S&P Brings Out The Big Policy Guns – Downgrades Russia To Outlook Negative

S&P, still deep in the mire of a legal battle with the US government, has decided now is an opportune time to cut the ratings outlook on Russia:

  • *RUSSIAN FEDERATION OUTLOOK TO NEGATIVE FROM STABLE BY S&P
  • *S&P SEES EU-U.S. IMPOSING FURTHER SANCTIONS

Russia remains a BBB credit (but with the outlook shift remains open to a downgrade with 24 months). S&P has cut 2014 GDP forecast to 1.2% and 2015 to 2.2%. Of course, we are sure, this would have nothing to do with currying favors with the US government (who threatened them when they downgraded the USA). Full report below.

 

S&P Reduces Russian Federation outlook to Negative from Stable.

Below is the full report:

OVERVIEW
• In our view, heightened geopolitical risk and the prospect of U.S. and EU economic sanctions following Russia's incorporation of Crimea could reduce the flow of potential investment, trigger rising capital outflows, and further weaken Russia's already deteriorating economic performance.

• We are therefore revising the outlook on our long-term sovereign credit ratings on Russia to negative from stable.

• We are affirming our 'BBB/A-2' foreign currency and 'BBB+/A-2' local currency ratings on the Russian Federation.

As a "sovereign rating" (as defined in EU CRA Regulation 1060/2009 "EU CRA Regulation"), the ratings on the Russian Federation are subject to certain publication restrictions set out in Art 8a of the EU CRA Regulation, including publication in accordance with a pre-established calendar (see "Calendar Of 2014 Publication Dates For EMEA Sovereign, Regional, And Local Government Ratings," published Dec. 30, 2013, on RatingsDirect). Under the EU CRA Regulation, deviations from the announced calendar are allowed only in limited circumstances and must be accompanied by a detailed explanation of the reasons for the deviation. In this case, the reason for the deviation is the material and unanticipated intensification of geopolitical risks since our most recent release on Dec. 13, 2013, the introduction of sanctions, and the increased financial and economic downside risks to Russia related to these events. The next scheduled rating publication on the sovereign rating of the Russian Federation will be on April 25, 2014.

RATING ACTION

On March 20, 2014, Standard & Poor's Ratings Services revised its outlook on the Russian Federation (Russia) to negative from stable. At the same time, we affirmed our 'BBB/A-2' foreign currency and 'BBB+/A-2' local currency long- and short-term sovereign credit ratings on Russia.

We also affirmed our 'ruAAA' long-term national scale rating on Russia.

RATIONALE

The outlook revision reflects our view of the material and unanticipated economic and financial consequences that EU and U.S. sanctions could have on Russia's creditworthiness following Russia's incorporation of Crimea, which the international community currently considers legally to be a part of Ukraine.

In February 2014, pro-Russian forces took control of Crimea. As a consequence, on March 6, the European Union (EU) and the U.S. agreed on an initial round of sanctions, as part of a staged approach to imposing sanctions on Russia. On March 16, a referendum was held in Crimea in which approximately 97% of voters reportedly were in favor of Crimea joining Russia. The following day, the EU and U.S. announced that they viewed the referendum as illegitimate and sanctioned certain Russian and Ukrainian nationals through travel bans and asset freezes. On March 18, Russia's president, Vladimir Putin, signed a decree incorporating Crimea into the Russian Federation which was ratified by parliament today.

We expect that the EU and U.S. will impose further sanctions.

In our view, the deteriorating geopolitical situation has already had a negative impact on Russia's economy. The Central Bank of the Russian Federation appears to have abandoned its policy of increased currency flexibility and limited intervention in the foreign-exchange market. The Central Bank is now focused on stabilizing financial markets in light of the inflationary impact of the around 10% depreciation of the currency so far this year and the significant capital outflow, which we estimate at about $60 billion in the first quarter of 2014, similar to the level for the whole of 2013. The Central Bank also called an extraordinary meeting in March, raising its benchmark interest rate by 150 basis points to 7%.

Economic growth in Russia slowed to 1.3% in 2013, the lowest rate since 1999–excluding the economic contraction in 2009. We expect a further modest deceleration in growth this year and have lowered our GDP growth forecasts for 2014 and 2015 to 1.2% and 2.2%, respectively, from 2.2% and 3.0% in December 2013. In our view, there is a significant downside risk that growth will fall well below 1% if the uncertainties caused by the geopolitical tensions do not subside in the near term.

In our view, there is a material risk that the conflict between Russia and Ukraine could extend beyond Crimea and that violence between pro- and anti-Russian protesters could spread to other cities in Eastern Ukraine. Should the situation deteriorate, we believe further and wider sanctions could be imposed against Russian institutions and individuals, potentially including trade restrictions. In our view, these sanctions could further undermine Russia's economic growth prospects. We note, however, that sanctions, particularly those that might be imposed by EU countries, could be tempered by European economic trade and energy interests.

Our ratings on Russia continue to be supported by its relatively strong external and government balance sheets. The ratings remain constrained by structural weaknesses in Russia's economy, in particular the strong dependence on hydrocarbons and other commodities. Further constraints are what we view as comparatively weak governance and economic institutions that impede the economy's competitiveness, investment climate, and business environment.

The Russian government's finances continue to be buoyed by strong commodity revenues, particularly from oil. These account for almost one-half of the government's budget revenues, but also leave it exposed to swings in commodity prices. To mitigate this vulnerability, the government has instituted a fiscal rule from 2013, which caps government expenditure based on long-term historical oil prices. This fiscal rule is designed to lead to the accumulation of assets in times of high oil prices, and to the drawing on fiscal assets in times of low oil prices, reducing the procyclicality of fiscal policy. In our view, the government's commitment to this fiscal rule will likely be significantly tested by the recent further deterioration in growth prospects, while off-budget measures to support additional spending could also increase. We estimate Russia's 2013 general government budget to have recorded a deficit of 0.6% of GDP. Based on our expectation that commodity revenues will decline slightly on the back of a slightly weaker oil price (falling to $95 by 2015), we think the general government deficit will gradually worsen, reaching 1.5% of GDP by 2016, just outside the level targeted by the fiscal rule, and implying an average annual change in general government debt of 1.5% of GDP over 2013-2016.

Russia's aging population will be a source of considerable medium- to long-term fiscal pressure. In a no-policy-change scenario, we expect the aging of the population to add more than 10% of GDP to government spending by 2050 compared with 2010 levels. While the government has been adjusting pension system parameters, it has so far shied away from more decisively tackling the issue. We now estimate the Russian government to be in a marginal net debtor position due to revised data on the outstanding stock of gross general government debt. Nevertheless, low levels of gross debt imply low general government interest payments at about 2% of revenues during 2014-2016.

Commodity exports are also behind Russia's persistent current account surpluses, resulting in a net external asset position of about 4% of GDP in 2014. Measured in terms of narrow net external debt, that is, external debt minus liquid external assets held by the public and banking sector, we expect Russia to be in a small net external creditor position. This strong external asset position has been declining since reaching a peak of 34% in 2009. We note, however, that due to consistently negative errors and omissions in Russia's balance of payments (averaging almost $8 billion annually, or 1.5% of CAR in 2007 to 2013) the reported net asset position is considerably lower than implied by the large current account surpluses.

We expect the current account surpluses to disappear by 2015, owing to imports rising faster than exports. Further ruble weakness could weigh on imports and keep current account deficits from occurring a little later, but we believe the longer-term trend of a weakening current account will remain in place even so. Gross external financing needs (current account payments plus short-term external debt by remaining maturity) will amount to 70% of CARs and usable reserves in 2014, in our view. Dependence on commodity exports results in terms-of-trade volatility, although past experience has shown that imports tend to adjust strongly, offsetting part of a commodity price-induced drop in export revenue.

Russia's political institutions remain comparatively weak and political power is highly centralized. Protesters, opposition members, nongovernmental organizations, and liberal members of the political establishment have come under increasing pressure. We do not expect the government to decisively and effectively tackle the long-standing structural obstacles to stronger economic growth over our forecast horizon (2014-2017). These obstacles include high perceived corruption, comparatively weak rule of law, the state's pervasive role in the economy, and a challenging business and investment climate.

OUTLOOK

The negative outlook reflects our view that there is at least a one-in-three chance that we could reassess the risks to Russia's creditworthiness based on its deteriorating external profile and reduced monetary policy flexibility. As a result, we could lower our ratings on Russia within the next 24 months. Geopolitical reaction to Russia's incorporation of Crimea could further reduce the flow of potential investment and negatively affect already weak economic growth, which would provide a further basis for lowering the ratings. Similarly, we could equalize the local and foreign currency ratings on Russia if we were to view Russia's transition toward a more flexible exchange rate regime as having stalled.

We could revise the outlook to stable if Russia's economy were to prove resilient to the current challenges, resulting in a return to a policy of a more flexible exchange rate, and if its external and fiscal buffers were to remain in line with our current expectations.


    



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Ukraine Goes Cyprus 2.0, To Tax Deposits Over 100,000 Hryvnia (To Appease IMF?)

It would appear the IMF’s dirty little fingerprints are all over this latest piece of legislation in Ukraine. The Ukraine Finance Ministry is proposing to take a very-similar-to-Cyprus approach to bailing in its despositors:

  • *UKRAINE PROPOSES NEW TAX ON DEPOSITS EXCEEDING 100,000 HRYVNIA
  • *UKRAINE TAX PROPOSAL WOULD INCLUDE 1.5% OF ALL DEPOSITS

This would appear a measure designed to stabilize the budget for potential IMF negotiations and fits perfectly with what the IMF has consistently hinted as the next steps for many nations.

 

This is further to the news last week that a 25% deposit “tax” was being considered…

Via Tax News,

Ukraine’s parliament is to consider draft laws which would ban foreign-currency bank deposits and introduce a 25% tax on interest on deposits in banks and other financial institutions in circumstances where the interest received is more than 5% above the rate set by the National Bank of Ukraine.

 

The proposed amendments to banking and tax legislation were put forward by Yevhen Sihal, who is a member of the country’s ruling Party of Regions. In an explanatory note submitted with the drafts, he argued that the higher tax rate will encourage consumer spending, reduce the cost of business loans, and provide extra funding for the country’s Pension Fund. Sihal also explained that his tax proposal is based on the experience of the Russian Federation.

 

Sihal’s proposals have united the National Bank of Ukraine (NBU) and the country’s Communist Party in opposition. The NBU was quoted as saying that it was concerned about the politicization of economic issues, and that its policy was to increase the deposit base in line with international practice, while Communist leader Petro Symonenko suggested that the owners of large deposits will simply move their funds abroad to avoid the tax.

We assume, just as with Cyprus, that the big money has already left the building leaving small businesses and the average joe to foot the IMF-demanding bill (for the good of the country) to get their bailout funds.


    



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US/Europe Stocks Melt-Up Into EU Close

US and European stocks are spiking higher this morning supposedly on the back of better-than-expected data (Philly Fed) and self-referencing bias that surely Janet Yellen didn't mean what she said. Stocks (oddly) melted up on the last Philly Fed release (which was a massive miss). Anyway, fun-durr-mentals aside, this move is all about AUDJPY all the time as Financials lead the way (and are the only sector green post Yellen). European stocks are merelty tagging along for the exuberant melt-up ride. Beware of financials as CDS are widening even as stocks soar – a pattern we have seen before into the run-up to CCAR (stress-tests) and doesn't end well for bank stocks.

 

All about AUDJPY…

 

And Europe catching up into the close…

 

With financials leading the way…

 

But we've seen this exuberance before…

 

and copper is tanking…

 

Charts: Bloomberg


    



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Illinois Supreme Court Unanimously Overturns the Country’s Strictest Recording Ban

Today the
Illinois Supreme Court unanimously overturned that
state’s draconian eavesdropping law, which makes it a felony to
record public officials without their permission, even when they
are performing their public duties. Two years ago the U.S. Court of
Appeals for the 7th Circuit
ruled
that the law was unconstitutional as applied to police
officers recorded in public. Today’s
decision
 extends that analysis to other public officials
as well as private citizens when they do not have a reasonable
expectation of privacy.

The justices note that the eavesdropping ban “criminalizes a
wide range of innocent conduct,” including “the recording of
conversations that cannot be deemed private: a loud argument
on the street, a political debate on a college quad, yelling
fans at an athletic event, or any conversation loud enough that the
speakers should expect to be heard by others. None of these
examples implicate privacy interests, yet the statute makes it
a felony to audio record each one. Judged in terms of the
legislative purpose of protecting conversational privacy, the
statute’s scope is simply too broad.”

The court adds that “even when the recorded conversation is held
in private, the statute does not distinguish between open and
surreptitious recording,” insteading prohibiting
“any recording of a conversation absent the consent of all
parties.” That means someone who openly records a conversation
“must risk being charged with a violation of the statute and
hope that the trier of fact will find implied consent.”

Because the eavesdropping ban “burdens substantially more speech
than is necessary to serve a legitimate state interest in
protecting conversational privacy,” the court concludes, “it does
not survive intermediate scrutiny. We hold that “the recording
provision is unconstitutional on its face because a substantial
number of its applications violate the first amendment.”

The case involved Annabel Melongo, who was arrested for
recording three telephone conversations with an assistant
administrator of the Cook County Court Reporter’s Office. Melongo
was trying to correct an erroneous transcript from a computer
tampering case in which she was involved, and she wanted to
document her interactions with the court reporter’s supervisor. She
was charged with six counts of eavesdropping in 2010 and spent 20
months in jail because she could not make bail. Her 2011 trial
ended with a hung jury.

[Thanks to Pete Heimlich and Ryan Compaan for the tip.]

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Fred Phelps Is Dead. Gay America Lives On.

If there are gay people in heaven, will he picket the pearly gates?When I was in college in the
1990s in St. Louis, I remember getting a bunch of bizarre
anti-abortion fliers faxed to our student newspaper office. That
was my introduction to Fred Phelps, his family, and the Westboro
Baptist Church of Topeka, Kansas (and also, to a lesser degree, the
frequent experience as a journalist of being sent strange screeds).
If I recall correctly, they were in town picketing something, so it
was part of their effort to scrounge up some press. They were still
crafting their image as far-right extreme religious conservatives,
blaming all of America’s ills on homosexuality and abortion and
other things they defined as non-Christian. I remember seeing Fred
Phelps sometimes showing up on daytime talk shows (anybody remember
Ricki Lake?), but the Westboro Baptist Church was not yet a
household name.

They most certainly are now, and today a family member has
revealed that former patriarch
Fred Phelps died last night at the age of 84
. Fred Phelps had
been out of the public eye for some time now, and over the weekend,
a son who had broken away from the family said the man was in bad
physical shape and had been moved into a
care facility
. He also, allegedly, had been
excommunicated
from the church during a power struggle over
leadership.

I encountered the Phelps family and Westboro Baptist Church
members in person in 1999 as attention on them started ramping up.
I was covering a meeting between a group of gay Christians and
Jerry Falwell’s followers at Liberty University in Virginia. By
agreeing to meet with the gay Christians, Falwell was deemed not
anti-gay enough, so Westboro Baptist (and another extremely
anti-gay church) showed up to picket Falwell. I decided to
acknowledge their appearance in my reporting (for an alt-weekly I
was working at and for a freelance piece for the gay magazine
The Advocate) but I declined actually trying to interview
them. Even back then, their shtick was well-worn, at least to the
audience I was writing for. They had nothing new to say. Other
journalists couldn’t wait to get some crazy, nasty quote for
them.

They had been picketing the funerals of people who had died of
AIDS for years, but after 9/11 they started picketing funerals of
soldiers, blaming their deaths on America’s failure to believe the
same things that the Phelps family believed. Well, now that they
were being bipartisan in their cruelty, the coverage took off. Even
as they started getting more and more attention, and people across
the spectrum started getting repulsed, I found it easier and easier
to tune them out. I always wondered why it was such a struggle for
others. The federal government passed a
law
blocking protests near military funerals (and only military
funerals, again showing what people were really upset about). The
church won a Supreme Court verdict in 2011 that they couldn’t be
sued for monetary damages by the family of a slain soldier they
picketed.

Given that Fred Phelps has already apparently been purged
from the church, it’s unlikely that his death will change the
family’s behavior in any recognizable way. On a fundamental level,
Fred Phelps is not really responsible for the family’s fame—we are.
The Westboro Baptist Church is a scab we keep picking at. Americans
have grown more and more accepting of gay people, and the church’s
actions grow more and more desperate to get attention. Yet so many
people find it hard to look away from them. They couldn’t be any
less relevant to the direction the country is moving, and yet they
bother us so much that we pass laws to try to stop their protests,
arrange
elaborate plans
to block said protests from public view, and
essentially continue to
perpetuate their fame
by continuing to let the church’s actions
draw outraged responses.

Like I said, the death of Fred Phelps probably won’t result in
any changes from the family, but it’s a good excuse for the rest of
us to move on. I’m sure that right now some dreadful editorial
cartoonist is sketching Phelps being met at the pearly gates
by all the soldiers his family picketed. It’s true that the
solution for bad speech is more speech. But the solution to crazy
obsession is not becoming obsessed right back at them. Stop picking
at this scab. The attention the Westboro Baptist Church received
was always much greater than their actual influence or import,
except perhaps as a bad example. They were the Kardashian family of
religious activism.

Read about Fred Phelps’ secret origins as a civil rights
attorney who fought racial discrimination in the 1960s here
and speculate about what the heck happened.

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Has the First Amendment Become a ‘Conservative’ Legal Cause?

The U.S. Supreme Court is hearing a series of cases this term
that raise fundamental questions about the scope of the First
Amendment, including in such areas as
mandatory union dues
for public-sector employees,
aggregate campaign spending limits
during election season, and
the health care law’s so-called
“contractive mandate.”

At the Los Angeles Times, Supreme Court correspondent
David G. Savage argues that the common thread uniting these
disparate cases is the presence of conservatives activists seeking
to vindicate their rights against the government. “For decades,
liberals wielded the 1st Amendment to protect antiwar activists,
civil rights protestors and government whistle-blowers,”
Savage writes
. “These days, however, the Constitution’s
protection for free speech and religious liberty has become the
weapon of choice for conservatives.”

In a broad sense, that sounds right. Most people tend to view
antiwar speech as a liberal cause and view campaign finance speech
as a conservative cause. But the details become more complicated
when you take a closer look. Citizens
United v. Federal Election Commission
(2010), for example,
the most famous—some might say most infamous—ruling in favor of
broad First Amendment protection for political speech against
campaign finance regulation, was also endorsed by the American
Civil Liberties Union, which filed an amicus brief on
behalf of the conservative non-profit corporation Citizens United.
Does that stamp of approval by the ACLU make Citizens
United
a liberal case?

The same analysis holds true for the issue of unpopular speech
during wartime. Let’s reach a little further back in history and
consider the case of Eugene Victor Debs, radical labor activist and
perennial Socialist Party candidate for the presidency. In 1918
Debs was arrested under Woodrow Wilson’s Espionage Act on charges
of interfering with U.S. participation in World War I after he gave
an antiwar speech. Debs ultimately spent three years in federal
prison for committing that “crime.”

In 1919 the Supreme Court issued a decision on his case. Because
he spoke out against the war, the Court argued, Debs had
effectively sought “to obstruct the recruiting and enlistment
service of the United States.” His conviction was upheld. The
opinion was written by Justice Oliver Wendell Holmes, a hero
to the Progressive Movement
who is still admired today by many
prominent liberal figures, including Justice Elena Kagan, who cited
Holmes as a judicial
role model
during her 2010 Supreme Court confirmation
hearings.

By contrast, one of the loudest voices raised on Debs’ behalf
was that of the journalist and critic H.L. Mencken, who is
nobody’s idea
of a left-winger. Indeed, Mencken despised Debs’
socialist views, yet knew perfectly well Debs was being railroaded
by the government and deserved to be set free.

My point is that First Amendment cases often fail to conform to
a binary left-right divide, and that’s because both sides of the
political spectrum are willing to accept the use of government
power to silence certain voices at certain times.

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Anti-Biotech Opposition to Golden Rice Has Cost 1.4 Million ‘Life Years’ in India Alone. Will Anyone Be Held Accountable?

Opposition to biotech crops,
and the subsequent failure to adopt safe, healthy genetically
modified crop variants, is causing mass human suffering all over
the world.

The most obvious example of this is Golden Rice, which has been
available since the early part of the last decade, but is not in
regular use in any country. Golden Rice is a genetically altered
rice strain built to address Vitamin A deficiency, which affects
about 10 percent of the 3 billion people for whom rice is a staple
food. That deficiency
causes blindness in between 250,000 and 500,000 children each
year
, half of whom die within 12 months, according to the World
Health Organization.

Golden Rice is cost effective and perfectly safe. But
environmentalist groups like Greenpeace continue to oppose it. Over
the years since its development, radical anti-biotech activists
have waged
violent crop-burning campaigns
intended to wipe it out. Back in
2000, the threat was so fierce that the strain was being stored
in a grenade-proof greenhouse
for protection.

The sheer physical misery—misery that could have and should have
been prevented—that has resulted from opposition to the rice has
been immense, but also difficult to quantify. But this year, two
agricultural economists attempted to estimate exactly how much it’s
cost, both in economic terms and in healthy lives lost. The results
are pretty grim. 

“Results show the annual perceived costs have to be at least
US$199 million per year approximately for the last decade to
explain the delay in approval of the technology,”
writes
 Justus Wesseler of  Technische Universität
München, Center of Life and Food Sciences in Freising Germany and
David Zilberman of UC Berkeley. “This is an indicator of the
economic power of the opposition towards Golden Rice resulting in
about 1.4 million life years lost over the past decade in
India.”

What does the study’s authors mean by “life
years?” David
Ropeik of Scientific American explains
:

That odd sounding metric – not just lives but ‘life years’ –
accounts not only for those who died, but also for the blindness
and other health disabilities that Vitamin A deficiency causes. The
majority of those who went blind or died because they did not have
access to Golden Rice were children.

Ropeik argues that at this point we need to do more than tally
the suffering. We need to assign blame, and hold those who have
opposed Golden Rice so adamantly, for so long, on such flimsy
justifications, accountable:

These are real deaths, real disability, real suffering, not the
phantom fears about the human health effects of Golden Rice thrown
around by opponents, none of which have held up to objective
scientific scrutiny. It is absolutely fair to charge that
opposition to this particular application of genetically modified
food has contributed to the deaths of and injuries to millions of
people. The opponents of Golden Rice who have caused this harm
should be held accountable.

That includes Greenpeace, which in its values
statement promises, “we are committed to nonviolence.” Only
their non-violent opposition to Golden Rice
contributes directly to real human death and
suffering. It includes the European Network of Scientists for
Social and Environmental Responsibility, which claims the
credibility of scientific expertise, and then denies or distorts
scientific evidence in order to oppose GMOs. It includes the
U.S. Center for Food Safety and the Sierra
Club and several environmental groups who deny and distort the
scientific evidence on GM foods every bit as much as they complain
the deniers of climate change science do. It includes
the Non-GMO Project, started by natural food retailers who
oppose a technology that just happens to threaten their
profits.

Reason’s Ron Bailey has been writing about the
homicidal
activism

of anti-biotech fanatics
for
years
.  

(Link via CEI’s
Greg Conko
.)

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Virginia Student Gets Suspended for Taking Razor From Kid Who Was Cutting

Note to American tweens: Don’t be a Good Samaritan on the
state’s watch. A sixth grader at a Virginia Beach public school

was suspended this week for having a razor blade
. She took
the blade from another student who was cutting himself with
it
. Bad move, apparently. 

The Bayside Middle School student, Adrionna Harris, said she
took a razor blade away from another student because he was using
it to cut himself. She threw the blade away and told school
officials. Then she was suspended for 10 days, with a
recommendation for expulsion, according to Virginia Beach news
station WAVY. 

Note that Harris didn’t even have the razor blade in her
possession when she went to school administrators. The only
evidence this razor blade existed is Harris’ own admission of it,
when she told school officials what had happened and that she had
already thrown it away.

“I was very shocked that a student would get suspended for
saving another child,” Rachael Harris, Adrionna’s mother, told
WAVY. “The school system over-reached absolutely.”

On Wednesday night, Virginia Beach City Public Schools agreed to
move Adrionna’s suspension hearing, which was scheduled for next
week, to Thursday night.

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British tax authorities just out-mafia’d the IRS

March 20, 2014
Sovereign Valley Farm, Chile

A few months ago, I told you about a bold report published within the IRS that absolutely blasted the agency’s mafia tactics.

In its 2013 annual report to Congress, the Office of the Taxpayer Advocate wrote that the IRS shows “disrespect for the law and a disregard for taxpayer rights.”

Further, the report says that the current system “disproportionately burdens those who [make] honest mistakes,” and that “tax requirements have become so confusing and the compliance burden so great that taxpayers are giving up their U.S. citizenship in record numbers.”

We all know the stories. The IRS has nearly infinite power to do whatever it wants, including freezing you out of your own bank account without so much as a phone call, let alone due process.

In the Land of the Free, people think they’re innocent until proven guilty. This is total BS. If you are only suspected of wrongdoing, you can be locked out of your entire savings.

This is an incredible amount of authority to wield.

But the British government has just gone even further.

Buried in its most recent budget package is a curt little paragraph that reads “The Government will modernise and strengthen [the tax agency’s] debt collection powers to recover financial assets from the bank accounts of debtors who owe over £1,000 of tax.”

Read that one more time just to let it sink in.

The British government is setting an absurdly low threshold at £1,000… about $1,650 in back taxes.

And they’re saying that if the tax authorities believe you owe even just a minor tax debt, they will not only FREEZE your assets, they’ll dip into your bank account and TAKE whatever they want.

Judge, jury, and executioner. They get to decide in their sole discretion if you owe them money, and they get to take as much as they want to satisfy the debt.

It’s unbelievable.

I can’t even begin to imagine why any Brit in his/her right mind would continue to hold a substantial amount of savings in UK banks.

You are practically begging for the government to relieve you of your hard-earned savings.

Even if you haven’t done anything wrong, and have paid up everything that you owe, the slightest clerical error could have them plunging their filthy hands into your account.

These issues are worldwide. Whether you’re in the US, UK, France, Cyprus, etc., when governments go bankrupt, these are precisely the sorts of tactics they resort to.

Rational, thinking people need to be aware of this trend. And it behooves absolutely everyone to come up with a plan B. Because at the rate things are going, Plan B may very soon become Plan A.

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