Dear rss free blog,
Under Internal Revenue Service pressure, the
Big Three Israeli banks have told all US residents with Israel bank
shareholding accounts to sell all securities held or close them. Israel’s banks
will no longer allow US residents to have securities accounts, according to Globes Israel, a website. Israeli banks, following the
advise of their lawyers, are instructing US residents with Israeli accounts to
immediately sell the securities in them, or, alternatively, to close the
accounts.
This measure is being taken by the major
Israeli banks to continue to operate in this country. Apparently the IRS,
basing its demand on the settlement over confidential accounts used to evade
taxes housed at Switzerland’s
UBS, has asked the major Israeli banks
for the names of all U.S.-resident customers. Barclays
analysts downrated the Israel
bank stocks.
The main reason is that Israel does not
tax capital gains. Several other countries, many in Europe,
also do not have capital gains taxes. Israel
does have independent brokerages (not linked to banks with networks in the USA). It would
seem logical to move your stock account to an independent non-U.S. brokerage,
but the Israeli banks will not help with the transfer, it appears. Do not move
from Bank Leumi to Goldman
Sachs, or from Hapoalim to E-trade, by the way.
While Israel is a
special case, because of its high involvement with Wall Street (where many Tel
Aviv stocks are co-listed), and because of its bad money laundering history, I
suspect similar pressures are being put on other foreign country banks and
brokers. Keeping the business of U.S. residents or citizens is just
not worth the regulatory hassle.
If you want to open a tax-evasion
broker account, consider one of the following underdeveloped countries, many of
which lack banks or bourses: Cuba,
North Korea, Sudan, Libya,
Myanmar, Iran, Zimbabwe,
or possibly Venezuela or Argentina. Tora
Bora in Afghanistan or Somalia or Yemen would work too if you are
willing to give a cut to Osama Bin Laden. Whether your account will be safe
from seizure by the local regime is not certain.
Euro-fringe outlaw states where you may
want to park money to evade taxes include: Nagorno-Karabakh, Abkhazia, South Ossetia, Transdniestria, and Republika Srpska. First
you have to find them on a map and figure out how to get to them. (cf our ad below.)
Some people swear by enclaves like Campione
d’Italia, Melilla, Ceuta,
Gibraltar, Kalinengrad, or San Marino. But beware oddball mini-Euro-principalities
like Liechtenstein, Luxembourg, Monaco,
or Andorra,
which will probably succumb to pressures from the IRS and their neighbors just
like the Swiss did.
Others like island havens.
I would try Saint Lucia
myself (160,000 people and two Nobel Prizes!) if a banking system were in
place. A stock market and an SEC exist in Trinidad.
I saw both in Port of Spain along with some very dodgy sounding fund management company offices. Other fun islands do have serious financial service centers (and
local crooks as well): the Caymans, Bermuda, Bahamas and Caribbean islands, the
Solomon and Cook Islands, Vanuatu, Madeira, and while it is not an island, Panama.
Note that these countries don’t have tax treaties with the USA so you will never get back
withholding tax on Wall St.
payouts. And from the USA
they really are sunny places for shady faces.
The news hit after the Tel Aviv market had
closed for the day on Weds. Roving reporter Frida Ghitis will follow up on this
matter. Meanwhile, I expect there to be some weakness in Israeli stocks on Wall
Street today, a chance to buy our latest idea from the Jewish State more
cheaply. It was written up for paid subscribers yesterday.
Dick Davis Digest
did not include my 2010 growth stock picks, maybe because they were not China
plays. I have offered editor Chloe Lutts lunch in the hopes of explaining my
reasoning to her. After she comes back from skiing we will chomp and chat. Just because China
was the hottie in 2009 does not mean it will continue its rise in the New Year.
Ten years ago, under a predecessor publisher, Steve Halpern, I recommended Teva (then TEVIY) in one of those yearly
surveys. It has risen six-fold.
Here is a way of looking at the turn of the
year from EPFR of Cambridge,
MA, which tracks U.S. fund flows:
“A year which started with investors fleeing to the
perceived safety of Money Market and US Equity Funds ended with those two fund
groups posting their biggest annual outflows – in dollar terms — since EPFR
Global started tracking them. On the other side of the coin, US, Global, and High Yield Bond, Commodity and
Technology Sector, and Global Emerging Markets (GEM), Asia ex-Japan, Europe and Pacific Equity Funds posted record inflows. So
did China, Brazil, Russia and BRICs Equity Funds.
”The final week of the year saw US Bond Funds complete 2009 having posted inflows every single week, Global Bond Funds take in over $1 bn for the 16th straight week, and y-t-d inflows into GEM Equity Funds push over the $43 bn mark. Money Market Funds surrendered over $520 bn during the course of the year. Overall, combing weekly data and the more comprehensive monthly numbers, emerging markets equity funds collectively posted inflows of $70 bn while their developed markets counterparts recorded net redemptions of $61 bn while bond funds ended the year having taken in $292 bn.”
Your
editor’s note yesterday about the cold weather was quoted by www.Fullermoney.com’s
David Fuller from icy London.
David added his own wicked note:
“When I
arrived home yesterday evening, Mrs Fuller was watching a special item on Sky
News, with the narrator talking assuredly about imminent global warming and rising
sea levels causing problems for Britain’s
agricultural industry.
“A
minute later, Sky’s weather man provided chilling details of the UK’s coldest
winter in 29 years, and it was only the 5th of January. I thought… something
is not right here.
“I look forward to seeing how the global warming
catastrophists explain this one. I am not a climate change denier – our
planet’s long-term weather history has been turbulent – but for medium-term
forecasting what impresses me is evidence. I’m no scientist but doesn’t the
coldest winter in at least 29 years look like the technical equivalent of a
downward dynamic on price charts?
“Presumably
we will know if ice thickness on the polar caps increases. Meanwhile, we have
seen at least 18 months and counting with minimal sun spots, and I believe
there has also been an increase in volcanic activity.
“If
I wanted to be unkind, I would suggest that someone strap Al Gore to a giant
icicle.”
Vivian does
not agree with the last remark. I want Gore tied to an exercise bicycle. More news for paid subscribers follows.
P.S. Despite my reinstalling Microsoft Word (2003) these font changes clearly visible above occur when writing in Word and copying to this site. I asked for a fix from Redwood and was told to buy a new software program. They are trying to sell Office 2010.
I preferred the free Open Office software but the webmaster made me go back to Word for this posting site. Frankly, I think this is a big timewaster so you will have to put up with the font changes for now to get your letter on time.
Anyone with influence on Microsoft among the readership (you know who you are) should bring this matter to their notice.
