Swiss Bank on the USA

[Peter Presland]

Hope the link works....Interesting read I thought

http://www.zerohedge.com/sites/default/f...Assets.pdf

Thanks for posting that David. Don't know how I missed it but I agree, it is definitely worth studying.

Some observations:

It is an advisory letter from Switzerland's oldest private bank advising its clients to 'exit from all direct investment in US securities'. Not primarily because of valuation and potential performance issue; rather because of the risks of becoming classified as 'a US person'.

It is essentially divided into two parts. Part one takes a bit of getting into. Initially I found it misleading in terms of where I thought it was headed - but it gets better and better with some very surprising revelations. If I had to compress the first half of the paper into just one sentence it would go something like this:

The US authorities are determined to increase their tax take by making access to US capital markets conditional upon a raft of intrusive measures aimed at ANYONE owning 'US assets' anywhere in the world and largely through the legal construct of 'US Person' - Watch out, buy shares in IBM and you could find yourself designated a 'US Person' involving major potential liabilities and no benefits whatsoever other than said access - if that can really be described as a benefit at all these days.

The second part deals with the other side of the balance sheet so to speak - ie 'access to US capital markets' which it finds of very questionable value. It is essentially an analysis of US government debt and forward liabilities, most of which is already pretty familiar territory. It argues - persuasively in my view - that the measures being taken to increase the tax take on foreign held securities will make it more difficult (as if it were not already pretty well impossible) for the US Treasury to finance its liabilities and that any increased tax take will be dwarfed by the the additional financing costs it precipitates.

Like David G, I am no fan of the Swiss - bankers to the Uber-wealthy - but, IMHO there will be many foreign banks taking exactly the same view and, in light of the papers speculation about US aggression over these issues, together with all manner of other ominous signs, I am becoming more and more nervous about what may unfold over the next few months.

BTW - welcome back David G.