A broker reported to me today that their clearing agent is requiring them to mark purchases of AAA sovereign bonds denominated in foreign currencies as “speculative” investments.
Pressure to do this apparently is coming form the U.S. Securities and Exchange Commission (SEC). This means if Congress and the administration request that the SEC take action to “stop speculation” a mechanism will be in place to insure that U.S. investors cannot protect themselves from a falling dollar.
Lest capital controls domestically inspire you to leave the country, you may want to educate yourself about the exit tax that was passed by Congress in the Heroes Act of 2008.
To:[name removed]
On your comment, What does that have to do with SEC, must be nice to have all this time putting out BS being on Well Fare!
Comment removed
Brilliant. Evil, but brilliant. You know, like 9-11.
Your broker is the choke point for your capital flight into Swiss Gov’t Bonds
denominated in — guess what — Swiss Francs. By this little change in the
bond rating scale, Congress will be in a position to STOP your remaining
dollars from finding safe haven in another currency. You would think they
are worried about the possibility of Capital Flight or something. (sarcasm)
So, if all the dollars fleeing U.S. Gov’t Bonds have no place to go over there,
guess where that money ends up. That’s right, in the U.S. Stock Market.
Another pump-up for those depressed equities, I do believe. And why do
you suppose THEY are worried about capital fleeing the U.S. Gov’t Bonds?
That’s easy, money flees anything Dropping In Price. And why will these
bonds drop in price so much as to cause panic selling? That’s easy, too.
The interest rates offered on the new bonds will have to skyrocket in order to
attract any buyers at all. Why? Because the dollar will be plunging, silly.
That naturally leads to the present bonds having their prices fall off a cliff.
Man, these dudes sure know how to leverage a simple little rule change
at the SEC into a total lock-down of your investing freedom, don’t they?
Hey buddy, can I interest you in some great mark-downs on these financial
equities? Here’s the short list : AIG BSC FNM FRE LEH MER WM . . . .
Ooops, by the time you read this, some of these may already be gone —
as in “no longer listed”. So you can just put all that cash into a Bank CD
at 5% and lose only 10% a year when the dollar is falling at 15% annually.
But wait, there’s more. You get to pay Capital Gains Tax on that 5%.
That puts your annual loss in the 12% range. Now, isn’t that “special”?
Don’t you just love it when a plan comes together? (more sarcasm)
Thanks, [b]starboard[/b],
JMR Denarius