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The difference between American & British arrogance…

There is a joke that the difference between American arrogance and British arrogance is the British think they run the world, whereas the Americans think they are the world.

Well just last week I started doing some business with a European bank… a quite mainstream one I might add… and discovered something remarkable. I had to sign a series of statements that I did not do business in the USA, had no assets in the USA and was not a US citizen or resident. Only then would they do business with me. Indeed I had to sign more papers regarding this than any actually pertaining to the business I was doing with them.

And this is why

The Internal Revenue Service on Monday launched an online registration program for the hundreds of thousands of financial firms around the world that must comply with a U.S. anti-tax evasion law or risk being shut out of financial markets.

Surely a significant European bank must do some business in the USA, I asked. Can the world’s largest economy really be so onerous that you truly want nothing whatsoever to do with it?

Well he was rather guarded and he knew I was a blogger, which I suspect made him a bit uneasy at the prospect of being quoted, which is why I am naming no names. But to paraphrase the reply I coaxed out of him, it was “yes, the USA is simply not worth the trouble and so rather than complying with their endless diktats and the uncertainties of what are increasingly capricious rules… well… there is a whole great big world out there for us to do business with that does not include the United States.”

Yet I suspect the powers-that-be in Washington could not care less and moreover the notion that sophisticated foreign bankers are starting to see American not as the land of opportunity, but as a place to be avoided at all costs, would strike them as preposterous. Indeed had I not had those documents laid in front of me asking me to attest to a complete lack of economic links to the USA or anything associated with the USA that the US state might claim extraterritorial jurisdiction over… well, I would not have believed it myself.

Moreover, after our business had been concluded and he relaxed a bit, the banker in question, who I very much doubt is on any Interpol wanted lists (well I certainly hope not given that he now has some of my money) said he would not even visit the USA or transit a flight through it, due to the US authorities propensity to detain foreign bankers and ask them questions if they even suspect any involvement with US nationals, particularly from ‘non-compliant’ banks such as his.

Am I the only one who is astonished things have come to this? I am suddenly very glad I do not actually live in Arkham, Massachusetts (not sure which is worse, the IRS or the Deep Ones).

34 comments to The difference between American & British arrogance…

  • Nick (nice-guy) Gray

    At least the IRS would leave your soul alone! The Deep Ones want it all!

  • Bod

    Indeed, FATCA and all it’s emanations and penumbras are living proof – once again – that actions (and legislation passed by congenital idiots) have consequences.

    The financial firm for which I work recently lost two quite significant non-US mandates, partly due to these regulations, and partly due to dissatisfaction with the anticipated use of NSA wiretaps and intercepts by the SEC and CFTC.

    One of the mandates stayed in Europe, despite a clear investment objective of participating in US Distressed Debt. The other? Who knows where the business has gone.

  • Fred Z

    I live in Calgary, Canada, heart of the Canadian energy industry.

    We are horrified at what has happened to the USA. They have simply gone quite mad, offensively and viciously mad. Not the average guy, just the congress, bureaucrats, law enforcement types and the elites generally.

    We too struggle to avoid traveling there or doing any business at all with them, which is tough given they are our largest customers and vendors and live right next door.

  • AGR

    The US Gov’s relationship with its overseas citizens was why I renounced my citizenship last year. FATCA was the last straw for me.

  • […] Samizdata, the U.S. is regulating itself out of the world […]

  • veryretired

    The victorious generation of WW2 bequeathed us the most powerful military and commercial entity the world had ever seen.

    “Shirtsleeves to shirtsleeves in 3 generations.”

    It isn’t hard to do the math…

  • Nick (nice-guy) Gray

    And have you kept up with asset forfeiture? ‘The New Yorker’ had a recent article about American big-city types who are driving through country counties and then being targeted by the local police as fitting the profile of the typical drug dealer, and then being arrested, and having any spare cash taken as ‘probable’ payments for drug deals! It’s not just the IRS; Americans are victims of ALL levels of government!

  • Paul Marks

    The oldest private bank in Switzerland was destroyed (under American pressure) even though it had stopped doing business in the United States.

    “Astonished” – no I am not.

    The defenders of the present credit bubble system will do anything (anything) to defend it.

    For example, I know I am no threat to them – just a irrelevant little person below their notice.

    How do I know this?

    Because I am still alive and not in prison.

  • Nick (nice-guy) Gray

    So, Paul, why did the IRS have Princess Diana killed? Are they the new Establishment?

  • This is the counter-argument to American patriotism, that anyone using non-US banks and other financial institutions is unpatriotic and therefore a suspect. The easiest things for them to be suspicious about are terrorism, money laundering and tax evasion. These are the various fronts of a phony war used to control the American people.

    It should be remembered that the US Dollar is backed by all the assets of the entire United States, both public and private, so it is important for the US government to dissuade US Persons (not just US Citizens) from being able to protect their capital and assets by having them outside of US control.

    Given the extra-territorial nature of FBAR, FATCA, even where legitimate non-residents are concerned (those living-and-working outside the US and other ex-pat groups), it is hardly surprising that foreign finance institutions are being obsessive in purging US Persons from their accounts.

    Certainly since the IRS forced the closure of Wegelin & Co, Switzerland’s oldest private bank, it has become obvious to many that US Persons carry a disproportionate risk in relation to their business and therefore what foreign institution can afford to do business with them.

    Actually, from a certain point of view FATCA and FBAR make perfect sense as they allow the imposition of capital control without actually introducing capital control laws.

    Can’t have the milch cows getting away can they?

  • Mr Ed

    I decided long ago that I would never go to the USA, nor overfly it. I regard it as a gigantic, embryonic North Korea, albeit stuffed with consumer goods, run by people with a peculiar obsession with state power. Whether Federal or State, the US seems to produce the most extraordinarily arrogant bureaucrats.

    The late, great Auberon Waugh wrote c. 1986 that anyone doing business with a party in the United States was mad, he was reacting to a peculiar aspect of an extension of US jurisdiction in tort law to matters outside the US, but now the situation is worse.

  • RRS

    JG –

    It should be remembered that the US Dollar is backed by all the assets of the entire United States, both public and private,

    How do you so conclude?

    The circulating currency of the U S is not directly “backed” by its “Full Faith and Credit;” although a good bit of the assets of the issuer (but much less than previously) consists of obligations that are.

    In fact, it may be said there is NO “U S Dollar” anymore (except collectors’ items).[That- despite the name of the nation on the reverse of the “Notes.”]

  • Chip

    I’m trying to remember when I fell out of love with America. I visited often, extolled its virtues at the most inhospitable London parties and my family had planned an eventual move to California.

    I certainly wouldn’t move there now. And I haven’t visited in several years. Too many bad memories of hostile airport security.

    I’m torn about its future. Is the creeping statism and inolvency a prelude to more libertarian house cleaning? Will responsible states show the way for broken states? Will private wealth creation like fracking outweigh wealth destruction from DC?

    Does any of it matter as technology continues its steady exponential expansion to the singularity?

    Who knows? In the meantime I’ll hold out it Singapore where it takes 10 minutes to file my taxes and success is still celebrated.

  • I hear from an academic friend that several of his colleagues with dual nationality are renouncing their US citizenship so that they don’t have to complete a US tax return.

  • Richard Thomas

    The incredible overreach of the IRS is certainly the main reason why I have only renewed my green card and not sought to attain citizenship.

  • Tedd

    I feel very much like Chip. I came very close to moving to the U.S. only a few years ago, but am now very glad that I did not. I have always been a strong defender of the U.S. against those who would criticize the ideals behind its creation (surprisingly many people) and those who ignorantly confuse the stereotypes of American people with actual Americans. I have also, until very recently, never given much credit to the various decline theories. But I am beginning to think that the U.S.’s long term role in history could end up being mainly a cautionary tale.

    (And, if history is any guide, a cautionary tale from which most people take the wrong lesson.)

  • rfichoke

    I can’t blame them. In fact, I’m proud of them. At least someone is standing up to our out-of-control bureaucracy. Most commercial interests here in the US fold immediately when threatened/encouraged to cooperate.

  • rfichoke, what I think is more significant is I am pretty sure the bank is not ‘standing up’ to the USA’s out-of-control bureaucracy out of any moral conviction but rather because they made a commercial decision. I think this is very important as few people, and even fewer banks or companies of any sort, will act out of principle, but when it comes to acting out of your own commercial interest, well that is what really drives people’s decision making. Lavabit is a rare exception of a company simply acting out of principle.

    But when an international bank with a presence in a several other countries makes the commercial decision to avoid the USA and anyone who is American or has any economic links with America, well, that suggests to me that we are probably in one of those hazy historic liminal moment when the world is beginning to change fundamentally.

    I rather doubt this sort of thing will get written about much in the MSM for many years until it actually becomes the norm for non-US companies. and I have my reasons for not wanting to ‘name names’ even if I could not resist at least commenting on what happened last week. Indeed I wonder how widespread this sort of commercial decision is? I am sure most ‘sensible’ commentators will snort derisively at the notion this could ever be a trend of major significance.

  • @RRS:

    Because that is the reality of the US National Debt, that it is always there to be paid by US taxpayers even if the reality is that they would have to raise taxes to punitive levels and foreclose on anyone not paying.

    Is there any way of doing this short of civil war, possibly not, but that is not the question. Certainly the IRS have turned the screws on poor benighted citizens and confiscated vast amounts of wealth at the stroke of a bureaucratic mouse without causing civil war.

    The US is gradually approaching the crunch point where they must bring their government to heal or be ruled by it.

    This isn’t new, it’s happened to many governments in the past who have let themselves be ruined by profligate governments pissing taxes AND loans up against the wall. You can do that for a long time, but at some point you run out of money and people will no longer buy your bonds.

    Look at Argentina. Once the 2nd most prosperous nation on earth, with the president Juan Peron complaining about tripping over gold bars in the treasury building on his visit there in 1946. Now a completely bankrupt debtor nation, living from hand-to-mouth on foreign loans.

    That could easily be what a future America looks like after the government cannibalises first the economy and then the people, just to stay in power.

  • Eric

    This has been thirty years in the making. Laws against money laundering and currency smuggling were never about drugs, after all. Big government types view your money as property of the state, firstly, and whatever you get to keep you get to keep because the state allows it.

  • […] The difference between American & British arrogance… […]

  • ErisGuy

    Every day the USA gets more Socialist.

  • bradley13

    FATCA is even worse than you may think. The US requires massive reporting machinery from any bank that has American customers. Since US regulations are clearly unenforceable on foreign businesses, they resort to blackmail: If they US discovers that a bank has American customers but doesn’t report on them, they will cut that bank off from any sort of dollar transactions. Since the dollar is (still) the primary international exchange currency, this is essentially a death sentence for the bank.

    Meanwhile, those banks that do chose to comply – and accept American customers – must get their customers’ signature on a document that (1) waives the customer’s privacy rights, (2) allows the bank to send the customer’s financial data to the IRS and other, unnamed third parties, and (3) makes the customer liable for any data breaches or data misuse that may occur.

    Ugly. From an international perspective, the US government is just ugly.

  • SC

    Short version:

    The US is screwed. The US doesn’t yet realize this.

  • Laird

    SC, some of us do. Just not the ones who matter.

  • Bradley. It is beyond the power of the US state to stop foreign banks dealing in US dollar transactions (i.e. the US cannot control Euro-Dollars), and indeed my business with them was mostly conducted in US dollars, just not anything within or relating to the USA (it is all entirely related to things in Asia and Europe)… so all they can do it keep non-compliant banks out of the US markets. And the bank in question has clearly decided “we are fine with that, so happy trails Uncle Sam and sorry, we can live without and indeed prosper without American customers as they are just too risky to deal with.”

    They are discriminating overtly against Americans not because they don’t like Americans or their money but simply because the associated and unpredictable future costs of dealing with Americans has been made unacceptable by the actions of the US state. By all appearances as the average American could not care less about such things, this is likely to only get worse.

  • bradley13

    You underestimate the power the US has over the banking system. They can indeed control Euro-dollar transactions. Just as one minor example: there was a story a year or two ago about a cigar shop in (I think) Belgium ordering cigars from Cuba. The US monitors *all* electronic banking transactions that run over the Swift system (not only those that run in dollars, but *all* of them). This one popped up, the US said “nope, we have an embargo against Cuba”. They not only stopped the transaction, they *confiscated* the dollars involved.

    I used to be American – I renounced my citizenship, because otherwise no bank here in Switzerland would deal with me. Our previous bank said that they would love to keep us as customers, but FATCA is actually retroactive – so the fact that I was once American would still prohibit them keeping me as a customer. The explanation about being cut off from the dollar markets came from one of the bank’s managers, as an explanation of why a European bank had to actually comply with US national regulations.

  • Paul Marks

    bradley13 – if the United States carries on the road it is on, their will be no citizenship to renounce.

    Mr Ed – some States of the U.S. are governed by reasonable people (well as reasonable as governments can be) – but the Federal government is a black hole of insanity.

    I doubt the Federal government has been “functional” since the 1950s (even under Jack Kennedy such things as unionisation were happening – as was FCC intervention with a political agenda in television entertainment).

    However, the United States being the most powerful country in the world obscured the dysfunctional (and increasingly tyrannical) nature of the Federal government.

  • Laird

    Renouncing US citizenship is a rapidly growing phenomenon, although in absolute terms the number of “renouncees” is quite small. Still, the fact is gaining recognition and has inspired several articles in the mainstream press. Here is one recent example. Also, recently there have been a number of prominent persons who renounced their US citizenship (including Eduardo Saverin, one of the founders of Facebook, and singer Tina Turner), which has drawn additional attention to the issue. Not all of these renunciations are for tax reasons, of course, and in any event the US imposes an “exit fee” which amounts to pre-taxing several years’ worth of future income before you are allowed to escape. But I suspect that the rate of renunciations will continue to increase, especially among expatriots like Bradley13 who are already living abroad and need to avoid FATCA but also including people seeking to escape from the panopticon state (as Perry deH likes to call it) and our oppressive taxation and regulatory schemes, as well as those simply desiring more freedom in general.

  • Mr Ed

    In the UK, for now, if you renounce, the only question is ‘Do ou have somewhere else to be citizen of?’ as they don’t permit people to become stateless. The UK govt. seems less opposed to liberty than the US govt. in principle at this point.

  • John

    ‘Do ou have somewhere else to be citizen of?’

    That is a very interesting question. It sounds like a UK citizen (?subject? I don’t know what the proper term is so forgive my colonial cluelessness…) can’t become stateless because the UK gov doesn’t permit it.

    Do Americans (or others) who renounce become stateless?

    How bad a situation is that?

    Also, perhaps it is too far off topic, but short of such drastic measures, is there realistically anywhere an American is welcome?

    My understanding is that while the lines are long and the hassles are many, as one would expect when dealing with the US gov, that immigration is possible for just about anybody. However, again my understanding, is that the opposite is not true, and that part of the “roach motel” or “Hotel California” nature of the thing is that, apart from the independently wealth, spouses of foreign nationals, and corporate execs acting under corporate sponsorship that there is nowhere to go.

  • Mr Ed

    John, ‘you’ not ‘ou’, of course. The UK Border Agency makes it seem ever so easy, as if you were applying for a fishing licence.

    http://www.ukba.homeoffice.gov.uk/britishcitizenship/givingupcitizenship/howtogiveupnationality/

    If you are mad, they still might let you renounce, pointing out that you need to be over 18 and:

    ‘of sound mind (but if you are not of sound mind, you may still be allowed to give up your British citizenship or other British nationality if it would be in your best interests).’

  • […] This is a comment on Samizdata relating to the experience of one of the bloggers in opening a bank account. He had to sign statements that he had no business in the USA and this new project (for which he was setting up accounts) would not have any US connection. But the comment that resonated is: […]

  • Philip Walker

    Mr Ed: “You don’t have to be mad to live here, but it helps”?