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LQD - 32 Trillion in Offshore Tax Havens?

by Zwackus Thu Apr 4th, 2013 at 04:52:52 AM EST

This is interesting.

Leaks reveal secrets of the rich who hide cash offshore


Millions of internal records have leaked from Britain's offshore financial industry, exposing for the first time the identities of thousands of holders of anonymous wealth from around the world, from presidents to plutocrats, the daughter of a notorious dictator and a British millionaire accused of concealing assets from his ex-wife.

The leak of 2m emails and other documents, mainly from the offshore haven of the British Virgin Islands (BVI), has the potential to cause a seismic shock worldwide to the booming offshore trade, with a former chief economist at McKinsey estimating that wealthy individuals may have as much as $32tn (£21tn) stashed in overseas havens.

To put that in perspective, the annual US Budget is 3.8 trillion dollars.  The US economy was estimated to be 15.8 trillion dollars in 2012.

An amount of money larger than the entire economy of the United States of America is secretly stashed in an overseas tax haven.

How much could such hoards as this be actually participating in the real economy in any way, and how much is it a giant dragon's hoard, of use to no one?  How much of that hoard is even real, and how much of it is the nominal value of speculative or fraudulent financial products?

Could such a hoard be confiscated by a government?  What sort of economic oddity would that be, a government in possession of a financial pile many times greater than the size of the world's largest economy?

I wonder what would happen if that money simply disappeared?  Erased from the books?  Gone forever?

It boggles the mind.  

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As far as I know, 32 trillion is only the tip of the iceberg.
by de Gondi (publiobestia aaaatttthotmaildaughtusual) on Thu Apr 4th, 2013 at 11:21:26 AM EST
From the Guardian article:
It is estimated that more than $20tn acquired by wealthy individuals could lie in offshore accounts. The UK-controlled BVI has been the most successful among the mushrooming secrecy havens that cater for them.

It is highly likely that at least that amount of assets of US citizens is concealed in other jurisdictions. Diversify, diversify, diversify.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 4th, 2013 at 11:53:00 AM EST
I wonder what would happen if that money simply disappeared?  Erased from the books?  Gone forever?

The infamous "dark pools", much discussed on Zero Hedge, would evaporate. A light just went on above many, though whose assets correspond to which "dark pool" remains unclear. Consider that they are the monsters of the deep in our free (fair and balanced) markets for stocks, bonds and, especially, derivatives. We might see a reset of valuations on stock markets in particular.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 4th, 2013 at 11:58:34 AM EST
Of course Bernanke could easily counter any such loss with fresh QE money for the afflicted, but might be queasy about so doing if there is enough fuss.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 4th, 2013 at 12:00:41 PM EST
[ Parent ]
How ICIJ's Project Team Analyzed the Offshore Files

The International Consortium of Investigative Journalists' exploration of the secretive world of offshore companies and trusts began after a computer hard drive packed with corporate data and personal information and e-mails arrived in the mail.

Gerard Ryle, ICIJ's director, obtained the data trove as a result of his three-year investigation of Australia's Firepower scandal, a case involving offshore havens and corporate fraud.

The offshore information totaled more than 260 gigabytes of useful data. ICIJ's analysis of the hard drive showed that it held about 2.5 million files, including more than 2 million e-mails that help chart the offshore industry over a long period of explosive growth.  It is one of the biggest collections of leaked data ever gathered and analyzed by a team of investigative journalists.

The drive contained four large databases plus half a million text, PDF, spreadsheet, image and web files. Analysis by ICIJ's data experts showed that the data originated in 10 offshore jurisdictions, including the British Virgin Islands, the Cook Islands and Singapore.  It included details of more than 122,000 offshore companies or trusts, nearly 12,000 intermediaries (agents or "introducers"), and about 130,000 records on the people and agents who run, own, benefit from or hide behind offshore companies.


Likely we are talking about a number of wealth holders in the low thousands world wide.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 4th, 2013 at 01:34:24 PM EST
as leaks go, it's right up there with assange and manning.

well done, whoever you are!

"A fool with a tool is still a fool." - Abraham Verghese

by melo (melometa4(at)gmail.com) on Thu Apr 4th, 2013 at 06:18:56 PM EST
[ Parent ]
Denise Rich   Offshore company: The Dry Trust

Among nearly 4,000 American names is Denise Rich, a songwriter whose ex-husband, the oil trader Marc Rich, was pardoned by President Clinton as he left office in 2001, over tax evasion and racketeering charges.


As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Apr 5th, 2013 at 12:27:20 PM EST
[ Parent ]
Could such a hoard be confiscated by a government?

Insofar as we are talking about financial instruments, this could only be done by or with the (at least implicit) consent of the issuing country or the country of residence of the debtor. Meaning that...

What sort of economic oddity would that be, a government in possession of a financial pile many times greater than the size of the world's largest economy?

... cannot happen. The (say) US government never has any US$, in the same way the referee at a football field never has any points: A US$ exists only when someone who is not the US owns it and the US government does not dispute the ownership.

The countries in which the banks are located could, however, erase this money from existence, by the simple expedient of blowing up the banks.

I wonder what would happen if that money simply disappeared?  Erased from the books?  Gone forever?

The only impact of any consequence would be that some of the 1 % would become unable to buy quite as many politicians as they currently do.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Apr 4th, 2013 at 03:39:04 PM EST
The crashes of several financial exchanges being, to Jake, of little consequence. I would not say 'little consequence' but would welcome such a development.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Apr 4th, 2013 at 09:25:23 PM EST
[ Parent ]
The exchanges are usually not the ones scamming people - they just provide the infrastructure. The exchange is like the casino's landlord, the market maker is like the casino, and the banksters and hedge fundies are like the card sharp over in the corner.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Apr 6th, 2013 at 06:52:03 AM EST
[ Parent ]
Nor would they be the ones who are bankrolling the whole game. Those would be the largest wealth holders. The casino operators and the card sharks are part of the game but they know who the big dogs are. If they don't they don't last long. It is only when one of the big dogs screws up, as with Jon Corzine of MF Global or with Martin J. Sullivan of AIG that even bigger dogs will take a bite or a limb for themselves. The others mostly try to play for some of the scraps.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Apr 6th, 2013 at 09:10:14 PM EST
[ Parent ]
why is it even there? Why don't the owners spend it? Get that new yacht you saw someone else using the other day. Invest in new technologies to make you even richer, more powerful, having an infinite lifespan, etc.

The only real use for that $$$ is to make sure that when the time comes, and it is definitely on its way, the guns will be protecting you and not pointed at you, and in that game, it will be a bidding war for the merc industries. Even the US Pentagon will be even MORE up for sale.

Such cheery thoughts on a Saturday AM.

Record. Store. Leave. Don't take it personally. A lifetime passes quickly.

by THE Twank (yatta blah blah @ blah.com) on Sat Apr 6th, 2013 at 02:01:14 PM EST


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