Absentee Bondholders? Ireland is 3rd Biggest Holder of US Treasury Bonds: $314,000,000,000 – Equal to it’s Annual GDP! Yet Ireland Benefits Little
A recent drop in Irish held US Bonds and Russia selling off most of its US Treasury Bonds, has once again highlighted the fact that Ireland is the third largest US Treasury Bond holder in the world, where Bonds held in Ireland equal the country’s annual economic output (GDP)! However this pot of gold is not Irish.
This huge disparity exposes the fact that most of these Bonds are not held by the Irish State nor Irish citizens, but rather by “Absentee Bondholders” who merely use Ireland as an address in order to dodge huge taxes. The situation however should bring up similarities and painful memories of “Absentee Landlords” where huge swathes of Irish land was given to the British, many of whom never ever visited the actual properties, but extracted huge profits from them, whilst the Irish tenants suffered greatly, especially during the great famine in the 1840’s.
Ireland has an unbelievable amount of financial companies on paper in the IFSC. There are companies managing tens of Billions of dollars that are literally just a post box. Ireland manages $5 Trillion in Financial products, which is about 15 times the size of it’s Economy! Even the hapless Mitt Romney who failed a bid for President in the US, managed most of his wealth from Ireland.
Many of these are Irish companies, but not Irish owned. So they are probably double Irish structures, meaning no country is receiving tax on them. Like the way many multinationals don’t pay tax on any of their profits in Ireland.
As many will remember, in 2015 The European Union ordered Ireland to collect $14.5 billion in unpaid taxes from Apple, a record penalty that worsened tensions with the United States over the bloc’s crackdown on sweetheart deals with global multinationals. Europe’s competition enforcer said that Apple’s illegal deals with the Irish government allowed the technology giant to pay virtually nothing on its European business in some years. The arrangements enabled Apple to funnel profit from two Irish subsidiaries to a “head office” with “no employees, no premises, no real activities,” the commission said.
By doing so, Apple paid only 50 euros in taxes for every million euros in profit during 2014. As part of its ruling, Europe demanded that Ireland recoup 10 years’ worth of back taxes, some 13 billion euros, or about $14.5 billion, plus interest. Controversially the globalist Irish State declined ot collect the huge sum of money which would certainly have benefited Irish citizens.
This disparity also reflects Ireland’s hosting of the European hubs of Globalist U.S. technology and multinational pharmaceutical corporations, mainly because Ireland is the only English Speaking country in the European Union.
Apple (AAPL.O), Google (GOOG.L), Microsoft (MSFT.O) and Pfizer (PFE) all have long-established Irish operations and large amounts of cash they stash outside of the USA in order to avoid repatriation taxes which Trump recently reduced.
Pfizer for instance bases some of its treasury management operations in Ireland and Linkedin profiles show staff employed there in “fixed income management”.
These US subsidiaries are not required to publish separate accounts, and so it is unclear how much of their cash might be stashed in Ireland.
The TIC release for February, the latest month for which data is available, meanwhile tracks only the registered location of U.S. government securities held overseas, not who owns them.
This a sudden drop in the stock of U.S. Treasury debt held in Ireland fueled speculation that Globalist U.S. multinationals may be shifting some of their gigantic cash piles back to the United States in response to Trump changing how foreign earnings are taxed. Could this be a source of liberal Leo Varadkar’s “Trump Anxiety Disorder“?
After rising a staggering six-fold since 2012, Irish-based holdings of U.S. Treasuries fell by $13.5 billion (9.8 billion pounds) in February, according to data from the U.S. Treasury International Capital, or TIC. Their biggest ever monthly drop. Ireland emerged as America’s third-largest creditor following China and Japan after the U.S. government revised the way it reports the figures last year.
Russia’s has recently sold off most of its holdings due to an assessment of financial, economic, and geopolitical risks, according to the chief of Russia’s Central Bank Elvira Nabiullina. The official said gold purchases were helping Russia to diversify its wealth.
Despite the escalating threat of a trade war, China is still the number one foreign holder of US Treasury bonds. The latest data shows that the country’s holdings grew by $1.2 billion in May to $1.183 trillion, remaining within the same range since last August.
Despite systematic reductions, Japan remains the second largest investor in US securities. In April, Tokyo reduced holdings to $1.031 trillion, the lowest since October 2011, but increased them by $17.6 billion to $1.049 trillion in May.
After Japan is Ireland which although it has close ties with USA, the sizze of its holding seems out of proportion to its ranking in the world economy.
After China, Japan and Ireland, the list of the largest holders of US Treasuries is made up of countries and offshores:
These include Brazil – $299 billion, UK – $265 billion, Switzerland – $243 billion, Luxembourg – $209 billion, and Hong Kong with $192 billion. The Cayman Islands reduced the share in the US holdings from $250 billion in April 2017 to $186 billion last month. Taiwan’s share reached $165 billion, while Saudi Arabia and Belgium hold US bonds worth of $162 billion and $151 billion.
According to latest study by advocacy group Tax Justice Network, only several states from the list are not included in the Financial Secrecy Index, which ranks jurisdictions according to their secrecy and the scale of their offshore financial activities.
Switzerland, Cayman Islands, Hong Kong, Singapore, Luxembourg and Japan were included into the top 15 nations demonstrating financial secrecy. The index, that places the US in second place, also includes the UK, Ireland and China. The minor holders of US Treasuries, such as Germany, the United Arab Emirates and Taiwan were also listed in the ranking.
When it comes to structure, foreign entities keep $6.17 trillion, which is some 29 percent of the entire US sovereign debt. More than 27 percent, or $5.72 trillion, is held by US government entities such as pension funds. About 11 percent, or $2.39 trillion, belongs to the Fed as a result of quantitative easing. The biggest portion of 32.2 percent, or $6.86 trillion, is owned by US institutional and individual investors.
A US Treasury bond is a fixed-interest government debt security with a maturity of more than 10 years. Treasury bonds make interest payments two times a year. The Treasury sell-off that had started last September peaked with the 10-year yield at 3.11 percent on May 17. Since then, the 10-year Treasury has rallied under heavy demand, and the yield has reportedly fallen.
Don Murray
