Swiss Bank Accounts: A Look Into Elite Banking
Swiss bank accounts have long been a place for the wealthy to store their cash in order to evade hefty taxes. As of late, however, the American government has been cracking down on tax evaders and those that aid them.
American tax authorities created an amnesty program for Swiss banks that were willing to cooperate in bringing American tax evaders to justice, in exchange for less severe fines. In total, 106 banks signed up for the program. This all stems from a criminal investigation of twelve Swiss banks, headed by US tax authorities.
In order to be in the good graces of Uncle Sam, some of these banks have even threatened to freeze the accounts of their American clientele, unless they can prove that they are fully tax-compliant. Other Swiss banks have taken a softer approach. If a client has or had an undeclared account and has avoided getting caught, the bank will aid them in paying fines if they confess to the American government. It sounds good, but the amount they are offering is only $5,000. It is likely that Uncle Sam will want a lot more than just a few thousand dollars.
Original infographic from: TimothySykes.com
The 20 Biggest Bankruptcies in U.S. History
There is always risk in business – but for these 20 companies, which caused the biggest bankruptcies in history, those risks didn’t quite pan out.
Doing business means taking calculated risks.
Regardless of whether you are opening a lemonade stand or you’re a leading executive at a Fortune 500 company, risk is an inevitable part of the game.
Taking bigger risks can generate proportional rewards – and sometimes, such as for the companies you’ll read about below, the risk-taking backfired to queue up some of the biggest bankruptcies in U.S. history.
Going For Broke
Today’s infographic comes to us from TitleMax, and it highlights the 20 biggest bankruptcies in the country’s history.
Companies below are sorted by total assets at the time of bankruptcy.
There are times when companies are forced to push in all of their chips to make a game-changing bet. Sometimes this pans out, and sometimes the plan fails miserably.
In other situations, companies were actually unaware they were “all-in”. Instead, the potentially destructive nature of the risk was not even on the radar, only to be later triggered through a global crisis or unanticipated “Black Swan” events.
The Biggest Bankruptcies in the U.S.
Here are the 20 biggest bankruptcies in U.S. history, and what triggered them:
|Rank||Company||Year||Assets at Bankruptcy||Downfall|
|#1||Lehman Brothers||2008||$691 billion||2008 financial crisis|
|#2||Washington Mutual||2008||$328 billion||2008 financial crisis|
|#3||Worldcom Inc.||2002||$104 billion||Accounting scandal|
|#4||GM||2009||$82 billion||Massive debt|
|#5||CIT Group||2009||$71 billion||Credit crunch|
|#6||Pacific Gas & Electric||2019||$71 billion||Wildfires|
|#8||Conseco||2002||$61 billion||Failed acquisition strategy|
|#9||MF Global||2011||$41 billion||European sovereign bonds|
|#10||Chrysler||2009||$39 billion||Massive debt|
|#11||Thornburg Mortgage||2009||$37 billion||Declining mortgage values|
|#12||Pacific Gas & Electric||2001||$36 billion||Drought|
|#13||Texaco||1987||$35 billion||Contract dispute|
|#14||FCOA||1988||$34 billion||Savings and loan crisis|
|#15||Refco||2005||$33 billion||Accounting fraud|
|#16||IndyMac Bancorp||2008||$33 billion||Mortgage market collapse|
|#17||Global Crossing||2002||$30 billion||Plummeting world economy|
|#18||Bank of New England||1991||$30 billion||Bad loans|
|#19||General Growth Properties||2009||$30 billion||Failed acquisition strategy|
|#20||Lyondell Chemical||2009||$27 billion||Decline in demand|
The data set on the biggest bankruptcies is organized by assets at time of bankruptcy. Therefore, they are not in inflation-adjusted terms, meaning the list skews towards more recent events.
This makes the impact of the 2008 financial crisis particularly easy to spot.
The events and consequences relating to the crisis (loan defaults, illiquidity, and declining asset values) were enough to take down banks like Lehman Brothers and WaMu. The after effects – including a slumping global economy – led to a second wave of bankruptcies for companies such as GM and Chrysler.
In total, nine of the 20 biggest bankruptcies on the list occurred in the 2008-2009 span.
A Dubious Distinction
You may also notice that one company was on the list twice, and this was not an accident.
Pacific Gas & Electric, a California company that is the nation’s largest utility provider, has the dubious distinction of going bankrupt twice in the last 20 years. The first time, in 2001, resulted from a drought that limited hydro electricity generation, forcing the company to import electricity from outside sources at exorbitant prices.
The more recent instance happened earlier this year. Facing tens of billions of dollars in liabilities from raging wildfires in California, the utility filed for Chapter 11 protection yet another time.
Animation: The Basics of the Stock Market
This video highlights the basics of the stock market, how they work, and also the history of how the first markets got started.
Since its inception, the stock market has been one of the most powerful and consistent sources of wealth creation available.
Although stocks see more volatility than other assets, they have also averaged a real return of 6.7% per year between 1925 and 2014, compared to just 2.7% for bonds and 0.5% for cash.
And over long periods of time, the extraordinary power of compounding can turn this differential into a wealth generation machine.
But What is a Stock Market?
There is no denying the stock market’s unparalleled ability to create wealth, but that doesn’t mean it’s always an easy sell to newcomers.
For most people, the very mention of the stock market conjures up images of a frantic floor at a busy stock exchange, people in suits yelling “Buy!” or “Sell!”, or even the sensational media coverage that can dominate the news cycle.
Today’s animation provides an easier reference point for potential newcomers – it comes to us from TED-Ed and it highlights the basics of the stock market, as well as how it works.
By understanding the original purpose of the stock market and also its history, we can better understand how the modern market applies to wealth creation.
In a nutshell, it provides a way for investors and companies to share the profit (and risks) of bold new endeavors, such as trying to invent a new cancer cure, discovering natural resource deposits, disrupting old business models, or innovating advanced technologies.
The stock market has allowed companies ranging from Amazon to Starbucks to succeed, and for investors to share in that success.
Basics of the Stock Market
Here are some other key questions that the animation helps to answer about the basics of the stock market:
How does a company get on the market?
A company needs to have an Initial Public Offering (IPO). This is traditionally done through big investment banks that help advise companies on the potential value of their company, and the market for their stock. More recently, companies like Slack and Spotify have IPO’d using a less traditional route.
How does going public help a company grow?
In the right scenario, listing on a stock market gives a company access to more capital. With more money, the company can make investments into new products and markets.
How is a stock price determined by the market?
By allowing millions of people to buy and sell shares of the company using the same set of information, it creates transparency and liquidity. Over time, this pushing and pulling creates a “fair” price for the stock.
What else influences stock prices?
Stock prices are not only influenced by what a company does – they are also influenced by external factors such as government regulations, market forces, competition, and changes in technology. Investor sentiment also plays a role.
Why invest for the long term?
Because short-term noise in the market can be hard to predict, most professionals promote long-term, reliable investment methods.
Some examples of this in practice would include low-cost index funds, mutual funds, or simply building your own diverse portfolio of stocks, bonds, and other investments for the long haul.
Past and Future
The stock market is very different today than it was when the first shares of the Dutch East India Company started trading in the 17th century.
Although the financial industry has increased in sophistication since those times, it still has the same general purpose – and it’s easier to get started investing than ever before.
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