http://www.cnbc.com/id/49792979
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For many of the wealthy, 2012 is becoming a good year to sell.
and....
http://beforeitsnews.com/gold-and-precious-metals/2012/11/this-u-s-currency-control-comes-into-effect-jan-1-2013-will-it-affect-you-2455652.html
( any savvy foreign investor ( and expect wealthy domestic investors to follow suit to more than just a small degree ) will withdraw money from the US before the end of this year as withdrawals next year will be subject to these control measures.... )
Long the champion and beneficiary of free trade and the free flow of capital,
the United States has enacted legislation that becomes effective on January 1, 2013 that a growing number of commentators and professionals believe could be the start of capital controls [in America and have serious unintended consequences. Let me explain.] Words: 1234
The law requires that any financial institution (US or foreign) remitting any foreign payment to a bank in such a country withhold 30 percent of the amount of such payment and remit that percentage to the Internal Revenue Service (IRS) as a tax.
A withholdable payment is defined as any payment of interest, dividends, rents, salaries, wages, premiums, annuities, compensation, enumerations, emoluments, and other fixed or determinable annual or periodical gains, profits and income, if such payment is from sources within the United States.
The net effect of provision #2 will be to greatly discourage any financial transactions between US banks and foreign banks not entering into information sharing agreements with the United States government. To wire transfer $100,000 to Panama, for example, to purchase a piece of real estate, one would have to agree to send $142,000 so that a net $100,000 would reach its destination. Who would be inclined or willing to pay 30 percent more in a global transaction in order to satisfy these requirements? Almost nobody.
International payments beginning January 1, 2013 will be subject to these new withholding requirements. The delay of over two years is designed to:
http://beforeitsnews.com/financial-markets/2012/11/warning-the-stock-market-panic-button-is-about-to-be-pushed-2467640.html
On that day, the S&P 500 (INDEXSP:.INX) decisively broke the Rising Wedge formation with a potential for a complete retracement to 1074.00 and the potential neckline (dotted line) for a Head & Shoulders Pattern with a minimum downside target of 1322.00. Either event could be construed as bearish — but the combination of the two may be a disaster for the longs.
Wealthy Dump Assets Amid Worries About Going Over 'Cliff'
Published: Monday, 12 Nov 2012 | 5:05 PM ET
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By: Robert Frank
CNBC Reporter & Editor
CNBC Reporter & Editor
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Mark Harwood | Iconica | Getty Images
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They're worried about the "fiscal cliff," which is when tax cuts expire and spending cuts are set to go into effect at the end of the year.
Fearing an increase in capital gains and dividend taxes, many of the rich are unloading stocks, businesses and homes before the end of the year.
Wealth advisors say that with capital-gains taxes potentially going to 25 percent from 15 percent, and other possible increases in the dividend tax, estate tax and other taxes, many clients are selling now to save millions in taxes.
“Under almost any scenario, it makes sense to take the gains this year,” said Gregory Curtis, chairman and managing director of Greycourt & Co. “Clients aren’t selling willy nilly. But if they can and they have a huge gain, they’re selling now.”
If the Bush-era tax cuts expire, taxes on capital gains would revert back to its previous rate of 20 percent from its current 15 percent. Another 5 percent may be added from health-care levies and changes in itemized deductions, bringing the rate to 25 percent for many high earners.
Taxes on dividends could go from 15 percent to over 43 percent. And the estate tax could go from 35 percent on estates worth more than $5 million to 55 percent on estates over $1 million. (Read more: CEO Sends Out Raises, Not Pink Slips After Election)
As a result, the wealthy are taking a close look at all of their assets to see what could or should be sold off now to avoid potentially higher taxes next year.
The most noticeable sell-off has been in stocks. Wealth managers say many of their clients who have large gains on stocks are selling them now, or selling them or buying them back again to create a higher basis (and thus a lower tax bill later).
Since the wealthiest one percent of U.S. households control more than half of the stocks in the United States, their selling and buying can have strong ripple effects on the market.
Bankers say owners of private businesses are also pressing to sell their companies to ahead of a possible tax hike. If an entrepreneur, for instance, sells a company for $100 million, they could pay $10 million less in taxes than if they sold in 2013.
Deal advisors say that by selling his company to Disney this year for $4 billion, George Lucas potentially saved hundreds of millions of dollars in taxes.
Granted, business owners aren't suddenly selling their companies after the election. The businesses most likely to take advantage of lower taxes are small businesses that may have been in the process of selling and can push to close before Jan. 1.
"Selling a business is not easy, it's not like you can just pull a switch," said Frederic Seegal, vice chairman of Peter J. Solomon Co, the investment banking firm.
Mansion sales are seeing a similar acceleration, brokers say. Some recent multi-million-dollar sales in Florida, New York and California were partly driven by sellers who were anxious to sell before the end of 2012, brokers say.
****
and....
http://beforeitsnews.com/gold-and-precious-metals/2012/11/this-u-s-currency-control-comes-into-effect-jan-1-2013-will-it-affect-you-2455652.html
( any savvy foreign investor ( and expect wealthy domestic investors to follow suit to more than just a small degree ) will withdraw money from the US before the end of this year as withdrawals next year will be subject to these control measures.... )
This U.S. Currency Control Comes Into Effect Jan. 1, 2013! Will It Affect You?
Thursday, November 8, 2012 17:43
the United States has enacted legislation that becomes effective on January 1, 2013 that a growing number of commentators and professionals believe could be the start of capital controls [in America and have serious unintended consequences. Let me explain.] Words: 1234
So says Joel M. Nagel in edited excerpts from his original article* posted on www.hemispherespublishing.com and entitled Have Exchange and Capital Controls Come to the United States?
Nagel goes on to say, in part:
“The provisions are found in a jobs’ bill – H.R. 2847 (also known as the HIRE Act), which became law in March 2010. Title V of the law largely encompasses the Foreign Account Tax Compliance Act of 2009, or “FATCA”, also referred to as the “Offset Provisions” of the bill.
On their face, these provisions appear intended to:
[While the intent of the new law is admirable - to force US tax compliance with regard to foreign accounts and transactions between the U.S. and individuals in countries that are considered to be tax havens - the unintended consequences could result in the immediate flight of capital from the country and long term devaluing of our currency through simple supply-and-demand manipulations.]Lorimer Wilson, editor ofwww.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) andwww.munKNEE.com (Your Key to Making Money!),has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Nagel goes on to say, in part:
“The provisions are found in a jobs’ bill – H.R. 2847 (also known as the HIRE Act), which became law in March 2010. Title V of the law largely encompasses the Foreign Account Tax Compliance Act of 2009, or “FATCA”, also referred to as the “Offset Provisions” of the bill.
On their face, these provisions appear intended to:
- force US tax compliance with regard to foreign accounts and transactions between the U.S. and individuals in countries that are considered to be tax havens (meaning the banks and financial institutions in those countries that do not share account information with US authorities). Section 1474 refers to “withholdable payments” to Foreign Financial Institutions that don’t meet United States standards for information sharing.
The law requires that any financial institution (US or foreign) remitting any foreign payment to a bank in such a country withhold 30 percent of the amount of such payment and remit that percentage to the Internal Revenue Service (IRS) as a tax.
A withholdable payment is defined as any payment of interest, dividends, rents, salaries, wages, premiums, annuities, compensation, enumerations, emoluments, and other fixed or determinable annual or periodical gains, profits and income, if such payment is from sources within the United States.
Who in the world is currently reading this article along with you? Click here
On its surface, the withholdable payment is designed to ensure that “pre-tax” monies are not sent abroad without applicable US federal taxes being paid. Looking a little deeper however, the law does two things that go beyond the responsibility of each tax payer to pay what they owe to the IRS:- under Section 1474 of the bill, the law makes banks, as a third party, responsible for the enforcement of government tax policy. The banks are liable for the customer’s tax obligation on transferred funds, if they don’t withhold the required 30 percent to cover any possible tax liability. The banks essentially become the tax police, working for the government as hammers to bring about individual compliance.
- the same provision holds the banks harmless and indemnifies them if they improperly withhold the 30 percent tax and it is not due.
The net effect of provision #2 will be to greatly discourage any financial transactions between US banks and foreign banks not entering into information sharing agreements with the United States government. To wire transfer $100,000 to Panama, for example, to purchase a piece of real estate, one would have to agree to send $142,000 so that a net $100,000 would reach its destination. Who would be inclined or willing to pay 30 percent more in a global transaction in order to satisfy these requirements? Almost nobody.
International payments beginning January 1, 2013 will be subject to these new withholding requirements. The delay of over two years is designed to:
- force foreign governments (especially those in tax havens) to enter into agreements with the United States, as Panama is in the process of doing now,
- put extreme pressure on individual foreign banks to enter into private-sector agreements with the IRS to disclose all United States account holders, or risk having all US transactions moving to their individual bank being subject to 30 percent tax withholding.
- Both US and non-US persons, fearing how the implementation of the new law will impact them after January 1, 2013, may be inclined to move asserts outside the United States before the effective date, meaning we could see significant capital flight from the U.S. in the next 2 months.
- Foreign financial institutions may drop US clients as one way to avoid being subject to the 30 percent withholding requirement, as well as avoiding the US regulatory compliance costs (again, probably an intended consequence of the law). These compliance costs to worldwide bankers have been estimated by the Swiss Banking Association to total nearly $40 billion dollars annually, while the measure is projected to generate only around $8 billion to the U.S. Treasury in increased taxes.
- Foreign financial institutions and many foreign, private sector interests may simply stop conducting their business in dollars. A dollar-denominated transaction will ultimately pass through a US Federal Reserve Bank and potentially subject the transaction to the risk of a US bank levying a 30 percent withholding tax on any payment. One method for foreigners to ensure that this would not happen would be to designate the contract in a currency other than US dollars. So if a German businessman for example contracts with his Japanese counterpart to do a deal to sell equipment in China, the best way to ensure that the transaction would not be subject to US withholding tax would be to designate the contract in Euros, Yen, Won or any other currency than dollars. Those currencies would not pass through a US Federal Reserve Bank and therefore not become subject to the backup tax regime. Russia and China announced at the end of last year that they would no longer be doing trade transactions in US dollars but rather in their own currencies. The two countries indicated that there was too much risk in utilizing the dollar for their trade.
- As more global transactions (especially oil, gold and other commodities) are done in non-dollar currencies, the global demand for the U.S. dollar will decrease and it will no longer be the world’s reserve currency. As demand decreases, the value of the dollar will surely fall as well.
Conclusion
It is unlikely that [even] a new President in January 2013 will undo the effects of the abovementioned damaging legislation. For individuals, [therefore, it is imperative]…to plan for the new law and take steps to avoid the consequences, both intended and unintended.”
* http://www.hemispherespublishing.com/Issues/2011/February-14th/Exchange_and_Capital_Controls_Come_to_United_States.html (Attorney-entrepreneur-investor Joel M. Nagel is a frequent writer and speaker on asset protection concepts…and creates legal structures around the world to protect his global clientele. Mr. Nagel welcomes response from readersor via telephone in the U.S. at 412-749,-0500.)
Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
2012-11-08 14:00:10
Source: http://www.munknee.com/2012/11/this-u-s-currency-control-comes-into-effect-jan-1-2013-will-it-affect-you/
And this end of the year , assuming there isn't a quick resolution of the Fiscal Cliff issues , liquidity will be quite dear........
http://beforeitsnews.com/financial-markets/2012/11/warning-the-stock-market-panic-button-is-about-to-be-pushed-2467640.html
By Anthony M. Cherniawski and Janice Dorn Nov 09, 2012
Investors are now dealing with the looming fiscal cliff and the prospect of higher taxes on capital gains and investment income starting next year.
MINYANVILLE ORIGINAL In October, we published two articles suggesting that there might be a stock market panic in October (see here and here). We were early. Whether the delay in the potential market panic was due to organic reasons, such as the excitement leading up to the November election, or some other factor is beyond the scope of this article. What we do know is that the day after the election the stock market had its worst day since November, 2011.On that day, the S&P 500 (INDEXSP:.INX) decisively broke the Rising Wedge formation with a potential for a complete retracement to 1074.00 and the potential neckline (dotted line) for a Head & Shoulders Pattern with a minimum downside target of 1322.00. Either event could be construed as bearish — but the combination of the two may be a disaster for the longs.
Warnings
In prior articles exclusve to Minyanville, we discussed stock market patterns that give warning to the probability of a reversal in trend and a possible panic or crash. A classic pattern is the Broadening Formation. These formations make their appearance as a rule only at the end or in the final phases of a long bull market.
One characteristic of Broadening Formations is that they become activated only upon the crossing of the lower trendline. Thus, you can see the larger Broadening Wedge Formation where the SPX has remained within its widening trendlines for almost an entire year. By early October, we were able to identify a smaller Orthodox Broadening Top that is a degree more aggressive than the Larger Broadening Wedge formation and with an easier-to-reach trigger point at 1395.00.
On Thursday, November 8, the lower trendline of the Orthodox Broadening Top was breached. In addition, The Dow Jones Industrial Average (INDEXDJX:.DJI), Wilshire 5000 (INDEXNASDAQ:W5000),Nasdaq (INDEXNASDAQ:.IXIC) Russell 2000 (INDEXRUSSELL:RUT) and S&P 500 all closed beneath their respective 200-day moving averages. You might say that the stock market panic button is about to be pushed.
Will History Repeat?
As Mark Twain once said, “History doesn’t repeat itself, but it often rhymes.” As the eye is drawn to the upper left corner of the weekly SPX chart, one sees a very clear Orthodox Broadening Top with the resulting decline into the crash of 2008. Today we don’t have only one Broadening Formation -- there are several! One may draw the conclusion that this time may be different -- but in the worst possible way for those who are holding long and hoping.
Have a look at the weekly chart of the 10-Year US Treasury Note Index (INDEXCBOE:TNX) It has the identical pattern as the S&P 500 Index. The Ending Diagonal portrayed in this chart projects a swift decline to its origin at 117.98. In the meantime, the Broadening Wedge has a good probability of being activated with a further decline projected beneath 100!
We believe that one of the reasons the Fed continues to be the largest buyer of Treasury paper is to keep bond and note values elevated above their respective long-term trendlines. Not only does the US government have to deal with the fiscal cliff, it also may have to contend with rising interest rates
if the trend breaks down. Rising interest rates have the potential to blow up any attempt at balancing the Federal budget.
The Broadening Top Formations have “allowed” the bull market to extend beyond the point that many had expected due to repeated quantitative easing to reflate stock prices. However, there is a payback for these extensions.
Fundamentally, investors are now dealing with the looming fiscal cliff and the prospect of higher taxes on capital gains and investment income starting next year. Higher taxes and reduced spending of both private and public funds suggest an economic slowdown in 2013 that may make equities less attractive. The urge to take profits before the year end may turn into a panic as the growing number of sellers simply overwhelms potential buyers.
In summary, trigger points that have been identified in prior articles have now been crossed. If you have not already done so, it’s time to take appropriate action in your portfolios. Don’t be the last person standing when the lights go out after the panic button is pushed.
In prior articles exclusve to Minyanville, we discussed stock market patterns that give warning to the probability of a reversal in trend and a possible panic or crash. A classic pattern is the Broadening Formation. These formations make their appearance as a rule only at the end or in the final phases of a long bull market.
One characteristic of Broadening Formations is that they become activated only upon the crossing of the lower trendline. Thus, you can see the larger Broadening Wedge Formation where the SPX has remained within its widening trendlines for almost an entire year. By early October, we were able to identify a smaller Orthodox Broadening Top that is a degree more aggressive than the Larger Broadening Wedge formation and with an easier-to-reach trigger point at 1395.00.
On Thursday, November 8, the lower trendline of the Orthodox Broadening Top was breached. In addition, The Dow Jones Industrial Average (INDEXDJX:.DJI), Wilshire 5000 (INDEXNASDAQ:W5000),Nasdaq (INDEXNASDAQ:.IXIC) Russell 2000 (INDEXRUSSELL:RUT) and S&P 500 all closed beneath their respective 200-day moving averages. You might say that the stock market panic button is about to be pushed.
Will History Repeat?
As Mark Twain once said, “History doesn’t repeat itself, but it often rhymes.” As the eye is drawn to the upper left corner of the weekly SPX chart, one sees a very clear Orthodox Broadening Top with the resulting decline into the crash of 2008. Today we don’t have only one Broadening Formation -- there are several! One may draw the conclusion that this time may be different -- but in the worst possible way for those who are holding long and hoping.
Have a look at the weekly chart of the 10-Year US Treasury Note Index (INDEXCBOE:TNX) It has the identical pattern as the S&P 500 Index. The Ending Diagonal portrayed in this chart projects a swift decline to its origin at 117.98. In the meantime, the Broadening Wedge has a good probability of being activated with a further decline projected beneath 100!
We believe that one of the reasons the Fed continues to be the largest buyer of Treasury paper is to keep bond and note values elevated above their respective long-term trendlines. Not only does the US government have to deal with the fiscal cliff, it also may have to contend with rising interest rates
if the trend breaks down. Rising interest rates have the potential to blow up any attempt at balancing the Federal budget.The Broadening Top Formations have “allowed” the bull market to extend beyond the point that many had expected due to repeated quantitative easing to reflate stock prices
. However, there is a payback for these extensions.Fundamentally, investors are now dealing with the looming fiscal cliff and the prospect of higher taxes on capital gains and investment income starting next year. Higher taxes and reduced spending of both private and public funds suggest an economic slowdown in 2013 that may make equities less attractive. The urge to take profits before the year end may turn into a panic as the growing number of sellers simply overwhelms potential buyers.
In summary, trigger points that have been identified in prior articles have now been crossed. If you have not already done so, it’s time to take appropriate action in your portfolios. Don’t be the last person standing when the lights go out after the panic button is pushed.
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