Billions of Dollars in Federal Spending Not Reported

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August 25, 2014

A Government Accountability Office (GAO) audit from June found that federal agencies failed to report nearly $619 billion in grants, loans, voucher programs, and other forms of federal assistance to USAspending.gov during fiscal year 2012. In other words, nearly one-quarter of the $2.6 trillion spent on federal assistance that year went unreported.

The GAO report, titled Data Transparency: Oversight Needed to Address Underreporting and Inconsistencies on Federal Award Website, found that although agencies generally reported required information for government contracts, they did not properly report information on grants and other federal assistance. This federal spending information is supposed to be reported to USAspending.gov, a website created in 2007 by the Office of Management and Budget (OMB) to bring transparency to government spending. As of January 2013—two months after the deadline for reporting fiscal year 2012 awards—agencies had not properly reported 342 programs, 27 of which belong to the Department of Health of Human Services (HHS) totaling $543 billion. Another 5 assistance awards totaling $64 billion went unreported by the Department of Veterans Affairs (VA). In total, failed reporting by HHS and the VA make up 98 percent of the missing $619 billion in assistance awards spending. The GAO was not able to break the $619 billion down into discrete spending categories.

Further, the audit found that few federal assistance awards or contracts were reported with all the required information, which includes the award amount, program source, and the desired purpose of program funding. Some agencies claimed not to know what to report, while others ignored the instructions entirely. The GAO found that fewer than 7 percent of the awards had information "fully consistent" with agencies' records. (To find the missing awards information data, GAO researchers consulted the Catalog of Federal Domestic Assistance and the Public Budget Database.)

The DATA Act, which was signed by President Obama in May, requires the Department of the Treasury and OMB to transform federal spending from "disconnected documents into open, standardized data, and to publish that data online." Additionally, the DATA Act transfers full oversight of USAspending.gov from OMB to the Treasury. The Project On Government Oversight supported the DATA Act and thinks it will add much-needed clarity to federal spending, starting with the budget process and ending with the actual outlays.

Many Members of Congress, including Senators Tom Carper (D-Del.), Rob Portman (R-Ohio), and Mark Warner (D-Va.)—who are all co-sponsors of the DATA Act—were unhappy to learn of USAspending.gov's failure to provide full and accurate data and OMB's failure to properly oversee the accuracy of the site. Senator Tom Coburn (R-Okla.), who, along with then-Senator Barack Obama (D-Ill.), was an original sponsor of the Federal Funding Accountability and Transparency Act that called for the creation of USAspending.gov in 2006, was particularly displeased.

​More at Source: POGO​

US Sanctions on Russia May Sink the Dollar: The Ron Paul Institute

The US government's decision to apply more sanctions on Russia is a grave mistake and will only escalate an already tense situation, ultimately harming the US economy itself. While the effect of sanctions on the dollar may not be appreciated in the short term, in the long run these sanctions are just another step toward the dollar's eventual demise as the world's reserve currency.

Not only is the US sanctioning Russian banks and companies, but it also is trying to strong-arm European banks into enacting harsh sanctions against Russia as well. Given the amount of business that European banks do with Russia, European sanctions could hurt Europe at least as much as Russia. At the same time the US expects cooperation from European banks, it is also prosecuting those same banks and fining them billions of dollars for violating existing US sanctions. It is not difficult to imagine that European banks will increasingly become fed up with having to act as the US government's unpaid policemen, while having to pay billions of dollars in fines every time they engage in business that Washington doesn't like.

European banks are already cutting ties with American citizens and businesses due to the stringent compliance required by recently-passed laws such as FATCA (Foreign Account Tax Compliance Act). In the IRS's quest to suck in as much tax dollars as possible from around the world, the agency has made Americans into the pariahs of the international financial system. As the burdens the US government places on European banks grow heavier, it should be expected that more and more European banks will reduce their exposure to the United States and to the dollar, eventually leaving the US isolated. Attempting to isolate Russia, the US actually isolates itself.

Another effect of sanctions is that Russia will grow closer to its BRICS (Brazil/Russia/India/China/South Africa) allies. These countries count over 40 percent of the world's population, have a combined economic output almost equal to the US and EU, and have significant natural resources at their disposal. Russia is one of the world's largest oil producers and supplies Europe with a large percent of its natural gas. Brazil has the second-largest industrial The Ron Paul Institute for Peace and Prosperity : sector in the Americas and is the world's largest exporter of ethanol. China is rich in mineral resources and is the world's largest food producer. Already Russia and China are signing agreements to conduct their bilateral trade with their own national currencies rather than with the dollar, a trend which, if it spreads, will continue to erode the dollar's position in international trade. Perhaps more importantly, China, Russia, and South Africa together produce nearly 40 percent of the world's gold, which could play a role if the BRICS countries decide to establish a gold-backed currency to challenge the dollar.

US policymakers fail to realize that the United States is not the global hegemon it was after World War II. They fail to understand that their overbearing actions toward other countries, even those considered friends, have severely eroded any good will that might previously have existed. And they fail to appreciate that more than 70 years of devaluing the dollar has put the rest of the world on edge. There is a reason the euro was created, a reason that China is moving to internationalize its currency, and a reason that other countries around the world seek to negotiate monetary and trade compacts. The rest of the world is tired of subsidizing the United States government's enormous debts, and tired of producing and exporting trillions of dollars of goods to the US, only to receive increasingly worthless dollars in return.

The US government has always relied on the cooperation of other countries to maintain the dollar's preeminent position. But international patience is wearing thin, especially as the carrot-and-stick approach of recent decades has become all stick and no carrot. If President Obama and his successors continue with their heavy-handed approach of levying sanctions against every country that does something US policymakers don't like, it will only lead to more countries shunning the dollar and accelerating the dollar's slide into irrelevance.

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Copyright © 2014 by RonPaul Institute. Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given.

​RP Institute​

The Strange Tale of Swiss Banking - And What It Means for You

By Staff Report - May 30, 2014

Secrecy's out, so here's what Swiss banks can still offer ... If Swiss banks were to cast off their usual discretion and make a marketing pitch these days, it might start off something like this: Dear Potential Client, While we would be delighted to open an account and manage your money for you, once you've complied with our anti-money laundering provisions, please be advised that we will no longer be able to help you avoid taxes back home, and in fact may soon start providing account details to your national tax authorities. Moreover, if you are American, please stay away. We've been so beaten up by the Justice Department that we'd rather not take your money at all. – Reuters Opinion

Dominant Social Theme: The Swiss will survive by offering innovative products and services not available elsewhere.

Free-Market Analysis: What, really, do the Swiss have to offer now? Is it possible that the UBS scandal was in some sense planned to bring down the system.

The damage is certainly clear; the Swiss government and banking community sacrificed centuries of banking history and culture to ensure the continued vitality of several Western-style banking conglomerates.

UBS and Credit Suisse were US-oriented firms and the worst, presumably, that the US could do to them was to bar them from US soil and citizenry. But apparently being shut out of the US so panicked the Swiss elite that they have now sacrificed their entire private banking industry and a millennium of tradition.

Here's more from the article:

Switzerland is bowing to massive international pressure — regulatory, judicial and political — to clean up its banking system, and the big question is how it can remain competitive as a financial center once it has done so. The fabled secrecy that Swiss banks used to provide — and which was a key to its attractiveness as a financial center — has been cracked open and replaced by a more nebulous form of confidentiality and privacy, the full details of which still need to be hammered out in international agreements.

The U.S. is leading the attack. After months of sparring with the U.S. Justice Department, Credit Suisse, one of the two big Swiss banks, this week pled guilty to conspiring to aid tax evasion and agreed to pay a $2.6 billion fine. The bank was just the latest such case; in 2009 its cross-town rival UBS settled with the U.S. government over similar accusations.

... These measures are part of a worldwide crackdown on offshore finance and tax evasion, and Switzerland has little option but to comply if it wants to maintain its place in a globalized industry. "It's a huge shift in culture for Swiss banking," says Stéphane Garelli, a professor at IMD business school in Lausanne. "Everyone is fed up and wants to turn the page."

But without secrecy as a competitive advantage, what is the future of Swiss banking? Switzerland has some undeniable strengths, including a long tradition of wealth management, political stability, an independent currency and what Garelli describes as an extensive "ecosystem" of lawyers, fiduciaries, accountants and other experts alongside the bankers.

... Experts say the big banks, including Credit Suisse, began adjusting to the new realities years ago. But some of the smaller private banks have been in denial until recently. One sign of a shift is that they are increasingly changing their governance structures, abandoning the age-old practice of being unlimited liability partnerships.

The change protects them personally, especially against legal action, but it also alters the trust-based relationship at the core of these private banks' business models. When you knew that the banker sitting on the other side of the table was personally on the hook if there were problems, you may have been more willing to trust her with your money.

Today Swiss banks of all sizes are trying to determine what they can offer clients to make up for the erosion of secrecy. The National Bank's Jordan provided some answers in his speech, saying banks need to ensure they can provide "considerably above average" value added for their customers, as well as stability during crises and "business conduct and reputations far beyond reproach."

If you read this last paragraph, you will see clearly the problems that the Swiss banking industry faces. Once, one could define exactly what Swiss banks did. They were private entities that provided their clients with numbered accounts and anonymity. The anonymity was part of an ancient tradition. But try to define what the Swiss system is today. 

Hard to do.

We remain surprised that an industry of such power and probity should allow its representative government to reduce it to a shambles inside of a few years' time. From our perspective, there was a lot more going on there than just a US attack on Swiss banking. In fact, it is well known that the banking industry in Switzerland is owned in part by the same Western powers that were behind the Justice Department's targeting of Swiss banking.

Thus, the same groups that managed the judicial attack from US soil acquiesced to it by signaling that their Swiss-controlled banks would abide by suggested settlements. Both the attackers and the accused were controlled by the same forces.

Not entirely, of course. But enough so that we can suggest with some surety that the Swiss affair was yet another episode of directed history. Western powers had decided that Swiss bank neutrality had to go, for one reason or another, and seemingly created the requisite scenario.

We are also aware that the most powerful banking families will likely continue to use Switzerland and will receive anonymity not afforded to others.

Finally, it is interesting that remaining private banks are switching from partnerships to corporations. This tends to confirm points made previously in these pages regarding how judicially enforced corporate personhood distorts markets and enables market behavior that would not otherwise be feasible or tolerated.

The article itself has a kind of chirpy tone, accepting as reality that governments, specifically the US government, has the right and obligation – on behalf of citizens – to eviscerate an industry in another country that provides substantial goods and services around the world.

Now, it may be that this industry enabled "tax evasion," at least in some cases, but that is something that states have traditionally dealt with using their own resources and usually applying them within their own borders. In many ways, it is an extremely slippery slope to insist that other countries cooperate with one's own bureaucratic priorities and national security concerns.

Eventually, perhaps, the US will face attacks from abroad over its behaviors. More than that, the precedent is a bullying one that seems to enshrine military and judicial force as the lodestars of international influence.

What remains most puzzling is that this most powerful industry composed primarily of private Swiss banks allowed itself to be virtually ruined in a few years' time. This alone shows us that there are very deep waters swirling around this debacle and that much of the story – most of it – has not yet been told, and may never be.

The precedent has been set, however. One nation may indeed interfere judicially in the affairs of another and force compliance.

The precedent is part of a wider assertion of privilege by a US government that is attempting to turn banking systems around the world into part of the US tax collection effort. FATCA and other regulatory environments are being imposed globally in an attempt to ensure that the financial affairs of US citizens are entirely transparent to the government.

No nation has ever asserted or tried to enforce such global authority.

Other articles and editorials in these pages have suggested that US citizens protect themselves from their government's overreach as best they can with second passports, second residences and various assets that can exist privately beyond government scrutiny and potential confiscation.

Conclusion

What we call the Internet Reformation has exposed internationalism and its goals as never before. But it is up to each individual to take human action to protect himself and his family from unfair and unreasonable depredations at home and abroad.

via dailybell

Capital Controls Rolling Into High Gear Under FATCA

May 29, 2014

Editorial By Jeffrey Berwick

The traditional banking system was already bad enough but now, with banks around the world rushing to comply with the Foreign Account Tax Compliance Act (FATCA) it is beginning to reach extreme levels.  And it isn't just affecting the most financially restricted people on Earth: US citizens... it is affecting everyone.

Take myself, for example.  I operate numerous businesses worldwide.  I am a Canadian citizen as well as the citizen of a Caribbean country and our business operations are also operated out of a non-tax jurisdiction in the Caribbean.  On top of that we hold no bank accounts, whatsoever, in the US... instead, we have bank accounts all over the world.

Yet, in the last two months we have had our accounts or transactions frozen, denied or questioned in different jurisdictions at least ten times.  And we have had countless other problems over the last two years.

Here are just a list of the most recent:

We got FATCA'ED.  We received a FATCA notice from one of our banks in Eastern Europe.  They told us that we must comply and contact them immediately.  We contacted them and let them know that the company is not a US company and no US citizen is involved with the company nor the bank account.  They told us that one of the phone numbers they had on file for us was a US number and therefore they'd have to close our account.  We informed them that the number they had was a virtual Skype number, one of many we have, that forwarded to the property departments in our companies around the world.  We are still dealing with this issue.

Constant Inquiries.  At the same Eastern European bank a few weeks ago they demanded to see detailed contracts and information on a large number of our transactions.  We are still also dealing with that.

Wires Constantly Scrutinized.  At one of our bank accounts in Canada with which I have had a 20 year relationship in good standing they have blocked numerous of our recent wires and demanded to see information on who the money is going to and why.  In more than one instance, when sending funds to the Middle East, we were informed that any and all wires sent to the Middle East were under heavy scrutiny causing us numerous problems.

The Paypal Monster.  Paypal has frozen many of our numerous Paypal accounts that we have worldwide on an ongoing basis. 

This shouldn't come as news to any merchants who use Paypal as the company is notorious for constantly freezing funds and accounts for all manner of reasons.  In one instance, as part of operations in our hotel in Acapulco (Las Torres Gemelas Private Suites) they froze our account until we could show them proof of numerous very small denomination transfers.  The transactions were for room rentals that had occurred weeks or months prior and Paypal would demand that we show proof that the person had stayed with us and approved the transaction.  Often these were past guests who had just booked for a few nights, who we had no other relation with, that we would have to somehow try to contact afterwards and bother them to supply Paypal with their information and approval of the transaction!

No Cuba For You.  In another instance, just a few weeks ago, another Paypal account we had was frozen after we paid for a flight from Havana, Cuba (ironically I had just stopped there for one night because I wanted to avoid the pain and risk of flying through the US) via Paypal because it was nearly impossible to purchase a flight to or from Cuba by any other means.  Because we denoted the payment done was for a flight from "Havana" the account was frozen.  The total dollar amount was for just a few hundred dollars.

No Brokerage For You. Last year, a brokerage account I use in Luxembourg threatened to close my account.  When I asked why they said that the brokerage had recently been bought by a Canadian brokerage and there is a Canadian law that says that no Canadian can deal with a brokerage owned by a Canadian company outside of Canada.  Luckily they accepted my Caribbean residency and therefore let the account remain open.  US citizens are not so lucky.  The SEC has made it so hardly any brokerage outside of the US will accept US citizens effectively locking their accounts inside the US as a capital control.

And, we are most definitely not alone.  At TDV Offshore we hear dozens of stories per week from people scrambling to find a way to have international bank accounts after their accounts have suddenly been shuttered.  The great majority are US citizens who receive a notice that their accounts will be immediately closed due to FATCA.  

FATCA is essentially creating capital controls for US citizens on banking making it harder and harder to hold funds outside of the US.

In short, it is getting more difficult all the time to transact in the traditional banking system.  And it seems to just get worse by the month.  There appears to be a worldwide effort underway to make it harder and harder just to transact financially.

THE OPTIONS

Luckily there is still options for getting around many of these issues but it isn't cheap or easy... and not about to get any easier.

Passports.  For Americans the only way to really be able to internationalize your assets and get out from the unbelievably egregious US tax system is to get a foreign passport and then to renounce your US citizenship.  This may seem extreme to some but it seems like the most rational thing to do to us.  We foresee the US continuing to devolve, further capital controls to be erected and the US not being a place anyone will want to go for an extended period of time as it completely collapses... so why not get yourself and your capital out while you can?  The US government, as we have reported, has even gone to lengths to make it harder for US citizens to get foreign passports... which should be a big hint as to their intentions. 

Just this month they have attacked probably the most arduous, respectable and legitimate "citizenship by investment" program in St. Kitts.  And the US government has pressured the Dominican Republic to increase the time to get a passport from an original two years to now eight years.  We foresee this continuing and by the time many do see the writing on the wall and want to get a second passport to get away from the US it will be too late.  The demand will be too overwhelming and the supply will continue to dwindle which will drive the cost through the roof... if it is even possible at all. 

You can contact TDV Passports for a consultation on what your current options are.

Foreign Trusts.  Another option that is still available but may not be for much longer is to transfer your assets into an offshore trust thereby getting around FATCA rules and giving US citizens the ability to bank, have brokerage accounts and to do business internationally. 

This is not easy or simple and our FATCA experts at TDV Wealth Management have a fulltime job trying to help US citizens to internationalize their assets.  Citizens of other countries may feel that they do not need to do something like this as their country does not currently have FATCA controls nor taxes them on worldwide income.  We expect this door to be closed very quickly as the Western countries all devolve into the Greater Depression and as tax revenue for their governments decline.

Bullion.  One of the best ways to retain your assets is to have them in hard assets like precious metals outside of the financial system and preferably geopolitically diversified to make it harder for any one government to seize.  This, also, is getting harder and harder but is still possible even though it is now nearly impossible for Americans to ship gold outside of the country and have it insured as we know of no companies that will now do that for US citizens.  There are many ways to international precious metals though and you can read more in the Getting Your Gold Out Of Dodge report.  As well, precious metals should rise tremendously as the modern banking and financial systems collapse during The End Of The Monetary System As We Know It (TEOTMSAWKI).

Bitcoin.  Bitcoin offers not only a safehaven from the financial system and ability to transact worldwide in seconds for free and with no chance of any government or bank freezing the transfer... but it also offers tremendous speculative upside.  I believe that as more people awaken to the serious capital controls and inability to transact internationally easily that more will move to bitcoin as a way to hold their assets as well as to transfer them easily.  This alone could see bitcoin go up 1,000% in the next 1-2 years in my opinion, if not more.  In fact, bitcoin has surpassed Western Union and is now close to surpassing Paypal in terms of transaction volume which is no surprise to us here at The Dollar Vigilante (where we have been following bitcoin since $7 in 2011 at The Dollar Vigilante newsletter) as it is a much easier, better, faster, safer, more private and cheaper way to transact.

MASSIVE CHANGES IN THE WORLD MONETARY AND BANKING SYSTEM

The perfect storm is developing and it is all going as we have predicted over the last five years.  The Western world will continue to inflate their currencies to keep the system alive as almost all governments are bankrupt.  Governments will continue to make it harder to get your assets outside of the country.  There will be further grabs on all manner of assets including retirement and pension funds and more bank bail-ins, like in Cyprus, as government bonds collapse and the currencies hyperinflate.

Luckily, as mentioned above, there are still options but the doors are closing at such a rapid pace now that if you haven't begun to protect yourself from the coming collapse you had better start doing it yesterday.

This article provided courtesy of The Dollar Vigilante.

via Dailybell