The Hunt is On... Do You Have Your Safe-Haven?

Dear Mountaineers:

As we told you last week, the indicators showing that the bear market rally is running out of steam are popping up everywhere like alarming red lights -- rather than green shoots. Apart from economic data that is not REALLY improving, insider selling has reached new heights as executives appear to be running out of confidence in a recovery. They are selling the shares they own in their own businesses as opposed to buying or holding on.

Meanwhile, another group of insiders have signaled their utter and complete panic over the direction that the global economy and financial markets are taking. This group of insiders is comprised of by the "united group of global central banks". Across the board, central banks are printing, pumping and lending money out of thin air, without any contempt of the fiscal damage whatsoever.

Since last October, the European Central Bank (ECB) has been giving banks 6-MONTH UNLIMITED loans against eligible collateral. As if it wasn´t enough, the ECB on June 23rd lowered its interest rates to a record low of 1% and is now providing 1-YEAR UNLIMITED loans to banks in order to boost lending and revive the recession-battered European economies. In response, banks borrowed over EUR 442 billion (that´s approximately USD 624 billiion) worth of unlimited, one-year funds.

On June 25th, the Fed announced that it was going to extend its "currency swap deals" that they had originally arranged with other central banks back at the end of 2008. These "deals" are now to be extended into 2010. They were originally put in place to alleviate the effects of the CREDIT CRUNCH, as well as to hide the fact that the US was not able to cover US Dollars sales with a sufficient stock of foreign currency reserves. Thus, these new deals allow the US to acquire foreign currencies by swapping US Dollars with other central banks without actually having to acquire the foreign currencies in the open markets - yet another trick in our central bankers´ hats.

Other banks followed suit, including the Swiss National Bank, and interfered in the markets in what appeared to be yet another concerted, pre-emptive measure against the building deflationary pressures.

And yesterday, finally, the brandnew "Global Central Bank", the IMF, announced that it too will start issuing its version of sovereign debt. Officially, these IMF bonds are to be backed by the IMF currency, special drawing rights. Whether they, in the end, will be backed by anything more than hot air and Keynesian dreams is most doubtful. But then, as long as they can save the world from a recession, anything goes...

Central bankers are the "INSIDERS" when it comes to financial markets and the global monetary system. You can be assured that a pattern of monetary intervention like this is no mere coincidence. They are trying to stave off the next round of deflation and de-leveraging. There is no doubt that CENTRAL BANKERS ARE VERY CONCERNED. They know what´s coming.

Sincerely yours,

Your Mountain Vision "Alert" Team

TAX AUTHORITIES ON THE HUNT, EVERYWHERE

While central bankers are doing their very Keynesian-best to float economies on "a cushion of liquidity", tax authorities everywhere are looking for tax money in every nook and cranny. And they will not be stopped by any laws. At this point, the rule of law has given way to the rule of PUBLIC FINANCE. We recently discussed the potential problems of the DEBT TRAP. Well, that debt trap is taking hold of world economies and national balance sheets alike.

We warned you of SOVEREIGN DEFAULT over the past few weeks. That is exactly the plague breaking out around the globe. As interest rates are just starting to rise and the resulting rate of private sector defaults is starting to accelerate, the Treasuries of most countries are finding it more and more difficult to fund their liabilities. They are headed toward default themselves.

Eastern Europe is infested with insolvency issues. The same applies to Japan and some other Asian nations. And then there is the United States. As reported yesterday on all new channels, California failed to reach an agreement to close a $24 billion budget deficit facing the most-populous U.S. state. Now, without budget revisions to account for a recession-driven 20 percent drop in revenue, California doesn´t have enough money to meet its debts and will issue IOUs beginning tomorrow. Here they come, more safe bonds for the masses.

What´s going on? On the one hand, costs are sky-rocketing. Social security and health care costs are on the rise. Unprecedented fiscal "bailouts" and "stimulus" packages are putting huge holes in fiscal budgets. The US just passed the largest tax bill in history. The Energy Cap and Trade Bill was silently pushed through Congress ( read more ).

On the other hand, on the other side of the equation, INCOME is plummeting: tax revenues are dropping rapidly and governments are facing increasingly empty coffers. After seeing the US FED monetize the issue of its Treasuries, we may soon see monetization of budget gaps.

This trend is obvious to all. Accordingly, it should not come as a surprise that the tax authorities of America, Germany, the UK and other highly indebted countries are ON THE HUNT. Obviously, in this kind of environment, a country with A SOLID BUDGET, LOW TAXES AND LAWS THAT PROTECT INDIVIDUAL FREEDOM AND PRIVACY becomes the enemy of the state.

Accordingly, countries like Switzerland, Luxembourg and Austria have been in the crosshairs of the aforementioned administrations. In his contribution to today´s Update, Ron Holland will discuss some of the aspects behind this, and address the fact that Switzerland is still the ultimate safe haven for wealth. You need to be aware that protecting yourself from the WEALTH TRANSFER coming your way is URGENT AND REAL.

This is not done by a lapidary game of "hide-and-seek". Instead, we recommend you employ the tax and reporting rules of your home country with care and diligence, while at the same time protecting your wealth by depositing part of it offshore. Most jurisdictions, even the ones mentioned above, still afford you rules that allow you to be able to do this and enable you to implement a private, flexible, safe and tax-efficient plan. We urge you to focus on such planning TODAY, while it is still possible.

Yes, tax rules change over time - currently more rapidly so than ever. There are time-tested models and strategies that protect your plan. Yet, there are no guarantees that they will do so forever. However, the tax planning aspect is only one of many. More importantly, you need to consider the importance of simply having part of your assets ELSEWHERE, IN SAFETY.

We deal with clients who recognize these REALITIES on a daily basis. These clients are interested in setting up compliant wealth management solutions that provide asset protection, safety, investment flexibility and inheritance planning. They are interested in second passports and physical gold storage. They are interested in long-term, generational planning to grow and protect what they have built, and continue to build, for their families.

Tax is a major cost to be considered. Therefore, tax efficiency too is an objective. However, you need to understand that ZERO TAX strategies will soon be a thing of the past. And, ultimately, it is not the most important aspect of planning. As of today, there are still strategies that provide tax-free compounding and tax-efficient inheritance. But, without a doubt, they may be destroyed as fiscal imbalances in your country grow further. If it gets to that point, tax efficiency may no longer be the priority. The priority will be PURE WEALTH PRESERVATION, ASSET PROTECTION AND SAFETY.

We invite you to contact us for advice and hands-on recommendations on how to get started with an international wealth management strategy. Or, you may just need to adjust and improve an international strategy that may no longer work as required.

SWITZERLAND IS STILL THE ULTIMATE SAFE-HAVEN FOR WEALTH
By Ron Holland

Many governments, politicians and financial centers competing with Switzerland regularly attack the independent, freedom loving Swiss because this alpine financial center is home to almost $4 trillion dollars in secure, private wealth. Back during World War Two, Adolf Hitler stated, "The Swiss are the most despicable and wretched people, mortal enemies of the new Germany".

His hate-filled description of Switzerland was made when he was considering invading the heavily armed but neutral nation. We all know our history and how that turned out.

Still, today almost 70 years later, I´m sure his sentiments, albeit in a more politically correct manner, are echoed privately by many major world politicians as they threaten, blackmail and somehow attempt to blame Switzerland and its respected banking industry for their revenue shortfalls. This link in reference to UBS stands testimony to the fact that the attack on UBS has little to do with adherence to US law. It´s about a US fiscal budget completely out of control, and a small alpine country that does not suffer from the same diseases.

Switzerland may be the most hated nation in the world by politicians, bureaucrats, lawyers and tax authorities, but can anyone remember how the old saying goes: "the enemy of my enemy is my friend"? And Victor Hugo could be right: "In history, Switzerland will have the last word".

Productive individuals around the world who prefer limited government and honor private property rights view Switzerland very favorably. The Swiss government is a shining example of how a decentralized confederation government -- one that still respects individual and cantonal (states rights) -- can create one of the highest standards of living in the world.

Last week on CNBC, they picked the top ten destinations of choice for successful, wealthy people to reside in. See more at this link: www.cnbc.com/id/31524931?slide=11. It is no surprise that Switzerland came out first overall and was highly rated in the following categories: education for children, economic and political stability, legal considerations, convenience and cultural/infrastructure sophistication. America did not place in the poll for obvious reasons.

The truth of the matter is that many investors prefer Switzerland and the Swiss franc, while most governments do not. Politicians and others out to plunder the private wealth of productive citizens look at Switzerland´s time-honored traditions of independence, financial privacy, and limited government as obstacles to their pillage and looting. Lawyers, especially in the US, despise Switzerland due to their acclaimed asset protection features built into Swiss insurance and annuity products through ironclad Swiss insurance regulations.

This small country is loved by her patriotic citizens and by knowledgeable world investors who choose Switzerland and their financial management expertise -- together with the Swiss franc and Euro -- as the currency and jurisdiction of choice for their personal safe haven of wealth.

Political dissidents and over-taxed citizens around the world also appreciate Swiss political neutrality and the importance of Swiss banking integrity. Wealthy citizens hounded by unscrupulous lawyers and corrupt legal systems that often determine guilt by one´s ability to pay, appreciate Switzerland´s respect for private wealth and its honest legal system, which has little in common with the lawsuit-mania driven U.S. court system.

Other central governments and political establishments that over-tax and over-regulate their citizens despise Switzerland´s confederation form of limited government. The Swiss practice of armed neutrality is often an embarrassment to governments, such as Washington, that attempt to enforce foreign policy through armed intervention and invasions around the world.

Recently, I had the opportunity to visit the Bundesbrief Museum in Schwyz, Switzerland, where in 1291, the first three Swiss cantons formed the Swiss confederation for defense purposes against foreign invaders. This Bundesbrief document is comparable to the Magna Carta in the United Kingdom, or the Declaration of Independence and the Constitution in the United States.

I´m a member of the International Bundesbrief Society based in PA and urge you to check out their website. Today, 700 years later, Switzerland is still a confederation, the citizens still control their federal government through direct democracy and the political tools of referendum and imitative. I wish I could say the same thing about the Constitution or the Articles of Confederation in my country.

In closing, remember that Victor Hugo once quoted, "In history, Switzerland will have the last word". He was right then and I believe he is still right now about the Swiss, their currency and their position as the leading financial center for investors seeking stability and security. For those Americans who understand economic history and are concerned about the growth of government debt now reaching $11.4 trillion and the long-term impact on the Dollar, Switzerland may be the answer for you...but don´t wait too long.

As I write this, China and Brazil just announced they are working on a currency arrangement to allow exporters and importers to settle deals in their local currencies, bypassing the U.S. Dollar. See this link. 

This is just the latest in ongoing news coverage as the world prepares for a future time when the Washington national debt drowns the economy and sinks the Dollar.

Read this article and stay current with news on the American debt and Dollar while preparing to defend your wealth before it is too late. Now is the time to develop a comprehensive plan to legally protect what is yours. The alternative could see your wealth disintegrating into ancient history for you and your descendants if you fail to prudently diversify outside of the Dollar, as well as the US investment and real estate markets. This way, you, along with Switzerland, will have the last word in the coming decades of economic and financial history. 

NEWS BRIEFS

Are Americans Finally Standing Up to "FED Dictatorship"?!?!

On CNBC, Larry Kudlow, in his "Kudlow Report", discusses his disgust with the FED and their power grab. He calls it like it is and airs his aggrevation over the fact that the FED has caused this crisis in the first place. "How can they be given even more power!?" is his justified question. "They need to find out what SOLID MONETARY POLICY is all about first, before they are given anything else to mess up".

One of Kudlow´s guests states another very important fact: "THIS IS NOT A LIQUIDITY PROBLEM! THIS IS A CREDIT PROBLEM!" Yes, that is correct -- it is a credit and SOLVENCY problem. More liquidity does not solve squadush! It is truly refreshing to finally see some open and to-the-point discussions on the mainstream broadcast. The American People may finally be waking up to REALITY.

Go to Story

The IMF - advancing to Central Bank of the World?...

Putting the next piece of a "Global Central Banker" in place, the IMF yesterday announced its own issuance of IMF bonds. Yep, you heard right. There´s a new player in the game of "sovereign debt" - now backed by the 186 IMF member states, and surely to be given that safety seal of a AAA rating...

It appears that this next source of thin-air liquidity is coming just in time as those aforementioned member states are running out of money to pay for their national bailouts and stimulus packages. So, now someone higher up has decided to simply take it to the next level in order to save the world from this global recession. Only, the problems will not be solved and, what´s more, high inflation will eventually rear its visage.

Read more on the a global central banker´s dreams come true.

The "Debt Trap" is Closing In - Quickly!

As interest rates move upward, the DEBT TRAP we discussed a few weeks ago is closing in on the US economy. Yields on U.S. 10-year Treasury notes are more than 1 percentage point higher than when the Fed announced the purchase program March 18th, climbing to 3.67%...at 8:37 a.m. in New York, from 2.5%. While central bankers have indicated that they accept the increase as long as it reflects expectations for an economic recovery, a further increase may put such an outcome in jeopardy.

Mortgage rates have risen in tandem with yields, potentially delaying a rebound in the housing market. The average 30-year mortgage rate increased to 5.59% earlier this month, the highest since November, before slipping to 5.38% in the week ended June 18, according to Freddie Mac, the McLean, Virginia-based mortgage-finance company.

On June 24, Bloomberg reported that the Fed left its $1.75 trillion bond-purchase program unchanged and said inflation will remain "subdued for some time." Well, what else will they say? In fact, the Fed will surely need the flexibility to expand its balance sheet further (i.e. PRINT MORE MONEY) as the economy continues to "underperform".

Read more on the Fed.

US Treasuries Continue to Have AAA-status - at Least for a while...

Reuters, New York, June 28: "Moody´s Investor Service said it may downgrade the ratings of certain US treasury bonds - considered to have virtually no risk of default - unless a deal is soon reached between Congress and the treasury to raise US debt ceiling." So, it´s simply a matter of raising the debt ceiling one more time (after how many times in the past few years?!!) in order to get a AAA-rating.

Moody´s also feels that the US treasury will be able to meet its payments during most of July, but the picture becomes less clear thereafter...Hmmm. But as of now, that´s still a AAA-rating. Could it be that rating agencies just aren´t quite what they used to be?

More on the quality work of Moody´s.

New York Court of Appeals Going GLOBAL!?

US law enforcement is really spreading its wings. The following article, written by Jeffrey E. Glen of Anderson Kill & Olick, P.C., describes New York as "The Creditor´s Playground".
The New York Court of Appeals holds that a judgment creditor can use the New York courts to execute against a judgment debtor´s assets anywhere in the world. And they will enforce this whenever the involved institutions of the debtor have any business dealings in New York.

This is a new level of jurisdictional scope. And it should alert all to the importance of prudent and solid jurisdictional diversification. Once more, it also highlights the fact that when you´re dealing with offshore institutions, don´t deal with any that are exposed to the jurisdiction you live in.

Go to Story