Technology has robbed the world of a lot freedom… just as it has added great freedom in other ways.
Technology allowed me to live in Hong Kong in the 1970s.
Technology has brought us the freedom to see the world in an instant… to speak to the world in an instant… to message the world in an instant… to travel the world… to buy and sell with those who offer the best deal… plus ever so much more.
Yet the same technology has allowed governments everywhere to restrict privacy and in many instances lifestyle.
For example… US legislation has slowly created such a burden on overseas banks that to serve US citizens most overseas banks will no longer accept Americans as customers.
Technology allowed me to live in London and …
work in the Isle of Man in the 19080s.
Our newsletters and later this website have warned about this problem for nearly 4o years as we have observed the gradual erosion of American access to global banking.
The first clues of our restricted freedom came clear back in the early 1980s when overseas mutual funds started dropping American investors. I saw the results of this myself. The 2nd book I wrote about global investing “Three Confidential Reports About Making Money Abroad” recommended several overseas mutual funds including Action Suisse (A Swiss fund that invested in Swiss shares) and Deutscher Investment-Trust (a German fund investing in German shares). These were great funds for that time as the Swiss franc, German mark and these stock markets were exploding.
I invested in these funds and was making triple digit returns when my Swiss banker at that time, Credit Suisse wrote and said…”Sorry we have to sell these funds for you because you are an American. Thank you very much.”
Since that time Swiss bankers and banks globally have been fighting a rear guard action against more and more legislation that does not make it illegal for Americas to bank overseas…. just financially impractical. The cost of complying with all the legislation is so high that overseas banks can’t charge enough.
The beginning of the end came in in 1996, when the USA concluded a new double taxation agreement with Switzerland, which, among other things, regulated the conditions for administrative assistance in matters of taxation. Switzerland agreed to provide assistance with regard to “tax fraud and the like”.
“And the like.” Three infamous words.
This extension of the concept of “tax fraud” was like a ticking time bomb. US authorities simply had to wait for some bank and in this case it was UBS to act in a way so the US authorities could expand their control over non US banks. Thus banking secrecy was well and truly dead not in 2009, but already in 1996.
UBS activity allowed the US government to pile so much additional paperwork on overseas banks that other banks in other countries began closing down American accounts as well.
A Daily Telegraph article “Lloyds Bank hit by Obama tax purge” shows what happened to Americans (even those who had lived in England for decades) says: Lloyds Banking Group is ditching American customers based in Britain pending a crackdown on international tax evasion planned by President Barack Obama.
This week American private client account-holders at Lloyds’s received letters informing them of an “important change in policy regarding clients who are resident, domiciled or linked to the United States by property or asset holdings”. They were told the bank had “no choice” but to “cease acting as your investment manager. One letter sent to Bank of Scotland’s portfolio management division, which is now part of Lloyds, said: “The USA has a mature regulatory environment governed by its Securities and Exchange Commission. These regulations mean that we are not licensed to manage portfolios for US clients”.
The letter added: “Unfortunately we cannot offer an equivalent service from within Lloyds Banking Group.” Clients have been advised to transfer their assets.
One recipient, who has lived in the UK for over 25 years, said: “After all this time, I’ve suddenly been told I must take my money elsewhere and I don’t understand why. Now I’m scared that other banks won’t take me on either.”
There you have it. Americans are totally free to bank abroad… yet many cannot because the cost of compliance is so high. This is true in many other fields. There are some great natural health products available that aren’t offered because of the high cost of FDA approval. The list could go on.
This is not a unique American phenomenon by the way. European food supplements are even more restricted than in the US.
What can we do to maintain freedom?
Freedom is an attitude and lifestyle we choose… not something legislated so we can use technology to help us be free as citizens of the world which I recommended in my first book (written in the 1970s) “Passport to International Profit”.
Here is an excerpt from that book.
Don’t be a Shooting Duck
This is the first story in the second chapter of a book, Passport to Profit, I wrote in 1979. Does this now apply to you?
Having a Harbor
Doesn’t everyone dream of having some safe harbor for the ultimate escape? A completely dependable last line of defense, so that when everything else falls to pieces, one can drop back inside this cozy little shelter and enjoy a safe snug comfortable life. Certainly it is sensible to have one. In fact, to my way of thinking, anyone who doesn’t have quite a few safe harbors is not only playing a dangerous game he doesn’t have to play, he is missing one of the greatest contentment’s of life..confidence.
Duck in the Pond Theory
We would all have our own little partnership with our own little pond if we were ducks. The pond gives us water, food, shelter and peace. We, in turn, give it ducks. For what is a pond without ducks? We clean it, eat up unnecessary plants and in general keep everything in tiptop condition. However, every once in a while the hunters arrive. Very quickly the rules of the partnership change. You see, the pond as your partner has a limited range of powers. Whether it likes it or not, a new partnership is about to be imposed upon the pond. It will be forced to join in a hunter/pond partnership and part of the rules of that relationship is that the hunters can shoot at the ducks on the pond. This not only throws you, the duck, into an unrequested, unwanted hunter/hunted partnership but threatens to terminate quickly your duck/pond partnership.
It’s possible if you are not careful that you will become a diner/dinner partner on the wrong end of the fork. Logic dictates what to do in a situation like this. Since your pond partner is no longer dependable because the rules are about to be changed, you should take the initiative. Rule #1 of the Duck in the Pond Theory is in fact “Don’t be a sitting duck when the shooting starts”, so you’ve go to decide what to do.
All too often in real life, people get too upset with change to use logic. Their first reaction instead is dismay. They sit there wallowing in disappointment, shock and anger because their pond has let them down. Or even worse, they sit there looking at the gun barrels and choose to blind themselves to the reality of the situation, saying this is some sort of joke or the hunters are really looking for rabbits or the pond won’t let this happen.
Rule #2 in this theory is “be realistic”. If you don’t accept partnerships change daily or ignore the limitations of your partner; you are not capable of deciding when to run for your harbor. You’ll lie to yourself and probably to your partner. This gums up the whole works. You’ll mess up a fairly clean machine by adding unwanted, useless nuts and bolts which do nothing but clog everything up.
The human mind/body partnership has an almost unlimited capacity to ignore its eyeballs, to adjust reality to match its desires. This inbred flaw causes humans to ignore reality and expect the world to revolve around them. Being realistic is accepting that no person, thing or partnership is indispensable or permanent. Realism is recognizing change and accepting it when no one is able to stop it.
If, by being realistic, you recognize that as much as you love your pond and as much as the gun barrels look harmless, that the shooting is not far away, you must act. You must get off the pond. Where do you go?
Rule #3 of the theory is to be sure you have another pond to go to. I call it having a positive pond factor. The more places you have to go, the more positive your pond factor.
Technology allows Merri and me to live on a remote Blue Ridge farm…
and Ecuador now.
Until next message, where we learn how to find other ponds, may your pond be a good one.
One bank that still welcomes Americans is Jyske Bank. They spent years (and probably millions in legal fees I might add) figuring out all the ways to make it possible for them to serve Americans. This is why I am pleased to be speaking at their 9th Global Wealth seminar.
See details on how to join Merri and me at Jyske’s bi annual Copenhagen seminar here Global Wealth Management Seminar.
Join us on the waterfront restaurants and coffee shops along Nyhavn as we learn about global investing in Copenhagen.
How We Can Serve You