Gyroscopic Investing

The lower house of Switzerland's parliament has refused to debate a bill that would allow Swiss banks to pass client information to the US tax authorities.

The bill is the result of pressure from the US following revelations that Swiss banks had helped American account holders to evade taxes.

The US had demanded action by 1 July, but the Swiss parliament summer session ends this week.

The bill will now return to the Senate.

Read the rest here...
http://www.bbc.co.uk/news/world-europe-22954374

I think this is a very temporary rearguard type of victory. The end result is not in doubt however. The Swiss will fold like a cheap lawn chair because the Feds have them by their... Now the squeezing will begin.

Is there anything in that article that explains what exactly the U.S. government could and would do to the Swiss government/banks?

moda0306 wrote: Is there anything in that article that explains what exactly the U.S. government could and would do to the Swiss government/banks?

Swiss banks can be barred from access to the US financial markets. That would be pretty much a death blow.

My understanding is that all international wire transfers (originating from anywhere in the world) have to pass through NY.  Does anybody here know for sure?

Coffee wrote: My understanding is that all international wire transfers (originating from anywhere in the world) have to pass through NY.  Does anybody here know for sure?

At one time all (95%) such transfers that were denominated in US dollars had to go through the USA banking system.  I think things may have changed since the early 2000s, but I cannot be sure. 

If the wire transfer does not involve US dollars or a US-based bank or a US-based account, there is no need for it to go through the US banking system, so it doesn't.  (That does not mean the FBI or CIA can't take a peek if they want to.)  It may go through SWIFT, which is based in Belgium.

Coffee wrote: My understanding is that all international wire transfers (originating from anywhere in the world) have to pass through NY.  Does anybody here know for sure?

One way or another, all non-cash transfers denominated in US dollars ultimately clear through the US banking system.  Yen transfers ultimately clear through the Japanese banking system, GBP transfers ultimately clear through the British system, etc.   

There are some ways to disguise individual transactions, but there are very few reputable bankers in the international community who want to engage in this behavior on a wholesale basis. 

Whether the "leverage" provided by this fact is ultimately used by the USG, or some other government, to enforce tax related issues is a complex issue related to national laws.  As a general rule, I think most governments are more willing to use the leverage over bank clearance facilities to address terrorism or national security related issues than to enforce tax laws.