Small Country

Nadia and i after shortly after we got married, moved to Australia. I began teaching and the Aussie students loved to hear my American accent and asked if I knew the various Hollywood celebrities they saw on TV and movies. I laughed because I didn’t think they realized that the USA had over 300 million people and I was from Michigan, a long way from Los Angeles. Australia has a population of 18 miillion, and I guess an ordinary citizen’s chances of meeting or getting to know a celebrity like Nicole Kidman, was higher than mine. By the way, one of my first substitute teaching jobs when I moved to Australia, was at the actor Heath Ledger’s old school, the Guildford Grammar School.

Serbia is even smaller than Australia, and the capital city, Belgrade, has a population of 1.5 million in the metro area. Working in the richest private school in the city and living in the most expensive neighborhood, it is easy to meet the “celebrities” of Serbia. Last weekend, our middle school girls’ basketball team hosted a local basketball club. On the visiting club team was the daugher to Serbian President, Boris Tadic. He can be seen in the crowd in the photo above. He is the grey-haired gentleman with the white-striped jacket. He also lives just a few houses down from our new apartment. One nice thing about him is that he is a former high school psychology teacher.

In my time here in Serbia, I have met many of “rich and famous” and it is interesting to see their lifestyle up close.

Latest Reading: “Treasure Islands: Tax Havens and the Men Who Stole the World” by Nicholas Shaxson

Nicholas Shaxson is an English economics writer for The Financial Times and The Economist. This book is an excellent introduction to tax havens. He defines tax havens by ”places that seek to attract business by offering politically stable facilities to help people or entities get around the rules, laws, and regulations of jurisdictions elsewhere.” I was aware of these places due to my expatriate lifestyle, as many expats have bank accounts or do business in these types of places. I wasn’t aware of the magnitude of the money found in these tax havens. Shaxson argues that these tax havens were a big cause of the global economic meltdown recently and that they do much damage to countries that are missing out on tax revenue. The book is an excellent introduction to this world, and he is a good storyteller and it is an easy read, not very much financial jargon. I enjoyed the book and recommend it to others who want to know more about this.

As I am typing this book review, I am following the Australian Open Tennis Championship, and I notice how many of the players live in Monaco or Monte Carlo, two tax havens! All three of Serbia’s superstars, Novak Djokovic, Jelena Jankovic, and Ana Ivanovic, live abroad. Imagine how much tax money Serbia is being deprived by these people living outside the country. I also think many high income earners avoid taxes this way. Shaxson describes how the system began historically and how they spread and maintain themselves.

Tax havens offer secrecy, very low or zero taxes, and have a financial service industry that is very large compared to the size of the size of the local economy. I learned that the world contains about sixty secrecy jurisdictions.

The most important is of all places, London. I thought that with the British organization, that this would be the last place where people to hide money from tax authorities, but “The City of London” is private organization within the municipality of London, that is outside of the government laws, not only city, but on par with the British Monarch and Prime Minister. This is historical, and Shaxson devotes an entire chapter to looking at it.

It was his impression that the latest global economic crisis, was caused in a large part, by these financial service companies and investment banks, operating unregulated in these havens. This offshore system is huge, with expert estimates stating that about half of all banking assets, and  a third of foreign investment is found in these havens.

Other European places that are tax havens are the Serbian tennis professional enclave of Monaco, the Netherlands, Luxembourg, Jersey Island, and, the traditional Switzerland. Shaxson debunks the myth that the Swiss bank secrecy began with the Nazis. It started before them, and it came about because Swiss farmers, and the traditional of independence of the isolated, mountain valleys in the country. They keep the country together by having autonomous regions.

Some other places in the world are the Cayman Islands, Bahamas, Hong Kong, (outgrowth of the British Empire and the City of London), and the USA is not exempt, with Florida, the Virgin Islands, etc. Shaxson also points out that much illegal (drugs, arms sales, dictator theft) ends up in accounts in these areas. Also, many multinational corporations, like petroleum companies, use these to avoid taxes.

I can see why rich people and companies do not want to pay taxes and how they justify them. I am sure Novak Djokovic is saying that the Serbian government is corrupt and his money would not be used well. He also gives back much to Serbia through promoting the country, winning the Davis Cup, charity, etc. The author however, is dead set against this and he does have many valid points. He points out how the British media loves Virgin’s Richard Branson, who nonetheless, is a major tax-dodger. It is the “little guy” who can’t get out of paying the bulk of taxes. In the last chapter, he gives a list of reforms that would track down this money distribute it to various nation’s governments.

Last week I met gentleman who worked for the German tax authorities. It was his job to work in London, tracking down Germans that owe taxes. It was funny in the book that the rich Russians refer to it as “Londongrad.” I would have to agree with Shaxson, in that this lost revenue could help countries. The book also got me to think about my retirement accounts and savings. Where do I want to put them…

I recommend the book to anyone who wants to learn more about this topic and it is also good for expatriates to read.

 

The People I Work With Everyday

ISB Administration Team - 2011

I am fortunate to work with outstanding people. I’ve really enjoyed the professional sharing, support, and camaradarie of the administration team at our school.  We’ve all had different experiences in education and are from different parts of the US and the world. This diversity of experiences and backgrounds has really helped me improve and grow as an educator. I appreciate the support, honest feedback, and trust we have.

From left to right are school director Eric Sands, lower school principal Tim Moynihan, IT director “Bane” Nikolic, Business Manager Zhana Hasanovic, yours truly, and MS Coordinator, Mark Noonan.

Ocean’s First Toboggan Run

 

Oceanćs First Tobaggan Run, originally uploaded by bill kralovec.

I promise not to do too many “kids in the snow” photo and video posts this year. I couldn’t resist however last weekend. We took the kids to Košutnjak Hill for some tobogganning. Ocean went down solo for the first time. She doesn’t like the snow as much as she does the water.

We really enjoyed the big snowfall and hopefully, more snow is on the way.

Family Journal: Saturday January 22, 2011

 

Ocean is shown above playing in the snow. We had a nice family Saturday yesterday. The snow continues to fall as I write this early Sunday morning and we plan to hit the sledding hill after breakfast. Yesterday I had a nice day with the kids. We had snowball fights, played snow football and enjoyed our new garden. It is a massive play space with many huge trees (I am a big tree lover!). I anticipate many good times in there in the years to come.

I made another moving run, taking a full car of stuff from our old apartment to the new place. Nadia organized a bit in the kitchen and the place is really coming into shape. I reckon in another week, we’ll be finished with the move. I took the boys to our intrasquad basketball scrimmage and afterwards, fellow coach Eric Sands hosted both the boys and girls’ basketball teams for a get-together. The high school students are always great with my children. My kids are exposed to a variety of cultures and interests. Shahaf a grade nine student, shown below, taught the boys a bit on the piano. After basketball season, I plan to take piano lessons, and after seeing Oliver last night, perhaps him too. It would be good to get our family playing music together.

Snow & Introduction to Dedinje: January 21, 2011

Yesterday Belgrade received a decent snow! It was only the second snowfall of the winter, the first being right before we left for Bahrain, on December 18th. I can’t wait to go outside and play with the kids today! I will definitely be posting photos our our family winter fun. Nadia, Oliver, and Owen are shown above walking to the car. Our new apartment building is in the background.

We will be finishing our move this weekend also (hopefully). We moved suburbs, going from Senjak to Dedinje. The suburb of Dedinje, which means “Old Man’s HIll” (note that deda is grandfather or old man in Serbian), is the most exclusive, and in my opinion, the most interesting neighborhood in Belgrade. The area reminds me somewhat of Gross Pointe, in suburban Detroit. That is a nice thing about teaching overseas – educators can live in the nicest neighborhoods in the city. In the US, our middle class salaries put us in more modest areas.

Anyway, Dedinje is interesting because of all the history that has occured here. The suburb is located on the slopes of Topcider Hill, and was home to the city’s rich and elite for many generations. After World War II, Tito and the communists came in and occupied the mansions and villas of the old money families of Belgrade. Later, ex Yugoslav President Slobodan Milosevic, and other shady characters like Arkan, moved in. I’ll be posting about the various aspects of the suburb for the next couple of years. Our apartment is quite modest compared to the diplomatic residences and other mansions around us. It is very comfortable however, and we’re very happy to be in a newer and better constructed apartment. We are just off the main drag of the suburb, ulica Užička. (ulica is street in Serbian, and Užiče is a city in southern Serbia)

Moving – Family Journal January 18, 2011

Owen & Oliver, originally uploaded by bill kralovec.

We’ve been quite busy since our return to Belgrade last weekend. It was a busy start to the school year with getting the second semester off and running and coaching basketball. Outside of school, our time has been devoted to moving apartments. After 2+ years in Senjak, we are moving to a different suburb. I’ll be blogging about the move and our new home later this month. Above, Owen and Oliver are shown playing our first soccer game at our new apartment. We should be in the house this week.

As you can see, there is no snow on the ground. Temperatures have been quite warm, and it is strange to have such a green winter. All is well and I should have more time to blog later this week.