Wednesday, August 29, 2012

Nice currency. Shame about its people.

run a mile © fintag

News comments:
America is the new pariah.

Thanks to Obama, Europeans have been told not to "touch" an American. Banks, insurers and funds are turning away and booting to touch anyone who is or maybe an American. Americans are not wanted because they carry a disease called FATCA that can only be treated with a trip to a Doctor called IRS.

Not only are Europeans (in fact every country in the world) frightened of Americans but many institutions do not want to trade in USD either. As you know movements of USD have to pass through the FBI in New York City where every dollar coming and going is checked over. It may take a few seconds to move cash around the world but moving USDs takes days as the FBI are in no hurry to sniff for money laundering.

A mate who works at Lloyds underwriters no longer deals in USD and runs a mile if he hears an American accent. He insures against earthquakes and 9/11 events and his premiums are in anything but the USD.

Not that he can rely on the Euro, which nearly became the reserve currency of the world, and all his recent contracts have clauses about what happens when the Euro collapses. This is obviously an issue because if it's no to USD and EUR, then what is it yes to?

As much as the EUcrats want to save Real Madrid (guardian) and the olive groves of Sicily, the Euro is dying painfully and despite the USD looking like the new JPY carry trade with all its debt but active printing presses, the USD is back to being the world's reserve currency.

As long as it never touches America itself of course, the USD is the preferred currency. So the contracts use the USD as the reference currency but the cash is delivered in GBP. USD is like the new virtual gold standard.

Yes to USD and no to its people.

Today's shorts:
American people (youtube)

Apple is a rich bully (reuters)

Greedy man throws his train set out of his pram (cityam)

Today's longs:
GOP GOLD (marketwatch)

Spanish speakers in America to replace USD with the Peseta.

The detail:
Reporting by Foreign Financial Institutions

FATCA will also require foreign financial institutions (“FFIs”) to report directly to the IRS certain information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. To properly comply with these new reporting requirements, an FFI will have to enter into a special agreement with the IRS by June 30, 2013. Under this agreement a “participating” FFI will be obligated to:

(1) undertake certain identification and due diligence procedures with respect to its accountholders;

(2) report annually to the IRS on its accountholders who are U.S. persons or foreign entities with substantial U.S. ownership; and

(3) withhold and pay over to the IRS 30-percent of any payments of U.S. source income, as well as gross proceeds from the sale of securities that generate U.S. source income, made to (a) non-participating FFIs, (b) individual accountholders failing to provide sufficient information to determine whether or not they are a U.S. person, or (c) foreign entity accountholders failing to provide sufficient information about the identity of its substantial U.S. owners.