Best of the Week
Most Popular
1.War on Cash, Bank of England Planning Hyper QE, Scrapping Cash for Digital Currency - Nadeem_Walayat
2.Stock Market End Run Smash Crash Looks Imminent... - Clive_Maund
3.Europe Refugee Crisis, UK to Repatriate 120,000 Hungarian Economic Migrants Back to Hungary - Nadeem_Walayat
4.The Great Deflation Will Destroy All Bubbles – These Too - Harry_Dent
5.Deflation Signals Abound for U.S. Dollar, Forex Markets and Commodities - Rambus_Chartology
6.U.S. Housing Market Two Outs in The Bottom of The Ninth - James_Quinn
7.Poland, Czech, Slovakia and Hungary Refugee Hypocrisy After Flooding UK with 4 Million Economic Migrants - Nadeem_Walayat
8.The Two Real Reasons Crude Oil Prices Are Currently Slipping - Dr. Kent Moors
9.R.I.P. Interest Rates - Andrew Snyder
10.Steps from a Deep October Stock Market Selloff - Bob_Loukas
Last 5 days
A Key Oil Price Trend That Everyone Is Missing - 6th Oct 15
Stock Market Turn Appears to Have Been Made - 6th Oct 15
Designing a Dividend Growth Portfolio for a Specific Retirement Yield Objective - 6th Oct 15
Peter Schiff Predicts Gold Price Breakout - Video - 6th Oct 15
Theresa May Declares War on Immigration - Conference Speech Full Transcript - 6th Oct 15
Is Russia Plotting To Bring Down OPEC? - 6th Oct 15
Target Date Funds As Aid In Retirement Investment Portfolio Design - 6th Oct 15
Stocks Bear Market Apocalypse Imminent Crash Gets Nuked Again - 6th Oct 15
Redesigning Internet and Facebook to Explore Their Full Potentialities... - 5th Oct 15
Nightshades Curb Your Enthusiasm - 5th Oct 15
U.S. Recession Watch, High-Yield – Rising Defaults - 5th Oct 15
The Social Challenge to Find Humanity in Capitalism - 5th Oct 15
Fed Interest Rate Hike: "I don't care. It doesn't really make much of a difference" - 5th Oct 15
Gold Rose 2.2%, Silver Surged 5.4% After Poor Jobs Number On Friday - 5th Oct 15
Gold, Silver Precious Metals: a Critical Week Ahead - 5th Oct 15
Stock Market Correction Still in Force - 5th Oct 15
Gold Price Change in Character - 5th Oct 15
Putin’s Blitz Leaves Washington Rankled and Confused - 4th Oct 15
More Selling for Stock Market, Gold? - 4th Oct 15
Gold And Silver – A Reality Check - 3rd Oct 15
Stock Market Primary IV Still, or Primary V Underway? - 3rd Oct 15
The Oil Industry’s Day of Reckoning - 3rd Oct 15
U.S. Interest Rate Hikes Keep On Slippin' Into the Future; Treasury Yields Sink Again - 3rd Oct 15
China's Stock Market Crashing; Time for Panic or Restraint - 3rd Oct 15
SPX Stocks Bulls Struggle to Regain the Upper hand... - 2nd Oct 15
The Two Faces of Stock Market Volatility - 2nd Oct 15
Money Supply and the Fed’s Serious Inflation Risks - 2nd Oct 15
Stock Market How Bad Can This Get, And How Fast? - 2nd Oct 15
A Worrying Set Of Recession Signals - 2nd Oct 15
Negative Jobs Report Sents SPX, TNX Lower - 2nd Oct 15
Don't be Fooled by the Recent Equity market Rallies. Its a Bear Market, Stupid! - 2nd Oct 15
US Bond Market - How to Fix This - 2nd Oct 15
Survival Secrets from Colorado Resource Investing Front Lines - 2nd Oct 15
What Two Risks From Rising Interest-Rates Could Each Trigger A New Global Crisis? - 1st Oct 15
Stock Market S&P 500 Volatility-Based Price Probability Range - 1st Oct 15
Dow Stock Market About To Crash Like October 1929? Get Your Physical Silver - 1st Oct 15
Stock Market Negative Expectations Once Again - Will It Break Down? - 1st Oct 15
Advice for Biotech Investors: 'Hold Your Powder' 'til Winter - 1st Oct 15
Best Short-Term Commodity Market Opportunities - Video - 1st Oct 15

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

World Governments Prepare Stealth Capital Controls as International Money flows Tighten

Stock-Markets / Financial Markets 2013 May 03, 2013 - 05:10 PM GMT

By: Casey_Research


By Kevin Brekke, Editor: Metals & Mining Division :

The EU continues its chainsaw juggling act. The austerity pledge from France is holding about as well as its Maginot Line, while Greece has sworn to meet its fiscal targets in 2014 2015 2016 soon, and the Italians promise they're going to kick some serious fiscal butt as soon as the country returns from holiday.

Spain reassures that it will squarely confront its need to raise worker productivity whenever the unions call an end to protests against austerity. And the Portuguese high court ruled it is unconstitutional for civil servants to work for less than twice the wages of their private-sector counterparts.

This chronic "the sky is falling" in the EU had induced investor news-cycle fatigue and rendered last year's black-swan threat level from red to this year's collective yawn…

… until Cyprus tossed another chainsaw into the act. The Cyprus looting of private wealth was a cold-shower reminder of the tenuous security of assets that are concentrated within reach of a single government – doubly true of nations in a desperate fiscal situation whose financial sector is about to topple.


The blatant theft of depositor money in Cypriot banks was at first peddled as a one-off emergency measure. Then a Freudian slip by the head of the Eurogroup finance ministers, Mr. Dijsselbloem, suggested this would be the new pattern for similar future events. Much back-pedaling and "clarification" ensued.

But don't bother squinting as you try to read the lips of mumbling bureaucrats. Just follow what they're doing and you won't get blindsided.

What have they been up to? In October 2011, the Financial Stability Board (FSB) – a tentacle of the Bank for International Settlements, the central bank for central bankers – released a report that proposed a new regime to resolve financial-institution instability.

In the report, the FSB calls for solvency support for banks without taxpayer exposure and the allocation of losses to shareholders and unsecured and uninsured creditors. Deposits at a bank are considered a loan, and if a bank fails, its depositors become unsecured creditors for amounts that exceed the insurable limit.

It gets worse. To protect the integrity of the financial system, controls on both endogenous (the bank itself) and exogenous (other firms and cross-border cooperation) capital movement can be implemented. This is exactly what happened in Cyprus. To prevent capital flight out of the banking system, the movement of money out of or between banks was restricted, as well as capital sent outside the country.

The G20 has fully endorsed the plan, and its implementation is complete or under way in member jurisdictions. The US is a G20 member, so don't kid yourself into believing it can't happen in America. It can and will. The Cyprus event has been carefully framed as an anomaly when in fact it is part of a well-orchestrated script.

In the Year of Our Overlord 1 AF

January 1, 2014, will mark the start of Year 1 AF – "after FATCA." In the run-up to the US reporting regime's full implementation, many foreign banks have opted not to accept US persons as clients, and we can see why. FATCA is a huge burden on foreign financial institutions in terms of time and resources needed to identify, track, and report on their US clients.

Today, it is nearly impossible to find a foreign bank that will open an account for an American without them visiting the bank and delivering a stack of notarized paperwork to prove they are who they say they are. Other banks that had welcomed US persons have suspended doing so in anticipation that further demands on their time will be announced.

In fact, one bank we spoke with during our research on internationalization has done just that. Lloyds TSB has stopped opening accounts for Americans, pending a review of FATCA later this year. Our contact at the bank did not sound optimistic that the policy would be reversed. This is a trend we expect will gain traction.

And as if Americans seeking to internationalize weren't already facing stiff headwinds, a recent leak of internal documents linked to offshore entities will likely add some force. In early April, millions of emails and other records were leaked with information on thousands of account and company owners in the British Virgin Islands, a popular offshore banking center. The leak exposed several high-profile clients that are allegedly "hiding" assets from their home tax authorities.

This is just the kind of news that will embolden the offshore-means-tax-evasion governmenteers to twist the reporting screws a little bit tighter.

When Is Now

The incremental creep of crises continues to aggravate the financial landscape and provokes increasingly desperate responses from Western governments, particularly the US.

Yet in spite of all the words unleashed and regulations imposed against offshore investing, it remains unquestionably legal. How long it will continue to be legal is questionable.

Is it easy? No. But neither is getting your luggage and shoes through airport security. The situation for the easy movement of capital and assets across borders is dire, but it is not hopeless if you have the right information.

FATCA has effectively acted as stealth capital controls, as the regulations dissuade foreign financial institutions from doing business with Americans, discouraging all but the most persistent investors from pursuing an international wealth preservation strategy.

As the pieces come together, a clear picture emerges: Americans are just one financial crisis away from triggering the provisions of the G20-backed FSB financial resolution regime. And that almost certainly will include restrictions on the movement of capital. Once your money is trapped inside the US, any type of concocted emergency "tax" can be imposed on your wealth.

Additional taxes are just one of many steps your home government can take to grab a share of your hard-earned wealth. Wise investors disperse their assets internationally to minimize this risk, and though it's getting late in the game, there's still time for you to join them.

You can learn about moving your cash offshore... setting up an offshore LLC... investing in international stock markets... and internationalizing yourself, including getting a second passport. It's all available in an information-packed special report titled Going Global 2013. You won't find a better resource for internationalizing your life and your assets. Get started today.

© 2013 Copyright Casey Research - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Casey Research Archive

© 2005-2015 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History