KeNo's Housing and Economic Portal: Monday July 7 Housing and Economic stories

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Retirees Suffer as $300 Billion 401(k) Rollover Boom Enriches Brokers - (www.bloomberg.com) Kathleen Tarr says AT&T Inc. employees looked to her as “their de facto 401(k) expert.” Visiting their homes and offices, she advised them on their retirement plans as they called up balances on computer screens. Actually, Tarr worked for Royal Alliance Associates, a brokerage firm owned by insurer American International Group Inc. She encouraged hundreds of departing AT&T employees to roll over their retirement money into the kind of risky high-commission investments that Wall Street’s self-regulatory agency warns against on its website. Tarr and her business partner reaped hundreds of thousands of dollars a year in commissions and trips to the Bahamas and Florida resorts. Not all of her clients fared as well, and 37 of them have filed complaints against her, according to Financial Industry Regulatory Authority records reviewed by Bloomberg News. Tarr and Royal Alliance say the investment choices were appropriate. “It’s scary,” said Maria Lew, a former AT&T administrative assistant and Tarr client whose account balance has fallen to $100,000 from $390,000. She fears she will lose her home, and her kitchen ceiling has a gaping hole because of a leak that will strain her budget to fix. “There are days when I go to sleep and I can’t stop thinking about it.”

China Aggression Sounds Wake-Up Call for Vietnam Makers - (www.bloomberg.com) For more than eight years, Luong Thi Kim Oanh bought cases of thread from China for her garment factory in Hanoi. Last month, rattled by an anti-China riot in her country, she placed her first order from South Korea. “I used to buy 90 percent of my thread from China,” said Oanh, 52, who employs about 200 people at Viet Hung Garments & Embroidery. “Shifting sourcing may cost us more, but we need to think of it now, or it may be too late. You never know how things may turn out.” Oanh fears a further disruption in trade after last month’s violent protests following China’s placement of an oil rig in disputed waters. The unrest halted production at foreign-owned factories and caused Chinese workers to flee. While China is the nation’s largest trading partner, Vietnam must reduce its dependence and develop a contingency plan to cope with any “hiccups, turbulence,” Vietnam Chamber of Commerce and Industry Chairman Vu Tien Loc said this month.

Wealthy Clintons Use Trusts to Limit Estate Tax They Back - (www.bloomberg.com) Bill and Hillary Clinton have long supported an estate tax to prevent the U.S. from being dominated by inherited wealth. That doesn’t mean they want to pay it. To reduce the tax pinch, the Clintons are using financial planning strategies befitting the top 1 percent of U.S. households in wealth. These moves, common among multimillionaires, will help shield some of their estate from the tax that now tops out at 40 percent of assets upon death. The Clintons created residence trusts in 2010 and shifted ownership of their New Yorkhouse into them in 2011, according to federal financial disclosures and local property records.

Another Exponential Chart: Americans Who Renounce Their Citizenship - (www.zerohedge.com) The American Dream appears to be less and less appealing. Following the release of the names of individuals who renounced their US citizenship (or terminated their long-term US residency) in Q1 2014, the rate of expatriation from the USA is continuing its exponential rise... While the catalysts are manifold, the WSJ notes that the US tax dragnet is largely responsible... Helping boost the exodus, experts say, is a five-year-old U.S. campaign to hunt for undeclared accounts held by Americans abroad. Since 2009, the government campaign has collected more than $6 billion in taxes, interest and penalties from more than 43,000 U.S. taxpayers. Federal prosecutors have filed more than 100 criminal indictments, including the high-profile case of Beanie Babies inventor Ty Warner, who last year pleaded guilty to tax evasion involving secret Swiss bank accounts. The tax dragnet has also swept up many middle-income Americans living abroad, prompting some to give up their U.S. citizenship.

Argentina: Won't submit to 'extortion' on debt - (www.sfgate.com) President Cristina Fernandez says Argentina can't possibly comply with U.S. court orders to pay $1.5 billion in cash to winners of a decade-long debt dispute, the position her country was left in Monday when the U.S. Supreme Court refused to hear her government's final appeal. Delivering a nationally broadcast address Monday night, Fernandez expressed willingness to negotiate, but said there is simply no way that Argentina can pay in cash, in full, starting just two weeks from now, which is what the U.S. courts have ordered. "What I cannot do as president is submit the country to such extortion," Fernandez said. Under the U.S. court orders, Argentina must hand over $907 million to the plaintiffs, or lose the ability to use the U.S. financial system to pay an equal amount due June 30 to holders of other Argentine bonds. Fernandez said the total owed to the plaintiffs is $1.5 billion including interest, and paying it all immediately in cash the way the courts ordered could trigger another $15 billion in other cash payments to the remaining holders of defaulted debt. That "is not only absurd but impossible," since it represents more than half the Central Bank's remaining foreign reserves, she said.

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