First question, what are the reasons to have an (illegal) offshore set up?
The main reason, 80% of the 80/20, is to eliminate paperwork, reporting, and exposure. Yes, with an offshore set up you are LESS likely to run into legal problems. The other huge advantage is the time savings (as well as monetary) when you reduce compliance requirements to zero. Even if you could afford the army of lawyers and accountants to fill out the 100’s of forms, you would still be peppered daily by them as they tried to comply. Set up an offshore business and banking, and all of that disappears.
To delay the payment of taxes. If Manafort made $10MM, then he was able to keep $5MM extra in his account, which he could invest. That was $250K yearly additional income from investment returns. If he was really good at investing, it would be a whole lot more.
To bring in petty cash by using an ATM card. This is nickel and dime type activity for a millionaire.
To buy overseas properties to enjoy, like condos and boats. Somewhat risky.
Note that you don’t do this to escape taxes. There is a cardinal rule. Except for what you can get away with with a debit card, any money that comes into the US, you immediately declare as income and pay taxes on it.
From reading the indictment, Manafort used offshore accounts to pay for houses and luxuries. This was utterly stupid. He’s nailed on tax evasion since he didn’t declare it as income. What he should have done was not been greedy and created a contract with his offshore company, then invoiced against that contract for “consulting”. Then the offshore company pays you, and you declare it as income. The IRS isn’t going to notice since they are getting paid.
The people who did it right were the Clintons, though they had a level of complexity that is only possible for high rollers and violent drug king pins. Here’s a typical example of how it went down:
The Clinton Foundation gets a bribe.
The Clinton Foundation wires $400K to their friends at “Feed Uganda” located in Kampala, outside of US jurisdiction.
“Feed Uganda” hires “Goldman Sachs Consulting Panama” for $300K for “consulting”. Discovering that would be next to impossible.
Goldman Sachs New York pays Bill $250K for a 15 minutes speech. Bill reports it as income.
So Manafort was an idiot. Or maybe he had assurances from Obama that the FinCen investigation would be buried, but unfortunately for him he got caught up in the Mueller investigation. The indictment looks legit and Manafort looks like a crook. However why the heck was Mueller investigating a tax case? He should have turned it over to the IRS.
As for me, I look at the big picture. Let us say Manafort made $10MM. He would have had to fork over $5MM in taxes. So I understand WHY he tried to get away with paying no taxes. It was resentment due to the unjust society we have. Will Manafort get $5MM in service for that payment? No, he’ll get 1/350MM th of a chunk of defense and 1/350MMth of a chunk of national parks if he ever even visits them. Highways he pays for with gas tax (which is just). No, 99% of the loot will be redistributed, which is theft. So I understand the resentment.
Final thing to remember, if you ever set up offshore, remember the golden rule. If money comes into a US bank, declare it as income.
According to Bloomberg, global butter prices have almost tripled to 7,000 euros ($8,144) a ton from 2,500 euros in 2016, according to Agritel, an Paris-based farming consultancy. In Europe, prices peaked at about 6,500 euros a ton in September, the highest since the European Commission began collecting such data in 2000…The problem can be traced to the end of (EU) milk-production quotas in April 2015 that led to a glut early last year in Europe, and a drastic drop in prices. This prompted production cuts by spring this year.
“The butter shortage in French supermarkets is the direct consequence of the 2016 milk crisis which prompted a 3 percent drop in production,”Xavier Hollandtsni , a Kedge Business School strategy teacher and an expert on agricultural matters, said in a note Thursday……..
“Global demand started to pick up, with China starting to buy again after having stopped for a few months to tap into its stocks, leading to a substantial rise in milk and butter prices,” Begoc said. French retailers have not adapted to the new market reality and have kept a cap on prices, Roquefeuil said. For French dairy companies, it’s easier to export to countries such as Germany,
This is known as the calculation problem. The EU and China were “deciding” the appropriate butter supply and price, and now the world markets are screwed up. France is short of butter. With these prices, expect a butter glut in another 6 months.
This is why communism, socialism, fascism, and distributism CAN’T work.
In my book I create a Left/Right political spectrum of liberty on the Right and Statism on the Left. Thus the National Socialist Nazis are hard Left. Others have contrasted it as Individual/Collective.
We observe throughout history that the Left eats itself. How do you explain that?
First, consider that the left is Statist and Collectivist. Who are the type that are attracted to this world view? Consider one of the flaws we observe in the US government is that a Donald Trump is extremely rare. Getting to the point, successful people don’t want to go into government. They’d rather be producers and creators in the private sector. The losers end up in the government and over time the country degenerates.
This then is a key feature of the Left. They are losers and parasites, haters and worshipers of death. What do these people have in their life? The only thing they have is the Party, and the society, circle of friends, that surrounds that. Threaten that, and you threaten everything they have.
Second, the Left rests on shifting sands. We can look at the spectrum of politics through another lense: reason vs. emotion. The Right stands on first principles, logic, and reason. The Left stands on emotions — how does it make you feel? (This by the way is why I support a Constitutional Aristocratic Republic, where the aristocracy is defined as married men.) The bottom line is that the policies of the Left are always changing depending on what people are emotional about at the time.
Put together, and the denizens of the Left must always feel a bit paranoid that they will lose everything. They are always checking in on what they are SUPPOSED to feel and say. If someone in their ranks gets it wrong, their fellow comrades will immediately attack them as a defensive scape goat. It is likely that their closest friends will denounce them the loudest.
Interesting action in the 10 yr treasury. Fed selling may be showing an impact, though they have only sold $10 Billion. The yield has increased to 2.4%.
Revisiting my theme, the long bond interest rate should head higher as the Fed sells. This should show up also as a reduction in the excess reserves held on the Fed. As liquidity is drained, I’d expect the Fed to have to purchase short term instruments to maintain the Fed Funds Rate at their target of 1.25%.
Some expected impacts will be a higher dollar, bearish gold, higher mortgage rates, and a slow down of the economy.
I find it hard to believe this small sale by the Fed is directly responsible, though the market could be front running, i.e. they take the Fed seriously and are selling bonds (raising interest rates) ahead of the Fed.
Chart action shows rates are heading higher. Yields violated a declining trend line, came back and retested the old trend line, then moved higher.
I’ve seen this style, the humble brag, on separate occasions, and it appears to be more popular with females than males. It also appears to be something that leftists like to employ. Here are some examples:
1. There was an article written by a light skinned black woman who was saying she had privilege since she dated successful white guys, and how light skinned blacks had to admit their privilege and have more solidarity with their darker skinned sisters.
2. The countless interviews/articles by women over “cat calling”. Invariably they describe themselves as hot, and how they like to dress in slutty clothes (which they can do because they are hot), followed up with a complaint that they should be able to be so hot and not get cat-called.
3. Women complaining that they can’t get dates, even though they are “HIGHLY successful, intelligent women”.
Now examples 1 and 3 are goofy all-around, and example 2 I can kind of agree with depending on what we define as “cat calling”. However the annoying feature for all of these cases is invariably these girls need to brag how hot/great they are. They are just being catty to other women. It’s annoying, though it has nothing to do with economics.
It’s just that being a High IQ man in great shape that has packs of females throwing themselves at me I wish they would not waste my time, which is so valuable. (I see what he did there.).
Be careful going into the weekend. It appears Catalan will declare independence from Spain on Monday. Expect the dollar to rally, gold to rally, and stocks to take a hit if violence breaks out. Good time to be defensive.