The Super-Rich are really getting worried !!!
(snip)"The Super-Rich Are Spooked
11/2/2009
by John Rubino
A couple of seemingly unrelated articles in Friday’s Wall Street Journal illustrate how life is getting more complicated for the super-rich. First, it seems that the UBS debacle was not just a U.S./Swiss disagreement. Far from it. Now that the IRS has shown other high-tax countries how easy it is to pierce the veil of bank secrecy, the Europeans want their tax evaders too. And in Switzerland, theirs are a lot more numerous than ours. (snip)
(snip)Some thoughts:
• It is only this weekend that the first batch of UBS client names will be turned over, and the rest will apparently be doled out a little at a time. So the ongoing revelations will be front-page news -- and a source of anxiety for account-holders and their advisors -- for at least another year.
• If U.S. clients hold one-twentieth of Swiss bank accounts and the IRS is getting 4,450 names from UBS alone, then Europe’s high-tax countries, which account for about one-sixth of Swiss deposits, will want tens of thousands of names.
• Big Swiss banks opening branches in the countries from which they were trying to attract undeclared deposits exposed those banks to pressure from high-tax country regulators. This was a red flag which holders of undeclared accounts were stupid to ignore. UBS caved because it would rather be an international bank than a Swiss bank. So will its peers.
• The money now fleeing Switzerland has to go somewhere. But apparently it’s not going is into ski chalets: (snip)
(snip)More thoughts:
• This gap down in trophy property prices implies that the more-dollars-than-sense crowd isn’t expecting a “V” shaped recovery in which vacation travel and asset prices spike back to 2007 levels. 50% reductions happen only where there’s an absence of buyers. Sellers aren’t seeing 20%-off low-ball offers; they’re being met mostly with silence.
• Can the remaining banking havens like Panama and Singapore absorb a trillion-dollar inflow from newly-transparent Swiss banks? Probably not, and in any event that would put them next on the US/EU hit list. So a lot of money will have no choice but to move out of the shadows and become taxable.
• The focus on tax evasion misses the real point. No one really cares what happens to people who hide fortunes in order to avoid paying taxes. They -- and their bankers -- are criminals and deserve to be treated that way. But tax evasion isn’t the only thing Swiss banks make possible; they also provide geographic diversification and privacy. That is, they’ve historically enabled clients to get wealth beyond the reach of corrupt and rapacious governments. They saved countless European fortunes from the Nazis during World War II, for instance, and to this day enable citizens of unstable countries to protect at least some of their wealth.
But now bank privacy is being systematically eliminated. Capital is being flushed out of hiding so it can be taxed today and, if some future government chooses, confiscated. The anxious rich -- and the rest of us -- are right to be spooked. (snip)
from