All global financial institutions now in bed with the IRS?

Posted February 16, 2012 at 2:22 am

by Simon Black

The Foreign Account Tax Compliance act, or FATCA, is one of the most arrogant pieces of legislation ever conceived. President Obama signed the Act into law in 2010, and there are a some key provisions that are important to understand.

Reporting Requirements of US Tax Serfs holding Foreign Financial Assets

According to the IRS, “FATCA requires certain U.S. taxpayers holding foreign financial assets with an aggregate value exceeding $50,000 to report certain information about those assets on a new form (Form 8938) that must be attached to the taxpayer’s annual tax return.”

In other words, the law extends the existing reporting and disclosure requirements for US citizens and residents holding certain assets abroad.

Reporting Requirements of Foreign Financial Institutions

This is the part that’s really arrogant. The US government is requiring any foreign organization it deems to be a “financial institution” to enter into an information-sharing agreement with the IRS.

They’re effectively trying to regulate [continue]….

Add Your Comment | 0 Comments

A segregated bank account is just an illusion

Posted February 16, 2012 at 2:16 am

by Barry Ritholtz

The esteemed former Fed Chairman, Paul Volcker, introduced a very simple regulatory concept that bears his name: The Volcker Rule. It was part of the Dodd-Frank regulatory reforms passed after the financial crisis of 2008-09.

There has been enormous pushback against what should be a simple piece of prophylactic rules on proprietary trading by depository banks (see this Jamie Dimon commentary as an example).

Why?

The profits of speculation goes to banks, driving bonuses and compensation; but the ultimate risk of loss lay with the FDIC and taxpayer. If the banks blow up, someone else besides the banker pays.

Privatized gains, socialized losses.

I want to take a few moments to briefly explain why this rule is so important to taxpayers, especially following the collapse of MF Global and the loss of billions of client assets.

Recall the basic facts of MFG: Management engaged in leveraged speculations with monies — whether it was their own or clients became irrelevant as the losses were [continue]…

Add Your Comment | 0 Comments

The Super Bowl ad Clint Eastwood should have made

Posted February 15, 2012 at 12:59 am

Add Your Comment | 0 Comments

Generous rich people you’ve never heard of

Posted February 13, 2012 at 11:11 pm

by Robert Frank

The 50 top philanthropists last year gave away a total of $10.4 billion – up by more than three-fold from 2010. The Chronicle of Philanthropy says that 29 people gave away more than $50 million each in 2011.

The strange thing is, you’ve probably never heard of most of them.

Ranked first was Margaret Cargill. You might know the last name – she’s the “press shy agribusiness heiress” who inherited part of the Cargill fortune. But less known is that the Eden Prairie, Minn., resident, who died in 2006, left a bequest of around $6 billion to a charitable trust and foundation. (The bequest is credited to last year because the trust was finally able to convert its shares of the private company).

Or how about America’s second largest giver last year, William Dietrich II. Ever heard of him? Me neither. He once owned [continue]…

Add Your Comment | 0 Comments

There is a better way to earn money

Posted February 10, 2012 at 3:55 am

by Barry and Heather Goss

We live in one of the nation’s most idyllic towns — a small Southern Oregon jewel that is surrounded by some of nature’s greatest wonders.

It’s protected by 360 degrees of small mountain peaks, and one of the most majestic rivers flows through the heart of it.

We say it’s small because, while we’re in one of the west coast’s most desirable tourist and retirement areas, it’s still only about 30,000 people deep.

Here, it’s easy to see what type of businesses can sustain revenue. After all, this little town has no industry, no major corporations, and no extra demand for something that has already been achieved.

For instance, one of the Rogue Valley’s largest and most amenities-rich workout clubs — which includes a full-sized pool, therapeutic pool, hot tub, saunas, steam rooms, six racquetball courts, a gymnasium, free weights and cardio machines galore, a Pilates center, an aerobics classroom, a kids’ zone, a world-class spa, a gymnastic training center, a climbing wall, and even a NASA inspired GyroGym™ — is located here.

It alone, with over 40,000 square feet of space, can accommodate not only the percentage of people who would use it in our town, but in two adjoining towns. And, this club even has a main competitor on the other side of town. It too has a unique value proposition, but different in approach and offerings.

Yet, over the last three years, we’ve seen three other small gym operators attempt to creep up. Two have gone bust, and one is still struggling.

But,  to our mouth-dropping amazement yesterday, as we were walking around downtown, we saw a sign for a NitroFitness, with three people inside slaving away at the drywall.

It’s mind boggling, from the perspective of two people who continue to wonder if  “strategic” and “critical” thinking is a lost art.

But, it’s not that we roll our eyes at their desire, ambition, and hope to get ahead… it’s that we wonder if they even know there’s a better way.

A better way to earn money, that is, a) without needing to break ground in a business where two key companies have a practical monopoly and b) without the expense of large retail space and onsite overhead.

So, since we’re about finding LEVERAGE in most of what we do, this reminded us of an article, written in 1970, that is probably even more imperative to read now than when it was written.

“The Ideal Business” ( PDF )

Download it now. If you’re currently in business, or are thinking about it, this is a MUST READ short PDF.

And pass it along to any friend, family member, or acquaintance who believes that just because they have an interest, knowledge, and passion for something, it must mean customers will come flocking to their door.

This notion — that way too many people dive into something without research or a competitive edge — shouldn’t be much of  a stretch, either. We all have seen way, way, way too many restaurants come and go, all because… well, the proprietor thinks that people have to eat, and his establishment has food and a sign on the window.

Ohhhhh booooy… time for a check up from the neck up.

Add Your Comment | 0 Comments

[ Friday's Fun Video ] – Shit nobody says

Posted February 10, 2012 at 12:10 am

Joining in on the never-ending blitz of “Shit X Say” videos, Tripp Crosby and Tyler Stanton come up with a bunch of shit you’ll never hear.

Add Your Comment | 0 Comments

Trust us; we’re the government

Posted February 8, 2012 at 3:50 am

by Ron Paul

While much has been made recently of the President’s unconstitutional appointment of Richard Cordray to be director of the Consumer Financial Protection Bureau (CFPB), lost in the hubbub has been any discussion of the unconstitutionality of, or the need for, the CFPB itself.

Proponents of the CFPB claim that this new bureaucracy will help consumers by protecting them from fraudulent activity. In reality, it will only expose consumers to more financial harm.

Housed within the unconstitutional Federal Reserve, and funded not through Congressional appropriations but through the Federal Reserve’s interest revenue off the trillions of dollars of US government debt it holds, the structure of the CFPB ensures that it is run by unelected, unaccountable bureaucrats, with no effective oversight from Congress.

Given broad power to regulate the activities not only of banks, but also of any other entity which the government deems offers a financial product, there is almost no limit to the scope of financial activities which the CFPB can oversee.

Giving impetus to the CFPB’s creation was the poor reputation of Wall Street banks and financial firms that developed as a result of the financial crisis, banks which received trillions of dollars of taxpayer-funded bailouts turned around and shafted their customers by foreclosing on homes, raising credit card interest rates and introducing numerous new fees.

But rather than keeping Wall Street in check as its proponents allege, the CFPB will end up placing further restrictions on the ability of Main Street Americans to engage in productive financial endeavors. Current law already allows only the richest Americans to invest in potentially lucrative ventures such as hedge funds because such investments are deemed to be “too risky” for the average American to invest in.

The government in its paternalistic wisdom treats American investors as too stupid to know what to do with their own money, and “protects” them, supposedly, by keeping them poorer than they otherwise would be. We can expect even more of this once the CFPB is running in full stride.

The CFPB will further harm consumers by [continue]…

Add Your Comment | 0 Comments

Shady numbers behind Suze Orman’s new investment newsletter

Posted February 7, 2012 at 3:41 am

by Jason Zweig

What business has an estimated one million clients, operates on the fringe of securities law and can say just about anything without immediate consequences?

Just ask followers of Suze Orman, the personal-finance icon. In March 2011, she and Mark Grimaldi, an investment manager in Wappingers Falls, N.Y., launched a monthly newsletter called The Money Navigator.

Ms. Orman has since given away more than 50,000 trial subscriptions to the newsletter, which costs $63 a year and now reaches 65,887 subscribers. She and Mr. Grimaldi are 50-50 owners, according to Mr. Grimaldi and Ms. Orman’s spokeswoman.

Mr. Grimaldi also manages a mutual fund called Sector Rotation, which has about $25 million in assets. His firm, Navigator Money Management, oversees a total of about $120 million in the fund and other accounts, according to its financial filings. That makes it a minnow in the money-management business.

The cover story in the December issue of the Money Navigator, adapted from a November 2011 article in the newspaper Investor’s Business Daily, said “Sector Rotation produced an average annual return of 10.25% from August 31, 2002, to October 31, 2011, vs. 5.47% for the S&P 500 Index, according to Morningstar.”

Yet the Sector Rotation fund wasn’t launched until Dec. 31, 2009. The earlier return, Mr. Grimaldi says, was produced by [continue]….

Add Your Comment | 0 Comments

Is it safe to ignore the prophets of doom again?

Posted February 6, 2012 at 3:25 am

by Adam Davidson

I remember the first time I interviewed a relatively unknown economist named Nouriel Roubini. It was 2005, and as we sat in his New York University office, he laid out his scary vision of the future.

Roubini is a specialist in the flow of money around the world and the crises that (sometimes) result. But on that day he wanted to talk about the U.S. housing market.

Homeowners, he said, had become too used to financing their lifestyles with money siphoned from overvalued homes. This housing bubble would pop, he warned, and send the world into a vicious recession, possibly even a depression.

I remember leaving his office both stunned and confused. Only after calling a few leading economists was I reassured that this Roubini guy was expressing a fringe view that merited little attention. Like a lot of reporters that year, I turned around a tongue-in-cheek story about Dr. Doom and his scary (but probably best ignored) world view. Oops!

A few years later, I interviewed Richard Wolff, who is probably America’s most prominent Marxist economist (though it’s not a hugely competitive field). Wolff also walked me through his view of the next few years.

He explained that the puncturing of the housing bubble, then apparent, would lead to a crisis much deeper than anyone understood: it would fracture American confidence in capitalism; the economy would stay stalled for a long time; and there would be global chaos. This time, I didn’t even bother calling other economists to check out Wolff’s story. The guy was a Marxist! Days later, Lehman Brothers collapsed.

Once the crisis hit, it became popular to scour the past for apocalyptic predictions that had come true. While many gloomy forecasts came from the left [continue]….

Add Your Comment | 0 Comments

Sunken treasure includes platinum bars now worth more than $3 billion

Posted February 5, 2012 at 8:32 pm

by Eamon Murphy

Off the coast of Massachusetts, and in the Mediterranean waters surrounding the Tuscan island of Giglio, treasure hunters are seeking sunken loot.

Greg Brooks of Gorham, Maine — a founder of shipwreck recovery firm Sub Sea Research — says he has located the underwater remains of a British merchant ship that was sunk off Cape Cod by a German submarine during World War II. According to Brooks, the wreck contains a cargo of platinum bars now worth more than $3 billion.

In Italy, meanwhile, the stricken cruise liner Costa Concordia beckons to would-be scavengers. The ship holds everything from jewels and cash to “19th-century Bohemian crystal glassware” and “300-year-old woodblock prints by a Japanese master,” according to the Associated Press.

For now, the hoard of riches left behind by the hastily evacuated passengers and crew remains inaccessible. Robert F. Marx, a seasoned diver and the author of 64 books on maritime history and underwater archaeology, told the AP, “As long as there are bodies in there, it’s considered off base to everybody because it’s a grave.”

Once all the bodies have been removed, however, “there will be a mad dash for the valuables.”

Hans Reinhardt, a lawyer representing 19 German passengers seeking compensation for their losses, seems to agree: “It’s now a paradise for divers.” According to the AP, “some of [Reinhardt's] clients traveled with diamond-studded jewels and other heirlooms that had been in their families for generations.”

The Italian company that operated the Costa Concordia still owns the ship, and passengers of course own their sunken possessions. Anyone seeking treasure in the wreck would therefore be breaking the law. “The ship is being guarded 24 hours a day,” said Lt. Massimo Maccheroni, a Coast Guard official. “It’s not possible to even get close.”

But the prospect of arrest — and the seizure of any valuables retrieved — might not be enough to deter treasure hunters, who tend to be [continue]…

Add Your Comment | 0 Comments