March 11, 2013

Capital Flight: Micro and Macro

First the Micro, another tale of someone with lots of money actually wanting to pay less of it in taxes.

Paulson Said to Explore Puerto Rico as Home With Low Tax

John Paulson, a lifelong New Yorker, is exploring a move to Puerto Rico, where a new law would eliminate taxes on gains from the $9.5 billion he has invested in his own hedge funds, according to four people who have spoken to him about a possible relocation.

But capital flight is not just for meat & bone people, it's also for corporate persons. And their tax-avoidance actions tends to keep a lot more money out-of-country than the actions of mere individuals, even billionaires.

GE, Pfizer, Microsoft, Apple And Other Major US Corporations Are Parking More Cash Abroad To Avoid Paying Taxes

Some of the largest companies in the U.S. greatly boosted their tax-avoiding cash stockpiles abroad last year, according to recent surveys of company filings from the Securities and Exchange Commission

For example, the Jedi master of avoiding U.S. taxation, General Electric Company (NYSE:GE), increased its tax-free cash accumulation to $108 billion, up from an estimated $94 billion in 2010. Microsoft Corporation (Nasdaq:MSFT) increased its stockpile to $61 billion, up 36 percent from 2011 and up from $30 billion in 2010. Apple Inc. (Nasdaq:AAPL) raised its ante to $40 billion, up 73 percent from 2011.
The obvious: All of the above are doing this to avoid paying what they perceive as overly-high tax rates. They are parking their asses and assets in jurisdictions that offer more competitive rates.


February 04, 2013

Weather Report, Argentina

Forecast: Freezes, with a strong potential for food shortages and even more inflation.

Argentina freezes prices to break inflation spiral

Argentina announced a two-month price freeze on supermarket products Monday in an effort to break spiraling inflation. The price freeze applies to every product in all of the nation's largest supermarkets — a group including Walmart, Carrefour, Coto, Jumbo, Disco and other large chains. The companies' trade group, representing 70 percent of the Argentine market, reached the accord with Commerce Secretary Guillermo Moreno, the government's news agency Telam reported.

The laws of economics make some unambiguous predictions about the results of price freezes in inflation-plagued markets. We saw them in action here in the United States during the Nixon and Carter years. There will be shortages. And sooner rather than later, as people start stocking up to avoid the inevitable shortages.

None of which will break the inflationary spiral being experienced by Agrentina, which is solely the result of their printing-press spending.

UPDATE: Tyler Durden says it in more detail, and some caveats for America.

January 25, 2013

Journal of Predictable Results

Brazil gives prison inmates a holiday vacation... but thousands don't return

More than 2,400 Brazilian inmates are on the run after they were granted a holiday vacation home but surprised prison guards by failing to come back. Of the 26,486 given furloughs for good behavior over the Christmas and New Year's holidays, prison systems from 26 states and the Federal District report five percent remaining at large. Perhaps more surprisingly, however, is that the majority of 45,000 men and women willingly returned.

That really is surprising. Brazilian prisons are not known for their comfortable conditions. And as for the following, well, I told you so.

Obama recess appointments unconstitutional

A federal appeals court has overturned President Obama's controversial recess appointments from last year, arguing he abused his powers and acted when the Senate was not actually in a recess.

Heh. "L'├ętat, c'est moi!" Um, not so much.