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Our December 15,
2009 Newsletter
Edition
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IN
THE NEWS:
.
.
LATIN AMERICA: McCAFE GROWS
BY
Mary Tabion – December 2, 2009
.
McDonald’s
is synonymous with burgers around the world, and Latin America is no
exception. The U.S.-based fast food chain ranks first in fast food
burger restaurants in Argentina, Brazil, Chile and Venezuela. Just as
consumers in the United States look to the Golden Arches for fast and
economical lunches, workers in Latin America also are on the lookout
for appetizing meals that fit their budgets.
.
While
the lunchtime trade is a lucrative business, McDonald’s has been eyeing
another opportunity to grow its day-part business outside of lunch in
Latin America. The McCafé concept is McDonald’s take on the
local café culture, offering not only traditional and European
coffee drinks, but local treats, such as pastries, cakes, confectionery
items, ice cream or other snacks. Rather than cannibalizing McDonald’s
lunch business, McCafé is attracting consumers looking for a
coffee break, a place to socialize or a merienda. McCafé
revenues in Latin America reached $55.2 million in 2008.
.
http://www.latinbusinesschronicle.com/
.
EDITORS NOTES:
We present this item as a follow up to the news story mentioned in the
last newsletter regarding Krispy Kreme. Which is to explain,
American food chains are expanding everyplace but the US, simply
because that is where the money and growth is. And of course
since we are on the topic of where the money is, you may be interested
in the following recent comments by Federal Reserve Chairman Bernanke
(see next news item below).
.
.
BERNANKE CHANNELS WILLIE SUTTON IN ASSAULT
ON SOCIAL SECURITY: THAT'S WHERE THE MONEY IS - - By Ryan Grim -
December 3, 2009
.
Ben
Bernanke has overseen the greatest expansion of the Federal Reserve's
balance sheet in its history, pouring trillions of dollars into Wall
Street firms at roughly zero interest rates. His generosity,
however, has a limit. In testimony before the Senate Banking
Committee today, where he's seeking re-appointment as the Fed's
chairman, Bernanke called for cutbacks in Medicare and Social Security
even as unemployment rises and the middle class is endangered.
Citing legendary bank robber Willie Sutton, Bernanke said of the
retirement and health care funds that are the legacy of the New Deal:
That's where the money is.
.
http://www.huffingtonpost.com/2009/12/03/bernanke-channels-willie_n_378963.html
.
EDITORS NOTES:
The head of the US Central Bank quoting one of the more famous American
bank robbers is quite ironic to say the least, but you should no longer
be shocked or surprised at this point (maybe both these guys, meaning
Willie Sutton and Ben Bernanke, are kindred spirits?). In any
event, while Bernanke suggests cutting Social Security because that is
where the money is, the following item would offer quite a different
point of view.
.
.
WATCHING
SOCIAL SECURITY EAT THE YOUNG ALIVE
By
Bill Frezza – December 7, 2009
.
My
26 year old son got the most extraordinary letter from the Social
Security Administration last week. In plain English it admitted that
the system was a Ponzi scheme destined for bankruptcy more than a
decade before he reaches retirement age. It warned that if he is to
have any hope of retiring he'd better start saving on his own. Anyone
who wasn't personally hypnotized by FDR knows this to be true. Yet I
was still surprised that such a frank government confession didn't make
national news.
.
The
two-page pamphlet entitled What young workers should know about Social
Security and saving reminds us that 50 million, or one in six,
Americans will collect more than $614 Billion dollars in Social
Security benefits this year. It informs young people that the Security
Taxes they now pay go into a Trust Fund that is used to pay current
beneficiaries. Paying off early investors with funds taken from later
investors is precisely how Wikipedia defines a Ponzi scheme. The
pamphlet advises that the Social Security Board of Trustees estimates
that the Trust Fund will be depleted before my son's 54th birthday.
Because people are living longer and the birth rate is low, it goes on,
taxes paid by workers in the future will not be enough to pay the
benefits promised in his personalized retirement account statement
enclosed with the pamphlet. Imagine what hell would break loose if
Schwab or Fidelity Investments enclosed a confession like this when
they mailed investors their 401(k) statements.
.
On
top of the negative rate of return young people paying into Social
Security are expected to suffer, the pamphlet concludes that my son
should plan on taking an additional 24% haircut on the benefits
promised in his statement. Given the fact that Social Security
will be bankrupt before my son even reaches my age, the pamphlet
directs him to a handy web calculator that shows how much he will have
to save every week if he hopes to retire on his own.
.
http://www.realclearmarkets.com/
.
EDITORS NOTES: In the words of
Edward R. Murrow, Good Night and Good Luck.
.
.
CONTINUING UNEMPLOYMENT IS PREDICTED BY FED
CHIEF
By
Edmund L. Andrews - November 16, 2009
.
The
chairman of the Federal Reserve, Ben S. Bernanke, warned on Monday that
high unemployment and a continued reluctance by banks to make loans
were likely to slow the economic recovery for the next year. And
in a departure from the usual practice of Fed chairmen, Mr. Bernanke
tried to reassure global investors about the recent fall in the value
of the dollar by saying that the central bank was attentive to the
implications of changes and would continue to monitor these
developments closely. It is rare for Fed officials to comment on
exchange rates, which for decades have been the responsibility of the
Treasury Department. Mr. Bernanke’s message seemed to be that the Fed
saw no cause for alarm in the dollar’s weakness and that it would not
need to bolster the dollar by raising interest rates sooner than it
would otherwise.
.
http://www.nytimes.com/
.
EDITORS NOTES:
First off, we think it quite clear and apparent that the game plan is
to devalue the US Dollar, albeit in a somewhat managed fashion, if that
is possible. Some economic commentators are predicting to expect
this devaluation to take hold in 2010, or better said, look for
some fireworks towards the end of next year. Of course, Mr.
Bernanke sees no cause for alarm regarding a future semi-worthless
greenback, just as the Wizard of Oz attempts to instruct Dorothy and
friends to pay no attention to the man behind the curtain.
However, also of interest are some of the other comments from the
Wizard of The Fed, who goes on to opine that: Unemployment, now 10.2
percent, is likely to remain quite high for the next year and will tamp
down both growth and inflation (actually unemployment is closer to 20
percent nationally and possibly 30 percent in California, but we shall
leave that alone for now). Mr. Bernanke goes on to say that: The
best thing we can say about the labor market right now is that it may
be getting worse more slowly (end of quote). Getting worse more
slowly? Is a proper analogy one whereby the doctor says: I have
some good news and some bad news? The bad news is, you still have
cancer. The good news is, I predict you will pass away in 18
months, and not the six months we predicted previously. Aren't
you pleased?
.
In
any event, CNN recently reported on November 20, 2009 that The
Congressional Budget Office is estimating that: More than half of the
$9 trillion in NEW debt that Uncle Sam is expected to build up over the
next decade will be interest. Which is to explain, US$4.8 Trillion
Dollars will be interest, as a conservative estimate. Maybe that
is why they want to devalue the US Dollar? To pay off all that
debt with proverbial funny money? Société
Générale, a major French bank, seems to think so.
In a recent report they issued to clients, the French bank goes on to
say that: state rescue packages over the last year have merely
transferred private liabilities onto sagging sovereign shoulders,
creating a fresh set of problems. They continue with the comment
that: Inflating debt away might be seen by some governments as a lesser
of evils. So-Gen (as Société Générale is
called in financial circles) happens to also advise it's own clients to
dump the US Dollar tout suite. Vive La France.
.
Also
of interest is the previous nationalization of Fannie-Mae and Freddie
Mac, as it pertains to other things yet to come. Naturally, they
do not call it that exactly, but what term would you use when the
Federal Government owns 80 percent of what was previously a private
company (with stock trading on the NYSE)? The point of all this,
or the next shoe to drop as they say, involves The Federal Housing
Administration. Which is to explain that we will throw our hat in
with those that have predicted the FHA, which is on precarious
financial footing at the moment (and we are being kind), to wallow into
the abyss along with it's cousins Fannie and Freddie. Keep your
eyes and ears focused, as the FHA will probably be the next black hole
in which to pour even more tax-payer money.
.
And
that leads us to remind those readers who have been reading our
newsletter for a few years now, to recall our previous comments about a
coming national sales tax in the US. Which is to say, State and
Local Municipal Income taxes could be going up (they have no choice as
these non-federal government entities cannot print money, and taxes
based upon real estate values are a hot button issue at the moment
considering all the declining real estate prices), plus the idea of
higher national income taxes certainly is a political hot potato on the
national level (although look out for other kinds of stealth taxes
against income, such as higher social security contributions).
However, a national sales tax, or otherwise known in other countries as
a Value Added Tax (VAT), is currently on the table as a political
option thanks to the current cabal of esteemed gentlemen (and ladies)
in the US Congress. The New
York Times reports as much in the recent December 10, 2009 news article
titled: Many See the VAT Option
as a Cure for Deficits. The New York Times goes on to
quote Mr. Charles E. McLure, a tax economist from the Reagan
administration, who says that: We have to start paying our bills
eventually, this strikes me as the best and most obvious way of doing
it (end of quote). As Mr. Ripley would say: Believe It, or
Not.
.
.
A TALE OF TWO AMERICAN ECONOMIES
By
Nouriel Roubini – November 17, 2009
.
While
the United States recently reported 3.5 per cent GDP growth in the
third quarter, suggesting that the most severe recession since the
Great Depression is over, the American economy is actually much weaker
than official data suggest. In fact, official measures of GDP may
grossly overstate growth in the economy, as they don't capture the fact
that business sentiment among small firms is abysmal and their output
is still falling sharply. Properly corrected for this, third-quarter
GDP may have been 2 per cent rather than 3.5 per cent. The story
of the U.S. is, indeed, one of two economies. There is a smaller one
that is slowly recovering and a larger one that is still in a deep and
persistent downturn.
.
Consider
the following facts. While America's official unemployment rate is
already 10.2 per cent, the figure jumps to a whopping 17.5 per cent
when discouraged workers and partially employed workers are included.
And, while data from firms suggest that job losses in the past three
months were about 600,000, household surveys, which include
self-employed workers and small entrepreneurs, suggest a number above
two million. Many of the lost jobs – in construction, finance,
and outsourced manufacturing and services – are gone forever, and
recent studies suggest that a quarter of U.S. jobs can be fully
outsourced over time to other countries. Thus, a growing proportion of
the work force – often below the radar screen of official statistics –
is losing hope of finding gainful employment, while the unemployment
rate (especially for poor, unskilled workers) will remain high for a
much longer period of time than in previous recessions.
.
To
be sure, the U.S. government is increasing its budget deficits to put a
floor under demand. But most state and local governments that have
experienced a collapse in tax revenues must sharply retrench spending
by firing policemen, teachers and firefighters while also cutting
welfare benefits and social services for the poor. Many state and local
governments in poorer regions are at risk of bankruptcy without a
massive federal bailout.
.
http://www.theglobeandmail.com/
.
EDITORS NOTES:
As we have suggested previously, many US state and local governments
are insolvent, or otherwise said, simply broke, and we would suggest
the US Federal Government is not far behind. Case in point is
Merrillville, Indiana – which is reportedly one year delinquent in it's
local electric utility bill payments (and they will be turning off the
public street lights, literally, for the good people of
Merrillville). Supposedly the town council there will be turning
off the street lights in order to save US$2,000 per month on the town's
electric bill. Let us analyze this for a moment, and ask the
question: how broke are these people (and the rest of the United
States)? Merrillville is a town with a population of about
30,000. And let us assume that two thirds of the town are
children, so maybe we are talking about 10,000 adults. If each
adult in the town coughed up an additional 25 cents per month, then
presumably they could keep the street lamps on. And so, the real
question is: in one of the so-called wealthiest nations on the planet,
with supposedly one of the highest standards of living in the world,
they cannot afford to keep the street lights on at night?
.
Moving
right along with another example, let us not forget the very recent
bargain basement sale of the Detroit Pontiac Silverdome, which was sold
for the greatly reduced price of $583,000. We say greatly reduced
as an understatement because the facility was build in 1975 at a cost
of US$55 Million Dollars. I guess Detroit desperately needs the
money (talk about a discounted fire sale).
.
Regardless,
you can be sure both at the State, Municipal and Federal levels that
the hunt will be on for more revenue (and that means much higher taxes
for the average, still currently employed, tax-payer). Of course you
might be thinking that taxation rates will be going up for major US
corporations, but you would be wrong (in our opinion). As one
blatant example, Goldman Sachs is on tract to report the most
profitable year (2009) in it's entire history and has set aside almost
US$17 Billion Dollars in bonus money for it's employees (that is
Billion, with a B). Now with all that profitability, you would think
they would be giving their proverbial pound of flesh to the US Treasury
(via it's collection agent, the US Internal Revenue Service), but
again, you could be wrong. To clarify this, Bloomberg news
recently reports that Goldman Sachs will have a tax rate of about 1
percent for the 2008 fiscal year (and we can assume for 2009 as
well). By the way, that is not a typographical error, you did
read it correctly: ONE PERCENT.
.
The
Bloomberg news service goes on to quote Mr. Robert Willens, president
and chief executive officer of a tax and accounting firm of the same
name, who says that (in terms of Goldman Sachs): Clearly they have
taken steps to ensure that a lot of their income is earned in lower-tax
jurisdictions. Even Goldman Sachs themselves claim the greatly
reduced tax rate is due to: changes in geographic earnings mix.
Bloomberg goes on to quote U.S. Representative Lloyd Doggett, a Texas
Democrat who serves on the tax-writing House Ways and Means Committee,
who says that steps by Goldman Sachs and other banks shifting income to
countries with lower taxes is cause for concern (end of quote).
Of concern? Maybe, but yet it goes on. And why is nothing
said? Because major financial services firms, including banking
concerns, pony up the lion's share of political campaign money.
However, as the old saying goes, if you cannot beat, then join
them. In other words, Change
Your Tax Domicile, and Lower Your Taxes. If they can do
it, you can do it. The other option of course is to remain behind
and go broke. This line of thinking appears to be perhaps
selfish, unpatriotic (according to some), and incorrect in terms of a
true and tangible long term solution. However, do you honestly
see anything changing for the better? Do you really believe the
middle class or small businessmen are going to be protected or helped
by politicians, in terms of the economic fallout from all this
nonsense? Who will pay for all these bailouts, increased
government spending and the resultant inflation (and other fallout)
from a devalued currency? Why do the solvent and prudent have to
suffer and pay for the foolish and irresponsible? Why kind of
behavior is being rewarded when any government takes this kind of
tact?
.
.
WAVE OF DEBT PAYMENTS FACING U.S. GOVERNMENT
By
Edmund L. Andrews - November 22, 2009
.
The
United States government is financing its more than
trillion-dollar-a-year borrowing with I.O.U.’s on terms that seem too
good to be true. But that happy situation, aided by ultra-low
interest rates, may not last much longer. Treasury
officials now face a trifecta of headaches: a mountain of new debt, a
balloon of short-term borrowings that come due in the months ahead, and
interest rates that are sure to climb back to normal as soon as the
Federal Reserve decides that the emergency has passed.
.
Even
as Treasury officials are racing to lock in today’s low rates by
exchanging short-term borrowings for long-term bonds, the government
faces a payment shock similar to those that sent legions of
overstretched homeowners into default on their mortgages. With
the national debt now topping $12 trillion, the White House estimates
that the government’s tab for servicing the debt will exceed $700
billion a year in 2019, up from $202 billion this year, even if annual
budget deficits shrink drastically. Other forecasters say the figure
could be much higher.
.
http://www.nytimes.com/
.
EDITORS NOTES:
While we are admittedly not always a big fan of the things that come
from Bill Gross, we do agree with the following quote that was
highlighted in the above article: What a good country or a good
squirrel should be doing is stashing away nuts for the winter. The
United States is not only not saving nuts, it’s eating the ones left
over from the last winter (end of quote).
.
We
will expand upon that: A good squirrel (meaning the average
middle class person) probably should not only be saving their nuts
(both literally and figuratively), but doing so in another country and
in another currency, or better still, hard assets that act as a counter
balance to inflation (gold, silver and real estate that is not over
priced – in other countries, all comes to mind). What we are
seeing at the moment is some aspects of deflation (falling real estate
prices in the US and US banks that are contracting credit lines for
both consumers and business) BUT all this new debt and fiat funny money
being printed will lead to currency devaluation, AKA inflation.
At the moment, all that monopoly money they have created is going into
bank coffers and to prop up the bond markets, but the real story is the
monetizing of debt, and resultant outcome for the longer
term.
.
.
MORGAN
STANLEY FEARS UK SOVEREIGN DEBT CRISIS IN 2010
By
Ambrose Evans-Pritchard – November 30, 2009
.
Britain
risks becoming the first country in the G10 bloc of major economies to
risk capital flight and a full-blown debt crisis over coming months,
according to a client note by Morgan Stanley. The US investment
bank said there is a danger Britain’s toxic mix of problems will come
to a head as soon as next year, triggered by fears that Westminster may
prove unable to restore fiscal credibility. In an extreme situation a
fiscal crisis could lead to some domestic capital flight, severe pound
weakness and a sell-off in UK government bonds. The Bank of England may
feel forced to hike rates to shore up confidence in monetary policy and
stabilize the currency, threatening the fragile economic recovery, they
said.
.
http://www.telegraph.co.uk/
.
EDITORS NOTES:
Are you surprised? You should not be, and the US may certainly be
sailing in the very same proverbial waters. On a related note,
and in line with this theme of capital flight, the indefatigable House
Speaker Nancy Pelosi recently endorsed the concept of a new global tax
on financial transactions. The lovely Ms. Pelosi was quoted (via
a press conference) as saying that: the financial transactions tax
(HR4191) currently before Congress would have to be made global to keep
U.S. investors from taking their business overseas and out of taxable
reach (end of quote). Please allow me to repeat that comment once
again for clarity: TO KEEP U.S. INVESTORS FROM TAKING THEIR BUSINESS
OVERSEAS AND OUT OF TAXABLE REACH. Is Nancy actually admitting
that once the money takes a vacation abroad (outside of the US), that
it is out of their reach? And why oh why would any other country
want to tax, or otherwise dissuade and discourage, foreign
investors? We are not quite sure if Ms. Pelosi supports the
recent initiative to legalize and tax marijuana, but she surely must be
smoking something if she believes all other countries are interested in
raising taxes to stop US citizens from investing
there.
.
Of
course, the option to banking or investing abroad is to keep your
investment funds at home (inside the US). But, recent news items
indicate that the US FDIC banking insurance fund is now officially
BROKE, as of September 2009, and that the FDIC has tapped an US$80
Billion Dollar line of credit with the US Treasury to cover the rash of
bank failures expected in 2010. Which is to say, the 100 plus bank
failures for 2009 are predicted to be a start and not the end of all
this, with many, many more to come (or at least the FDIC seems to think
so, and they should know).
.
Maybe
your 2010 New Year's resolution should be to get the heck out of the US
Dollar and the Pound Sterling. That is perhaps the bad
news. The good news is, there are other places to put your money,
your assets, and yourself in order to get some protection from all this
nonsense. However, just make sure you have another passport as
the modus operandi at the moment is to try and pressure financial
institutions abroad NOT to accept US or EU citizens. Then again,
who says you have to necessarily be a US or EU citizen? Dual
citizenship and a second passport is not only a possibility, but
perhaps now a coming necessity.
.
.
THE
COMING WAVE OF DEBT DEFAULTS
By
Sam Rovit and David Sweig – December 8, 2009
.
The
worst is not yet past. Be prepared. The trouble in the commercial
real estate markets is getting ugly, as the precarious situation of
Dubai World has made all too clear. Expect many more unpleasant
situations like that one.
.
Speculative-grade
debt issuers are bracing for the default rate to hit 12% to 14% by the
end of 2009, according to our projections at Bain & Company. The
last time the U.S. economy experienced default rates of that magnitude
was 28 years ago. The current long-term average default rate is 4.5%;
as recently as 2007, it was just under 1%. These failures are not
limited to small or marginal firms; they are happening at large
companies with at least $100 million in assets, and have, after all,
already hit legendary businesses like General Motors, Lehman Brothers
and General Growth Properties.
.
In
aggregate, default rates will probably peak this year, but
above-average default rates will last through 2011, since defaults
historically lag changes in gross domestic product by 12 to 18 months.
Like depth charges, defaults will continue to explode as cash positions
sink, even as the economy recovers. By the end of this year, we will
have seen nearly 300 speculative-grade issuers default on their debt in
2008 and 2009; only 116 did in the four years between 2004 and 2007.
Yet as many as 300 more companies are likely to default by the end of
2011, and that could increase if current GDP expectations prove too
optimistic. This could hit commercial real estate particularly hard
since cash flows there are tightly linked to employment growth, making
prolonged high unemployment an additional challenge on top of other
economic woes.
.
http://www.forbes.com/
.
EDITORS NOTES:
When Forbes Magazine starts opining gloom and doom, it either means
that pessimism among the American business community has hit an all
time high (and some would argue a buying opportunity) OR the mainstream
business media is finally reporting what is really and truly going
on. Regardless, 2010 does not look like it is shaping up to be a
banner year for the US, economically speaking. Of course, across
the Pacific, the New York Times reports a different story for China
(see below).
.
.
RECESSION
ELSEWHERE, BUT IT'S BOOMING IN CHINA
By
Keith Bradsher - December 9, 2009
.
For
the first time, Chinese will buy more cars this year than Americans.
Demand is so high that drivers put their names on long waiting lists
for the most popular models. I’m disappointed, but what can I do?
asked Zhang Ge Lu, a 28-year-old interior designer. He came recently
with two friends to a row of dealerships here in southeastern China to
buy a black Toyota RAV4, only to be told that he would have to wait two
months for delivery.
.
And
it is not just cars. For more and more consumer goods, China is
surpassing the United States as the world’s biggest market — from cars
to refrigerators to washing machines, even desktop computers. The
Chinese market is on full tilt — booming is an understatement these
days, said John Bonnell, the director of Asia vehicle forecasting at
J.D. Power & Associates.
.
China
is pulling ahead at this particular moment partly because Americans,
debt-laden and worried about their jobs, are pulling back. After
decades of gorging on consumption, Americans are saving. And the
Chinese, whom economists thought were addicted to saving, are spending
more. Among China’s 1.3 billion people, rising incomes are
finally making large numbers of Chinese prosperous enough to make
big-ticket purchases.
.
http://www.nytimes.com/
.
EDITORS NOTES:
McDonald’s and Krispy Kreme are expanding in Latin America (because
that is where the money is). The economy in Brazil is plugging
along quite well, thank you very much. And Chinese consumers are
waiting two months to buy a Toyota, because of the high demand (and
regardless if they pay cash, they still have to wait). Are you
starting to get the picture?
.
Looking
at the Dominican Republic, they supposedly do not have all the things
they have in the wealthy, modern, first world countries (such as no
money down liar loans), but they do have plenty of Rice and
Sugar. What is the point? Well, according to a recent news
article (December 14, 2009) by Bloomberg, it is reported that rice is
expected to go up in price by 63 percent and JP Morgan claims that
sugar will be going up by about 25 percent as well. Could this be
the coming price inflation for commodities priced in US Dollars
(courtesy of US Dollar Inflation, or devaluation if you prefer) that is
finally now making itself known? Regardless, Mr. Oliver Kratz,
Who is the head of Global Thematic Strategy investments at Deutsche
Bank AG’s DB Advisors in New York, claims that: Agricultural
commodities will be a great investment in the next three to five years
(end of quote). In terms of the Dominican Republic, and to quote
the punch line from a popular American television announcement:
Yeah, we got that.
.
.
DRUG
MONEY SAVED BANKS IN GLOBAL CRISIS, CLAIMS UN ADVISOR
By
Rajeev Syal – December 13, 2009
.
Drugs
money worth billions of dollars kept the financial system afloat at the
height of the global crisis, the United Nations' drugs and crime tsar
has told the Observer. Antonio Maria Costa, head of the UN Office
on Drugs and Crime, said he has seen evidence that the proceeds of
organized crime were the only liquid investment capital available to
some banks on the brink of collapse last year. He said that a majority
of the $352bn (£216bn) of drugs profits was absorbed into the
economic system as a result.
.
http://www.guardian.co.uk/
.
EDITORS NOTES:
Drug money saved some of the banks? Is that why the US now wants
to legalize and tax cannabis (because that is where the money
is)? In any event, the above article goes on to say that: Mr.
Costa declined to identify countries or banks that may have received
any drug money, saying that would be inappropriate because his office
is supposed to address the problem, not apportion blame (end of
quote). Of course, we are not so shy, and this UN report on drug
money in the financial system, which was prepared by Mr. Costa and
released earlier this year, specifically cites the money center banks
in New York and London as being the conduits for such illicit
funds. So there you go. Despite all the chatter about banks
in so-called tax havens being hotbeds of illegal and illicit activity,
the United Nations squarely puts the blame on banks in the US and the
UK.
.
Why
is it that there is never any hesitation to blatantly accuse the
financial authorities in Panama, The Bahamas, Etcetera, Etcetera when
it comes to supposed complicity with banking clients that may be
involved with illicit activities, and yet when it happens in New York
or London, a sudden timidity emerges. Years ago I remember when
the rumors were circulating on Wall Street about the Bank of New York
laundering money for the Russian Mafia. Even the guy that sold
bagels and coffee from a pushcart on the corner of Water Street and
Wall could bend your ear about the subject. And it went on for
years, until finally, probably about 10 years later, all of a sudden
the US authorities swooped down. To tell the truth, it was
probably the worst thing that could have happened. I mean, I hate
to say it, but financial backing by the Russian Mob has to be better
than FDIC. You never heard of the Russian Mob going broke – have
you?
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