http://www.zillow.com/or/expensive-homes/
I admire both and learn from them. This was a double header but I am extremely disappointed.
They spoke of money and wealth as if they were one in the same thing. That is ambiguous when clarity of terms is required. They should have used the terms currency and investments (assets expressed in money value). Money value is a market dependent term.
Wealth can be holdings of currency in an account. Holdings exclusive of asset money value in an account. It can also be exclusively assets exclusive of any currency in the account. It can be any mixture of both. That mixture is wealth. Cash plus Assets. Cash is also an asset.
The point is that both assets and cash currency in an account is the money value of the account. They are two different things but are often combined to simply calling them "Money".
Thom and Richard know that and made serious mistakes in conflating the two. It only leads to public misunderstanding. There is enough of that already about Money. They talked about the Trillions of dollars in offshore accounts. The number can only be approximated by academic educated guesses that I have recently read and vary widely. Those "Trillions of Dollars" are not cash but Richard at one point said or implies that it reduces the money supply "there is no money" referring to the deficit problem and need for austerity. What he means is that wealth (currency/assets money value) is hidden from taxation. Generally currency transactions resulting in profits are taxed. Wealth in terms of assets like a house can be taxed but I don't think that asset value in an account is often taxed like that. It is taxed when assets are sold for a gain.
Banks are no longer exclusively in the Currency business. They are also in the Asset Management business. My broker is Morgan Stanley. I do cash transactions in the account as well as asset management. What kind of business is an off-shore Bank doing? Both I suppose. But where does the bank profit come from? Transactions but there are probably "Management Fees" as well unrelated to transactions.
Mossock Fonseca is a legal firm. Not a Bank by any stretch of the term?? Not involved in any bank accounting for their customer? Its role in the game is murky, of course. Any company they create for a customer has to have a banking account. Who takes the company documentation to a bank to open a banking account for the business? The customer of Mossock Fonseca or Mossock Fonseca on behalf of the customer. From reading the press it appears that Mossock Fonseca makes the choice on where geographically to do business with a bank.
A shell company identity does not have to relate to a bank to maintain the account but something I read about how easy it is to establish one said "whats the point" if there is not an associated banking account. Banking can mean both Cash and Non-Cash assets I would think. Customer choice of what is to be managed. However I can't imagine that any bank account service would not include cash management as well as non-Cash management? Possible but not likely?
It is a shell game so I will not feel badly about my lack of ability to understand it all.
The entire offshore account domain is confusing. Thom and Richard only added confusion when they could have really clarified the problem. That clarification however would have had to employ terms and knowledge of the general relationships of money wealth and economics that are not know nor easily understood by the average person....unfortunately.
That lack of understanding is what makes the wealthy.....wealthy!
I really don't know if the core problem with off shore accounts is that they shelter Currency or non-Currency assets or both. Obviously "Money Laundering" applies by reason to Currency transactions. At the upper strata of extreme wealth I would think that non-currency asset trading might make any given asset de-facto currency in terms of medium of exchange, for whatever reason the exchange involves.
"Money Lundering"? That is another case of ambiguity! It certainly means "Currency Laundering" Accuracy in the definition of terms is absolutely necessary to understand the problem. That is both a bug and a feature in the system that uses the Shell Game as a business model.
200,000 offshore companies have been set up by the Mossack Fonseca law firm.
This link lists the top ten banks requesting off shore companies for their clients. "More than 500 banks, their subsidiaries and branches registered nearly 15,600 shell companies with Mossack Fonseca, according to ICIJ’s analysis. HSBC and its affiliates created more than 2,300 in total."
How does this off shore business work? Does the client ask their bank to set it all up or does the client go directly to a law firm to have one set up for a company and then go to a bank with the company documentation from some given country and ask for an account in that company identity? An off shore company identity without any bank account means nothing beyond using it in a flim flam to make anyone think the company is legit. That however is another matter. Companies without a bank account are non functional as far as money transactions are concerned but may function as far as nominal ownership of other companies is of value to some purpose.
Who goes to whom to set this all up? Client to Bank then Bank to Law Firm? Client to Law Firm that goes to a Bank? In either case there seems to be a continuing relationship between Client/Bank/LawFirm. In some cases is a Bank the direct sole Client of the LawFirm? The Bank is a business like any other Business.
It is a shell game meant to be confusing.
Again I will use as I have used often in the past in this blog: "Who's on First?"
"What a tangled web we weave......... " This whole thing is getting so tangled up in a web of its own design that the web they have woven will be the device of their own demise. That will happen because Information Age Technology is all about establishment and definition of entity relationships to extract organized knowledge.
It is another case of my favorite method of skinning a cat. Induce the cat to skin itself. Hoist itself on it own petard. Hang itself with its own rope. All that is necessary is to establish relationships among thing so that the object of the problem is its own recursive target of itself.
The ultimate relationship is recursion. It is a unity relationship a step above binary us and them. Good and Bad. Call it recursive Bad. Recursive Bad dies. Recursive Good lasts forever.
Good wins in the end.
The Information Age grinds and refines and relates data exceedingly fine to the granular level. Everything is rateable in the search of the relational data base. Give me a relational data base and I will move the earth.
This is of course taken out of context of the full original text that the link http://www.nakedcapitalism.com/2016/04/panamapapers-offshore-funds-on-the-run-with-nowhere-to-go.html refers to. However it stands alone in conflating Currency and Value of Non-currency assets...as far a I can tel from reading it. Deposits are Currency. Not stocks or bonds or similar financial paper called investment portfolios
"The largest US banks do not really want to take more deposits, or even do the cursory know-your-customer due diligence work to open new special purpose accounts for old customers. Americans I know with legitimately acquired nine- or ten-figure investment portfolios now have to scrounge around to open accounts in midsize US banks.
US banks deal in both retail and wholesale levels. Currency at the Retail, investments on the Wholesale. For example, my Morgan Stanley account handles my currency transactions as well as my stock investments. They do not hold currency for paying my bills but, I believe, hold money market accounts for my "Cash on Hand". A money market account is "near money" I perceive currency as real money. Hard money. My base money.
Maybe the problem is that they are scrounging around to open accounts in midsized banks when they should be going to the big crooks that will welcome their portfolios with open arms. What is in those portfolios anyhow?
The link goes on to state the obvious:
He also depicts banks as winding up being beneficiaries, which contradicts his message that they regard onshored money as more hassle (which means cost) that its worth:
"This will, within the next two years or so, lead to a one-time transfer from the global rich to the staff and owners of US financial institutions. But that will be followed by a long drought for new business, as the global wealth that did not move quickly enough gets slotted into endless holding patterns in the mid-Atlantic or mid-Pacific."Banksters are licking their chops. The next big thing to plunder are the rich. They have plundered everything lower on the food chain.
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