Friday, February 20, 2009

Hard Times

Interesting article in the NY Times a few days ago (Feb. 18): A Swiss Bank is Set to Open its Secret Files. Remember those Swiss banks? The ones with those secret numbered accounts that were never ever supposed to be revealed? That could somehow flaunt the laws of every government everywhere in the world, providing a safe haven for tax cheats, mafia dons, jewel thieves, corrupt officials, Ponzi scheme operators, and God knows how many Wall St. bonus babies? (In case you were wondering where all that money is being stashed.) Gee, it's funny how for so many years no one in government seemed too concerned about those accounts or what they might mean. (And come to think of it, haven't you ever wondered about what happened to all that extra campaign contribution money that never got spent?) And our citizens never seemed particularly worried either.

"Call it sleep," I suppose. But now we're being rudely awakened -- and at the worst possible time. "Gee Ma, do I have to go to school today? Again???" "I'm afraid so, son." As Marshall McLuhan once said: "Education is painful."
UBS, the largest bank in Switzerland, agreed on Wednesday to divulge the names of well-heeled Americans whom the authorities suspect of using offshore accounts at the bank to evade taxes. The bank admitted conspiring to defraud the Internal Revenue Service and agreed to pay $780 million to settle a sweeping federal investigation into its activities. It is unclear how many of its clients’ names UBS will divulge. Federal prosecutors have been examining about 19,000 accounts at the bank, but UBS ultimately may disclose the identities of only a few hundred customers.
Only $780 million? Chump change these days. Looked like UBS might be getting off easy, especially if the heads of only a few hundred "customers" will be on the chopping block. There's more, however, because in a followup article yesterday the Times revealed that the Justice Dept. wanted UBS "to divulge the identities of 52,000 Americans whom the authorities suspect of using secret offshore accounts at the bank to dodge taxes." Say what? 52,000 who??? As in: fifty two thousand? Americans? Dodging taxes????

More juicy details:

The 2004 memorandum, for instance, described how UBS created hundreds of “dummy” offshore corporations where its clients could hide money from the I.R.S. An e-mail message sent that year captured some of the coded language used by UBS bankers. In their world, “one nut” meant $250,000, while “one swan” meant $1 million. Colors were used to designate certain currencies. Orange, for example, represented the euro; blue, the British pound. Several messages described UBS actively referring clients to outside lawyers and accountants in Switzerland and elsewhere who set up secret accounts for them.

In a brief interview on Thursday, one UBS client said the bank also provided wealthy clients with electronic devices with coded computer chips that enabled them to gain access to their accounts and transfer money secretly. The passwords changed each time the accounts were accessed.

In the criminal investigation that led to this week’s settlement, the Justice Department had zeroed in on about 19,000 wealthy Americans. Those UBS customers had a combined $20 billion in assets at the bank, and may have evaded $300 million a year in federal taxes through UBS’s undeclared offshore private banking services.

But the I.R.S. has been conducting a parallel investigation, and on Thursday the Justice Department asked a federal judge to require UBS to disclose to the I.R.S. the identities and records of the 52,000 clients. In the past, UBS has suggested that the 19,000 accounts under investigation, which it is now closing, were the extent of its undeclared offshore banking services.
So far, this truly astounding and profoundly disturbing piece of news doesn't seem to have made much of an impact on the media. And I'm wondering why. Nothing at all on the economics blogs I've been following. Nothing on the usual network news or even PBS. I don't have cable, so maybe something's been mentioned there. Nothing on the CNBC website today, unless it's buried somewhere at the bottom of the heap. All I get when I search the Fox News website for UBS is under "subscribe." Maybe if I subscribed???

I have a bad feeling about this. There are going to be lots of very influential people who will not be happy about this development and will be doing everything in their considerable power to kill both the investigation and the story. On the other hand, if we could collect back taxes from 52,000 (count 'em!!!!) crooked billionaries -- think what that could do for the "recovery."

To borrow the prophetic refrain of an old song:
Since cheating has got so much in the fashion
I'm afraid it'll spread all over the nation
And it's Hard Times:

(As sung by Mrs. Lillie Steele.)

Come all you good people, I'll sing you a song
I'll tell you the truth I know I ain't wrong.
From father to mother, from sister to brother
They've got in the fashion of cheating each other
And it's hard times.

Since cheating has got so much in the fashion
I'm afraid it'll spread all over the nation
And it's hard times.

Here's the old baker bakes the bread we eat.
Likewise, the old butcher by selling his meat.
They tip up the scale yards and make them lay down
And swear it's good weight if it lies ten pounds
And it's hard times.

Here's the old blacksmith makes his living by the sweat of his brow.
Likewise, the old farmer by following his plow.
They think they are right in their own conceit,
They'll cheat each other in measure and weight
And it's hard times.

Since cheating has got so much in the fashion
I'm afraid it'll spread all over the nation
And it's hard times.

Here's the old Methodists they'll sigh and they'll morn.
They'll hang down their heads, they'll grunt and they'll groan.
And if there's no money, they'll have to go out
They'll shut up their doors and they'll sing and they'll shout
And it's hard times.

And here's the young gentlemens, they'll mat (?) and they'll go.
With ruffles and buckles, to make a great show.
They go to their town, and call for some wine
I'm afraid a great many the gallows will find
And it's hard times.

And there's the young ladies, they'll slick and they'll sleep (?)
They bunch up there hair, so nice and so neat
They'll sit up in their chairs, so nice and so straight
To make the young gentlemens think they look sweet
And it's hard times.

Since cheating has got so much in the fashion
I'm afraid it'll spread all over the nation
And it's hard times.

There's the old Baptists I like to left out
I believe to my God they're the worst in the shop\
They'll sell you cold iron instead of good steel
They'll charge two dollars a bushel for meal
And it's hard times.

Now concluded I'll finish my song
I've told you the truth and I know I ain't wrong.
And if you ain't ready to come at his call,
The Lord will depart and the Devil take all
And it's hard times.

Since cheating has got so much in the fashion
I'm afraid it'll spread all over the nation
And it's hard times.

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