Friday Financial Five – December 5th, 2014
Friday, December 05, 2014
China projected as world’s largest economy
Several analysts predicted that China would soon overtake the United States for the world’s largest economy, but 2014 may be earlier than anyone suspected. According to numbers released by the International Monetary Fund and reported by Marketwatch, China has assumed the number one spot. The key to this calculation is that it values each country’s Gross Domestic Product in terms of “real” goods and services. This allows for a global comparison of each country’s output. In 2014, China projects production based on purchasing-power-parity (PPP) of $17.6 trillion versus $17.4 trillion for the U.S. That difference is expected to widen in the subsequent years.
Japan to keep Abe as Prime Minister
When it comes to Japanese elections, apparently the old tagline, “it’s the economy stupid”, doesn’t come into play. Despite consecutive quarters of a contracting economy, Shinzo Abe’s party should very comfortably win election on December 14th, allowing Mr. Abe to continue his policies of massive quantitative easing. While Japanese companies remain competitive, the country lays claim to the largest debt-to-GDP ratio in the world at roughly 250%. By comparison, the United States is concerned about a debt problem and the country’s ratio is 74%. Through easing and weakening of the yen, Abe hopes to reverse the country’s course but positive growth is a necessary first step.
Switzerland keeps the millionaires’ tax break
There may have been a decline in Swiss bank accounts if the country’s Socialist Party had gotten their way in a recent vote. Groups in Switzerland took aim at the tax regime known as the forfait, a specialized lump-sum tax system for the very rich. This structure has attracted wealthy foreigners for years, with the government believing that the addition of rich inhabitants increases jobs and revenue for the country. In recent years, several areas of the country have abolished or restricted the practice due to the drastically lower percentage of taxation the beneficiaries pay. In the end, 59 percent voted to keep the tax break in place, a much higher percentage than was anticipated.
Elder abuse continues to be a problem
The elderly are under constant attack, be it the run-of-the mill scam or family members seeking to take advantage financially. Reportedly, a third of securities related fraud victimizes seniors, but privacy rules often make it tough to prevent before it happens. The CFPB worked with the FDIC and other agencies to produce a resource guide called “Money Smarts for Older Adults”. By being informed about the proper way to identify and report possible cases, financial institutions and the public can work to reduce this huge percentage of seniors that are being unfairly exploited.
Former NHL team owner behaving badly
Another money manager was sentenced to ten years in prison for committing over $500 million in fraud. Paul Greenwood was found guilty of bilking charities and university foundations for thirteen years starting in 1996. He also used his clients’ money to buy ownership in the NHL’s New York Islanders in 1992. Greenwood and his partner, Stephen Walsh, misappropriated over $100 million in client funds for their own family businesses and collections and they issued over $500 million in promissory notes to investors. Walsh was recently sentenced to twenty years in prison.
Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected].
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