Friday, February 10, 2012

If you've got nothing to hide ...

Pardon the disjointed post. It's actually sort of two posts and I'm rushing to get it out here, particularly since I missed Wednesday's post.

This Financial Times article was quite disturbing. It mentions a large (unnamed) A Asian bank which is considering no longer handlg US Treasury Bonds. It's not because they're afraid the US will default. It's because they're afraid that they can't afford to comply with FATCA.

Author Unknown, Possibly 'Shopped
But if it's fake, it's still real
It's one thing for the IRS to declare that it all financial institutions in the world come under its jurisdiction. It's another thing entirely if the world banking industry decides to divest itself of US assets. Yes, this would be very painful, financially, for these institutions, but when they consider turning over their information to the US to be so expensive (and it's often illegal for them to turn this data over to foreign governments) that no longer doing business with the US is seen as a better option, we have a serious problem.

First, I can't even begin to understand the level of arrogance which led US politicians to think that they can command the entire world financial industry to bow to US interests. However, it looks like there's a quid pro quo going on. It looks like we're going to go ahead and possibly require our banks to report to foreign governments.

Update: this was a draft of a post I started a while ago and failed to get online. Now I've read that the US has reached an agreement with five countries to share bank information. This is a far better approach because it's being done government to government instead of IRS to private companies world-wide, but still, it's very disturbing. When is this "information sharing" going to stop? Just how much information are governments going to agree to send to each other about every private citizen's activities? I don't like this trend at all.

What's even more disturbing is that this has been used to sidestep European privacy laws:
The United States and the five European countries said Wednesday that they would get around the secrecy problem by having financial institutions share data with their own governments, which would then share with Washington.
It reminds me of articles I've read about US government agencies legally buying information about private citizens that would be illegal for them to collect it directly.