Wednesday, January 28, 2015

Hanergy scam: how can this possibly end well?

Hanergy is currently the worlds largest (by market cap) solar energy company, supposedly worth $18 billion. Financial times just published an article trying to figure out exactly what this company does and if it actually makes any money at all.

My guess is that people will be scratching their heads a year from now wondering how any idiot could have fallen for this scam.

Here’s how it works:

The public Hanergy has only one customer, its own parent company Hanergy Group. However, it’s parent company doesn’t actually “pay” for anything and almost all of the assets of Hanergy are actually accounts receivables owed by its parent group.

The public company makes “equipment” that is used by nine factories owned by the parent group. These will supposedly manufacture huge amounts of solar panels, although none of them has actually shown up in the wild.

It’s not clear that Hanergy (the public company) even has any products that anyone other than the parent company would want to buy, so if the parent company ran into problems, Hanergy would have no customers and be worth nothing.

Wednesday, January 21, 2015

Tax advantages of being an American citizen living abroad with children

I know I complain a lot about having to file US taxes every year, but for many Americans living abroad with children, they may actually be missing out on a significant tax refund:

Juan and Jill live in Spain. Jill is a US citizen; Jill makes 80,000 annually and Juan is a native Spaniard who doesn’t work. They have no other income. They have 3 little kids all under 17.

There are three options:

1) Jill doesn’t file US taxes and risks getting in trouble if she ever goes back to the US.

2) Jill files US taxes using the Foreign Earned Income Exclusion, end up owing 0 in US taxes.

3) File joint US taxes using the Foreign Tax Credit for taxes paid in Spain. Juan elects to be treated as a US resident for tax purposes under §6013(g). They fill out form 8812 “Additional Child Tax Credit” and get a refund of $3000 from the IRS.

Thursday, December 11, 2014

Public sector salaries in Spain

The brouhaha about how much high-level public sector employees is kind of missing the point:

  1. Yes, you need higher salaries if you are going to attract the best people
  2. However, all the current high-level public sector employees are PP flunkies who are barely qualified for their position

What is the solution? A starting point should be minimum qualifications and open competition for these positions.

Tuesday, December 2, 2014

Who is the lucky seller of oil hedges?

Everyone thought that US shale oil producers would get killed by the drop in oil prices. Turns out that they were smart enough to hedge their production back when the prices were high. For example, Miller Energy hedged 1.4 billion barrels of oil at around $95 until the end of 2016. Someone is going to have to mark-to-market $36 billion in losses (and that’s just for one of the producers), and I wonder who the lucky owner will be.

Saturday, November 29, 2014

Gender violence/abuse and protection orders

Spain has a very dysfunctional way of dealing with gender violence, and especially in protecting children from abusive environments. A recent story in El Pais showed that 97% of men with protection orders against them still visit their children. Since 2008, 20 children have been killed during these visits.

From seeing someone go through the court system here in Sant Cugat (everything goes through the court in Rubi, which is pretty bad), here are some of the things that shocked me:

The speedy trial:

  • If you call the police while you are being abused, they will take away the abuser and put in him jail pending a hearing which happens within a couple days.
  • This hearing IS THE TRIAL, so if you don’t have your shit together and can present a coherent case with evidence, etc, it can be difficult to even get a protection order. There isn’t really a chance to work with a lawyer, collect evidence, get translations, etc.
  • If you believe you were treated unfairly, you can appeal, but it will probably take years to get anywhere.
  • Basically if you are in an abusive relationship, but haven’t got the courage to call the police yet, you should at least be talking to a lawyer to prepare a case so that when you do finally make the call to 112, you won’t lose your chance to make a case.
  • Expect your ex to lie outrageously. Remember that there is no penalty for lying in court if you are the defendant.
  • Be very careful of how you answer questions like, since it can mean the difference between shared or exclusive custody later on:
    • “Is your partner a good father?”
      • If you say yes, this will be held against you. The correct answer is: “No. A good father does not hit his wife”
    • “Does he hit the children?”
      • Again, if you say no, this will be held against you. The correct answer is: “He has a tendency for violence. I don’t know how he acts when he is alone with the children.”

Child kidnapping:

  • Expect your partner to take your kids and try to use them as a negotiating ploy. If there is no court ordered custody agreement, your partner keep the kids as long as he likes as long as he tells you where they are.


  • Witnesses may be afraid to testify: there should be a provision for the identity of witnesses to be protected, but as far as I know there isn’t.
  • Audio recordings: even if you have a recordings of your partner yelling or threatening you, it is difficult to get these admitted in court.
  • Medical evidence: there isn’t a standard way for the court to get a doctor to testify as to the nature of any wounds etc. Good luck finding someone in the short amount of time you have before your speedy trial.

Criminal vs civil tracks

  • There are two completely separate “tracks” that your case can take, criminal (try to send your ex to jail) or civil (getting a divorce/custody hearing).
  • Unless you are pursuing the criminal route, you can’t present evidence of criminal behavior in the civil route.
  • Neither can the criminal route determine your divorce settlement.

Leaving the country

  • If the kids have a passport, put it in a safe place.
  • Almost all countries (with a couple exceptions like Japan and Cuba) will immediately force your kids to go back to Spain (with or without whoever took them) with barely a judicial hearing.
  • Your partner can file criminal child kidnapping charges against you and/or gain full custody of the kids while you are gone.
  • Fundamentally you don’t gain anything by doing this, and it will be held against you.

Friday, November 28, 2014

How realistic are the economic plans of Podemos?

Given the ridicule heaped on the economic proposals of Podemos, my impression is that they are not actually that far outside what is possible if you run some basic numbers.

How much room does Spain have in raising taxes? Currently Spain collects about 37% of the GDP in taxes, for a total of about 500 billion euros. Germany (who we must all now worship as the model of economic success) collects 45% of their GDP in taxes and is doing quite well. If Spain raised their taxes this amount, there’d be about 100 billion euros of additional spending capacity.

The 600 euro a month basic income, multiplied by 47 million residents would come out to about 30 billion euros. However, much of this would find its way back to the government in forms of taxes collected (since it is likely people would spend this).

Spain is actually incredibly stingy when it comes to social transfers in general. For people with less than 50% of the median income, only 14% of their income comes from social transfers, vs 47% in Germany.

The belief that the only agency capable of making change is the European Central Bank (which by design is supposed to be independent of elected officials) is to me a stunning abdication of the responsibilities of national governments.

Tuesday, November 25, 2014

I love CurrencyFair

After paying God knows how much in commission transferring money back and forth between the US and Spain, I finally found a solution that isn’t a complete rip-off.

(In terms of pure money exchange, the best is Interactive Brokers and charges absolutely minimal commissions. You actually trade the currency, so the price you get has no spread whatsoever. The downside is that this it is a brokerage and isn’t meant to be used as a money transfer service and there are restrictions on moving money out too quickly after moving it in)

CurrencyFair works quickly as well, and I’ve gotten exchanges within 0.1% of the current rate. The way it works is that you send the deposit to CurrencyFair via ACH or SEPA. Then you use the internal market to exchange the currency. The internal market has a built-in spread of 0.15% (however, if you put in a bid at 0%, it can get hit).

Sometimes the order book is a bit sparse and you have to wait to get a good rate (they will step in and give you a commission of 0.4-0.5% if no one else is willing). Once you’ve done your exchange, you can directly transfer the money to your US or Spanish bank account, and it arrives within a day or two.

It’s also useful even if you don’t want to do currency exchange, since some banks here charge commissions even to just accept foreign bank transfers.

Note that they don’t accept US residents, but they do accept US citizens that live in Spain with no problem.