The Private Banking Saga and Switzerland

I recently read a comment that said the G7 countries and national standard banks could close down privare banks over night if they do not conform to demands because the private banks depend on them to do their trade. I’m not convinced that the private banks depend on the standard banks across the market range.

Certainly standard banks do depend on private banks. Why else would practically every self-respecting standard bank have an independent branch in or an affiliation with a private bank in Switzerland.

If the world’s governments break Suisse banking privacy laws, one option is that the banks  could move the goal posts and maybe forget to tell anyone.

It may be a moral issue for governments who want to whip the rich and super rich who choose not to be fleeced. As Johnny Halliday so eloquently commented on the French governments policy to help him reduce his own fortune even after he has paid tax at the appropriate rate, thus moving his home and tax base to Switzerland.

It’s not just the privacy and private banks that people come to Switzerland, they also like to come here for the taxation strategy. I.e. respecting people’s rights to amass a fortune without fleecing those fortunates, like a bad sheep sheerer cutting all the arteries and the flock who grow the wealth bleeding to death. Talk about killing the golden goose and the left wing blind leading the jealous.

National governments will never see the rational of the rich wanting to protect their estate because that is the only way governments seem to be able to collectively think. The rational is this. Through the private banks private investors are putting their money where it works and creates jobs, millions of jobs around the world.

Do you really want to screw up ( to put it not to finely) a system that works quite well for the sake of a few million dollars. Right, OK, then the investors will simply take their 6 trillion$ away from factories and industry in general and also government bonds, then put their money into something like gold or diamonds or precious works of art that create no jobs and then millions of people will loose their work and even some countries may go into decline as a result of rocketing unemployment costs and lost taxes that will likely far exceed what they are hoping (there is no guarantee that those they want to chase have done anything wrong, much of it is suspicions and rumours) to gain by breaking the Suisse private banking laws.

Break the Suisse private banking and privacy laws and something will evolve to fill the gap and that may just play into the hands of criminal money and new forms of laundering. There is nothing so creative as the money that gets the very best to think creatively. There is nothing like a dame good reason like protecting your money to release that creativity.

Remember, it’s the standard banks that are in financial trouble not the private banks. The standard banks like other companies launch new rights issues when they need to recapitalise to cover up the mess from lousy management mistakes. Take a safe haven away and those fund raising efforts might just not happen. Then think of the mess when the standard banks start going to the wall big time.

There are many other reasons why the standard banks will not or are reluctant to rock the boat. Cutting off the hand that feeds them is perhaps one of the most painful and self destructive. It is not in their interests to do it, it is not in our interests (the ordinary people) and it is not in the interests of nations to do it.

Other governments can only see the big stick strategy to pay for their own appalling mess and continual cock-up. This whole affair is more to do with smoke screens,  limited strategies and jealousy of the Suisse way of government.

It is nature and natural to protect what we work hard for. Certainly serious organized crime and money laundering is an important issue. It is always important to keep a certain rational and balance. Is it really going to solve anything to throw the baby (the super rich) out with the bath water (the real bad boys)?

This really is a dilemma because those that really understand it know it is the worst thing that can happen. The trouble is that the subject is now on the table and it is not going to go away. Therefore perhaps the solution is what governments always do so well. That is to talk until the issue has become so confused that they end up solving something else and the real issue that should be left alone for everyone’s sake is lost in the bureaucratic mess.

Go to http://robertpaul.wordpress.com for all other articles on private banking a stress, burnout, cancer and others.