1. Fraudulent applicants come to the bank with crazy stories to ask for enormous loans/mortgages toward a Toronto house, allegedly to turn hyper-suspicious big piles of cash into a more reputable-looking asset.
2. HSBC goes along with that because they want to suckle on the sweet regular payments of suspicious cash, even though they ought to damn well know that these customers are just a front for an organized crime ring.
3. As a bonus, this locally-concentrated money-laundering/speculative-investment thing screws up the property market for Torontonians. The local multimillionaire babysitter is willing to buy at almost any price because their secret financial goals are very different than yours.
While looking for other articles, I notice it's been ~16 months after the end of HSBC 10-year tangle with US regulators over their business with Mexican and Columbian drug cartels. [0]
[0] https://www.reuters.com/business/finance/us-fed-terminates-e...
I only recognize the HSBC name from scandals in the news: https://en.wikipedia.org/wiki/HSBC#Controversies
https://www.investopedia.com/stock-analysis/2013/investing-n...
> “This guidance reminds lenders that denying someone access to credit based solely on their actual or perceived immigrant status may violate federal law.”
Ref: https://www.justice.gov/opa/pr/justice-department-and-consum...
If the polity is smart, yes.
It looks like British Columbia gets about 15% of its revenue from property taxes and transfers [1]. So you'd need adjustments to make up for the personal, corporate, sales, fuel, carbon, tobacco and insurance premium (?) revenues the vacant homeowner isn't paying.
[1] https://www2.gov.bc.ca/assets/gov/british-columbians-our-gov... Table 2.3
So who would you jail in this case? The bank tellers interfacing with cartel? They're in Mexico anyway. Some overworked compliance manager in the US who ignored the suspicious transactions? Some C-Level exec person who didn't know about the suspicious origin of a billion dollars into a bank with something like 2.5 trillion in assets?
What specific crime do you think they committed?
Nobody likes these global banks, they're run by absolute psychopaths but remember, the optimal amount of fraud is non-zero. All of the mirror image complaints about banks not wanting to touch Crypto or proceeds from gambling/porn sites is downstream from settlements like these.
https://www.bitsaboutmoney.com/archive/optimal-amount-of-fra...
Also, strategically, having powerful people own expensive real estate influences them to visit and maybe not bomb it... at least, it's better than them never having stepped foot there. The famous example is Kyoto not being nuked because an American leader had seen it firsthand[1]. The Nazis spared Paris was apparently spared for similar reasons[2].
The counterexample is NYC which everybody loves to crap on (Gerald Ford "drop dead", 1993 bombing, 9/11, and lots of failed terrorist attacks since), presumably as a symbol of American greed and excess, but also as a symbol of urban chaos, rot and violence.
If you want to read more about this: https://philebersole.com/2013/02/15/hsbcs-history-and-the-or...
As opposed to most Americans, at least those that have been in the industry for a decade or more, who would rather be as far from tech as possible, in whatever direction.
See also: https://imgur.com/vbFNbON
This is so true it hurts.
And while there's some numbers that outsiders can look at and gasp[0] at how absurd it's become, there's a whole lot that isn't being tracked or documented. Official immigration numbers are ~0.5mn for 2023, but (and I've seen it elsewhere, but I can't find it right now) if you use a common sense definition that includes all inflow (e.g. asylum seekers, tfw, foreign students, etc) then it's 1mn+. It's insane for a country of <40mn, with highly socialized services.
The quality of life in Canada is horrid in a way that's not comparable to anywhere else other than maybe australia. Everything is silly expensive, with low salaries, and it's not like in europe where you can travel 3 hours to go somwehere with cheaper services. It's crazy. Or what about crime, the right wing, tough on crime party leader yesterday said that if someone has 3 convictions for car theft that it should mean 3 years. It's no wonder that I know some crazy personal stories about people getting their cars stolen and the police doing nothing.
Anyways, I don't want to rant even more, all I can hope is that for younger people in Canada to realize that the best thing they can do is hop to the US or something.
[0] https://www.financialsamurai.com/what-if-the-u-s-housing-mar...
There are loads of cheap houses in the USA. They're just in places where most people don't want to live.
Here's a cheap house:
https://www.zillow.com/homedetails/420-Tyler-St-Gary-IN-4640...
The commute to Southern California is pretty killer though.
The problem is what is the incentive to keep working once you've earned a house and bach? Why bother save for retirement if your savings are to be taken from you at a significant percentage per year? A few percent is a huge penalty (see index funds versus mutual funds), and the wealth tax is on top of taxation of salary and dividends.
assets over $1m - a threshold the party thought would hit the wealthiest 6 per cent of New Zealanders. The higher [$2m] threshold means only the wealthiest 0.7 per cent of households will be targeted. The $2m threshold is a net figure, meaning people with mortgages and other debts would need $2m of equity before they began paying the tax.
And incentive is to borrow money on property which is whacko, and then next thing CGT will also be added.
Houses should be for living in, not financial instruments.
They've already announced measures to reduce student visas which were uncapped previously.
https://www.ft.com/content/085cda38-9060-4da1-8532-1a3af9cd7...
Still. This isn't going to solve the issue. They need to build far more than they currently are doing. They need to strip local government of its veto over housing. They need to definancialize real estate.
In the 3 banks I've worked with in Canada, all were completely unable to access my American credit history.
The governments do share tax data, but AFAIK the banks have no way to link "John Smith SSN:123-45-6789" to "John Smith SIN:098-76-54321". They even have my US SSN number since Canadian banks report to the IRS.
Edit: here's experian explaining it: https://www.experian.com/blogs/ask-experian/u-s-credit-histo...
That and lack of venture capital/funding and, I've heard, increased government barriers compared to the USA, reduce the number of local tech companies.
The one bright spot in the past decade are the AI hubs in Toronto and Montreal - but they seem to be mainly satellite offices for USA companies.
[1] https://sexxis.github.io/classprofile/ , 2021 UWaterloo SWEng profile
[2] https://uw-se-2020-class-profile.github.io/profile.pdf , 2020 UWaterloo SWEng profile
[3] https://krishn.me/syde-2018-profile.pdf, 2018 UWaterloo SysDesEng profile
[4] https://joeyloi.com/SYDE2017classprofile.pdf, 2017 UWaterloo SysDesEng profile
Edit: looks like we had to ask you exactly this before: >>34844518 , about exactly the same topic. Can you please not do this on HN? It's not what this site is for, and destroys what it is for.
You're repeating bullshit - The majority of spending in New Zealand is not by the wealthy but by the rest of the majority of kiwis[1].
If people earning less than $100k waste 5% of their income, and people earning more than $300k waste 50% of their income, then the people earning less than $100k are wasting more.
We're not in the USA with Jeff Bezos, so your point just makes no sense.
The majority of earners I know blow more than single digit percentages on unnecessary crap and luxury. For example my working class friends that spend more than 10% per week on booze and drugs - plenty of people spending more than $150 with a weekly income <$1500.
Look around you and there are obviously not a lot of superyacht stores. Plenty of booze shops doing a roaring trade and it isn't the $300k+ earners in them.
The wealthy people I know invest. If those investments are bringing foreign income into New Zealand, we already tax that and all New Zealanders win!
The government needs to get rid of the bad property investment incentives - those are where the wealthy are fucking over the non-wealthy. We have enough land and resources in New Zealand for everyone to have their own home.
Don't discourage people from investing in things that make New Zealand better off. Our taxation system discourages founding internationally competitive businesses, and it discourages owning more than $50k in overseas shares. And the majority of New Zealanders don't give a shit because the majority don't begin such businesses and they are ignorant about where their income to buy imports ultimately comes from.
Negative incentives matter, probably more than positive incentives. We all want to slowly tax the well off until they leave or until they are no longer well off.
[1] Data based on: https://www.ird.govt.nz/about-us/tax-statistics/revenue-refu...
no: - I'm using the numbers in the quote in my comment, and from the link I gave you.
Taxation rules create incentives and disincentives. If you earn a salary you are usually ignorant of those incentives because you don't experience them. From what I see the attitude is "fuck everyone who is better off than me".
Our rules need to encourage people to make NZ better off. Not have the incentive to stop once you have gotten a $20m home: https://www.trademe.co.nz/a/property/residential/lifestyle-p...
Anyone that owns businesses worth $20m is already taxed on income. Giving a big middle finger to people that build businesses is silly.
Disclosure: I am not anywhere near the big salary or wealth numbers we've mentioned.
But as leveraged as Canada is, Canada is well below the average for debt-to-GDP ratio of the G7 (admittedly skewed by Japan's monster debt, but still well below US debt). https://www.visualcapitalist.com/government-debt-by-country-...
Yes, you are correct that the USA is bigger and has more money than Canada. If you think about it globally (as one should), but it's worth noting that they're not so much moving to the USA as they are specifically the Seattle & Bay Area, and they're doing so at lower rates than for comparable Americans living outside those areas. Also worth noting, for the most part, they aren't founding companies in the US. The pattern is to go to the US, work for large tech companies, and about half return to Canada within 5-10 years, which is when they're more likely to engage in entrepreneurial pursuits.
Just looking at the financial might of Seattle & the Bay Area, it's amazing that 90% of Canada's innovators and entrepreneurs aren't in the US. It suggests that the country is perhaps more supportive of innovation than this narrative being presented.
> That and lack of venture capital/funding and, I've heard, increased government barriers compared to the USA, reduce the number of local tech companies.
The conservative financial system and comparative size of Canada does mean there is much less "free money" flowing around, though as demonstrated from the examples I provided, companies do procure foreign investment, particularly from the US, with comparative ease.
...and while you'll always here entrepreneurs complain about government barriers, having started up companies on both sides of the border, I can tell you that in many ways Canada has comparatively smaller government barriers. In particular, the universal health care and generally more significant social safety net also means that it's a lot easier for prospective entrepreneurs to leave jobs at stable businesses and take on greater risk. It's just one of many ways that while it is harder to get capital in Canada, you don't need as much to get going. This is probably part of the reason that a larger percentage of Canada's labour force (67.7%) [1] is employed by small businesses than the US (46.4%). [2]
AI hubs in Toronto & Montreal are more than just satellite offices for USA companies. You may recall that Geoffrey Hinton, "Godfather of AI", was in Toronto, teaching at U of T, when Google bought the startup he founded with Alex Krizhevsky & Ilya Sutskever... in Toronto. The modern AI revolution traces back to innovative work in... Toronto!
1. https://ised-isde.canada.ca/site/sme-research-statistics/en/...
2. https://advocacy.sba.gov/2023/03/07/frequently-asked-questio....
They used to try to overbuy milk powder in NZ, ignoring supermarket limits imposed bc NZ mothers couldn't find enough formula for their kids. Chinese buyers would sell it back to China to make a tidy profit, after their baby formula scandal drove demand for foreign baby formula (which still exists today). Worked at a supermarket at start of uni, got so fucking sick of being screamed at in mandarin bc I refuse to sell them 30 tins when the limit was 2. Over and over, every damn shift.
Source that isn't me: https://www.nzherald.co.nz/nz/china-buys-up-big-in-nz-baby-m...
Yep. They don't buy Chinese stocks either. They would invest in property within China.
The kind of Chinese moving to Canada (and Australia) after 2008 aren't "most Chinese".
They tend to be from much more affluent and connected backgrounds. Think businesspeople, large property owners, or middle level party members.
Upwardly mobile Chinese (eg. Those in the tech industry or finance) will target the US or Singapore if they emigrate because they can keep their careers - something which Canada absolutely sucks at (eg. Most foreign degrees aren't recognized, white collar salaries have largely stagnated since the 2000s, blue collar work like oil drilling pays much more)
Blue collar/middle class Chinese tend to target Malaysia, Thailand, or Singapore because it's easy for Chinese to emigrate and average salaries are higher and they can blend in as the Chinese diaspora is massive in all those countries
> On a relative basis, right? In absolute terms, it’s still very low. Similar to the practical requirements for opening an American brokerage account
But faith in it is low for most Chinese. The 2015-16 market crash was extremely volatile.
Also, stock investing is a new concept for a lot of Chinese - stock markets started unofficially in the 1987-1991 period, didn't formalize until 1997, and most companies preferred listing in Hong Kong or Singapore until the 2010s.
Also, if you have a finite amount of cash, you would be chasing the highest stable returns, and for most of the post-Mao era, that was in real estate.
> Do you have data for this
I'm using Shanghai as my example, but it's the same story for Shenzhen, Beijing, and Guangzhou - the Tier 1 cities.
The real estate bust happened in cities outside of those, but specifically, in property located outside the "Inner Ring"
Chinese cities are planned with 3 rings - an Inner Ring with all the businesses, government offices, and residential property of people working for both, a middle ring that would often be industrial but increasingly converted into residential, and an outer ring that was farmland until 10-15 years ago when it was converted to residential.
It's that expansion of outer ring construction in all cities across China that caused the property bust.
Inner Ring residential property is basically VIP. Those are the kinds of people buying property in Canada.
From 1995-2021 [0] From 2022 [1]
[0] - https://www.statista.com/statistics/1325915/china-average-pr...
[1] - https://www.statista.com/statistics/243404/sale-price-of-res...
If you cherry pick the localized data, even the worst off suburbs of Toronto you see a dip of just over 22% with a pretty quick reversion to the mean. If you look at metro areas, none of the cities in Canada saw greater than 10% drops from 2022 peaks, and they have all recovered from the bottom.
The irony is the US talks a lot about financial transparency for other countries, but the US itself is the preferred place if you're looking to launder money.