Almost every spy movie ever made, has at least one reference to secret and anonymous bank accounts in Switzerland. Every negative propaganda against tax havens has Switzerland at the top of its list. Every person in the western hemisphere (and many in the eastern one) knows about Swiss banker's tightness of lips. Well, starting 01 January 2017 all this gone. Forever.
Consider the following data. Swiss banks hold about 2.5 trillion dollars of wealth in their vaults (about 1/3 of all off-shore accounts in the world). Swiss banks represent about 11% of the Swiss GDP and employ about 5% of the entire Swiss workforce. But this is not the scary part. The scary part is that Swiss banks are leveraged to the tune of 29 to 1 and their short-term liabilities are in the order of 260% of the Swiss GDP!
THE DAY SWITZERLAND DIED
Why 01 January 2017? Because that day is the day banking secrecy dies in Switzerland. Back then we warned you that this will happen (see This Is The End). In or about 2014 Switzerland accepted OECD's "Standard for Automatic Exchange of Financial Account Information in Tax Matters". This little document written in technobabble and bureaucratese essentially demands that all banks in all countries snitch their customers to their respective tax authorities. Automatically. Every year. Without rationale, warrant or probable cause. You are guilty. Period.
Switzerland and all other minor tax havens have become a:
- betrayer
- blabbermouth
- canary
- double-crosser
- fink
- informant
- narc
- nark
- rat
- sneak
- snitcher
- source
- squealer
- stoolie
- tattler
- tattletale
- tipster
- turncoat
- weasel
- whistle-blower
- deep throat
- stool pigeon
Got the gist of it?
LET THE MASSACRE BEGIN
Yet, the massacre has already begun. Swiss banks have a plan. They plan to commit seppuku (or ritual Japanese suicide) in 2015. They are already sending out letters to all their customers demanding (that's right, demanding) from their customers proof that they have paid taxes on their assets in Switzerland. And if a customer does not do so, they will close their account near the end of 2015. See A Big Fuck You From Switzerland.
Can you imagine this? The share temerity, gall, arrogance and… why not… balls of the Swiss banks? Can you imagine receiving a letter from your bank threatening you with closing your account unless you demonstrate that you have paid your taxes? Threatening you with legal action?
Let's rephrase this again just to be sure you understand the astronomically gigantic level of stupidity and arrogance. Swiss banks headquartered in Switzerland and based on Swiss capitals and Swiss managers and (mostly) Swiss shareholders demand from non-Swiss clients that they demonstrate that they have paid taxes in their countries of origin or residence, countries that are not Switzerland!
This is so grand, so large as to be mindboggling. Not only that, but Swiss banks so demand in no uncertain terms including legal threats! Swiss banks. That's right! Swiss banks!
Consider this, just a few years back should an officer of any Swiss bank would do so, this person would have been dragged by the police in front of a judge and thrown into jail for breaching Swiss banking laws. Yet, this is now official Swiss bank policy!
And why had Swiss banks choosen to do so?
Because they must begin to snitch on their customers on 01 Jan 2017. And what will they snitch about? All the transactions of all their customers in 2016. And why are they doing this thing in 2015? Because whatever happens in 2015 is not reportable.
Basically, the Swiss are covering their collective asses in paperwork.
STUPID, STUPID SWISS
Over many years we have seen many stupid decisions by stupid politicians baked by stupid people. But what Switzerland and the Swiss people did must be at the top of the list.
Consider this.
Switzerland is not an international financial centre. A financial center is where one goes to borrow money, invest money or seek investors. New York is a financial centre, Tokyo is a financial centre, London is a financial centre, Dubai is a financial centre but Zurich or Switzerland are not. Nobody in their right mind would seek capital in Switzerland because the costs of money in there are astronomical.
Furthermore, the cost of the Swiss banking products are ridiculous, to the tune of several times the costs of similar products in other countries. Nobody in their right mind would buy a Swiss mutual fund because the entry fees, the exit fees and the management fees are so incredibly high as to make them sure losers (except to the Swiss banks, that is).
So let's recap. The Swiss banking industry has one of the highest costs, its products are massively underperformers and nobody is interested in capitalizing their business in Switzerland.
Then why is Switzerland so full of money? For one reason and one reason only: they knew how to keep their mouths shut. They could do so because it was Swiss law. The government protected Swiss banking secrecy.
And what was that imbecilic and brain-dead Swiss politicians and people did? They obliterated banking secrecy! They totally and utterly destroyed the only advantage that Swiss banks had over any other banks anywhere in the world.
The bloodletting has already begun and this will only accelerate. Swiss banks are done. Kaput. Dead. Gone. Swiss banks are deluding themselves if they believe that they can make it in the hyper competitive world of financial products. They are dinosaurs and they are about to learn what it means to get extinct.
And why would Swiss politicians and people do something so incredibly stupid that ranks on par with drinking rat poison or jumping off the 10th floor while flapping your hands in an attempt to fly?
Because "it is the right thing to do". At least this is what they have been brainwashed to believe. Alas, this is not even closer to the truth. The truth is that the US "allegedly" threatened Switzerland with cutting off the entire country from the SWIFT system. The SWIFT system being the system that performs "wire transfers". No bank can survive if they cannot transfer funds in our out. The Swiss could have gone public with this information but instead they attempted to negotiate quietly with US. Big mistake. Even more considering that for any intent and purpose, every single transaction being routed through SWIFT is already copied, monitored and processed by US through several "security" organizations including the NSA (yes that one, the no-such-agency). Swiss banking secrecy was already compromised to a ludicrous degree. Yet, not even this blatant intrusion in other people's affairs was enough for the USA because They Want Everything.
The fall of Switzerland created a domino effect. All other remaining tax free jurisdictions felt afterwards. Game over.
WHAT WILL HAPPEN NEXT?
Well, to begin with, money will leave Switzerland in droves. People won't forget. Switzerland backstabbed them. Switzerland is done. 11% of their GDP is going to go up in smoke. But what's really, really scary is that Swiss banks will lead the entire Swiss country into a catastrophe because they won't be able to maintain short-term liabilities in the order of 260% of the Swiss GDP. As Swiss banks begin to collapse so will Switzerland. If you ever wanted to see Switzerland as it is, now is the time to go. In a couple of years it will be just like any other decrepit EU country.
CONCLUSION
Switzerland is done by their own hands. There is nobody to blame but Swiss people and politicians. And once the massacre begins and Swiss people start looking for somebody to blame, we will be here telling them: we told you so!
But then again. Perhaps you believe that people should pay their "fair share" of taxes, despite the fact that this is an incredible fallacy (see for example Tax Havens Libertys Last Bastion). Perhaps you believe that the world will suddenly become a better place just because (mostly) average Joes and Janes are now far, far less wealthy. Perhaps you believe that politicians will not squander that capital and will make a better place. Silly you (or more precisely, stupid you). But then again, if you choose stupidity and ignorance that's entirely your right. Just one thing, once everything is said and done and nothing changes, don't come crying to us saying that your life still sucks. We told you so.
Note: please see the Glossary if you are unfamiliar with certain words.
