Sunday, July 11, 2010

Accounts Abroad

Hello FerFal,

I'm a Greek citizen and I'm fully interested about your blog. I have a question about the abroad deposits of Argentina's people during the crisis. The Argentina's governement has been able to return them back and pesified these deposits which were gone out of the country just few months before the collapse? According to your opinion, if the IMF-EU 110 bn euros plan aims a controlled sovereign Greek default, is there a risk that the governement return back the outflow deposits? Thanks a lot for your advise.

Regards,

M-

Hi M. No, they didn't bring the accounts back from abroad before freezing the accounts in Argentina when the economy collapsed. That's the idea of an off shore account. Even though nothing is perfect and even numbered Swiss accounts aren’t what they used to be in terms of privacy, its still an account outside the national financial (and legal) system so of course Argentines that had their money in other countries where safe.

I think there's little to be done about the outflow deposits, people already view the Greek economy in a certain way (unfavorable) and it takes time, not money, to regain that trust. After all, the entire idea of economy is based on trust, the belief that A is truly worth B, once you lose that idea the economy of a country goes to hell. ironic how something considered technical and mathematical is entirely founded on feelings and perceptions, but that's the way it is. Give it a couple more years until you have a better idea of where Greece is going, on the meantime I'd do my best not to have much money in their banks.

I'd also like to take this opportunity to mention that offshore accounts aren’t that hard to open, its pretty easy actually. A few minutes of googling will give you a basic idea, and a few more hours of learning and looking around, plus a few phone calls, you'll soon figure out how to open one. Swiss bank accounts are a possibility and its historically been known as a solid, neutral country.

FerFAL

7 comments:

Don Williams said...

1) What is the benefit of having money in a foreign account versus having it readily at hand with you in your own country in the form of gold, foreign currency, diamonds, native currency etc?

Is the concern that you might not be able to get it across the border if you had to flee --that it might be confiscated?

2) US citizens are required to report any foreign accounts we have when we file our income tax--
which reveals assets in those accounts to the gaze of the US government.

The high profile fight the US Government recently had with the Swiss government shows that obviously not everyone in the USA follows those instructions, heh heh.

3) It seems to me that the surveillance national governments maintain over wire transfers going in and out of their borders removes any privacy anyway.

4) I seem to remember Hong Kong banks were on the list of those not cooperating with the US Internal Revenue Service --although that may have changed.

Obviously it would be a lot harder for the US Government to push China around than the Swiss (I believe China holds over $1 Trillion of our debt.)

FerFAL said...

Hi Don, like Jack the Ripper said, lets do this by parts. :-)

1) What is the benefit of having money in a foreign account versus having it readily at hand with you in your own country in the form of gold, foreign currency, diamonds, native currency etc? Is the concern that you might not be able to get it across the border if you had to flee --that it might be confiscated?
The benefit is that you can use a card in Argentina, get cash out of ATMs in Argentina, and do all of that with an account that wont be touched if they steal people’s money again. And yes, you can leave the country right away without that concern.

2) US citizens are required to report any foreign accounts we have when we file our income tax--
which reveals assets in those accounts to the gaze of the US government.

The high profile fight the US Government recently had with the Swiss government shows that obviously not everyone in the USA follows those instructions, heh heh.


We’ll. You can report everything. You still have your money in some other country and if by any chance your country goes to hell, at least that money is safe from a crash where banks close, accounts are frozen and the currency devaluates (if the foreign account is in another denomination of course)

3) It seems to me that the surveillance national governments maintain over wire transfers going in and out of their borders removes any privacy anyway.

I think that mostly affects high profile people with lots of money. For average Joe that isnt’ trying to hide anything form the IRS, the concern isn’t that big even if I agree with you about the privacy concern.

4) I seem to remember Hong Kong banks were on the list of those not cooperating with the US Internal Revenue Service --although that may have changed.

Obviously it would be a lot harder for the US Government to push China around than the Swiss (I believe China holds over $1 Trillion of our debt.)

Yes, that would be a good example. Preferably choose a country that isn’t that likely to get pushed around by your own.

FerFAL

DaShui said...

I'm sure the IRS just opened offices in Beijing and Hong Kong to snoop around.
China might cooperate with the IRS because their pols and businessmen hide money in the US.
I think the account limit for reporting is $10,000.
It sucks for the small guy, don't it?

Nolan said...

Don't forget that while the Dollar is looking mighty shaky the other major currencies are looking shaky also. If you have your money in another denomination (assuming it isn't tied to the dollar) then you also run the risk of losing that money if THAT government steals the bank's money or the other currency devalues.

I'm a big fan of eggs in different baskets; just remember that means you are more likely to lose an egg or two (though hopefully not the whole nest).

Anonymous said...

I didn't think a person could get a foreign bank account online, or that it could be done easily. It shouldn't be a difficult thing to do, but it seems that way for some reason.

I came across this example of an individual in GTA mode chasing the spiral down and still making a profit and thought of how already having a foreign account might be of use:

From Florida Today. “Merritt Island contractor Sergio Novo was forced to leave the country to make ends meet. The 50-year-old has been taking construction jobs throughout the Caribbean and in Central America. He may head off to Hawaii soon, after bidding on work there. Peaking at 50 to 60 full-time employees, and up to 500 total workers, in the boom years earlier this decade, Novo’s work force has dropped to about five trusted foremen, some of whom also take on the duties of construction worker.”

“‘I’ve got four foreman doing the work of one foreman and three helpers,’ he said. ‘I can’t get any smaller. My thing right now is survival.’”

“By 2007, Novo and other Brevard contractors began to suffer as the credit crisis burst the housing bubble. Work became scarce in Brevard, so Novo began to reach out to contacts he made in the Caribbean during the 1980s and 1990s. The overseas work is welcomed because, with very little construction work in Central Florida, desperate contractors are bidding so fiercely that profit margins have vanished. And commercial construction starts in Florida, estimated at less than $1 billion in 2010, will be less than half the average for the previous five years, according to McGraw-Hill Construction.”

“Novo believes he will be forced to rely on working overseas for at least another year. He sees the benefits of the stimulus funding beginning to fade although the U.S. economy has not yet recovered. In Brevard, building permits for May show only slight improvement in rebounding from historic lows. ‘I don’t see it getting better any time soon,’ he said. ‘The profit margins aren’t there. It’s just survival.’”

http://thehousingbubbleblog.com/?p=6128

David said...

Lots of non-U.S. banks see U.S. customers as more trouble than they're worth. Also, the economic problems faced by the USA are worldwide in scope. According to what I've seen, there are only a few banks in the world that are relatively safe in the event of a major U.S.-led meltdown.

To give you an idea of just how bad it is, one group I hear from has arranged for their "approved" Swiss banks to offer not only gold storage but currency (bank note) storage, with a second (non-bank) entrance in case the "bank side" of the business is closed by government edict. This offers their clients the appropriate hedge against deflation (with bank notes) or hyperinflation (gold) as is deemed timely. The downside? Account minimums are generally greater than $100,000 and in some cases $500,000 (which is why I don't play in that league).

Dale said...

Here are some useful hints that echo many of Ferfal's recommendations:

http://www.safehaven.com/article/17802/expatriate-your-wallet