Money And Change

This Is The End: Venezuela Runs Out Of Money To Print New Money

Submitted by Tyler Durden on 04/27/2016 18:38 -0400 ZeroHedge.com
 
Back in February, when we commented on the unprecedented hyperinflation about the be unleashed in the Latin American country whose president just announced that he would expand the "weekend" for public workers to 5 days...

... we joked that it is unclear just where the country will find all the paper banknotes it needs for all its new physical currency. After all, central-bank data shows Venezuela more than doubled the supply of 100-, 50- and 2-bolivar notes in 2015 as it doubled monetary liquidity including bank deposits. Supply has grown even as Venezuela has fewer U.S. dollars to support new bolivars, a result of falling oil prices. 
 
This question, as morbidly amusing as it may have been to us if not the local population, became particularly poignant recently when for the first time, one US Dollar could purchase more than 1000 Venezuela Bolivars on the black market (to be exact, it buys 1,127 as of today).
And then, as if on cue the WSJ responded: "millions of pounds of provisions, stuffed into three-dozen 747 cargo planes, arrived here from countries around the world in recent months to service Venezuela’s crippled economy. But instead of food and medicine, the planes carried another resource that often runs scarce here: bills of Venezuela’s currency, the bolivar.
The shipments were part of the import of at least five billion bank notes that President Nicolás Maduro’s administration authorized over the latter half of 2015 as the government boosts the supply of the country’s increasingly worthless currency, according to seven people familiar with the deals.
More planes were coming: in December, the central bank began secret negotiations to order 10 billion more bills which would effectively double the amount of cash in circulation. That order alone is well above the eight billion notes the U.S. Federal Reserve and the European Central Bank each print annually—dollars and euros that unlike bolivars are used world-wide.
Where things got even more ridiculous for the government where the largest bill in denomination is 100 Bolivars, is how much physical currency it needed, and the cost to print it:
The high cost of the printing binge is an especially heavy burden as Venezuela reels from the oil-price collapse and 17 years of free-spending socialist rule that have left state finances in shambles.
Most countries around the world have outsourced bank-note printing to private companies that can provide sophisticated anticounterfeiting technologies like watermarks and security strips. What drives Venezuela’s orders is the sheer volume and urgency of its currency needs.
The central bank’s own printing presses in the industrial city of Maracay don’t have enough security paper and metal to print more than a small portion of the country’s bills, the people familiar with the matter said. Their difficulties stem from the same dollar shortages that have plagued Venezuela’s centralized economy, as the Maduro administration struggles to pay for imports of everything, including cancer medication, toilet paper and insect repellent to battle the mosquito-borne Zika virus.
Wait a minute, why not just print a single 100,000,000 Bolivar note instead of one million 100 bolivar bills? After all the savings on the printing, let along the air freight, to the already insolvent country will be tremendous and allow it to pretend it is not a failed nation for at least a few more days? It is here that the sheer brilliance of the rulers of this socialist paradise shines through:
Currency experts say the logistical challenges of importing and storing massive quantities of bank notes underscore an undeniable truth: Venezuela is spending a lot more than it needs because the government hasn’t printed a higher-denomination bank note—revealing a misplaced fear, analysts say, that doing so would implicitly acknowledge high inflation the government publicly denies.  
“Big bills do not cause inflation. Big bills are the result of inflation,” said Owen W. Linzmayer, a San Francisco-based bank-note expert and author who catalogs world currencies. “Larger bills can actually save money for the central bank because instead of having to replace 10 deteriorated notes, you only need five or one,” he said.  
The Venezuelan central bank’s latest orders have been exclusively only for 100- and 50-bolivar notes, according to the seven people familiar with the deals, because 20s, 10s, 5s and 2s are worth less than the production cost.  
Mr. Maduro and his allies say galloping consumer prices reflect a capitalist conspiracy to destabilize the government.
Well, no, but at this point one may as well sit back and laugh at the idiocy of it all.  But at least we will give Maduro one thing: he has done away with the pretense that when push comes to shove, the state and the central bank (and thus commercial banks) are two different things: "the president in late December changed a law to give himself full control over the central bank, stripping congressional oversight just as his political opponents took control of the National Assembly for the first time in 17 years."
Sadly, that did nothing for the imploding economy and country, whose morgues are now overflowing due to rampant social violence.
Of course, the punchline of all the above means that Venezuela has to buy bolivars from abroad at any cost. "It’s easy money for a lot of these companies," one of the people with details on the negotiations said. 
The problem is that it is "very difficult money" for Venezuela which needs to pay in hard dollars to print its rapidly devaluing domestic currency. In fact, among the sources of funds to purchase its own money was the liquidation of its gold reserves, which as we reported recently, Venezuela has been quietly selling to willing offshore buyers.
* * *
All of this brings us to today's latest update in the sad story of Venezuela's terminal collapse: today Bloomberg wrote a story that basically covers everything said above, noting that "Venezuela’s epic shortages are nothing new at this point. No diapers or car parts or aspirin -- it’s all been well documented. But now the country is at risk of running out of money itself."
Indeed, as we hinted three months ago, "Venezuela, in other words, is now so broke that it may not have enough money to pay for its money."
Among the new information revealed by Bloomberg is that last month, De La Rue, the world’s largest currency maker, sent a letter to the central bank complaining that it was owed $71 million and would inform its shareholders if the money were not forthcoming. The letter was leaked to a Venezuelan news website and confirmed by Bloomberg News.
"It’s an unprecedented case in history that a country with such high inflation cannot get new bills,” said Jose Guerra, an opposition law maker and former director of economic research at the central bank. Late last year, the central bank ordered more than 10 billion bank notes, surpassing the 7.6 billion the U.S. Federal Reserve requested this year for an economy many times the size of Venezuela’s.
Venezuela had prudently diversified its money printing relationships, and ahead of the 2015 congressional elections, the central bank tapped the U.K.’s De La Rue, France’s Oberthur Fiduciaire and Germany’s Giesecke & Devrient to bring in some 2.6 billion notes, Bloomberg adds. Before the delivery was completed, the bank approached the companies directly for more. De La Rue took the lion’s share of the 3-billion-note order and enlisted the Ottawa-based Canadian Bank Note Company to ensure it could meet a tight end-of-year deadline.
As we reported four months ago, the cash arrived in dozens of 747 jets and chartered planes. Under cover of security forces and snipers, it was transferred to armored caravans where it was spirited to the central bank in dead of night.
But while Venezuela was already planning its future cash orders, the cash vendors were starting to get worried. According to company documents, De La Rue began experiencing delays in payment as early as June. Similarly, the bank was slow to pay Giesecke & Devrient and Oberthur Fiduciaire. So when the tender was offered, the government only received about 3.3 billion in bids, bank documents show.
Which led to an interesting phenomenon: when it comes to counterparty risk, one usually has in mind digital funds or electronic securities. In this case, however, the counterparty risk involved cold, hard cash: "Initially, your eyes grow as big as dish plates," said one person familiar with matter. “An order big enough to fill your factory for a year, but do you want to completely expose yourself to a country as risky as Venezuela?"
As Venezuela's full implosion emerges, the answer has now become obvious, and companies are backing away. With its traditional partners now unenthusiastic about taking on new business, the central bank is in negotiations with others, including Russia’s Goznack, and has a contract with Boston-based Crane Currency, according to documents and industry sources.
We expect these last ditch efforts to obtain much needed paper currency for the hyperinflating nation will break down shortly, forcing Venezuela into one of two choices: do away with cash entirely and resort to barter, or begin printing high-denomination bills which in turn will only facilitate even faster hyperinflation as there will be no actual physical limit on how much something can cost; as of right now the very physical limit is how many 100 bolivar bills one can put on a wheelbarrow.
Steve Hanke, a professor of applied economics at Johns Hopkins University, who has studied hyperinflation for decades, says that to maintain faith in the currency when prices spiral, governments often add zeros to bank notes rather than flood the market.
“It’s a very bad sign to see people running around with wheelbarrows full of money to buy a hot dog,” he said. “Even the cash economy starts breaking down."
In Venezuela's case it is sadly too late.
This Is The End: Venezuela Runs Out Of Money To Print New Money

Submitted by Tyler Durden on 04/27/2016 18:38 -0400 ZeroHedge.com
 
Back in February, when we commented on the unprecedented hyperinflation about the be unleashed in the Latin American country whose president just announced that he would expand the "weekend" for public workers to 5 days...

... we joked that it is unclear just where the country will find all the paper banknotes it needs for all its new physical currency. After all, central-bank data shows Venezuela more than doubled the supply of 100-, 50- and 2-bolivar notes in 2015 as it doubled monetary liquidity including bank deposits. Supply has grown even as Venezuela has fewer U.S. dollars to support new bolivars, a result of falling oil prices. 
 
This question, as morbidly amusing as it may have been to us if not the local population, became particularly poignant recently when for the first time, one US Dollar could purchase more than 1000 Venezuela Bolivars on the black market (to be exact, it buys 1,127 as of today).
And then, as if on cue the WSJ responded: "millions of pounds of provisions, stuffed into three-dozen 747 cargo planes, arrived here from countries around the world in recent months to service Venezuela’s crippled economy. But instead of food and medicine, the planes carried another resource that often runs scarce here: bills of Venezuela’s currency, the bolivar.
The shipments were part of the import of at least five billion bank notes that President Nicolás Maduro’s administration authorized over the latter half of 2015 as the government boosts the supply of the country’s increasingly worthless currency, according to seven people familiar with the deals.
More planes were coming: in December, the central bank began secret negotiations to order 10 billion more bills which would effectively double the amount of cash in circulation. That order alone is well above the eight billion notes the U.S. Federal Reserve and the European Central Bank each print annually—dollars and euros that unlike bolivars are used world-wide.
Where things got even more ridiculous for the government where the largest bill in denomination is 100 Bolivars, is how much physical currency it needed, and the cost to print it:
The high cost of the printing binge is an especially heavy burden as Venezuela reels from the oil-price collapse and 17 years of free-spending socialist rule that have left state finances in shambles.
Most countries around the world have outsourced bank-note printing to private companies that can provide sophisticated anticounterfeiting technologies like watermarks and security strips. What drives Venezuela’s orders is the sheer volume and urgency of its currency needs.
The central bank’s own printing presses in the industrial city of Maracay don’t have enough security paper and metal to print more than a small portion of the country’s bills, the people familiar with the matter said. Their difficulties stem from the same dollar shortages that have plagued Venezuela’s centralized economy, as the Maduro administration struggles to pay for imports of everything, including cancer medication, toilet paper and insect repellent to battle the mosquito-borne Zika virus.
Wait a minute, why not just print a single 100,000,000 Bolivar note instead of one million 100 bolivar bills? After all the savings on the printing, let along the air freight, to the already insolvent country will be tremendous and allow it to pretend it is not a failed nation for at least a few more days? It is here that the sheer brilliance of the rulers of this socialist paradise shines through:
Currency experts say the logistical challenges of importing and storing massive quantities of bank notes underscore an undeniable truth: Venezuela is spending a lot more than it needs because the government hasn’t printed a higher-denomination bank note—revealing a misplaced fear, analysts say, that doing so would implicitly acknowledge high inflation the government publicly denies.  
“Big bills do not cause inflation. Big bills are the result of inflation,” said Owen W. Linzmayer, a San Francisco-based bank-note expert and author who catalogs world currencies. “Larger bills can actually save money for the central bank because instead of having to replace 10 deteriorated notes, you only need five or one,” he said.  
The Venezuelan central bank’s latest orders have been exclusively only for 100- and 50-bolivar notes, according to the seven people familiar with the deals, because 20s, 10s, 5s and 2s are worth less than the production cost.  
Mr. Maduro and his allies say galloping consumer prices reflect a capitalist conspiracy to destabilize the government.
Well, no, but at this point one may as well sit back and laugh at the idiocy of it all.  But at least we will give Maduro one thing: he has done away with the pretense that when push comes to shove, the state and the central bank (and thus commercial banks) are two different things: "the president in late December changed a law to give himself full control over the central bank, stripping congressional oversight just as his political opponents took control of the National Assembly for the first time in 17 years."
Sadly, that did nothing for the imploding economy and country, whose morgues are now overflowing due to rampant social violence.
Of course, the punchline of all the above means that Venezuela has to buy bolivars from abroad at any cost. "It’s easy money for a lot of these companies," one of the people with details on the negotiations said. 
The problem is that it is "very difficult money" for Venezuela which needs to pay in hard dollars to print its rapidly devaluing domestic currency. In fact, among the sources of funds to purchase its own money was the liquidation of its gold reserves, which as we reported recently, Venezuela has been quietly selling to willing offshore buyers.
* * *
All of this brings us to today's latest update in the sad story of Venezuela's terminal collapse: today Bloomberg wrote a story that basically covers everything said above, noting that "Venezuela’s epic shortages are nothing new at this point. No diapers or car parts or aspirin -- it’s all been well documented. But now the country is at risk of running out of money itself."
Indeed, as we hinted three months ago, "Venezuela, in other words, is now so broke that it may not have enough money to pay for its money."
Among the new information revealed by Bloomberg is that last month, De La Rue, the world’s largest currency maker, sent a letter to the central bank complaining that it was owed $71 million and would inform its shareholders if the money were not forthcoming. The letter was leaked to a Venezuelan news website and confirmed by Bloomberg News.
"It’s an unprecedented case in history that a country with such high inflation cannot get new bills,” said Jose Guerra, an opposition law maker and former director of economic research at the central bank. Late last year, the central bank ordered more than 10 billion bank notes, surpassing the 7.6 billion the U.S. Federal Reserve requested this year for an economy many times the size of Venezuela’s.
Venezuela had prudently diversified its money printing relationships, and ahead of the 2015 congressional elections, the central bank tapped the U.K.’s De La Rue, France’s Oberthur Fiduciaire and Germany’s Giesecke & Devrient to bring in some 2.6 billion notes, Bloomberg adds. Before the delivery was completed, the bank approached the companies directly for more. De La Rue took the lion’s share of the 3-billion-note order and enlisted the Ottawa-based Canadian Bank Note Company to ensure it could meet a tight end-of-year deadline.
As we reported four months ago, the cash arrived in dozens of 747 jets and chartered planes. Under cover of security forces and snipers, it was transferred to armored caravans where it was spirited to the central bank in dead of night.
But while Venezuela was already planning its future cash orders, the cash vendors were starting to get worried. According to company documents, De La Rue began experiencing delays in payment as early as June. Similarly, the bank was slow to pay Giesecke & Devrient and Oberthur Fiduciaire. So when the tender was offered, the government only received about 3.3 billion in bids, bank documents show.
Which led to an interesting phenomenon: when it comes to counterparty risk, one usually has in mind digital funds or electronic securities. In this case, however, the counterparty risk involved cold, hard cash: "Initially, your eyes grow as big as dish plates," said one person familiar with matter. “An order big enough to fill your factory for a year, but do you want to completely expose yourself to a country as risky as Venezuela?"
As Venezuela's full implosion emerges, the answer has now become obvious, and companies are backing away. With its traditional partners now unenthusiastic about taking on new business, the central bank is in negotiations with others, including Russia’s Goznack, and has a contract with Boston-based Crane Currency, according to documents and industry sources.
We expect these last ditch efforts to obtain much needed paper currency for the hyperinflating nation will break down shortly, forcing Venezuela into one of two choices: do away with cash entirely and resort to barter, or begin printing high-denomination bills which in turn will only facilitate even faster hyperinflation as there will be no actual physical limit on how much something can cost; as of right now the very physical limit is how many 100 bolivar bills one can put on a wheelbarrow.
Steve Hanke, a professor of applied economics at Johns Hopkins University, who has studied hyperinflation for decades, says that to maintain faith in the currency when prices spiral, governments often add zeros to bank notes rather than flood the market.
“It’s a very bad sign to see people running around with wheelbarrows full of money to buy a hot dog,” he said. “Even the cash economy starts breaking down."
In Venezuela's case it is sadly too late.
This Is The End: Venezuela Runs Out Of Money To Print New Money

Submitted by Tyler Durden on 04/27/2016 18:38 -0400 ZeroHedge.com
 
Back in February, when we commented on the unprecedented hyperinflation about the be unleashed in the Latin American country whose president just announced that he would expand the "weekend" for public workers to 5 days...

... we joked that it is unclear just where the country will find all the paper banknotes it needs for all its new physical currency. After all, central-bank data shows Venezuela more than doubled the supply of 100-, 50- and 2-bolivar notes in 2015 as it doubled monetary liquidity including bank deposits. Supply has grown even as Venezuela has fewer U.S. dollars to support new bolivars, a result of falling oil prices. 
 
This question, as morbidly amusing as it may have been to us if not the local population, became particularly poignant recently when for the first time, one US Dollar could purchase more than 1000 Venezuela Bolivars on the black market (to be exact, it buys 1,127 as of today).
And then, as if on cue the WSJ responded: "millions of pounds of provisions, stuffed into three-dozen 747 cargo planes, arrived here from countries around the world in recent months to service Venezuela’s crippled economy. But instead of food and medicine, the planes carried another resource that often runs scarce here: bills of Venezuela’s currency, the bolivar.
The shipments were part of the import of at least five billion bank notes that President Nicolás Maduro’s administration authorized over the latter half of 2015 as the government boosts the supply of the country’s increasingly worthless currency, according to seven people familiar with the deals.
More planes were coming: in December, the central bank began secret negotiations to order 10 billion more bills which would effectively double the amount of cash in circulation. That order alone is well above the eight billion notes the U.S. Federal Reserve and the European Central Bank each print annually—dollars and euros that unlike bolivars are used world-wide.
Where things got even more ridiculous for the government where the largest bill in denomination is 100 Bolivars, is how much physical currency it needed, and the cost to print it:
The high cost of the printing binge is an especially heavy burden as Venezuela reels from the oil-price collapse and 17 years of free-spending socialist rule that have left state finances in shambles.
Most countries around the world have outsourced bank-note printing to private companies that can provide sophisticated anticounterfeiting technologies like watermarks and security strips. What drives Venezuela’s orders is the sheer volume and urgency of its currency needs.
The central bank’s own printing presses in the industrial city of Maracay don’t have enough security paper and metal to print more than a small portion of the country’s bills, the people familiar with the matter said. Their difficulties stem from the same dollar shortages that have plagued Venezuela’s centralized economy, as the Maduro administration struggles to pay for imports of everything, including cancer medication, toilet paper and insect repellent to battle the mosquito-borne Zika virus.
Wait a minute, why not just print a single 100,000,000 Bolivar note instead of one million 100 bolivar bills? After all the savings on the printing, let along the air freight, to the already insolvent country will be tremendous and allow it to pretend it is not a failed nation for at least a few more days? It is here that the sheer brilliance of the rulers of this socialist paradise shines through:
Currency experts say the logistical challenges of importing and storing massive quantities of bank notes underscore an undeniable truth: Venezuela is spending a lot more than it needs because the government hasn’t printed a higher-denomination bank note—revealing a misplaced fear, analysts say, that doing so would implicitly acknowledge high inflation the government publicly denies.  
“Big bills do not cause inflation. Big bills are the result of inflation,” said Owen W. Linzmayer, a San Francisco-based bank-note expert and author who catalogs world currencies. “Larger bills can actually save money for the central bank because instead of having to replace 10 deteriorated notes, you only need five or one,” he said.  
The Venezuelan central bank’s latest orders have been exclusively only for 100- and 50-bolivar notes, according to the seven people familiar with the deals, because 20s, 10s, 5s and 2s are worth less than the production cost.  
Mr. Maduro and his allies say galloping consumer prices reflect a capitalist conspiracy to destabilize the government.
Well, no, but at this point one may as well sit back and laugh at the idiocy of it all.  But at least we will give Maduro one thing: he has done away with the pretense that when push comes to shove, the state and the central bank (and thus commercial banks) are two different things: "the president in late December changed a law to give himself full control over the central bank, stripping congressional oversight just as his political opponents took control of the National Assembly for the first time in 17 years."
Sadly, that did nothing for the imploding economy and country, whose morgues are now overflowing due to rampant social violence.
Of course, the punchline of all the above means that Venezuela has to buy bolivars from abroad at any cost. "It’s easy money for a lot of these companies," one of the people with details on the negotiations said. 
The problem is that it is "very difficult money" for Venezuela which needs to pay in hard dollars to print its rapidly devaluing domestic currency. In fact, among the sources of funds to purchase its own money was the liquidation of its gold reserves, which as we reported recently, Venezuela has been quietly selling to willing offshore buyers.
* * *
All of this brings us to today's latest update in the sad story of Venezuela's terminal collapse: today Bloomberg wrote a story that basically covers everything said above, noting that "Venezuela’s epic shortages are nothing new at this point. No diapers or car parts or aspirin -- it’s all been well documented. But now the country is at risk of running out of money itself."
Indeed, as we hinted three months ago, "Venezuela, in other words, is now so broke that it may not have enough money to pay for its money."
Among the new information revealed by Bloomberg is that last month, De La Rue, the world’s largest currency maker, sent a letter to the central bank complaining that it was owed $71 million and would inform its shareholders if the money were not forthcoming. The letter was leaked to a Venezuelan news website and confirmed by Bloomberg News.
"It’s an unprecedented case in history that a country with such high inflation cannot get new bills,” said Jose Guerra, an opposition law maker and former director of economic research at the central bank. Late last year, the central bank ordered more than 10 billion bank notes, surpassing the 7.6 billion the U.S. Federal Reserve requested this year for an economy many times the size of Venezuela’s.
Venezuela had prudently diversified its money printing relationships, and ahead of the 2015 congressional elections, the central bank tapped the U.K.’s De La Rue, France’s Oberthur Fiduciaire and Germany’s Giesecke & Devrient to bring in some 2.6 billion notes, Bloomberg adds. Before the delivery was completed, the bank approached the companies directly for more. De La Rue took the lion’s share of the 3-billion-note order and enlisted the Ottawa-based Canadian Bank Note Company to ensure it could meet a tight end-of-year deadline.
As we reported four months ago, the cash arrived in dozens of 747 jets and chartered planes. Under cover of security forces and snipers, it was transferred to armored caravans where it was spirited to the central bank in dead of night.
But while Venezuela was already planning its future cash orders, the cash vendors were starting to get worried. According to company documents, De La Rue began experiencing delays in payment as early as June. Similarly, the bank was slow to pay Giesecke & Devrient and Oberthur Fiduciaire. So when the tender was offered, the government only received about 3.3 billion in bids, bank documents show.
Which led to an interesting phenomenon: when it comes to counterparty risk, one usually has in mind digital funds or electronic securities. In this case, however, the counterparty risk involved cold, hard cash: "Initially, your eyes grow as big as dish plates," said one person familiar with matter. “An order big enough to fill your factory for a year, but do you want to completely expose yourself to a country as risky as Venezuela?"
As Venezuela's full implosion emerges, the answer has now become obvious, and companies are backing away. With its traditional partners now unenthusiastic about taking on new business, the central bank is in negotiations with others, including Russia’s Goznack, and has a contract with Boston-based Crane Currency, according to documents and industry sources.
We expect these last ditch efforts to obtain much needed paper currency for the hyperinflating nation will break down shortly, forcing Venezuela into one of two choices: do away with cash entirely and resort to barter, or begin printing high-denomination bills which in turn will only facilitate even faster hyperinflation as there will be no actual physical limit on how much something can cost; as of right now the very physical limit is how many 100 bolivar bills one can put on a wheelbarrow.
Steve Hanke, a professor of applied economics at Johns Hopkins University, who has studied hyperinflation for decades, says that to maintain faith in the currency when prices spiral, governments often add zeros to bank notes rather than flood the market.
“It’s a very bad sign to see people running around with wheelbarrows full of money to buy a hot dog,” he said. “Even the cash economy starts breaking down."
In Venezuela's case it is sadly too late.

EXCLUSIVE: Kerry, Heinz Family Have Millions Invested In Offshore Tax Havens
 

Richard Pollock   thedailycaller.com

Reporter
 
10:42 PM 04/25/2016
Secretary of State John Kerry and his wife Teresa Heinz have invested millions of U.S. dollars through family trusts in at least 11 offshore tax havens, according to an analysis by The Daily Caller News Foundation.
The revelation comes on the heels of the release of the Panama Papers, a treasure trove of 11.5 million legal and financial records documenting how some of the world’s richest and most powerful people have used offshore bank accounts to conceal their wealth and avoid taxes.
Since the release of the papers, no American politician has been identified as using the secretive offshore accounts.
A DCNF investigation has confirmed that the former Massachusetts Democratic senator and his billionaire wife, using an elaborate set of Heinz family trusts, have invested “more than $1 million” each into 11 separate offshore accounts — mainly hedge funds in the Cayman Islands.
The investments were made during both Kerry’s tenure in the Senate and in his present position as the nation’s chief diplomat.
TheDCNF identified the offshore accounts by examining the 2012 financial disclosure documents that then-Senator Kerry filed with the clerk of the Senate during his final year in Congress.
TheDCNF also acquired the detailed 2015 financial disclosure documents produced by Kerry, which he filed before the Department of State’s Office of the Assistant Legal Adviser for Ethics, known as the Annual 278 form. The form was acquired from the federal Office of Government Ethics — the repository of all Annual 278 forms.
The trusts funneled millions of dollars over the years into various offshore investment vehicles through a Heinz trust called the “Heinz Family Commingled Alternative Investment Fund.”
Two other trusts appear to have been set up by the Heinz family since Kerry was appointed by President Barack Obama in 2013 to succeed Hillary Clinton as secretary of state. One is called “HFI Intermediate Fund II” and the other called “HFI Dividend Investments.” HFI stands for the Heinz Family Investments.
Another Heinz trust, called “HP Imperial,” invests in companies throughout Asia, including state-run companies within the People’s Republic of China. It is an interesting decision by the Heinz family, given Kerry’s present duties.
Overall, the Heinz fortune operates six different trusts.
When Kerry joined the Obama administration in February 2013, he was considered the second wealthiest member of the Senate, with personal assets totaling nearly $200 million.
Teresa Heinz inherited hundreds of millions of dollars when her former husband, Republican Sen. John Heinz of Pennsylvania, died in 1991 in an airplane crash. Forbes estimates Heinz’s net worth today is $1 billion.
Even after his ascension as secretary of state, the Heinz family continues to make sizable investments in tax havens, a fact that doesn’t sit well with some who would normally be supportive of Kerry.
“Well I say it doesn’t look good by any means,” said Susan Harley, deputy director of Congress Watch, a progressive lobby organization founded by Ralph Nader.
“There’s always a question of whether it’s tax avoidance or tax evasion,” she told TheDCNF.  “We would expect our government servants to uphold the law. Those folks need to be held to the same standards as everyone else.”
Obama recently lashed out at U.S. citizens who use tax havens.
On April 5, a few days after the Panama Papers were released, the president said the rich “have enough lawyers and enough accountants to wiggle out of responsibilities that ordinary citizens are having to abide by.” He said they were “gaming the system.”
Harley said the president might not be pleased with some of his cabinet members investing in tax havens: “Given what the president has said, it doesn’t sound like he would be in favor of that kind of behavior as far as people in his cabinet.”
For its part, State Department Spokesman Adm. John Kirby told TheDCNF Kerry is not a beneficiary of the investments and does not own them.
“Secretary Kerry has no offshore investments. He is not, nor has he ever been a beneficiary of Heinz Family and Marital Trusts and he has no decision-making power over them since they are entirely controlled by independent trustees,” said Kirby.
Yet Kerry, through his marriage to Heinz, is a beneficiary of the offshore investments.
Secretary Kerry was compelled under federal rules to state any gifts, outside income and investments, that could impact his independence, impartiality and freedom from conflicts of interest.
Heinz is also a direct beneficiary of the investments, Kirby acknowledged. He emphasized that the investments “are entirely controlled by independent trustees.”
Kirby and other State Department officials, however, declined to say who actually controls the trusts and makes investment decisions.
The Kerry/Heinz family investments are so vast that Kerry’s federal financial disclosure form runs 169 pages in length, with about 10 investments per page.
Although Democrats are united in condemning offshore accounts, many Democrats, including Obama, have actually benefited from them.
The York Opportunities Fund, founded by James Dinan, is a tax shelter that is close to Democrats. The Heinz family invested “more than $1 million” in York when Kerry was a senator, according to his 2015 financial disclosure form.
York is incorporated in the Cayman Islands, according to the company’s filing with the Securities and Exchange Commission.
Dinan also was a top Obama bundler who raised between $50,000 to $100,000 in 2008, according to OpenSecrets, a nonprofit campaign finance research group.
Another Kerry/Heinz investment is in Fortress V.  In 2006, Fortress first came to public attention when it was disclosed that the hedge fund paid Democratic presidential candidate John Edwards $480,000 for a “part time job.” Edwards had invested $16 million into Fortress.
The New York Times described the Fortress Fund in 2007, saying it was comprised of “thinly regulated pools of often risky investments,” and linked it to the subprime mortgage meltdown of 2008.
And Penta Asia Fund, based in the British Virgin Islands, was founded by former George Soros fund manager John Zwaanstra.
According to records from Kerry’s Senate filing and his federal disclosure filing, he and his family appear to have cut back on their offshore investments after he joined the Department of State, but did not eliminate them. In some instances, they actually invested more in various offshore funds.
The Heinz family trust offshore investments are in:
Abry Partners – The company finalized $42 billion in “leveraged transactions” according to its website. Incorporation: Cayman Islands. Kerry family investment was worth “more than $1 million” while he was in the Senate, but was reduced in 2014 to between $250K to $500K.
Cevian Capital – Is an active ownership investment firm that seeks ownership in undervalued public companies. Incorporated: George Town, Grand Cayman. This is the only offshore investment organized by the new Kerry family “HFI Diversified Investment Fund.” While secretary of state, Kerry and family invested “more than $1 million” in the fund. It pays annual dividends, interest and capital gains of $100,000 to $1 million.
DLJ Merchant Partners III — is a Delaware registered company, but as of 2013, it was managed by APriori Capital Partners, a Cayman Island registered firm. Kerry only had $100K in DLJ in 2014, but the family still receives dividends, rentals and royalties, interest and capital gains. Annual income is $50,000.
Dover Street VII – Seeks to buy investments in venture capital or buyouts in the U.S. and U.K. Incorporated: Cayman Islands.  The family trust invested more than $1 million while Kerry was in the Senate. As secretary of state, the family expanded investments into four more funds. They get annual dividends, interest, rents royalties, and capital gains totaling $120,000 to $185,000.
Fortress V Fund – Specializes in buyouts and recapitalizations, according to Bloomberg. Incorporation: Cayman Islands. The trust investment: more than $1 million. After Kerry became secretary of state, the family reduced investment to $500,000 for Fortress V but added a new investment in “Fortress V Co-investment Fund” for $250,000. The family receive dividends, rents and royalties, interest and capital gains.
Owl Creek II – A hedge fund. Incorporation: Cayman Islands. Kerry family investment: More than $1 million in Senate filing; reduced to $100,000 from $1 million in 2014.  The family receives dividends, rent and royalties, and capital gains up to $100,000 per year.
Penta Asia Fund – An Asia-focused hedge fund founded by Soros Fund manager John Zwaanstra. Registration: British Virgin Islands. The trusts investment began while Kerry was in the Senate with an investment of more than $1 million.  It was liquidated in 2014.
Patron Capital Group III – The fund makes “opportunistic and value-oriented investments,” including “liquidity constrained property assets” predominantly in Western Europe. Registered in Guernsey and based in Gibraltar. While Kerry was in the Senate, the family invested more than $1 million, but that was reduced to $250,000 in 2014. They receive dividends, interest, and capital gains, now only $5,000 per year
Tiger Growth Equities – This fund primarily focuses investment in China, Southeast Asia, Latin America and Eastern Europe. Incorporation: Cayman Islands. More than $1 million in Kerry’s Senate filing. Kerry and family have continued their investment during his secretary of state years. They receive annual dividends, interest and capital gains estimated from $100,000 to $1 million.
Valinor Capital Partners –  Is a “pooled investment hedge fund.” Incorporated: Cayman Islands. Kerry and family invested more than $1 million, receiving annual income from dividends, interest and capital gains of $100,000 to $1 million.
York European Opportunities fund – a hedge fund, that invests in “restructures, spinoffs, split-ups and proxy contests.” Incorporation: Cayman Islands. Kerry Family Investment: $1 million during the Senate term. Dividends: $100,000 to $1 million annually. Subsidiary York Capital Management’s number one investment is in the HJ Heinz Company.
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Do You Think It's Wrong For Democrats Like John Kerry To Criticize Offshore Bank Accounts When He Has Some Himself?
 

“HP Imperial,” another Heinz trust, invests in Malaysia, Hong Kong, Thailand and South Korea. Its biggest investments are in communist China, including the Alibaba Group; Boer Holdings, a Chinese electrical distribution company in Wuxi, Yixing and Shanghai; Hubao International Holdings, a tobacco company; Labixiaoxin Snacks Group, a Chinese snack food provider; Sands China, with six casinos in Macau; and Tibet 5100 Water Holdings, a Chinese-owned company trying to sell Tibetan premium water like Evian.

States and cities have dramatically scaled back taxpayer subsidies to corporations in the past two years, doling out fewer and smaller breaks to lure development projects.

Government subsidies of at least $50 million have plummeted about 70 percent since 2013, according to an analysis by Good Jobs First, a union-funded research and advocacy group that tracks the cost of tax breaks. The drop-off comes in the face of a tough new accounting rule that will force governments to release more information about the deals and a presidential campaign that has Republicans and Democrats alike criticizing "crony capitalism."

"It’s a reflection of the political climate of the times, a resistance to public debt and also to economic subsidies," said Richard Ciccarone, president and chief executive officer of Merritt Research Services LLC, in Chicago. “Subsidies have become more of a negative among politicians, and a lot of people are hot on that issue."

Economic-development competition has triggered decades of state-versus-state subsidy wars. Even as critics say local tax breaks have no impact on the national economy, they have become a standard part of doing business as companies play one jurisdiction against another, year after year.
Tax breaks in 2013 to such companies as Boeing Co., IBM Corp. and Toyota Motor Corp. were part of $17 billion from state and local governments, according to Good Jobs First. In 2014, the figure dropped to $7 billion, and last year fell to $4.8 billion, according to preliminary figures.
"Subsidies are getting more controversial," said Kenneth Thomas, a professor who specializes in government assistance to corporations at the University of Missouri-St. Louis. "People are more aware of them because the press pays more attention to them."

Heading West

He cited the recent opposition to building a $1 billion stadium for the National Football League’s St. Louis Rams. Critics said the public should be allowed to vote on the plan, as it was their dollars that would be committed. Amid the debate, the team announced its move to Los Angeles.
Part of public animosity toward such emoluments stems from their lack of transparency in state and local financial documents. Many governments disclose little information about the nature of tax breaks and their financial impact.

In response to almost 300 comments, the Governmental Accounting Standards Board approved a new rule in August requiring full disclosure from governments on the amount and impact of tax breaks. It takes effect this year for most governments, and next year for the remainder. It applies to all new incentives and those that remain in effect.

"Corporations have long gotten pretty much whatever they wanted under the guise that they are doing something wonderful for the community or society as a whole," wrote Tim Noonan of West Bend, Wisconsin, in a November 2014 letter to the board, arguing for greater disclosure of corporate incentives. “This is rarely ever the truth, they get what they want so a politician can make themselves look good for a reelection."

Greg LeRoy, executive director of Good Jobs First, said it’s premature to say precisely why tax breaks declined. Others cited politics that put tax-break-pushing politicians on the defensive as corporations move jobs overseas; increased budget and pension pressure in states; and lower unemployment, which reduces the incentive for governments to dangle money before companies.
Louisiana, where declining oil prices slashed tax revenue, still provided $7 billion in tax breaks in 14 separate deals in the past three years. The cost of tax breaks and other incentives to corporations have exceeded business-tax revenue in the state by more than $225 million since November.
The state can ill afford such largess. The new governor, Democrat John Bel Edwards, took office in January facing a $950 million deficit in the current budget year and $2 billion in the next two.
Nor are incentives guarantors of prosperity. German Pellets Louisiana, a manufacturer of wood fuel for commercial and residential use, received a $75 million deal in 2013. It filed for Chapter 11 bankruptcy in February. In a court filing, the company blamed slumping oil prices, warm winters and a bad investment.

A spokesman for Louisiana Economic Development, Gary Perilloux, said tax incentives have had a "relatively limited impact" on the state’s fiscal situation.

"Incentives are necessary to keep Louisiana competitive with other states and global locations," Perilloux said, citing tax breaks offered by other states.

Rancor Recorded

Corporations and job cuts are at center stage in Indiana’s May 3 presidential primary. 
United Technologies Electronic Controls Inc. and its subsidiary Carrier Corp. in February said they would move heating and air conditioning assembly operations to Mexico, eliminating 2,100 jobs in Indianapolis and Huntington. Carrier had received $1 million in incentives from Indianapolis in 2011 to help it expand. 

A video of the job-elimination announcement wound up on YouTube, drawing international attention.

Republican candidate Donald Trump, whose own New York real-estate company has received tax abatements for developments, has made the cuts central to his pitch to voters. Trump said that in retaliation he would impose taxes on Carrier air conditioning units made in Mexico and shipped to the U.S.

Ciccarone said there’s a danger in politicians overreacting to resentment toward corporate subsidies.

"The pendulum may have been too generous,” Ciccarone said. “A correction is healthy, but you don’t want to create a hostile environment to economic activity."

The new GASB rules will require state and local governments to reveal the description and purpose of all tax abatements, the dollar amounts involved and provisions for recapturing the revenue.
"As the transparency gets better, that will increase the public outrage," said Thomas, who has followed trends in public subsidies for more than 20 years. "There’s an ebb and flow to subsidies, but somewhere down the line there will be another recession, and we’ll see what state and local governments do."

Is Deutsche Bank’s Gold Manipulation The Main Scam Or Just A Side-Show?
 
Submitted by John Rubino via DollarCollapse.com,

For years now, the easiest way to finesse a debate over whether precious metals markets are manipulated has been to say, “well, if they’re not manipulated they’re the only market that isn’t.”
That was unsatisfying, though, because as the big banks got caught scamming their customers on interest rates, mortgage bonds, forex and commodities trades, those markets (presumably) began to operate more-or-less honestly. Gold and silver, meanwhile, kept right on acting strangely, for instance plunging in the middle of the night on no news but massive futures volume, to the detriment of honest investors and traders who naively bet their capital on fundamentals. The (already huge) amount of money thus stolen from gold bugs kept rising.
So it is with relief that fans of honest markets have greeted the news that at least one kind of precious metals manipulation has been exposed:
Deutsche Bank Settles Silver, Gold Price-Manipulation Suits
 
(Bloomgerg) – Deutsche Bank AG has reached settlements in lawsuits over allegations it manipulated gold and silver prices, lawyers for traders of the commodities said in court filings.
 
Attorneys for futures contract traders in two private lawsuits said in letters filed Wednesday and Thursday in Manhattan federal court that the bank has executed term sheets and is negotiating final details for the accords.
 
The German financial firm also agreed to help the plaintiffs pursue similar claims against other banks as part of the settlements, according to the letters. Vincent Briganti and Robert Eisler, attorneys for traders in the silver-fixing lawsuit, said Deutsche Bank will turn over instant messages and other communications to help further their case. Financial terms of the settlements weren’t disclosed.
 
“In addition to valuable monetary consideration to be paid into a settlement fund, the term sheet also provides for other valuable consideration such as provisions requiring Deutsche Bank’s cooperation in pursuing claims against the remaining defendants,” attorneys Daniel Brockett and Merrill Davidoff said in their letter Thursday in the gold-fixing lawsuit.
 
Silver and gold futures traders sued groups of banks in 2014 alleging they rigged prices for the precious metals and their derivatives. Silver traders brought claims against Deutsche Bank, HSBC Holdings Plc, Bank of Nova Scotia and UBS AG. Gold traders additionally sued Barclays Plc and Societe Generale SA.
 
The traders alleged the banks abused their positions of controlling daily silver and gold fixes to reap illegitimate profits from trading and hurting other investors in those markets who use the benchmark in billions of dollars of transactions, according to versions of the complaints filed in 2015. Of those banks, only Deutsche Bank has reached a settlement.
 
Amanda Williams, a spokeswoman for Deutsche Bank, declined to comment on either accord. Rick Roth, a spokesman for Scotiabank, the operating name for the Bank of Nova Scotia, and HSBC spokesman Robert Sherman also declined to comment. Representatives from UBS, Barclays and Societe Generale didn’t immediately respond to requests for comment.
 
The silver case is In re: London Silver Fixing Ltd. Antitrust Litigation, 1:14-md-02573. The gold case is In re: Commodity Exchange, Inc. Gold Futures and Options Trading Litigation, 14-md-2548, U.S. District Court, Southern District of New York (Manhattan).

Deutsche Bank’s plea is of course just the beginning of the story. It will apparently name its co-conspirators, while providing details on how the scam was run. This will be interesting and amusing (those instant messages promise to be classic), especially at a time when those same banks are also in the news for falling earnings, rising layoffs and exploding loan loss reserves.
But is this gaming of the London precious metals fix the same thing as - or even tangentially related to - the main manipulation of the gold price, which is the practice of central banks “lending” their gold to big commercial banks, which then sell that gold on the open market to depress the price? These seem to be two different frauds, and if only the first comes to light while the second continues unimpeded, there’s no reason to expect precious metals to start trading rationally — which is to say in line with fundamentals like soaring global debt, ever-increasing money creation and general geopolitical and economic instability. At least not until Western central banks run out of gold.