital markets in the space has prevented the need for a catastrophic decrease in production. Production has come down, but overall the U.S. producers have hung strong which has likely forced some of the OPEC hand that they will not be creating a paradigmatic change in world energy production and pricing any time soon. Another big move down could very well shake up this situation, but for now it is clear that the refiners and infrastructure plays have been the relative winners whereas the drillers and servicers have been the most affected by oil prices.
I definitely do, but that is very different than saying that oil prices will not drop further. The recent increase to $60 off a low $40s price was quick and dramatic, but it also has left oil still 40% off 2014 highs. The reality is that Saudi manipulation of supply still has a profound effect on where oil prices can go and it remains to be seen whether or not Saudi Arabia has had enough of the forced pain on oil producers (themselves amongst that group). If one believes that their intention was to inflict pain upon U.S. producers so as to force a drop in production (and that was never my theory, as you know), it doesn’t seem to have worked much. U.S. energy profits are way down, obviously, and at least the oil services sector has seen some layoffs, but strong capital markets in the space has prevented the need for a catastrophic decrease in production. Production has come down, but overall the U.S. producers have hung strong which has likely forced some of the OPEC hand that they will not be creating a paradigmatic change in world energy production and pricing any time soon. Another big move down could very well shake up this situation, but for now it is clear that the refiners and infrastructure plays have been the relative winners whereas the drillers and servicers have been the most affected by oil prices.
If you
could think of one data point that analysts and pundits continually get wrong
from a macro standpoint, what would it be?
If you go back to some of my writing in 2009 you will see my beginning to flush out this line of thinking, but I have for some time now been mystified by the aspiration of analysts to use the consumer as an indicator of, well, anything whatsoever. Consumer confidence and sentiment has proven to be a very poor indicator of actual activity. Consumer behavior has often failed as both a leading and lagging indicator. The argument is that consumption still represents about 70% of GDP, which is true enough, but I think what pundits seem to miss is the immutable reality that consumption is a permanent part of our DNA, and that more important variables to both analyze and forecast data actually exist around Fed policy and corporate profits than they do consumer activity.
If you go back to some of my writing in 2009 you will see my beginning to flush out this line of thinking, but I have for some time now been mystified by the aspiration of analysts to use the consumer as an indicator of, well, anything whatsoever. Consumer confidence and sentiment has proven to be a very poor indicator of actual activity. Consumer behavior has often failed as both a leading and lagging indicator. The argument is that consumption still represents about 70% of GDP, which is true enough, but I think what pundits seem to miss is the immutable reality that consumption is a permanent part of our DNA, and that more important variables to both analyze and forecast data actually exist around Fed policy and corporate profits than they do consumer activity.
Contrarian
reflection of last week?
If one was looking for a reason to be optimistic about the sustainability of this bull market, I would suggest this chart is as good as any for contrarians (like us):
If one was looking for a reason to be optimistic about the sustainability of this bull market, I would suggest this chart is as good as any for contrarians (like us):
Source: BofA Merrill Lynch Global Investment Strategy, EPFR Global
Quote of
the Week
“Education is simply the soul of a society as it
passes from one generation to another.”
-- Gilbert K. Chesterton
It is a very interesting time in the markets right
now, but perhaps I always think that because I eat, drink, sleep, and breathe
in it all day, every day. It seems to me right now that the media is, even more
than normal, really tripping over themselves to generate some drama. And I will
be the first to say: They do such professionally – it is hardly new. However, I
have noticed a real particular frustration lately out of financial press that
they can’t seem to figure out if the big story is “the blow-up of the market,”
or “the thriving new highs of a rallying market." Their agenda is not
well-served by the present environment, or the call of this environment, which
is poise, patience, modest adjustment, and no overreaction. We are more focused
on tuning out media noise than we have ever been. Real life markets give us
enough noise.
Read more at http://affluentinvestor.com/2015/06/is-recent-rally-in-oil-prices-sustainable/#O01OgO7mAYtAM4xr.99
Read more at http://affluentinvestor.com/2015/06/is-recent-rally-in-oil-prices-sustainable/#O01OgO7mAYtAM4xr.99
Data
hacked from federal government dates back to 1985: U.S. official
BY ANDREA SHALAL AND MATT SPETALNICKJun 5th 2015
5:34PM
Data stolen from U.S. government computers by
suspected Chinese hackers included security clearance information and
background checks dating back three decades, U.S. officials said on
Friday, underlining the scope of one of the largest known
cyber attacks on federal networks.
The breach of computer systems of the Office of
Personnel Management was disclosed on Thursday by the Obama administration, which said
records of up to 4 million current and former federal employees may have been
compromised.
Accusations
by U.S. government sources of a Chinese role, including possible state
sponsorship, in the cyber attack could further strain ties between Washington
and Beijing. Tensions are already heightened over Chinese assertiveness in
pursuit of territorial claims in the South China Sea.
White House Press Secretary Josh Earnest
answers questions on the massive cyber-attack on the personal data of
government employees June 5, 2015 during the daily briefing in the Brady
Briefing Room of the White House in Washington, DC. The US government on
Thursday admitted
hackers accessed the personal data of at least four million current and former
federal employees, in a vast cyber-attack suspected to have originated in
China. AFP PHOTO/Mandel NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)
Several U.S. officials, who requested anonymity, said
the hackers were believed to have been based in China but that it was not yet
known if the Chinese government or criminal elements were involved.
Another U.S. official said the breach was being investigated
as a matter of national security.
The cyber attack was among the most extensive thefts
of information on the federal work force, and one U.S. defense official said it
was clearly aimed at gaining valuable information for intelligence purposes.
"This is deep. The data goes back to 1985,"
a U.S. official said. "This means that they potentially have information
about retirees, and they could know what they did after leaving
government."
Access to data from OPM's computers, such as birth
dates, Social Security numbers and bank information, could help hackers test
potential passwords to other sites, including those with information about
weapons systems, the official said.
"That could give them a huge advantage," the
official said.
Investigators have linked the OPM breach to earlier
thefts of personal data from millions of records at Anthem Inc (ANTM.N), the
second largest U.S. health insurer, and Premera Blue Cross, a healthcare
services provider.
It was the second computer break-in in less than a
year at OPM, the federal government's personnel office, and the latest in a
string of cyber attacks on U.S. agencies, some of which have been blamed on
Chinese hackers.
A Chinese Foreign Ministry spokesman said such
accusations had been frequent of late and were irresponsible. Hacking attacks
were often cross-border and hard to trace, he said.
White House spokesman Josh Earnest said, "It's
not clear who the perpetrators are," but he noted that President Barack
Obama and his aides regularly raise with their Chinese counterparts concerns
about Chinese behavior in cyberspace.
Disclosure of the latest computer breach comes ahead
of the annual U.S.-China Strategic and Economic Dialogue scheduled for June
22-24in Washington, D.C. Cyber security was already
expected to be high on the agenda.
U.S. officials said the talks would proceed as
scheduled, as would Obama's plans to host Chinese President Xi Jinping on a
state visit to Washington in the fall.
FBI PROBE UNDER WAY
The Federal Bureau of Investigation has launched a
probe of the OPM attack, and vowed that it would bring to account those
responsible for the hacking.
RELATED COVERAGE
› U.S. investigating cyber breach as national security matter: official
› White House: 'no conclusion' on who is behind cyber breach of U.S. data
› U.S. investigating cyber breach as national security matter: official
› White House: 'no conclusion' on who is behind cyber breach of U.S. data
OPM detected new malicious activity affecting its
information systems in April and the Department of Homeland Security (DHS) said
it concluded early in May that OPM's data had been compromised and about 4
million workers may have been affected.
Hackers hit OPM's IT systems and its data stored at
the Department of the Interior's data center, a shared service center for
federal agencies, a DHS official said on condition of anonymity.
Chinese hackers were blamed for penetrating OPM's
computer networks last year, and hackers appeared to have targeted files on
tens of thousands of employees who had applied for top-secret security
clearances, the New York Times reported last July, citing unnamed U.S.
officials.
James Lewis, a cyber security expert at the Center for
Strategic and International Studies think tank, said the administration's
disclosure of the hacking could be a signal to China of Washington's plan to
push hard on cyber issues at this month's talks.
"The Chinese have been saying privately, and
somewhat in public, that we want the summit to go really well. 'Let's not talk
about espionage. Let's talk about how we can work together'," said Lewis,
a former State Department official. "This might be a U.S. response to
that: 'No, we are going to talk about espionage.'"
He suggested it might also be a way of telling the
Chinese that part of the cost of their conduct in the South China Sea, where
Beijing is carrying out land reclamation on tiny islands and reefs, will be a
tense round of meetings in Washington.
(Additional reporting by Phil
Stewart, David
Brunnstrom, Julia
Edwards and Roberta
Rampton; Editing by Jason
Szep, Doina
Chiacu, Toni
Reinhold)
“FREEDOM
IS NOT FREE”
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