Too Secret To Fail?
Presumed GOP presidential nominee Mitt Romney touts as the principal reason why he should be our next Chief Executive that he is a successful business man and that he knows how to “turn this economy around”. Never mind that he has been willfully and consistently non-specific about just how he would do this, there is one aspect of his methodology that consistently characterizes it, i.e., secrecy. His personal finances, except for one year’s tax returns and an outline of another’s, remain secret, but it was only because of that one year’s voluminous return that we know about his offshore financial accounts. What we do not know, yet anyway, is why he needs such accounts.
Do you own an offshore company or an offshore bank account? I’m guessing not. Me neither. In fact, except for my interest in politics it wouldn’t even have occurred to me to look into it. However, as luck would have it I came across a Planet Money podcast this morning that explained how to get them in clear layman’s terms. It turns out, dear readers, that it isn’t all that hard or expensive, and obtaining them is a surprisingly popular activity nowadays.
A couple of enterprising young people are doing investigative reporting on the matter and the project is ongoing. I invite you to tune in and follow along. Allow me to list some questions to which, if you invest a half hour or so of your time, you will know the answers.
- How hard is it to create and register your very own offshore company?
- How long does it take?
- Once registered, how does one get a corresponding offshore bank account in that company’s name?
- Is it legal to do this?
- In what countries can one do such registration?
- What percent of GDP for the country of Belize (for example) is constituted from registering offshore companies?
- What is the age and experience level of a typical agent in the offshore registration business in Belize?
- What kind of ID and personal information are required for registration?
- Is there any one country in which no personal identity information is required for registration? (Hint: the answer is yes, and it will surprise you.)
- What is a “shelf company”? (No, that’s not a typo. I did say “shelf” company, not shell company.)
- Can you buy a board of directors and stockholders and still retain full control of your offshore company? (My, my, why would you want to?)
- Why would you even want an offshore company and bank account anyway? (Warning: partial answers only, investigation ongoing.)
Well, that should be enough. The podcast can be found at this link. But if your curiosity is not whetted and you would rather not be bothered with the details of how Mr. Romney plans to lead the country out of the financial wilderness, if you think meddling with the rules for offshore accounts would just be more job-killing, excess government regulation, please send me your name and address and I will forward it to the Romney campaign. You are just the kind of voter they are looking for. Heck, you probably wouldn’t understand all those high-finance secret methods anyway.
“Does anybody want to hear that I had a successful business and did all these wonderful things for the industry? And got all these awards? And so did my family? I did all of this during the legitimate years. No. You don’t read any of that.” – Bernie Madoff
Related articles
- Romney’s offshore assets hint at greater wealth (cbsnews.com)
- Mitt Romney’s 2010 Tax Disclosure Missing Key Documents (huffingtonpost.com)
Still Skeptical After All These Years 
It’s all about tax dodging, right? That’s all I need to know.
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C’mon, PT, listen to it. It is entertaining, amusing even. Trust me! 😆
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Being the cynical skeptic that I am, I’ve always suspected that there were a lot more “dirty little secrets” out there than is widely reported. Frankly, I doubt that anything I heard in those podcasts would come as a big surprise to me. Sicken me? Yes. Enrage me? Absolutely! But surprise me? Certainly no more than any of the other lunatic stuff that goes on in the world…
BTW, I loved the hilarious “BM” bit at the end! 😀
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Jim,
But, but, but . . . we DO have our (this country’s) money in off-shore accounts – in China, in Japan, in Saudi Arabia, and in many other countries – 5.264 TRILLION dollars worth, or about 1/3rd of our entire federal debt!!! (See http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt.)
So, maybe Mittens is the guy we should have in there after all. And the secrecy part is a bonus. The less we know, the better off we are. Ignorance is bliss. Or so they say.
Herb
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But Herb, that’s their cash in our accounts, not the other way around. That’s not so bad – we’ve become too big to fail! Heh, heh.
But seriously, Robert Reich had an editorial in today’s paper that made me re-think the global economic situation. He says we are wasting our time exhorting corporations to site manufacturing in the U.S.A. or buy components here. The same probably goes for asking them to actually pay corporate taxes here. Apple for example buys components for the iPhone in places that have similar wage scales as ours, places like Germany, South Korea and Japan. He says they don’t come here because our work force isn’t adequately educated. I think he’s right. We’ve got lots of young people with degrees in psychology, biology, and the liberal arts, but not in the STEM disciplines, nor even in areas like welding and truck-driving. Our culture is in the toilet.
Business is about the money, only the money. Maybe it would help to understand the education problem better if the money were more visible. Probably blow our socks off if we could see where it all is and who owns it. Color me curious.
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I love the line from the “President Romney’s First 100 Days” ad: “He’ll make China play fair.”
Kinda sounds a lot like asking Hitler NOT to kill 6 million Jews. And with about the same chance of success.
I’ll be happy to check that link out, once I get my misbehaving wi-fi to behave. The “wi” part has gone totally wonky – hence my absence, and the fact I’m plugged in with a wire, thus giving lie to the term “wireless”. 😀
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Good point, John. China Inc. has never played fair and if Mitt has a means of doing so, he’s keeping that secret too.
Good to hear from you.
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Jim, I heard that too, when it aired a couple of days ago on NPR/Planet Money. I was just waking
up, it was early (for me), and the bedside radio told me these incredible things. I could hardly believe what I was hearing. My husband was in the kitchen making coffee when I stumbled in and said, Did you hear that? He had — we were both incredulous. I even thought of writing it on my blog, but you have written it much better than I would have. And I agree with, support, endorse, second — help me out here — encourage, affirm your comment to PT — Listen to it!
http://www.npr.org/blogs/money/2012/07/27/157421340/how-to-set-up-an-offshore-company
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Thanks for the endorsement, Helen. The thing that made the podcast entertaining for me was the notion of two young radio reporters getting all this information about offshore companies and accounts by simply picking up the phone and dialing a toll-free number they got off the internet. For anyone who wants a secret financial life, there’s lots of help waiting for them out there. Mind-blowing!
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To all,
So many things to comment upon herein after listening to the entire podcast related to setting up “offshore” companines with huge anonimity. I will try to just touch on some of them.
First let me say it is no surprise at all how easy it is to do so, set up shell companines with tax free offshore accounts. Why do people do it, legally? To save money on taxes first off all. The second reason is to legally hide the real power behind a given company. The tax savings is so apparent I see no reason to comment on it further, other than to suggest that if a small country like Belieze decides not to tax something, is that any of our business in America?
For about two years in my “business” career I was involved in making “compete or non-compete” decisions before bidding on a project. Knowing who exactly is your competition is a critical factor in making that decision. The system described makes it much more diffiult to make such decisions today. However companies all over the world are doing exactly that today, hiding, legally their real financial power in a competive, dog eat dog world.
Were you surprised to hear that the U.S. is one of the easiest countries to pull these kind of stunts? Well, it did not surprise me at all. For decades I have known, generally, that a LOT of U.S. companies are incorporated in Deleware for example.
Well “that is not FAIR” you say. Why I ask? If someone else can do it legally, why should I not be able to compete on the same field of play? Note again I am only addressing legal actions by anyone in such competition. Drug lords laundering money out of the U.S is a whole different matter but Romney I assume you agree is not doing THAT!!
But if you really want to be “fair” then all we in America have to do is pass enough laws and implement enough regulations to absoultely make it ILLEGAL to do any of this “stuff”, for sure. BUT what might be some of the unintended consequences of such unilateral actions in a global market around the world today? CAPITAL FLIGHT is one of them of such size and intensity that American companies would simply vanish, all for the sake of “fairness”.
I am currently working on a blog reflecting the opening ceremonies of the Olympics and this topic by Jim plays right into it. The Industrial Revolution of course was a revolution where large scale manufacturing with worldwide markets of physical “stuff” entered the world at large. But such “stuff” became easy to keep track of. Build a car in America and government could count the cars going out the door and tax the company accordingly, regardless of where it was ultimately sold and thus profit made. For several centuries government revenues were ultimately determined by physical things produced, things that could not be hidden so to speak. Well no more of that today, like it or not.
We are in a digital world today and huge profits are now made in “bytes”, electronic signals going all over the world at the speed of light. Like it or not that is today’s world, worldwide, profit in “bytes” so to speak. And that genie is very much out of the box and in play all over the world today. We can complain about it all we like but even American power will not change that new reality.
When the argraian economy of England transitioned to that of the Industrial Revolution look what happened? RULE BRITAINIA was the outcome for about 300-400 years, in my view. Was it “fair” for Great Britain to become a world superpower because it lead the way into a new world of commerce? Certainly the Brits did not think so but the black tribes in Africa may have felt that way!!!
I would suggest that since WWII America has lead the way in another transistion world wide, from the last stages of the industrial revolution into the digital age. And we can no more put the digital age back into a box than we can try to do the same with nuclear weapons!!
Learn, adapt and GROW is the key to success for individuals, companies and countries. We are struggling to do exactly that and our politics reflects the consternation dealing with such reality, in my view.
Anson
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Jim ,
Wow, comparing Romney to Bernie Madoff ? Isn’t that just a tad of a Smear ? Weren’t you one of those who preached civility and substance in political speech ? I guess not .
Let me tell you why President Obama has a chance of being reelected . Not the smears against Governor Romney . Not his record on the economy . No President Obama has made things so bad that many voters I’ve spoken to believe that no one can turn it around any time soon . In other words, President Hope and Change has killed all hope that anyone can Change the economy . When you destroy all hope, you have really managed to accomplish a profound disaster .
Mitt Romney has yet to project enough of a positive profile to convince America that he can undo Obamanomics . He would do well to study Ronald Reagan . Things were pretty hopeless under President Carter.
Back to Madoff. Governor Romney made money for his investors, he did not cheat them as Madoff did his . Romney had successful business turnarounds . What did President Obama ever turnaround ? Government Motors ? They are not doing so hot just now . The American taxpayer will never get it’s money out of that . So if you throw in $ 5 trillion in new debt that President Obama has put on the taxpayer, we know who is really the Bernie Madoff of politicians .
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Alan,
I had completed the post and was looking for an image that would be appropriate to the notion that secrecy and high finance is a dangerous combination. Thus, when I saw the Madoff cover, it clicked. By displaying it I am not inferring that Romney has been convicted of any crime, I’m just pointing out an example where public faith in a shining icon of financial expertise, faith without proof, resulted in calamity. Secrecy is the issue, Alan. If Romney is so squeaky clean, why not remove those tax records from beneath the bushel and let them shine their light to the whole world?
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Com’on Jim,
Put a picture, actually a characature of Madoff in a blog against Romney and you get a comparison, whether intended or not. If I wrote a blog against Obama and put a picture of Hitler in it, well just imagine!!!!
If you or others are convinced that Romney did something illegal the simple fact is to ask the IRS if such is the case. The IRS is in fact a law enforcement agency supposedly actting in the best interests of the public. Do you believe the IRS failed to enforce the law against Romney ten or so years ago?
I don’t think you or the EC really believe Romney actted illegally in long ago tax returns. All you want is the returns to launch political spin against Romney.
Allan,
you hit the nail on the head, in my view. Our economy is so screwed up right now that NO ONE knows how to “fix” it. Look at what the FED just announced….. “We have no new plans to fix anything”. Like it or not Dems, the FED is now telling Congress and the President to fix it themselves. Don’t you love it when huge bureaucracies start pointing fingers like that during really tough times!!!
I for one am smack in the middle of those that believe no single man or party can fix our economy now. Romney for sure has not blown me away with “his plans” where I am confident that good things will follow, “only if……” he is elected. Right now a vote for Romney is a vote for “hope and change” just like we had in 2008. And look what that got us as a nation!!!
My ONLY HOPE for now is a change of LEADERSHIP. I have no complete or even partial confidence that such a change in leadership will work. But as well I KNOW that the leadership we have seen for almost 4 years now has not worked either.
I suppose that is a voter dilemma, at least for me.
Anson
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C’mon yourself, Anson. Look, for decades Bernie Madoff portrayed himself as a paragon of financial genius, all the while hiding the details of his investment strategy from not just the public but his investors themselves. He was a Wall Street hero and served as Chairman of the NASDAQ board of trustees for god’s sake! That just proves he could fool not just the little people but the “experts” too.
Bernie was a big man in charitable giving too, sucking up praise and prestige like a sponge, all the while running a Ponzi scheme. His strategy was simple, showmanship and secrecy. Message: Trust me, I know what I’m doing. Sounds a lot to me like Romney’s message, “I know how to get this economy back on track.” And, as with Madoff, we get no details, what we get is “Trust me.” Leadership? I don’t care if you capitalize it, I would like some details along with the “trust me” if you don’t mind. Bernie Madoff knew leadership – hell, he had leadership in spades. Bernie could sell ice cubes to Eskimos. Maybe Mitt is not a crook like Bernie, but could we have some sunshine on that, Mitt?
Fool me once, shame on you. Fool me twice, shame on me. Seems clear to me.
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Anson ,
I was about to write just about the same words as you wrote about the Hitler image .
Obama has managed to make malaise and economic recession seem normal . Jimmy Carter could not pull that off . Remember how when George Bush had numbers nowhere near Obama unemployment and Democratic toadies called it the worst economy since the great depression ?
Barak Hussein Obama sold himself as the guy who would turn the economy around . I have no doubt that Mitt Romney can actually do what Obama failed to do , but he must first sell himself .
Jim,
One of the big mouths saying that Mitt should release his tax returns is Harry Reid . It is reported that Harry has not released ‘his’ tax returns . Hmmmmm, wonder what’s goin on there ? I don’t know that Harry ever did anything wrong, but I’m just sayin we could use some sunshine.
Now do you have evidence that Governor Romney has run a Ponzi scheme ? Tell me how Romney has ever fooled you . I can tell you how Obama has . He convinced you he knew how to run an economy .
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Point taken, Jim. But in terms of what Romney and the GOP propose……….
Remember the “59 point plan” from last year’s primary campaign in the GOP? I never read it for sure. And it has now gone away. Why? Well maybe it is because the 59 points were simply too much for the public to swallow and comprehend. That becomes a communications issue, not one of substance, good or bad, in policy pronouncements, in my view.
999 went the same way more or less when Cain dropped out. People could grasp three numbers, maybe, and had he stayed in the race, well who knows for sure today. But that is beside the point as well. 59 points and 999 on not on the table to debate today.
So what are we really debating in terms of substance today? Forget the mudslinging, Bain Capital, no experience, etc. What specific substantive fiscal policy issues are on our plate today to debate?
We are stuck on whether to tax the rich or not come January. YUK! One way or the other that is a subtantive, mere drop in the bucket in terms of overall economic fiscal policy today.
The other underlying debate is the whole “fiscal cliff” one as well. Let’s just “cancel” the whole tax increase/spending reduction package, reset ourselves for the coming election and then make up our minds what to do!!! Now IF we do that, and it just might happen, it is an admission by BOTH the President AND the entire Congress that all the talking and voting in Congress over the last year has come to ZERO, nothing, period. A complete waste of time governing, which those people are suppose to be doing.
Now show me any President that stood and said, “All I have attempted to do for a year in terms of fiscal economic policy has come to ZERO. NOTHING has been done other than argue”.
Would you vote for such a President, admitting ZERO progress for a year on a burning issue?
Anson
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Jim,
To me the distinction between Romney and Madoff is very clear. Madoff was proven to be a crook, period. Romney has not even come close to such accusations, much less proven as such in a court of law. Now if you really think Romney is a crook, then say it and then prove it.
We are engaged in political spin throughout the country coming from both sides. To engage in such no proof is required, only accusations. Romney is too “secretive” you say? Well cannot I say the same about Obama and his “early years”. For example I accept that Obama was an American borne citizen. But good Lord, was it not a very long and drawn out process to get some form of a birth certificate that at least MOST Americans now accept? And for sure we will never fully understand Obama’s early background in college, as a lawyer/constitutional teacher, exactly who he associated with and agreed with when he was in his 20’s and at least early 30’s, what his REAL sentiments were with Rev Wright, Ayers, etc. and the list goes on. How exactly did Obama gain the support of the Daley Machine in Chicago and what did he “give up” to join that team?
I put all that innuendo in the “who cares” now bucket. For sure I have seen 4 years of Obama governance as President and a pretty clear picture of Romney’s entire professional life, including his tour as a Mormon missionary. My conclusion is they are both honorable men trying to limprove our countries condition as they best see fit, sort of. Neither is going to really go out on a limb to make a dramatic change in fiscal policy, like really take on the tax codes as only an example.
I don’t think I have ever fully agreed with a Robert Reich column but in today’s Globe (Friday, Aug 3rd) I endorse what he said at close to 100%. Both candidates are focusing on negatives about the other and neither is promoting the complete package needed to turn America around, economically or geopolitically. BOLD leadership is needed and neither is stepping up to the plate, in my view.
I anticipate making a more public statement in that regard, soon.
Anson
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I too agree with the Reich column, Anson. I know it is in both our natures to want bold action when things are going wrong. We like to fix problems, not let them fester. However, I think we also know from blogging over the past two years that the problems with the economy are complex and deeply imbedded in the machinations of the Congressional Sausage Factory over decades of time. Just off the top of my head, this list of “problems”:
1. EMTALA – probably the largest unfunded mandate ever slipped quietly under the legislative tent in history.
2. Top Secret America – budget-busting spending out of control and apparently still going on, powered by fear of terrorists.
3. Bureaucracy – out of control, with unneeded layers like DHS and the DNI.
4. Revolving door politics – Wall St. executives in charge of regulating Wall St.
5. Single-issue politics – like abortion and gun control. Thanks to the likes of the NRA and the Tea Party, political compromise is now something dirty.
6. Gerrymandering – lack of balanced rules results increasingly in the election of extremists while moderates have been mostly purged.
7. A senseless tax code that defeats fairness and promotes infighting.
8. A healthcare system that costs 2.5 times what it should, delivering high-tech medicine selectively while neglecting badly-needed preventive care (something ObamaCare is starting to deliver).
9. A smug, self-indulgent culture that fails to promote hard work, with jobs going overseas or going unfilled because nobody wants to be a welder or truck driver, or to take hard STEM courses.
10. A broken educational system, including colleges more fixated on money than quality.
11. An electorate that expects magic from politicians with little effort or taxation on their part.
12. A fast-growing elite class of Americans who see economics as a Monopoly game in which their challenge is to amass a bigger fortune than the executive across the street.
Whew! I didn’t know all that was in my head. I sure don’t know how to approach all that, but I too would be supportive of any politician who had the courage to start. But given nr. 11 above, such a pol wouldn’t survive, IMHO.
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A. Burlingame sent me an email link to a Washington Post article indicating the Obama Administration, after initially positive efforts to be more open and forthcoming regarding FOIA requests, has been backsliding in its progress. (I’m not sure why he didn’t simply post it here as a comment.)
I don’t doubt the accuracy of the report for a minute, nor do I believe that a GOP administration would have done any better or even as well. Anyone who thinks a President is in full control of how government and all its bureaus and departments functions probably also thinks a President can control an economy. The U.S. government that Obama inherited is about as controllable as the Manhattan-sized iceberg that broke off of Greenland last month. Also, Presidents have been trying unsuccessfully to rein in the over-classification of military information longer than I’ve been alive, and the fact that our “enemy” now is terrorism has only seemed to make it worse.
I think the ACLU spokeswoman in the article summarized the situation fairly:
Which of the two presidential candidates is more likely to make some progress with government openness in the next four years? Obama at least made some progress his first two years – that’s documented in the WP article. On the other hand, Mr. Romney seems much less likely to succeed in this. His excessive personal secrecy is the subject of this post, and then there’s the record of the previous GOP President. It was under his watch that Top Secret America flourished. The choice is clear to me.
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Well this is sort of a “red letter day” a day with unique achievments,
I agreed with Reich’s column and now I agree with Jim’s above list of things affecting this country, rather poorly if that is a strong enough word.
If Jim and I keep coming back to his list then at least we won’t be arguing about the problem(s). But the solutions, well we will still argue I suppose. For example, underlying Jim’s list is the fundamental, to me, issue that government has bitten off far more than it can chew or we the people can afford to pay it to fix all those problems. Thus smaller and far more manageable government, one that when it in fact takes on a problem, it solves it, efficently and thoroughly.
Instead we have created, over time a government, that rarely does much of anything very well and certainly not efficiently. I would hope that a government could figure out how to regulate oil rigs for example. But our government cannot even do that, much less try to regulate “capitalism”
As for secrecy, I simply was trying to be polite and not try to shove another “link” into Jim’s face. Instead I sent him the Post article via private email. After all a single link does not a solid position make in complex issues.
anson
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Jim ,
When you call your self the most transparent Administration maybe the burden of living up to your own words should be higher than for the last Administration . Or when you brag that lobbyists will have no place in your Administration . This may or may not be the most dishonest group to ever be in power, but nobody can hold a candle to them for sheer hypocrisy at all levels .
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Alan, you are ignoring the realities of politics. Our whole political system was designed to be a system of checks and balances, of negotiation and compromise, of a free flow of ideas and opinions, of competing interests in a free and open forum monitored by a free press. If you insist on interpreting political statements as absolutes without recognizing those realities, then you are inviting yourself to be duped by the polemicists of unyielding dogma.
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Jim ,
I hope you are aware that you have just admitted that any moral statements made by the Obama Administration are only done for political effect . They do not really believe that Republicans are for tax cuts to benefit the rich. They are firing for effect . When they tell retired folks that Republicans want Grandma and Grandpa to eat cat food so the Koch Brothers can melt another polar ice cap and Mitt Romney can put in another elevator at one of his mansions, the Obamaites don’t really believe that crazy talk .
See when we Conservative say that President Obama is at heart a Bolshevik mixed with a crony capitalist, we really really believe it . We see it in his actions every day .
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