In “Planet U.S.A”, the U.S.A. isn’t everything – it’s the only thing! The U.S. is of course also the world’s number one debtor. As was argued in a post yesterday, the U.S. is, through its attempts to increase the money supply, inflicting a vicious inflationary tax on the rest of the world. But, then again, they are the U.S. Therefore they can do what they want (or can they). How much longer is the rest of the world going to tolerate this? As one commentator noted, when it comes to other countries, the U.S. is kicking them in the banks. Of course, FATCA, the new Berlin wall of the financial system is a big part of this.
An act of particular U.S. good graciousness occurred on May 15, 2012. The U.S. invited its, subjects (the rest of the world’s sovereign countries) to a hearing on the implementation of FATCA. Fascinating, the world’s biggest debtor, telling the rest of the world how it must behave. I for one, don’t believe that King U.S.A. is going to get away with this. Peaceful resistance to FATCA is likely. Peaceful resistance to FATCA will result in a new financial world order. FATCA will certainly hasten the (inevitable) demise of the U.S. dollar as the world’s reserve currency.
Funny, when it comes to debt, I didn’t realize that the debtor set the rules with the creditors.
#FATCA unites world against U.S. renounceuscitizenship.wordpress.com/2011/12/30/oba… and on May 15 the world told the U.S. why google.ca/#hl=en&gs_nf=1…
— U.S. Citizen Abroad (@USCitizenAbroad) May 16, 2012
The #FATCA hearings: 1. Canada objects business.financialpost.com/2012/05/15/can… 2. Global bankers object bloomberg.com/news/2012-05-1… U.S.A. says “Go ahead make my day”
— U.S. Citizen Abroad (@USCitizenAbroad) May 15, 2012
Surely these other countries must have the “intelligence” to see that this is about control and nothing else. Like I said in a different comment, how easy this would be for the US to “change the rules” (something they always do), and say “Ok, you must give us the information on anybody that we want, or we will withhold 35% of US-sourced based payments”.
The FATCA represents a humungous risk to banks and to the sovereignty of nations. This is huge; how countries implement this FATCA can affect geopolitics for the next 50 years, or more. The safest thing is to tell the US to “shut up and sit down” and then pull out of the US altogether.
How many times in my life have I heard, “It’s on paper, but it’s not enforced.” It’s not enforced until they decide to enforce it. If it’s on paper, then it is a risk. Period. Look at the FBAR!! Or the requirements for overseas filers? Non of that was “enforced” in the past, but now they nail people.
As far as the end of the dollar goes, I don’t see much change there because I know that things go in cycles. Brazil was the “darling” of the investment world and bloggers for a decade. But things are starting to slow down here. Demand is drying up. The Government is lowering interest rates to try to stimulate demand and exports through a weaker currency. It’s a real balancing act that they are doing! So if anything, I personally see the dollar going up in value in this next cycle. We may have some dips, but I do expect the dollar to rise over the long-term. My view on this is unemotional, that’s not affected by tricky governments, citizenship, FATCA, or anything else.
@geeez I agree, once FATCA would be implemented, the US would have a whole lot of information which could be used to leverage (read perhaps as “blackmail”) countries to accept more US extraterritorial policies.
http://www.thestar.com/business/article/1178970–canadian-bankers-fight-washington
Toronto Star article, but no section for comments yet.
Am wondering why this paragraph is only in the midst of the article:
“The Canadian government is largely staying out of the fray despite the fact as many as 1 million Americans live in Canada, possibly unaware they and their Canadian banks are about to face the new reporting requirements.”
Also, does not make clear that to the US, ANY bank ANYWHERE non-US = ‘offshore’ or ‘foreign’. They don’t make the connection sufficiently clear that to the US, Canada and every other country in the world is a ‘foreign’ potential tax haven for the purposes of this law – simply based on being outside the US – with absolutely no other criteria.
They also don’t really explain the real nature of the impact on ALL the account holders in banks in Canada (and elsewhere outside the US), or discuss just how many dual US/Canadians, or accidentals, or green card holders, or some snowbirds, this is going to potentially penalize through onerous reporting and penalties for even accidental footfaults in complying/ noncomplying through individual FATCA filings due this year. Or the tie in with the FBARs and extra-territorial taxation. Many many people still don’t know about this – and is it any wonder given the complexity of the subject, and the ways in which it is discussed (or not) in the media – as only having an effect on institutions – with no dots connected as to the privacy and witholding or other issues that will fall onto lowly individuals? The discussion of ‘accounts’ also misleads readers into thinking only of chequing/savings, rather than things they consider untouchable and Canadian government protected like RRSPs, and the like.
@badger Great article you linkted to above in the Toronto Star. What is unfortunate is that the article does not appear to be open for comments. Does anybody know how to contact the Editor / Author, I am not familiar with the Star site.
Another article quoting Jatras re repealing FATCA;
http://www.investordaily.com.au/cps/rde/xchg/id/style/14218.htm?rdeCOQ=SID-0A3D9633-40981AB7
…………..””To the trained Washington eye, FATCA presents what military planners call a target-rich environment for, first, rendering unenforceable the partnership agreement and the FATCA regulations, and then for final repeal of this monstrosity,” Washington-based government relations firm principal James George Jatras said.”
“……….Jatras said the public discussion on FATCA in the US had only just started.”
“It sounds hard to believe, but you’d be shocked to learn people here have never heard of FATCA, and when you explain it to them their jaw drops,” he said.”………
@badger
Most interesting links, particularly the investordaily article and Jatras’ comments. I hope he is correct.
Does anyone else find the ‘silence’ of our own (Canada’s) finance department, to be ‘deafening’? It seems like ages since Flaherty or anyone else in government has made a statement with regard to Canada’s privacy laws and FATCA. Even the CBA’s submission to the Washington meeting does not address that issue – addresses instead the issue of ‘not enough time’ to implement the FATCA rules.
@badger, another good article “FATCA is projected to “recover” less than $1 billion a year – enough to fund the federal government for about two-and-a-half hours,” he said.” If we think about it, imagine the expense incurred at the banks (including indirect costs of the employees in the banks that have to worry about this) the time wasted on the part of everybody who either fights FATCA, hides from it, or complies with it. All of that wasted effort that could be creating wealth and innovation worldwide? All for just 2.5 hours of US Gov’t operating expenses? What a rediculous investment, especially when one weighs in the bad reputation and capital flight it will cause.
@JeffDThomas,
This might be the same author – it was at the bottom of another Star article:
“Peter Morton is a Washington-based freelance journalist. petermorton@economicreporter.net
http://www.economicreporter.net/about_us
it looks like other Star article are open for comment, perhaps this one is not open for comment yet as it was just published.
from the link to the author’s bio:
http://www.economicreporter.net/about_us
“Mr. Morton is both a Canadian and American citizen and has written extensively about macro-economics, bilateral and multi-lateral trade issues as well business, economics and politics.”
…”and received the Canadian Readers’ Digest Story of the Year for a story about Members of Parliament receiving two pensions or “double dipping.’ That story ultimately led to a major overhaul of the government pension system in Canada. ”
“Mr. Morton has appeared frequently on both US and Canadian television and radio, as well as writes for a variety of American and Canadian newspapers and magazines.”
Sounds like someone who has the background to really understand the issues from the US/Canadian cross-border (and broader, global) perspective.
Tax Executives Institute, Inc have posted their testimony (by Mike Bernard of Microsoft) on the FATCA public hearings. It seems to me all they’re asking for is more time?? Comments can be made…
http://www.tei.org/news/TEINewsFeed/Lists/Posts/Post.aspx?List=af3f3f92%2D29d7%2D4956%2D86b4%2D7757d49d8f55&ID=316&RootFolder=%2Fnews%2FTEINewsFeed%2FLists%2FPosts&Source=http%3A%2F%2Fwww%2Etei%2Eorg%2FPages%2Fdefault%2Easpx&Web=c6baa8a6%2D1ca7%2D4e13%2Da9c4%2Dde909aec5305
I live overseas and the reality of FATCA is this: Some countries (like Switzerland) balk at FATCA’s onerous and sovereignty-destroying requirements, but most will jump on board. After all, FATCA opens the way to data sharing on individuals. So far, data flows will be in one direction (to the US), but I believe many foreign governments are somehow expecting some quid quo pro, even if it makes a farce of their sovereignty.
Too, the Big Five are loving this and are organizing themselves accordingly for the big dineiro flow.
The only group that will suffer immensely from FATCA and have their rights and privacy (and in some cases even bank accounts) taken away will be US citizens abroad (and those with “indicia” of US person status). Things will only get worse for them.
I don’t think that Switzerland is balking enough at FATCA. But I am trying to change that without becoming too much of a target for the spooks.
May 15th release: Center for Freedom and Prosperity site, calling for repeal of FATCA. It says it’s a ‘non-profit organization created to lobby lawmakers in favor of market liberalization.’
http://freedomandprosperity.org/2012/press-releases/treasury-hearing-on-fatca/
@ Jefferson
Good luck.
You know, the sad thing is that European governments today love to roll over for the US, in one form or another. Sometimes it’s so extreme I don’t understand it. Many of the present crop of political leaders here crave approval – at any cost – from their constituents as well as from the US. But all this represents the old EU-centric order, who are now being voted out of office in one country after another (witness France and Greece). So I have some hope that countries here will slowly rediscover an important concept called “sovereignty.”
The US is trying to make use of the old adage “you owe the bank $1000 dollars it’s your problem, if you owe the bank $100M its the bank’s problem”
However this is a short term strategy because the “bank” will eventually get itself out of that situation by crisis or planned divestiture. No country has ever solved its debt problems without giving up influence or power by not paying.
The Americans actually believe they owe so much to China that they won’t flinch. The creditor always has the upper hand eventually whether the debtor wants to believe that or not.
The day will come when they will decide the US is too much of a liability to support perhaps like the EU and Greece today. Debtors very rarely get the upper hand on creditors without paying a big price. The US should concentrate on improving its hand by domestic means and not rely upon China to flinch – they may not.
Pingback: FATCA Public Hearing – May 15, 2012 | outragedcanadian.ca
Badger:
Peter Morton is an old colleague. We both worked at the Vancouver Sun as reporters years ago, and we’ve had contact on other stories over the years.
I’m going to send him a note and see if I can help him out. Interestingly, I didn’t know he was dual.
NYT wasn ‘t interested in my op-ed submission — too long I’m sure. I’ve shortened it considerably and sent it off elsewhere. I’ll let everyone know if anyone bites.
I’ll tell you what bugs me about the articles written about FATCA in both the American and Canadian press. Look at how Peter Morton of the Star in badger’s link describes it: ““FATCA will pose significant business challenges to financial services organizations, especially (foreign financial institutions) and U.S. withholding agents, and affect their business models. It will also impact their non-U.S. customers/clients, investors, and counterparties,” said KPMG in its analysis.”
These mealy-mouthed phrases just do not resonate with the uninformed reader, who will read them and say, “Yeah, so? How about those Leafs, eh?”
“Significant challenges”? “Will affect their business models”? You mean that the banks must violate the privacy laws of their own countries in order to determine which of their customers are US citizens, and will cost the banks hundreds of thousands, if not millions of dollars, plus months or years of reforming their procedures and hiring and training new staff, and therefore result in increased bank fees for all their customers, simply to comply with FATCA.
The reason Canadians aren’t angry about this is because the media make it sound like the IRS is imposing a few mild administrative irritations for the bank staff. They don’t know what a major upheaval it is for their own banks nor what it will mean for them as customers, and they certainly do not recognize the assault on Canadian sovereignty from FATCA or any alternative agreements contemplated by their government.
BTW — does anyone know a simple way to make all these links open in a new tab, instead of a new window? If I want to refer back to, say, badger’s link, I have to open IBS in two windows and juggle them back and forth to put my reply together coherently.
Right Click on the link and select Open in New Tab
@Christophe: well duh!
I just tried it. It’s wonderful! Do you know how long I’ve been struggling with this??
I can’t believe how complicated it gets if you Google that question!
Will you marry me?
@foxyladyhawk, I agree with you that the language needs to change in order for the average Joe to grasp what’s really happening. Phrases like “the US though FATCA poses a serious threat to Canada’s sovereignty and tramples on the privacy of all Canadians” might resonate more. Most Canadians don’t have much sympathy for the banking establishment and may even think that the banks are too greedy and deserve some impediments to their profits. I have been telling everyone I can that you don’t have to love banks to hate FATCA!
RE: opening links
For Mac users press CONTROL/OPTION and select Open Link in New Window.
@Arrow, good to know of a connection with the author- who seems to have the background to make sense of all this.
Sorry to hear about the op-ed piece, but thank you for working on it. The op-ed more personal piece can resonate with the average person – to tell them why they should care, rather than just the seemingly-distant bank point of view. I think that is why the NYT article will be effective- because it speaks to how this is crushing ordinary people – who have not been seeking to do more than just continue to live the way US citizens INSIDE the US do, and the way their compatriots do. Just working and banking and paying taxes in full in the countries where we live – trying to raise families and retire – same as any ordinary Joe inside the US. Which is why this is so tragic – because it crushes anyone in it’s path – like a juggernaut – and accomplishes very little constructive – not even for the US itself.