Wealthy

Are You A Slave Of The System?

If you went out and took a poll of the American people on July 4th (Independence Day) and asked them if they are free, what would the results look like?  Of course the results would be overwhelmingly lopsided.  Most Americans believe that they live in “the land of the free” and that they are not enslaved to anyone.  But is that really the case? Slavery does not always have to involve whips and shackles.  There are many other forms of slavery.  One dictionary definition of a slave is “one that is completely subservient to a dominating influence”.  I really like that definition.  Today, millions of Americans are slaves of the system and they don’t even realize it.  Debt is a form of slavery, and millions of Americans having become deeply enslaved to our debt-based financial system.  When someone enslaves someone else, the goal of the master is to reap a benefit out of the slave.  You don’t want the slave to just sit there and collect dust.  Today, most Americans have willingly shackled themselves to a system that systematically drains their wealth and transfers it to the very wealthy.  Most of them don’t even realize that they have been enslaved even as the system sucks them dry.

Just think about it.  Where is the “big money” in the United States today?

When asked that question, most Americans think of Wall Street.

Well, who controls Wall Street?

The bankers do.

The borrower is the servant of the lender, and they generate massive amounts of wealth by lending us money.

Perhaps an example will be helpful.

Have you ever run up $5000 of credit card debt?  Many people have run up much, much more than that, but let us use $5000 for our example.

According to the Federal Reserve, if you only make the minimum payment every month, at a 20% interest rate it will take you 49 years to pay that credit card off and you will pay back a total of $26,169.

So you would have gotten the original benefit of spending the $5000 and you would have had to work extremely hard to pay back an additional $21,169 to the bankers.

In essence, you would be working as a servant of the bankers until you had paid back that entire debt plus interest.

Unfortunately, our entire system is now designed to get you to go into debt.

It starts before we even get into the “real world”.  We are constantly told that we cannot get a “good job” without a college degree, but a college education is so ridiculously expensive these days that most of us cannot afford one without going into lots of debt.

Many of you out there know exactly what I am talking about.

Do you have a pile of student loan debt?

I do.

In fact, the total pile of student loan debt in the United States is now over a trillion dollars.

Unfortunately, when a lot of us graduated we found out that the “good jobs” that we were promised simply were not there.  Last year, 53 percent of all Americans with a bachelor’s degree under the age of 25 were either unemployed or underemployed.

So many young adults are starting out life already enslaved to a gigantic pile of debt but without a good job that will enable them to comfortably service that debt.

The really “lucky” graduates from the top schools flock to Wall Street so that they can make lots of money running the debt-based financial system that is enslaving all the rest of us.

Once young people leave school, there are lots of other “debt traps” to fall into.

Once you get out into the “real world”, just about every major purchase is going to involve another pile of debt.

Do you want a house?

That is going to mean more debt.  As I have written about previously, mortgage debt as a percentage of U.S. GDP has more than tripled since 1955.

Do you want a car?

About 70 percent of all vehicle purchases in the U.S. now involve at least some borrowed  money.

Consumer debt is particularly insidious.  Our stores are filled with very beautiful things, and it is really easy to buy a bunch of stuff and “put it on plastic”.

Since 1971, the total amount of consumer debt in the United States has increased by 1700%, and approximately 46% of all Americans now carry a credit card balance from month to month.

We just keep plunging ourselves deeper and deeper into debt slavery.  Most Americans never seem to learn.  Over the past 30 years those of us in the “bottom 95 percent” have seen our financial shackles just get heavier and heavier.  The following is from a recent CNN article….

In 1983, the bottom 95% had 62 cents of debt for every dollar they earned, according to research by two International Monetary Fund economists. But by 2007, the ratio had soared to $1.48 of debt for every $1 in earnings.

When you pile up lots of debt, you aren’t just working for yourself anymore.  You are also working for those that you owe the debts to.  Your hard work and sweat end up making them a lot wealthier.

Our state and local governments have enslaved themselves to debt as well.  Total state and local government debt is now about 8 times higher than it was 30 years ago.

At this point, many U.S. cities are in very serious trouble with debt.  In fact, another California municipality has just declared bankruptcy.  On Monday, the town of Mammoth Lakes announced that it has formally filed for bankruptcy.

But this is just the beginning.

The truth is that we are a nation that is absolutely drowning in debt and we need a lot more money in order to keep up with all of this debt.

But there is a problem.

In our debt-based financial system, the creation of more money actually creates more debt.

So how are we ever going to get out of the hole that we are in?

Today, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created back in 1913.  This is why it is so important for the American people to realize that the Federal Reserve is a perpetual debt machine.

The Federal Reserve system itself does not make much money.  The vast majority of the profits that the Federal Reserve makes are transferred back to the U.S. government.

But that is not what the Federal Reserve was created to do.

What the Federal Reserve was created to do was to set up a system where the U.S. government would borrow money and pay interest on it instead of just creating the money itself.

Last year the U.S. government spent more than 454 billion dollars just on interest on the national debt.  That is a form of national slavery.  454 billion dollars that we worked very hard to make was taken from us and transferred into the pockets of some very wealthy people.

The truth is that the U.S. government does not actually need to ever borrow a single penny from anyone.  As a sovereign government it could directly issue money into circulation.

But lending money to governments is very, very profitable and it is the kind of thing that wars are fought over.

For example, the First Bank of the United States (the very first central bank in our country) was established in 1791 and the charter for that bank expired in 1811 and was not renewed.

So what happened the very next year?

The War of 1812.  During that war Washington D.C. was actually captured and burned.  The final major battle of that war was the battle of New Orleans which took place on January 8, 1815.

So what happened the very next year?

President James Madison signed the charter for the Second Bank of the United States on April 10, 1816.

The goal has always been to enslave the American people.  Debt is used to enslave us individually, it is used to enslave our businesses, it is used to enslave our state and local governments and it is used to enslave our federal government.

So are you a slave of the system?

If you are in debt, then you are a slave at least to some degree.

Unfortunately, the global financial system has become so saturated with debt that it is now on the verge of collapse.  It appears that things could be getting significantly worse during the second half of this year, and the years ahead do not look very promising at all.

Sadly, most Americans do not see any of this coming.  In fact, a new CNN/ORC International poll has found that about 60 percent of all Americans think that the U.S. economy will be in good shape next year.

Can you believe that?

The mainstream media has done a fantastic job of brainwashing the general public.

The “blue team” is convinced that if Barack Obama wins the election and the Democrats take control of both houses of Congress that prosperous times are on the way.

The “red team” is convinced that if Mitt Romney wins the election and the Republicans take control of both houses of Congress that the U.S. economy will be put back on the right track.

Well, the truth is that there is not going to be a solution to our economic problems on the national level.  We have accumulated the greatest mountain of debt in the history of the world, and it is going to collapse and crush us no matter which brand of corrupt politicians we sent to Washington.

On July 4th, millions upon millions of Americans will celebrate “Independence Day” with cookouts, parades and fireworks without ever realizing the true nature of what is really going on.

Hopefully we can get more of them educated while there is still time.

Will Toledo, Ohio Be The First Major American City To Be Owned By China?

It has been said that there are two ways to conquer and enslave a nation.  One way is by using the sword, and the other is by using debt.  Fortunately, America is not in danger of being conquered by the sword right now, but America is being conquered by debt.  The borrower is the servant of the lender, and today we owe China more than a trillion dollars.  By running a gigantic trade deficit with us, China has been able to become incredibly wealthy.  We have begged them to lend us back some of the money that we have sent them and this has made them even wealthier.  Now China is gobbling up U.S. real estate and U.S. assets at an astounding pace.  In fact, some cities are in danger of becoming completely dominated by Chinese ownership.  One of those cities is Toledo, Ohio.  In many “rust belt” areas, real estate can be had for a song, and the Chinese are taking full advantage of this.  America was once the wealthiest nation on earth, but now we are drowning in debt and we are being sold off in chunks to the highest bidder.  Is this the legacy that we are going to leave for future generations?

According to a recent Fortune article, Chinese investors have been very busy purchasing distressed commercial real estate in Toledo lately….

In March 2011, Chinese investors paid $2.15 million cash for a restaurant complex on the Maumee River in Toledo, Ohio. Soon they put down another $3.8 million on 69 acres of newly decontaminated land in the city’s Marina District, promising to invest $200 million in a new residential-commercial development. That September, another Chinese firm spent $3 million for an aging hotel across a nearby bridge with a view of the minor league ballpark.

Toledo is being promoted to Chinese investors as a “5-star logistics region“.  From Toledo it is very easy to get to Chicago, Detroit, Cleveland, Pittsburgh, Columbus and Indianapolis.

With a population of 287,000, Toledo is only the fourth largest city in Ohio, but it lies at the junction of two important highways — I-75 and I-80/90. “My vision is to make Toledo a true international city,” Toledo’s Mayor Mike Bell told the Toledo Blade.

For some reason the Chinese seem to be very interested in that area of the country.  Last month, I wrote about how one Chinese group plans to develop a 200 acre “China city” just 40 minutes away from Toledo….

A Chinese group known as “Sino-Michigan Properties LLC” has bought up 200 acres of land near the town of Milan, Michigan.  Their plan is to construct a “China City” with artificial lakes, a Chinese cultural center and hundreds of housing units for Chinese citizens.  Essentially, it would be a little slice of communist China dropped right into the heartland of America.  This “China City” would be located about 40 minutes from both Detroit and Toledo, and it would be marketed to Chinese business people that want to start businesses in the United States.

But it is not just the rust belt that is being bought up by the Chinese.  A recent Forbes article documented several of the huge real estate deals that the Chinese are doing in New York right now….

According to a recent report in the New York Times, investors from China are “snapping up luxury apartments” and are planning to spend hundreds of millions of dollars on commercial and residential projects like Atlantic Yards in Brooklyn. Chinese companies also have signed major leases at the Empire State Building and at 1 World Trade Center, the report said.

In addition to real estate, the Chinese are also buying up businesses and natural resources all over the United States.

For example, the Dalian Wanda Group recently bought U.S. movie theater chain AMC Entertainment for 2.6 billion dollars.

Also, the Obama administration has been allowing companies owned by the Chinese government to gobble up U.S. oil and gas deposits worth billions of dollars.

On top of all that, the Federal Reserve recently announced that it will now allow Chinese banks to start buying up American banks.

So how in the world did we come to be so completely and totally dominated by China?

Well, the key to all of this is the trade deficit.

Most Americans can’t even tell you what a trade deficit is, but it is at the very heart of our economic problems.

Basically, we buy far, far more from other countries than they buy from us.

Most Americans don’t realize this, but the truth is that the United States has a trade imbalance that is more than 5 times larger than any other nation on earth has.

Overall, the U.S. has run a trade deficit of more than 8 trillion dollars with the rest of the globe since 1975.

If you go into a Wal-Mart of a dollar store today and you start looking at product labels, you will notice that hundreds of products say “made in China” and very few of them say that they were made in this country.

Every single month, China sends us gigantic mountains of plastic crap to sell in our stores and we send them gigantic mountains of our money.

The U.S. trade deficit with China during 2011 was $295.4 billion.  That was the largest trade deficit that one country has had with another country in the history of the planet.

Sadly, so far our trade deficit with China in 2012 is about 12 percent larger than it was last year.

So things are getting even worse.

To get an idea of how far things have come, let us take a look back at the 1980s for a moment.

Back in 1985, the U.S. trade deficit with China was only 6 million dollars for the entire year.

All of this imbalanced trade is absolutely killing us.

Today, the United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

So why doesn’t China buy more stuff from us?

Well, there are a whole lot of reasons.  One of the main reasons is that they slap huge tariffs on many American-made goods.

For example, according to the New York Times a Jeep Grand Cherokee that costs $27,490 in the United States costs about $85,000 in China thanks to all the tariffs.

So why do we allow China to keep doing this to us?

That is a very good question.

Meanwhile, China is continually getting wealthier and we are continually getting poorer.

All of the money that is leaving this country and going to China could be going to U.S. businesses and U.S. workers instead.  In turn, those businesses and workers would pay taxes on that money to support the government.

Instead, we have to go beg China to lend us the money that we just sent to them.

At this point, China now holds approximately 1.17 trillion dollars of U.S. government debt.

None of this ever had to happen.

But it did happen because we were stupid.

Now China has mountains of money to literally buy us up.

But China is not the only country that we have an imbalanced trading relationship with.

For example, the new “free trade agreement” between the United States and South Korea that Barack Obama has been touting went into full effect on March 15, 2012.

So how has that “free trade agreement” turned out so far?  The following is from a recent article by Pat Buchanan….

The U.S. trade deficit with Korea tripled in one month. Imports from South Korea jumped 15 percent to $5.5 billion in April, while U.S. exports to South Korea fell 12 percent to $3.7 billion. Suddenly, the U.S. trade deficit with Seoul surged to an annual rate of $22 billion.

Shades of NAFTA. When it passed in 1993, we had a $1.6 billion trade surplus with Mexico. By 2010, our trade deficit with Mexico had reached $61.6 billion.

Ouch.

The truth is that these free trade agreements are not fair and balanced.

U.S. workers end up competing for jobs with workers in countries where it is legal to pay slave labor wages.  And other countries often have far fewer rules and regulations to follow as well.  In his recent article, Buchanan described why all Americans should be economic nationalists….

Global free trade means U.S. workers compete with Asian and Latin American workers whose wages are a fraction of our own and whose benefits may be nonexistent. Global free trade means U.S factories that relocate to Indonesia or India need not observe U.S. laws on health, safety, pollution or paying a minimum wage.

Global free trade means that companies that move factories outside the United States can send their products back to the United States free of charge and undercut businessmen who retain their American workers and live within American laws.

Free trade makes suckers and fools out of patriots.

Unfortunately, both major political parties in the United States are absolutely married to the one world economic agenda that the elite are pushing.

So we will continue to bleed wealth, businesses and jobs at an astounding pace.

You can get a really good idea of the horrific manufacturing job losses in the United States over the past 40 years by checking out this map right here.

Overall, the United States has lost a total of more than 56,000 manufacturing facilities since 2001.

According to the Economic Policy Institute, since 2001 America has lost approximately 2.8 million jobs due to our trade deficit with China alone.

There seems to be absolutely no concern with protecting American jobs these days.

If you can believe it, Chinese corporations are even building our bridges.  The following is a brief excerpt from a recent ABC News article….

In New York there is a $400 million renovation project on the Alexander Hamilton Bridge.

In California, there is a $7.2 billion project to rebuild the Bay Bridge connecting San Francisco and Oakland.

In Alaska, there is a proposal for a $190 million bridge project.

These projects sound like steps in the right direction, but much of the work is going to Chinese government-owned firms.

“When we subsidize jobs in China, we’re not creating any wealth in the United States,” said Scott Paul, executive director for the Alliance for American Manufacturing.

Americans need to start understanding that our trade deficit is causing us to lose massive numbers of businesses and jobs and that this is making us poorer as a nation.

As I wrote about the other day, the median net worth of families in the United States declined “from $126,400 in 2007 to $77,300 in 2010” according to the Federal Reserve.

Even if you take away the effect of the housing collapse, household net worth still declined by 25 percent between 2005 and 2010.

A lot of that decline in wealth was due to the recent recession, but the point I am trying to make is that we are getting poorer as a nation.

A decade ago, the United States was ranked number one in average wealth per adult.  By 2010, the United States had fallen to seventh.

And when you factor in our debts, we are a complete and total mess.  U.S. consumers are more than 11 trillion dollars in debt and the federal government is nearly 16 trillion dollars in debt.

We are getting deeper in debt at the same time that our ability to service that debt is declining.

The reality is that our economy is completely falling apart and it no longer produces enough jobs for everyone.

In fact, it isn’t even close.

Right now there are about 3.7 workers that are “officially” unemployed for every single job opening.

So what we are doing right now is clearly not working.

We need to fundamentally change direction as a nation.

Unfortunately, that is not going to happen any time soon.

So where do we go from here?

How The Super Rich Avoid Taxes Even As They Demand That The Rest Of Us Pay More

The way that we tax people in the United States is fundamentally broken and should be completely discarded.  The U.S. tax code is absolutely riddled with loopholes that allow the super rich to legally avoid taxes while many of the rest of us are being taxed into oblivion.  In our system of taxation, middle class families that work hard and try to play by the rules are deeply penalized while those that are willing to abuse the system make out like bandits.  There is something fundamentally wrong with a system that enables wealthy politicians such as Barack Obama and Mitt Romney to pay a smaller percentage of their incomes in taxes than millions of middle class families.  Mitt Romney has millions of dollars parked down in the Cayman Islands and in other tax havens.  He does this to avoid taxes.  Unfortunately, most Americans do not have the resources to funnel money through offshore tax havens.  Most Americans just automatically have their paychecks shredded by taxes and then try to live on whatever is left over.  Most Americans are just trying to survive financially from one month to the next.  But the super rich have options.  Thanks to technology, they can live almost anywhere they want and they can run their companies and manage their investments from anywhere in the world.  The truth is that the wealthier you are the easier it is to avoid taxes.  But even as the ultra-wealthy do their best to avoid taxes, many of them still feel free to demand that the rest of us be taxed more.

So what are some of the ways that the super rich avoid taxes?

Well, let’s start with those that are just “somewhat wealthy”.  Many millionaires still want or need to be U.S. citizens, so they are subject to the U.S. tax code.  Fortunately for them, their tax lawyers know of thousands of loopholes that have been designed to help the rich avoid taxes.

The following is from a recent article by Jen Talley….

Some of the richest people in the country pay the least, relatively speaking, in taxes. How is this possible? Answer: Through the clever manipulation of the U.S. tax code’s loopholes. And it works: as income rises, effective tax rates rise as well, but only up to a point. IRS data shows that the effective income tax rate flattens out at just over 24 percent for those making over a million dollars. As income exceeds $1.5 million, the rate begins to decline; those with incomes above $10 million pay an average income tax rate of around 19 percent. So, how do they do it?

You could write an entire series of books on the technical details of how this gets done.  Trust me, I studied tax law when I was in law school.

If you are interested in digging into some of the technical details of tax avoidance, a recent Businessweek article detailed 10 ways that the wealthy use our current tax code to avoid paying billions of dollars in taxes.  It is an article worth reading if you have the time.

Sadly, tax avoidance by the wealthy is not just something that happens in the United States.  The truth is that the exact same kind of thing happens in the UK as well.

There is not an easy fix to this problem.  Our politicians have had decades to try to come up with a fair tax system and they have completely failed.  The wealthy are always several steps ahead of them.

But federal taxes are not the only taxes that can be avoided.  The vast difference in state tax rates creates another opportunity.

One advantage that wealthy Americans have is that they are far more mobile than most other Americans are.  So if they don’t like the tax system in one state they can simply pick up and move to another state.

According to the Tax Foundation, 3.4 million Americans left New York state between 2000 and 2010.

So where did they go?

The following is from a recent CNS News article….

Where are they escaping to?  The Tax Foundation found that more than 600,000 New York residents moved to Florida over the decade – opting perhaps for the Sunshine State’s more lenient tax system – taking nearly $20 billion in adjusted growth income with them.

There is no state income tax in Florida.  So moving from New York to Florida can end up saving you a bundle.

The same kind of migration is happening out west as well.  According to that same CNS article, hundreds of thousands of people have been moving from California (a high tax state) to Texas (no state income tax)….

Between 2000 and 2010, the most recent data available, 551,914 people left California for Texas, taking $14.3 billion in income.  Texas has no state income tax or estate tax.

A total of 48,877 people moved to Texas from California between 2009 and 2010 alone, totaling $1.2 billion in income.  Another 28,088 from California relocated to Nevada and 30,663 to Arizona, a loss of  $699.1 million and $707.8 million in income respectively.

Not that anyone really needs much of an excuse to move away from California.  It is rapidly decaying right in front of our eyes.

But a lot of families do not have the same options that wealthy people do. Unfortunately, most average Americans are tied to their jobs and it would be much more difficult for them to pick up and move across the country.  In this economy it can be economic suicide to give up a good job.

The reality is that most of us simply do not have the resources to play the same kinds of games that the wealthy play.

Sadly, even our most prominent politicians avoid taxes.

Just look at Massachusetts Senator John Kerry.  He has avoided approximately $500,000 in taxes by docking his yacht in Rhode Island rather than in Massachusetts.

Yet Kerry sure does love to call for more taxes on the rest of us, doesn’t he?

Now let’s talk about the “super rich” and the “ultra-wealthy”.  For many people that are worth billions of dollars, tax avoidance has become an art from.

Facebook co-founder Eduardo Saverin made national headlines recently when he gave up his U.S. citizenship, but the truth is that his case is small potatoes compared to the global elite and the shadow banking system that supports them.

According to the IMF, the global elite are holding a total of 18 trillion dollars in offshore banks.

That amount is more than the GDP of the United States for an entire year.

So what do I mean by “offshore banks”?  I defined the term in a previous article….

Well, the term originally developed because the banks on the Channel Islands were “offshore” from the United Kingdom.  Most “offshore banks” are still located on islands today.  The Cayman Islands, Bermuda, the Bahamas, and the Isle of Man are examples of this.  Other “offshore banking centers” such as Monaco are actually not “offshore” at all, but the term applies to them anyway.

Traditionally, these offshore banking centers have been very attractive to both criminals and to the global elite because they would not tell anyone (including governments) about the money that anyone had parked there.

It has been reported that 80 percent of all international banking transactions involve offshore banks.  A whopping 1.4 trillion dollars is being held in offshore banks in the Cayman Islands alone.

An article that appeared in the Guardian estimated that a third of all the wealth on the entire planet is being kept in offshore banks.  One of the primary reasons for this is tax avoidance.

A lot of wealthy individuals never even visit these tax havens and yet reap the benefits anyway.  The truth is that tax avoidance has become way too easy.  The following example is from a recent Politico article….

A plausible scenario plays out like this: I hire an accountant. Doing her job, my accountant tells me that if I sign a few legal documents and route my money through a small Caribbean island, I could keep more of my paycheck and pay a lower tax rate. I may have earned my money in the United States, but legally I can claim that it was, in fact, earned in a tax haven.

Are you disgusted yet?

You should be.

But even though they avoid taxes like the plague, many of these elitists have the gall to call for higher taxes on all the rest of us.

For example, let’s review what the managing director of the IMF, Christine Lagarde, said in a recent interview….

“Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax.”

Even more than she thinks about all those now struggling to survive without jobs or public services? “I think of them equally. And I think they should also help themselves collectively.” How? “By all paying their tax. Yeah.”

It sounds as if she’s essentially saying to the Greeks and others in Europe, you’ve had a nice time and now it’s payback time.

“That’s right.” She nods calmly. “Yeah.”

And what about their children, who can’t conceivably be held responsible? “Well, hey, parents are responsible, right? So parents have to pay their tax.”

Well, it turns out that she doesn’t pay any income taxes at all on her own income….

The IMF chief Christine Lagarde was accused of hypocrisy yesterday after it emerged that she pays no income tax – just days after blaming the Greeks for causing their financial peril by dodging their own bills.

The managing director of the International Monetary Fund is paid a salary of $467,940 (£298,675), automatically increased every year according to inflation. On top of that she receives an allowance of $83,760 – payable without “justification” – and additional expenses for entertainment, making her total package worth more than the amount received by US President Barack Obama according to reports last night.

Her “diplomatic status” allows her to escape all income taxes.

So perhaps she should pay her “fair share” before pointing the finger at anyone else.

But she is not the only one being hypocritical.

The super rich claim that they should pay lower taxes on investment income for the good of our “capitalist system”, but when their banks are about to go under they are more than happy to have those losses be socialized.

As I wrote about yesterday, the stage is already set for another massive round of bailouts when the next great financial crisis strikes.  Once again our taxes will pay for the mistakes of the ultra-wealthy.

The truth is that our system is fundamentally broken.

We need to abolish the income tax and shut down the IRS.

Those two steps alone would do wonders for our economic system.

We also need to shut down the Federal Reserve and break up the too big to fail banks.

Unfortunately, the vast majority of our politicians are not even willing to consider any of those solutions.

So our fundamentally broken system will continue to chug along.

It really is sad.

25 Signs That The Smart Money Has Completely Written Off Southern Europe

When it comes to the financial world, it is important to listen to what the “smart money” is saying, but it is much more important to watch what the “smart money” is actually doing.  The ultra-wealthy and those that run the biggest financial institutions on the planet are far more “connected” to what is really going on in financial circles behind the scenes than you and I could ever hope to be.  But if we watch their behavior we can get clues as to what they think is about to happen.  As is the case with so many other things, if you want to figure out what is really going on in Europe, just follow the money.  And right now, money is rapidly flowing out of southern Europe and into northern Europe.  In fact, some large corporations are now pulling the money that they make in Greece during the day out of the country every single night.  It is becoming increasingly clear that the upper crust of the financial world considers a Greek exit from the euro to be “inevitable” and that it also considers much of the rest of southern Europe to be a lost cause.  Unfortunately, a financial collapse across southern Europe is also likely to trigger another devastating global recession.

Even though all the warning signs were there, very few people actually expected to see the kind of financial crisis that we saw back in 2008.

But it happened.

Now very few people actually expect another “Lehman Brothers moment” to happen in Europe although the warning signs are all around us.

Sadly, most people never want to believe the truth until it is too late.

The following are 25 signs that the smart money has completely written off southern Europe….

#1 Lloyd’s of London is publicly admitting that it is rapidly making preparations for a collapse of the eurozone.

#2 According to the New York Times, top global law firms are advising their clients to withdraw all cash and all other liquid assets from Greece….

So their advice is blunt: Remove cash and other liquid assets from Greece and prepare to take a short-term hit on any other investments.

“My personal view is that it is irrational for anyone, whether a corporation or an individual, to be leaving money in Greek financial institutions, so long as there is a credible prospect of a euro zone exit,” said Ian M. Clark, a partner in London for White & Case, a global law firm that has a team of 10 lawyers focusing on the issue.

#3 According to CNBC, large numbers of wealthy Europeans have been moving their money from banks in southern Europe to banks in northern Europe….

Financial advisers and private bankers whose clients have accounts too large to be covered by a Europe-wide guarantee on deposits up to 100,000 euros ($125,000), are reporting a “bank run by wire transfer” that has picked up during May.

Much of this money has headed north to banks in London, Frankfurt and Geneva, financial advisers say.

“It’s been an ongoing process but it certainly picked up pace a couple of weeks ago We believe there is a continuous 2-3 year bank run by wire transfer,” said Lorne Baring, managing director at B Capital, a Geneva-based pan European wealth management firm.

#4 The President of the Federal Reserve Bank of Philadelphia, Charles Plosser, says that the Federal Reserve is advising money market funds to reduce their exposure to Europe….

The Fed and regulators have tried to stress to money market funds, for example, to reduce their exposure to European financial institutions.

#5 The yield on 10-year Spanish bonds is rapidly moving toward the very important 7 percent level.

#6 Many multinational corporations that operate in Greece are now pulling their funds out of the country on a nightly basis.

#7 Juergen Fitschen, the co-CEO of Deutsche Bank, has publicly proclaimed that Greece is a “failed state“.

#8 The head of the Swiss central bank has admitted that Switzerland is developing an “action plan” for how it will handle the collapse of the eurozone.

#9 The European Commission has urged all member states to develop contingency plans for a Greek exit from the euro….

Last week, the European Commission said that it has asked member states to make plans to deal with a potential Greek exit, ahead of a second round of Greek elections on 17 June.

#10 PIMCO CEO Mohamed El-Erian says that a Greek exit from the euro “is probably inevitable“.

#11 Spanish stocks continue to drop like a rock.

#12 The percentage of bad loans on the books of Spanish banks has reached an 18 year high.

#13 Late on Friday, the Spanish government announced that banking giant Bankia is going to need a 19 billion euro bailout.

#14 Standard & Poor’s downgraded the credit ratings of five more Spanish banks to junk status on Friday.

#15 Moody’s downgraded the credit ratings of 16 Spanish banks back on May 17th.

#16 According to the Telegraph, “struggling European banks could be seized and controlled by Brussels as part of secret plans being drawn up”.

#17 The head of equity strategy at Societe Generale, Claudia Panseri, is warning that European stocks could fall by as much as 50 percent if Greece leaves the euro.

#18 Economist Marc Faber is warning that there is now a “100% chance” that there will be another global recession.

#19 There seems to be an increasing attempt to pin the problems that Greece is now experiencing on the behavior of Greek citizens.  The following are some of the shocking things that the head of the IMF, Christine Lagarde, said in a recent interview….

“Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax.”

Even more than she thinks about all those now struggling to survive without jobs or public services? “I think of them equally. And I think they should also help themselves collectively.” How? “By all paying their tax. Yeah.”

It sounds as if she’s essentially saying to the Greeks and others in Europe, you’ve had a nice time and now it’s payback time.

“That’s right.” She nods calmly. “Yeah.”

And what about their children, who can’t conceivably be held responsible? “Well, hey, parents are responsible, right? So parents have to pay their tax.”

#20 According to the Telegraph, an unidentified member of Angela Merkel’s cabinet has stated that Germany simply will not “pour money into a bottomless pit”.

#21 This week the Bank of England is holding a “secret summit” of global central bankers to address the European financial crisis….

The summit will be dominated by central bankers including the host, Sir Mervyn King, Governor of the Bank of England. Mario Draghi, president of the European Central Bank, and Zhou Xiaochuan, governor of the People’s Bank of China, have been invited.

#22 According to Zero Hedge, a major German newspaper is reporting that a Greek exit from the eurozone is a “done deal”….

“The Greece-exit is a done deal: According to the German economic news from financial circles EU and the ECB have abandoned the motherland of democracy as a euro member. The reason is, interestingly, not in the upcoming elections – these are basically become irrelevant. The EU has finally realized that the Greeks have not met any agreements and will not continue not to meet them. A banker: “We helped with the Toika. The help of the troika was tied to conditions. Greece has fulfilled none of the conditions, and has been for months now.”

#23 According to CNBC, preparations are quietly being made to print up and distribute new drachmas should the need arise….

British banknote printer De La Rue is drawing up plans to print new drachma notes in the event of a Greek euro exit, according to an industry source with knowledge of the matter.

The world’s biggest security firm G4S expects to be involved in distributing notes around the country.

#24 Citibank’s chief economist Willem Buiter is warning that any new currency issued by the Greek government could “immediately fall by 60 percent“.

#25 Reuters is reporting that a planning memo exists that suggests that Greece could receive as much as 50 billion euros to “ease its path” out of the eurozone.

If Greece does leave the eurozone, the cost to the rest of Europe is going to be astronomical.  The following is from a recent article by John Mauldin….

The debate among very knowledgeable individuals and institutions as to the future of Europe is intense. There are those who argue that the cost of breaking up the eurozone, even allowing Greece to leave, is so high that it will not be permitted to happen. Estimates abound of a cost of €1 trillion to European banks, governments, and businesses, just for the exit of Greece. And that does not include the cost of contagion as the markets wonder who is next. Keeping Spanish and Italian interest-rate costs at levels that can be sustained will cost even more trillions, as not just government debt but the entire banking system is at stake. Not to mention the pension and insurance funds. If the cost of Greece leaving is €1 trillion, then who can guess the cost of Spain or Italy?

As I have written about previously, a Greek exit from the euro would cause the “bank jogs” that are already happening in Spain and Italy to accelerate.

The problem in Europe is not just government debt.  The truth is that the entire European financial system is in danger of melting down.

Unfortunately, there are no more grand solutions on the horizon and so things are going to continue to get worse for Europe.

As I have talked about so many times, the next wave of the economic collapse is going to start in Europe, but it is going to deeply affect the entire globe.

During the next major economic downturn, the official unemployment rate in the United States will rise well up into the double digits.

Once that happens, perhaps many more Americans will finally figure out that they should have been paying much more attention to what was taking place in Europe.

Class Warfare Is Being Used To Divide America – And It Is Working

At a time when America desperately needs to come together, we are becoming more divided than ever.  The mainstream media and most of our politicians love to pit us against one another in dozens of different ways, and right now class warfare has become one of their favorite tools for getting us to hate one another.  If you are struggling in this economy, you are being told that “the wealthy” are the cause of your problems.  If you have money, you are being told that the poor hate you and want to tax you into oblivion.  Class warfare has already become a dominant theme in the 2012 race for the White House, and there will certainly be endless speeches given along these lines by politicians from both major political parties all the way up to election day.  Class warfare will be used by both sides as a way to divide America and get votes.  And the frightening thing is that it is clearly working.  There is more hatred between the poor and the wealthy in America today than at any other time that I can remember.  But hating people because of how much money they have or don’t have is not going to solve anything.  Instead, it is just going to cause more problems.

The other day, Yale economics professor Robert Shiller told CNBC that the globe is already in a state of “late Great Depression“.  The United States is heading into unprecedented economic and financial problems and we desperately need to pull together as a country and solve these problems.

But instead, our leaders are tapping into the politics of division in a desperate attempt to get elected in the fall.

Rather than focus on real issues and real solutions, our politicians attempt to make “the wealthy” or “welfare recipients” the focus of our debates.

Well, you know what?

Most people that are rich and most people that are poor are not purposely trying to abuse the system.  Most of them are hard working people that are trying to do the best that they can in a world that is increasingly going crazy.

These days, the Occupy Wall Street crowd loves to talk about how evil the “1 percent” is.  But most of the “1 percent” are people that have worked really hard and that have been fortunate enough to get some really good breaks in life.

Yes, there are some among the “1 percent” that do some really bad things.  The too big to fail banks and the big money managers on Wall Street should be held accountable for the crimes that they have committed.

But most wealthy Americans are not trying to oppress the poor.  Most of them are just trying to do the best that they can for themselves and their families.

Neither are most poor people trying to abuse the system either.

Yes, without a doubt there are some that do not want to work and that want to live on government benefits indefinitely.

But that is a minority.

Most Americans that are receiving government benefits today would rather be working good jobs that would enable them to provide for their families.

Most Americans understand that government handouts can never provide dignity and hope for a better future.

But if you don’t demonize the poor and you point out the decline of the middle class, many Republicans will call you a “liberal” or a “socialist”.

And if you don’t demonize the rich and you don’t blame them for all of our economic problems, many Democrats will call you a “pig” or a “fascist”.

Unfortunately, playing the blame game is not going to get us anywhere.

The number of Americans living in poverty increased dramatically under George W. Bush and it also increased dramatically under Barack Obama.

Our country is drowning in debt, millions of our jobs are being shipped overseas, the middle class is shrinking at an astounding pace, and the Federal Reserve continues to destroy our financial system.

Getting angry at the wealthy or the poor is not going to fix those problems.

But it will distract us from the reality that both major political parties have been doing a horrible job.

Sadly, Americans seem to really enjoy blaming one another these days.  Just check out some of the slogans that have been seen on various signs at Occupy Wall Street protests….

“They Only Call It Class Warfare When We Fight Back”

“Eat The Rich – Feed The Poor”

“The Rich Are Wrecking The Planet”

So will destroying the lives of the rich solve our problems?

Of course not.

The truth is that we should want millions more Americans to be prosperous.  We should be cheering for one another instead of tearing one another down.

But that is heresy to many on the left.

On the right, it is heresy even to mention that our tax system is fundamentally flawed and that it has thousands of loopholes that are being abused by the very wealthy.

In a previous article, I detailed how many of the largest and most profitable corporations in America get away with paying absolutely nothing in taxes.

There is something very wrong with that.

Our income tax system should be abolished altogether, but if we do have to pay income taxes, then it is fundamentally unfair for some people and businesses to be able to pay little or nothing while the rest of us get absolutely obliterated by taxes.

But if you try to say that to many on the right, they will look at you in horror.

The other day, there was a New York Times article that detailed the extreme measures that Apple takes to avoid paying taxes.  It turns out that Apple sets up shell offices all over the globe in order to evade taxation….

As it has in Nevada, Apple has created subsidiaries in low-tax places like Ireland, the Netherlands, Luxembourg and the British Virgin Islands — some little more than a letterbox or an anonymous office — that help cut the taxes it pays around the world.

That same article talked about how Apple has become a model which hundreds of other companies have followed.  To giant corporations such as Apple, tax evasion has become an art form….

Apple, for instance, was among the first tech companies to designate overseas salespeople in high-tax countries in a manner that allowed them to sell on behalf of low-tax subsidiaries on other continents, sidestepping income taxes, according to former executives. Apple was a pioneer of an accounting technique known as the “Double Irish With a Dutch Sandwich,” which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations — some of which directly imitated Apple’s methods, say accountants at those companies.

So what is the solution to all of this?

Raising income taxes won’t work too well because the tax lawyers are always several steps ahead of our politicians.

The truth is that when taxes get raised it is always the middle class that gets absolutely clobbered and the wealthy always find more ways to reduce their exposure.

Just take a look at Mitt Romney.  He made more than 42 million dollars in 2010 and yet Romney had an effective tax rate of only 14 percent.

If I could find a way to have an effective tax rate of only 14 percent I would be jumping up and down for joy, and so would millions of other Americans.

Our tax system is deeply, deeply broken and needs to be thrown into the trash can.

Abandoning the current tax system would not solve all of our problems, but it would be a start.

Unfortunately, neither political party is willing to even consider this.

Instead, the Democrats want to raise taxes a little bit and the Republicans want to lower taxes a little bit.

But neither alternative will do much of anything to solve any of the real problems we are facing.

Our economy is dying and it is not producing nearly enough jobs for all of us.  When Barack Obama took office, the number of “long-term unemployed workers” in America was 2.6 million.  Today, it is 5.3 million.

At this point, an astounding 53 percent of all college graduates under the age of 25 are either unemployed or underemployed.

So where is all of the “change” that Obama promised?

Things just keep getting worse.

Since Obama has been in the White House, 14 million more Americans have gone on food stamps, and more than 25 percent of all American children are enrolled in the program today.

How will class warfare help those people?

Will blaming the wealthy make things better for them?

They are already receiving government handouts.

Will increasing those handouts a little bit more fundamentally change their lives for the better?

Of course not.

What those people need are good jobs.

But instead, both the Democrats and the Republicans continue to pursue the same job killing policies that have been destroying American jobs for decades.

Without good jobs, the number of Americans dependent on the government is going to continue to grow.

In a previous article, I detailed the explosive growth of social welfare benefits that we have seen under both Republicans and Democrats….

Back in 1960, social welfare benefits made up approximately 10 percent of all salaries and wages.  In the year 2000, social welfare benefits made up approximately 21 percent of all salaries and wages.  Today, social welfare benefits make up approximately 35 percent of all salaries and wages.

The goal should not be to rape the rich and give out even more social welfare benefits.

Instead, the goal should be to develop an economy that creates good jobs.

We need have an economy that empowers individuals and small businesses.

Instead, we have an economy dominated by big government and big corporations.

We have an economy that funnels the vast majority of the economic rewards to a tiny elite while most of the rest of us struggle.

Just consider the following statistics….

*Back in the 1970s, the top 1 percent of all income earners in the United States brought in about 8 percent of all income.  Today, they bring in about 21 percent of all income.

*The following is how income gains in the U.S. were distributed during 2010….

-37 percent of all income gains went to the top 0.01 percent of all income earners

-56 percent of all income gains went to the rest of the top 1 percent

-7 percent of all income gains went to the bottom 99 percent

*In America today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.

*According to Forbes, the 400 wealthiest Americans have more wealth than the bottom 150 million Americans combined.

So what is the solution to that problem?

Is it to attack the rich and take away all their money and give more government handouts to the poor?

Of course not.

Rather, we need to change the rules of the game so that individuals and small businesses are empowered to succeed.

We need to decentralize economic power and dramatically reduce the undue influence that big government and giant corporations have over our economic system.

We need to create an environment where almost anyone that has a good idea and that is willing to work hard can succeed.

But instead of focusing on real solutions like shutting down the Federal Reserve, converting to debt-free currency, eliminating the income tax, shutting down the IRS, massively reducing the size of government and getting rid of thousands upon thousands of unneeded regulations, the mainstream media and our politicians are going to continue to try to get Americans to blame one another for our problems.

The efforts to divide America are working, and hatred is growing to unprecedented levels in this country.

Eventually this will lead to mass rioting in our major cities and that will make our problems far worse.

Hatred and division are not going to bring us a better future.

They are only going to destroy us from within.

We don’t need hate.

What we need is more love and more solutions.

Unfortunately, our leaders are leading us down a very dark path, and we are heading for a future that is going to be a complete mess.

24 Outrageous Facts About Taxes In The United States That Will Blow Your Mind

The U.S. tax code is a complete and utter abomination and it needs to be thrown out entirely.  Nobody in their right mind would ever read the whole thing – it is over 3 million words long.  Each year, Americans spend billions of hours and hundreds of billions of dollars trying to comply with federal tax requirements.  Sadly, it is the honest, hard working Americans in the middle class that always get hit the hardest.  The tax code is absolutely riddled with loopholes that big corporations and the ultra-wealthy use to minimize their tax burdens as much as possible.  Many poor people do not pay any income taxes at all.  The dishonest are rewarded for cheating on their taxes (if they can get away with it) and the ultra-wealthy have moved trillions of dollars to offshore tax havens where they can avoid U.S. taxation altogether.  Our system is incredibly unfair to the millions of hard working people in the middle class and upper middle class that drag themselves out of bed and go to work each day and try to do the right thing.  In addition, the current U.S. tax system is incredibly inefficient, it diverts a tremendous amount of resources away from more valuable economic activities, and it has chased thousands of businesses and trillions of dollars out of the United States.  The U.S. tax code is such a complete and utter mess at this point that it can never be “fixed”.  The only rational thing to do is to abolish it completely, and any politician that tells you otherwise is lying to you.

The following are 24 outrageous facts about taxes in the United States that will blow your mind….

1 – The U.S. tax code is now 3.8 million words long.  If you took all of William Shakespeare’s works and collected them together, the entire collection would only be about 900,000 words long.

2 – According to the National Taxpayers Union, U.S. taxpayers spend more than 7.6 billion hours complying with federal tax requirements.  Imagine what our society would look like if all that time was spent on more economically profitable activities.

3 – 75 years ago, the instructions for Form 1040 were two pages long.  Today, they are 189 pages long.

4 – There have been 4,428 changes to the tax code over the last decade.  It is incredibly costly to change tax software, tax manuals and tax instruction booklets for all of those changes.

5 – According to the National Taxpayers Union, the IRS currently has 1,999 different publications, forms, and instruction sheets that you can download from the IRS website.

6 – Our tax system has become so complicated that it is almost impossible to file your taxes correctly.  For example, back in 1998 Money Magazine had 46 different tax professionals complete a tax return for a hypothetical household.  All 46 of them came up with a different result.

7 – In 2009, PC World had five of the most popular tax preparation software websites prepare a tax return for a hypothetical household.  All five of them came up with a different result.

8 – The IRS spends $2.45 for every $100 that it collects in taxes.

9 – According to The Tax Foundation, the average American has to work until April 17th just to pay federal, state, and local taxes.  Back in 1900, “Tax Freedom Day” came on January 22nd.

10 – When the U.S. government first implemented a personal income tax back in 1913, the vast majority of the population paid a rate of just 1 percent, and the highest marginal tax rate was just 7 percent.

11 – Residents of New Jersey pay $1.64 in taxes for every $1.00 of federal spending that they get back.

12 – The United States is the only nation on the planet that tries to tax citizens on what they earn in foreign countries.

13 – According to Forbes, the 400 highest earning Americans pay an average federal income tax rate of just 18 percent.

14 – Warren Buffett had an effective tax rate of just 17.4 percent for 2010.

15 – The top 20 percent of all income earners in the United States pay approximately 86 percent of all federal income taxes.

16 – Sadly, as Bill Whittle has shown, you could take every single penny that every American earns above $250,000 and it would only fund about 38 percent of the federal budget.

17 – The United States has the highest corporate tax rate in the world (35 percent).  In Ireland, the corporate tax rate is only 12.5 percent.  This is causing thousands of corporations to move operations out of the United States and into other countries.

18 – Some tax havens are doing a booming business in setting up sham headquarters for U.S. corporations.  For example, the city of Zug, Switzerland only has a population of 26,000 people but it is the headquarters for 30,000 companies.

19 – In 1950, corporate taxes accounted for about 30 percent of all federal revenue.  In 2012, corporate taxes will account for less than 7 percent of all federal revenue.

20 – In a previous article, I discussed how many of our largest corporations make huge profits and yet pay less than nothing in taxes….

What U.S. corporations are able to get away with is absolutely amazing.

The following figures come directly out of a report by Citizens for Tax Justice.  These are combined figures for the tax years 2008, 2009 and 2010.

During those three years, all of the corporations below made a lot of money.  Yet all of them paid net taxes that were below zero for those three years combined.

How is that possible?  Well, it turns out that instead of paying in taxes to the federal government, they were actually getting money back.

So for these corporations, their rate of taxation was actually below zero.

If you have not seen these before, you are going to have a hard time believing some of these statistics…..

*Honeywell*

Profits: $4.9 billion

Taxes: -$34 million

*Fed Ex*

Profits: $3 billion

Taxes: -$23 million

*Wells Fargo*

Profits: $49.37 billion

Taxes: -$681 million

*Boeing*

Profits: $9.7 billion

Taxes: -$178 million

*Verizon*

Profits: $32.5 billion

Taxes: -$951 million

*Dupont*

Profits: $2.1 billion

Taxes -$72 million

*American Electric Power*

Profits: $5.89 billion

Taxes -$545 million

*General Electric*

Profits: $7.7 billion

Taxes: -$4.7 billion

Are you starting to get the picture?

21 – Exxon-Mobil paid $15 billion in taxes in 2009, but not a single penny went to the U.S. government.

22 – Many wealthy Americans hide enormous amounts of money outside the country in order to avoid paying taxes.  According to the IMF, a total of 18 trillion dollars is currently being hidden in offshore banks.

23 – The number of traffic accidents spikes each year right around April 15th.  The following is from a recent Bloomberg article….

Deaths from traffic accidents around April 15, traditionally the last day to file individual income taxes in the U.S., rose 6 percent on average on each of the last 30 years of tax filing days compared with a day during the week prior and a week later, according to research published in the Journal of the American Medical Association.

24 – Most of the tax debate is focused on income taxes, but the truth is that Americans pay dozens of other taxes every single year.  The following are just a few of the taxes that many Americans pay….

#1 Building Permit Taxes

#2 Capital Gains Taxes

#3 Cigarette Taxes

#4 Court Fines (indirect taxes)

#5 Dog License Taxes

#6 Federal Unemployment Taxes

#7 Fishing License Taxes

#8 Food License Taxes

#9 Gasoline Taxes

#10 Gift Taxes

#11 Hunting License Taxes

#12 Inheritance Taxes

#13 Inventory Taxes

#14 IRS Interest Charges (tax on top of tax)

#15 IRS Penalties (tax on top of tax)

#16 Liquor Taxes

#17 Luxury Taxes

#18 Marriage License Taxes

#19 Medicare Taxes

#20 Property Taxes

#21 Recreational Vehicle Taxes

#22 Toll Booth Taxes

#23 Sales Taxes

#24 Self-Employment Taxes

#25 School Taxes

#26 Septic Permit Taxes

#27 Service Charge Taxes

#28 Social Security Taxes

#29 State Unemployment Taxes (SUTA)

#30 Telephone Federal Excise Taxes

#31 Telephone Federal Universal Service Fee Taxes

#32 Telephone Minimum Usage Surcharge Taxes

#33 Telephone State And Local Taxes

#34 Tire Taxes

#35 Toll Bridge Taxes

#36 Toll Tunnel Taxes

#37 Traffic Fines (indirect taxation)

#38 Utility Taxes

#39 Vehicle License Registration Taxes

#40 Vehicle Sales Taxes

#41 Workers Compensation Taxes

When you account for all forms of taxation on the federal, state and local levels there are many Americans that pay out more than half of their incomes in taxes.

We are being taxed into oblivion, and yet most Americans do not even realize that it is happening.

It is kind of like being killed by thousands of tiny cuts.

So what do all of these taxes buy us?

They buy us a massively bloated government that wastes money on some of the craziest things imaginable.

Millions of Americans work for the federal government, and yet most of them produce very little of real economic value.  The following comes from a recent National Review article….

By 2005, the federal government employed 14.6 million people: 1.9 million civil servants, 770,000 postal workers, 1.44 million uniformed service personnel, 7.6 million contractors, and 2.9 million grantees. This amounted to a ratio of five and a half “shadow” government employees for every civil servant on the federal payroll. Since 1999, the government had grown by over 4.5 million employees.

According to that same article, when you add in state and local government workers the numbers are even more dramatic….

According to the U.S. Census Bureau, there are 3.8 million full-time and 1.5 million part-time employees on state payrolls. Local governments add a further 11 million full-time and 3.2 million part-time personnel. This means that state and local governments combined employ 19.5 million Americans.

Yes, we do need some government.  For example, without any law enforcement at all our society would descend into complete chaos, and without any military at all we would be completely open to foreign conquest.

In order to have a stable, secure society we do need some government.

However, we definitely do not need the massively bloated government that we have today.

The truth is that most government employees are a drain on the system.  Most of them just push paper around.  I used to work in Washington D.C. so I know what pushing paper around is all about.

And as I wrote about yesterday, there are millions of other Americans that enjoy a comfortable existence at the expense of the federal government without doing any work whatsoever.

Of course the biggest welfare recipients of all are the big corporations.  All forms of corporate welfare should be eliminated immediately.

When are U.S. taxpayers going to get sick and tired of paying for all of this?

Every single year, the federal government, state governments and local governments drain massive amounts of desperately needed money from hard working middle class families.

Then they take that money and spend it on incredibly foolish things.

When are American voters going to stand up and boldly declare that they have been taxed enough already and they aren’t going to take it anymore?

The current tax code is completely and utterly broken and it is beyond repair.

Unfortunately, neither the Republicans or the Democrats are proposing that we should get rid of it.

So we are just going to continue to get more of the same year after year, and it is the middle class that will feel the pain.

The Global Elite Are Hiding 18 Trillion Dollars In Offshore Banks

In recent days, the fact that Mitt Romney has millions of dollars parked down in the Cayman Islands has made headlines all over the world.  But when it comes to offshore banking, what Mitt Romney is doing is small potatoes.  The truth is that the global elite are hiding an almost unbelievable amount of money in offshore banks.  According to shocking research done by the IMF, the global elite are holding a total of 18 trillion dollars in offshore banks.  And that figure does not even count any money being held in Switzerland.  That is a staggering amount of money.  Keep in mind that U.S. GDP in 2010 was only 14.58 trillion dollars.  So why do the global elite go to such trouble to hide their money in offshore banks?  Well, there are two main reasons.  One is privacy and the other is low taxation.  Privacy is a big issue for those that are involved in illegal enterprises such as drug running, but the biggest reason why people move money into offshore banks is in order to avoid taxes.  Some set up bank accounts in foreign nations because they want to legally minimize their taxes and others set up bank accounts in foreign nations because they want to illegally avoid taxes.  You would be absolutely amazed at what some large corporations and wealthy individuals do to get out of paying taxes.  Unfortunately, the vast majority of the rest of us don’t have the resources or the knowledge to play these games, so we get taxed into oblivion.

So why do they call it “offshore banking”?

Well, the term originally developed because the banks on the Channel Islands were “offshore” from the United Kingdom.  Most “offshore banks” are still located on islands today.  The Cayman Islands, Bermuda, the Bahamas, and the Isle of Man are examples of this.  Other “offshore banking centers” such as Monaco are actually not “offshore” at all, but the term applies to them anyway.

Traditionally, these offshore banking centers have been very attractive to both criminals and to the global elite because they would not tell anyone (including governments) about the money that anyone had parked there.

These days some governments (particularly the U.S. government) are trying to change this, but we certainly will not see the end of offshore banking any time soon.

The amount of money that goes through these offshore banks is absolutely astounding.

It has been estimated that 80 percent of all international banking transactions take place through these offshore banks.  $1.4 trillion is being held in offshore banks in the Cayman Islands alone.

One article in the Guardian estimated that a third of all the wealth on the entire globe is being held in offshore banks, and others believe that as much as half of all the capital in the world flows through offshore banks at some point.

Obviously, all of this tax avoidance means that governments around the world are missing out on a whole lot of money.

It has been estimated that the U.S. government is missing out on $100 billion a year because of these offshore banks.  Others would put that figure significantly higher.

Avoiding taxes is a game that the global elite have mastered.  They are playing a whole different ballgame than you and I are.  They don’t just sit there like idiots and get blasted with taxes.  Instead, they hire the best experts and they employ every trick in the book to hold on to as much money as they possibly can.

These days, taking advantage of offshore tax havens is not that complicated to do.  The following is from a recent Politico article….

A plausible scenario plays out like this: I hire an accountant. Doing her job, my accountant tells me that if I sign a few legal documents and route my money through a small Caribbean island, I could keep more of my paycheck and pay a lower tax rate. I may have earned my money in the United States, but legally I can claim that it was, in fact, earned in a tax haven.

If it is legal, perhaps more of us should look into this.

After all, if playing these kinds of games is good enough for Mitt Romney, then why isn’t it good enough for all the rest of us?

During a campaign stop recently, Romney said the following….

“I can tell you we follow the tax laws”

I certainly believe him when he says that.  But it is what he said next that is troubling….

“And if there’s an opportunity to save taxes, we like anybody else in this country will follow that opportunity.”

I certainly believe him when he says that too.

ABC News recently revealed that Bain Capital has established an astounding 138 different offshore funds in the Cayman Islands.

Something has got to work pretty well to want to do it 138 times.

But Bain Capital was also very busy over in other offshore banking centers as well.

One of the largest shell companies that Bain set up down in the Caribbean was called Sankaty High Yield Asset Investors Ltd.  It did not have an office in Bermuda and it had no staff in Bermuda.  But it helped clients of Bain Capital avoid a whole lot of taxes.

The following comes from a 2007 Los Angeles Times article….

In Bermuda, Romney served as president and sole shareholder for four years of Sankaty High Yield Asset Investors Ltd. It funneled money into Bain Capital’s Sankaty family of hedge funds, which invest in bonds and other debt issued by corporations, as well as bank loans.

Like thousands of similar financial entities, Sankaty maintains no office or staff in Bermuda. Its only presence consists of a nameplate at a lawyer’s office in downtown Hamilton, capital of the British island territory.

“It’s just a mail drop, essentially,” said Marc B. Wolpow, who worked with Romney for nine years at Bain Capital and who set up Sankaty Ltd. in October 1997 without ever visiting Bermuda. “There’s no one doing any work down there other than lawyers.”

The amount of money being funneled through Sankaty today is absolutely stunning….

Today, Bain Capital manages $60 billion in assets, according to a spokesman. The total includes $23 billion in Sankaty debt and credit funds. Half a dozen Sankaty affiliates now are active in Bermuda, corporate registry records show.

The Sankaty debt hedge funds are organized as partnerships in Delaware that produce taxable business income by investing in fixed-income bonds and other debt instruments. Under tax law, even tax-exempt U.S. institutions may face a 35% tax if they invest directly in such hedge funds. By investing instead through a Bermuda corporation, the taxes are legally blocked, experts say.

Of course all of this is perfectly legal.

So nobody gets into trouble for any of this.

By keeping money offshore, even those managing these kinds of funds can avoid being taxed.

Victor Fleischer, a tax professor at the University of Colorado Law School, recently explained how this works….

“The idea behind some of the Cayman Island strategies was that the income that the fund managers receive for managing the money would be kept offshore in the Cayman Island — and the chief benefit is that you can defer when you recognize that income until a later date and you can reinvest the money from the Cayman islands and none of those reinvested funds get taxed until you bring them back either”

So was Romney doing this?

We may never know unless he shows us his tax returns.

What we do know is that Romney has millions of dollars of his own personal wealth invested in offshore tax havens.

The following comes from ABC News….

In addition to paying the lower tax rate on his investment income, Romney has as much as $8 million invested in at least 12 funds listed on a Cayman Islands registry. Another investment, which Romney reports as being worth between $5 million and $25 million, shows up on securities records as having been domiciled in the Caymans.

But Romney does not just have money invested down in the Cayman Islands.  Apparently his money is invested in a whole host of offshore tax havens.

The following quote comes from a Reuters article….

Bain funds in which Romney is invested are scattered from Delaware to the Cayman Islands and Bermuda, Ireland and Hong Kong, according to a Reuters analysis of securities filings.

So is there anything wrong with this?

Well, it depends on how you define “wrong”.

What Romney is doing is perfectly legal.

But it also stinks.  Washington lawyer Jack Blum recently told ABC News the following about Romney’s finances….

“His personal finances are a poster child of what’s wrong with the American tax system”

So now we may have a few hints as to why Romney may not want to release his old tax returns.

But as noted above, what Romney is doing is just small potatoes compared to what the ultra-wealthy do.

The U.S. Congress has been trying to clamp down on offshore banking, but the ultra-wealthy are always two or three steps ahead of them.

The ultra-wealthy will go to just about any extreme in order to avoid paying taxes.

In fact, the Washington Post has reported that an increasing number of wealthy individuals are actually deciding to renounce their citizenship rather than face the wrath of the IRS.

The ultra-wealthy aren’t really concerned that much with national citizenship anyway.  If they want to influence an election, they can have far more influence by donating a few million bucks to a “Super PAC” than they can by casting the few votes that they have.

In a previous article, I described how the ultra-wealthy use offshore banks as a “shadow banking system” that plays by rules that most people don’t even know exist….

It is a shadow banking system that most Americans don’t know anything about. Most Americans don’t have the resources to be able to set up shell companies in half a dozen different countries so that they can “filter” their profits.  Most Americans don’t know a thing about complicated tax avoidance plans that tax lawyers use such as the “Double Irish” and the “Dutch Sandwich”.  Most Americans would have no idea how to eventually have most of the money that they make end up in Bermuda so that it can avoid taxes.

Most among the global elite simply do not care that U.S. debt is climbing into the stratosphere.  All they care about is keeping as much of their own money in their pockets as they possibly can.

Of course there are always exceptions to this rule.  Warren Buffett recently wrote a check to the U.S. Treasury for a little more than $49,000 to help pay off the national debt.

But considering the fact that the U.S. national debt is increasing by more than 100 million dollars an hour, that didn’t exactly do much to help.

Our system is deeply broken and the global elite are getting away with bloody murder.  Over the decades, they have carefully crafted the rules so that as much wealth as possible is funneled into their pockets, and they have carefully crafted the rules so that as much wealth as possible stays in their pockets.

Of course if we got rid of the personal income tax and the corporate income tax entirely and replaced them with a completely new system we could get rid of all of this game playing once and for all.

But what do you think the odds are of that happening?

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