The stock market suddenly discovered something yesterday: The economy really isn’t doing that well. So stock prices fell sharply, as did most commodities.
Anyone who reads this column already knows about the economy’s ongoing problems. Wall Street is only now coming around to the truth.
Stock markets have their up and down days. Lately, however, the market has mostly been going up.
Yesterday was the exception, as the Dow declined 265.86 points and all the other major indicators also suffered big losses.
So let me warn you again: The only thing this market has going for it is the Federal Reserve’s persistent money-printing operation. And that’s starting to get opposition from governors on the Fed’s board, who realize quantitative easing — as that program is called — isn’t working.
Despite all the money being thrown around by the Fed, the economy is slowing. And it’s not just statistical aberrations causing the slowdown.
Worse, there is a currency war going on between Japan and the rest of the world, which should be front and center at the G-20 meetings this week. And there’s a pesky little country called North Korea threatening evil nuclear things.
Be careful if you are relying on this market to pay your bills. If you can’t afford to lose 20 percent of your assets, get out.
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Lots of people are frustrated this week with the IRS — some for reasons you’d never guess.
These people are trying to pay money they owe but the government is very slow to collect.
Last week’s big tax news was that 130,000 people from 170 nations had money parked in 10 offshore tax havens. The list of tax evaders was disclosed by the International Consortium of Investigative Journalists.
A source tells me there’s a flip side to the story: Americans who, sometimes quite innocently, have assets overseas that haven’t been properly taxed and who would like to settle up with Washington under something called the Offshore Voluntary Compliance Program.
The program — which began in 2009 and is now in its third iteration — has already collected $5.5 billion from some 38,000 participants. The more money the government gets from other people, the better for you and me.
But a source tells me that the program has been so successful that the IRS seems overloaded.
“They’ve gotten many more applicants than they ever expected,” says the tax professional who asked not to be identified. He says that one of his clients has waited three years to get his compliance application completed.
The government doesn’t distinguish between people who have had second thoughts about hiding money in tax havens and those who might be doing so accidentally — say, because their grandma in Ireland left them some dough that they didn’t realize was taxable.
When a person is accepted into the compliance program, they turn over to the IRS the tax they failed to pay, plus interest.
At the end of the process, the person pays a penalty that amounts to 27 percent of the highest balance in the foreign account over an eight-year period.
That beats the criminal penalties they could have been subjected to (plus confiscation of half the assets in each year). That’s why the program has been so successful in spite of the delays.
Since Washington is so desperate for money, let me suggest this: Hurry up and take what is owed to us! Hire some more people to handle the applications if you need to.