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(Especially noteworthy articles’ headings highlighted in gold.)
MUTUAL LEGAL ASSISTANCE TREATY (MLAT) NEWS
Supreme Court of British Columbia Chief Justice denied a request for information via the US-Canada MLAT due to a finding of “abuse of process” by the IRS in connection with efforts to obtain records relating to alleged tax offenses of offshore promoter Jerome Schneider. An international tax attorney labeled it a setback to the United States because “The case shows the ability or targeted persons to raise constitutional and other legal issues, even though new US-MLATs expressly state that MLATs are between the treaty states only and do not give rise to any rights of the investigated, defendants or third parties.”US vs. Schneider (Supreme Court of British Columbia) link here.
Coalition of freedom-oriented organizations expresses concern that two proposed anti-money laundering laws will actually hurt the fight against terrorism by discouraging other nations from assisting the United States in its investigations. The claim is that both proposed laws create protectionist barriers and regulatory burdens that threaten political and financial ties with many nations. Complete letter to President Bush here.
POWER HUNGRY U.S. POLICE WANT MORE
WASHINGTON: Cops want limits on police spying and surveillance of its own citizenry lifted. Civil libertarians argue that the fear of police abuses in a war on terror is neither speculative nor paranoid, in light of history. New York Civil Liberities Union director says "New York is a town of big mouths. If we chill dissent and stop being the city of big mouths, the nation loses something vital, even if it doesn’t realize that now."More on this story here.
BUSH CREATES “PARALLEL LEGAL SYSTEM”
Terrorism suspects -- U.S. citizens and noncitizens alike -- may be investigated, jailed, interrogated, tried and punished without legal protections guaranteed by the ordinary system, lawyers inside and outside the government say. President alone can designate individuals, including U.S. citizens, as enemy combatants, who can be detained with no access to lawyers or family members.More on this story here.
Why the Pentagon will watch where you shop. Should Uncle Sam know as much about you as MasterCard does?More on this story here.
Actions taken since September 11 in the effort to combat terrorism effectively erode individual freedoms while exceeding the historical powers assumed by past presidents in times of national emergency, according to a new report from a New York think tank. These actions also hold little prospect of improving the chance of stopping terrorist threats. “The attempt to detain Americans and then treat them as prisoners of war, even when they were arrested on U.S. soil, is virtually unprecedented,” said report writer, noting that this did occur to some extent during the civil war, but not since.More on this story here.
“HOMELAND SECURITY” MEANS SPYING ON YOU
Privacy advocates warn that the nation is indeed experiencing the beginnings of a real-life Orwellian nightmare. “The Department of Homeland Defense is another example of ... providing authority to the executive branch with a lack of effective oversight and checks and balances,” says People for the American Way legal director.More on this story here.
RESISTANCE RISING IN AMERICA
Abuse of liberties by government creates growing opposition. House majority leader Dick Armey says “The Justice Department ... seems to be running amok and out of control. ... This agency right now is the biggest threat to personal liberty in the country.” Fort Wayne, Indiana newspaper notes that “The power to demand reading lists from libraries could have been drawn from the pages of Ray Bradbury’s Fahrenheit 451.” Continued growth occurring in the number of cities and towns throughout the nation of Bill of Rights Defense Committees or their equivalents, a number of which are working with ACLU affiliates. ACLU $3.5 million campaign to defend the Constitution, called “Safe and Free”, now airing TV ads.
Notes a Madison, Wisconsin high school student, with regard to The Patriot Act: “For many of you in this room who were active in the civil rights movement of the ‘60s, you’ve been down a similar road before, and for my generation it’s a road we don’t want to go down again.”More on this story here and here.
“SECURITY” BECOMES “SECRECY”
Attorney General John Ashcroft, who is sworn to enforce all laws, has told federal employees that they can bend -- perhaps even break -- the Freedom of Information Act, and he will even defend their actions in court. Terrorism excuse used to prevent researchers from evaluating effectiveness of government efforts, and subsequently embarrassing beaurocrats.More on this story here.
How government secrecy operates in real life. Governments have a tendency to classify everything. World War II memories of Japanese newspaper clippings being stamped “classified”. Far fewer conspiracies than examples of stupidity and incompetence, and a keen desire to cover up both.More on this story here.
SWISS-EU TALKS COLLAPSE ... FINANCIAL PRIVACY WINS
Swiss refuse to help other EU states in the milking of their citizens, despite the threat of sanctions and other pressure. Swiss officials have argued that the secrecy laws are fundamental to Switzerland’s financial services industry, and that scrapping them would simply prompt depositors to move their money to other nations offering tax havens. Because tax evasion is not considered a serious crime under Swiss law, Swiss officials do not waive bank secrecy to assist foreign prosecutors in such cases, as they do when fraud, terrorism and other criminal matters are involved.
“As a human being, I believe financial privacy is a fundamental right. I don’t have to sacrifice my financial privacy on the altar of transparency,” says said Raymond Baer of Bank Julius Baer.More on this story here, here, here, here, and here.
US COURT UPHOLDS RIGHT TO LEGAL COUNSEL FOR ALLEGED COMBATANT
A U.S. citizen accused of plotting to explode a radiological “dirty bomb” in the US must be granted access to an attorney to challenge his detention as an enemy combatant, a federal judge in New York ruled yesterday. Administration’s assertion that allowing accused access to his attorney would impede intelligence gathering and jeopardize national security is rejected. ACLU, which filed a brief on Padilla's behalf, called the decision “a critical repudiation of the Bush administration’s claim of virtually unbridled power to unilaterally detain an American citizen and to hold him incommunicado indefinitely.”More on this story here.
PGP OPENS UP ENCRYPTION SOURCE CODE, RELEASES VERSION 8.0
The code for the entire PGP 8.0 line, which was released on Monday, is available on the company’s Web site for free download. Users can review the code but cannot reuse or modify it. “We believe that releasing the source code for security-related software should be a standard industry practice and a requirement of any serious security vendor,” says company CEO.More on this story here.
CARIBBEAN NATIONS OPEN BOOKS
In the past year, four more Caribbean nations have made their banking systems more transparent to the U.S. Internal Revenue Service in return for favorable tax status for U.S. company meetings. Caribbean-area countries that have signed TIEAs with the IRS include Barbados, Bermuda, Dominican Republic, Grenada, Guyana, Jamaica, St. Lucia, Trinidad & Tobago, Venezuela, Antigua & Barbuda, The Bahamas, The Cayman Islands, and The British Virgin Islands.More on this story here.
CENTER FOR FREEDOM AND PROSPERITY TESTIFIES AGAINST I.R.S. PROPOSAL
The proposed regulation (REG-133254-02) would require U.S. banks to report to the IRS the amount of bank deposit interest paid to foreign depositors, even though the IRS admits that this information is not needed to enforce U.S. tax law and is being requested solely for the benefit of foreign governments. “This proposed regulation will drive capital out of America and hurt U.S. financial markets. This ‘new’ regulation is based on the same misguided policies the Clinton Administration tried to sneak through during its last few days. Unfortunately, the IRS apparently puts the interests of foreign tax collectors above the interests of the American people.” IRS pushing forward despite almost zero favorable comments on proposal. “This proposal is an abuse of the regulatory process,” says Texas Rep.More on this story here, here, and here.
MAJOR REASON TO MOVE ASSETS OFFSHORE
Annual direct cost of US tort system is over $180 billion -- 1.8% of GNP -- or 2.5 times greater than other industrial nations. Estimate does not include loss of products or services that never come to market, or excessive “defensive” medical care. In many cases there is little or no relation between compensatory damages and punitive damages, and there is little rationale or predictability for punitive damages. Someone that is only fractionally at fault can be required to pay 100 percent of the compensation if they have the “deep pockets”. Reform critics say there is no crisis and the system works. But the data suggest an increase in claims and frivolous lawsuits. Roughly 70 percent of medical malpractice claims result in no payments, but the median cost of defending such a case is $66,000. From 1930 to 1994, tort costs grew four times faster than did the U.S. economy.More on this story here.
Official analysis of tort liability claims here (PDF file).Legal Methods of Asset Protection, a free condensed book on the subject of how to protect your assets from predatory lawsuits and the lawsuit lottery by Vernon Jacobs available here.
MANY IN CENTRAL AND EASTERN EUROPE QUESTION WHETHER JOINING THE EU IS WORTH IT
Pre-1989 Western Europe lived in the imaginations of those trapped behind the Iron Curtain as big and colourful, full of sufficiency and comfort, with free expression and freedom to travel. The colourful image has turned into an abstract, grey and bureaucratic colossus full of faceless white collars. After barely a decade of freedom, could it be swapping one tyranny for another?More on this story here.
WHO ARE THOSE “RICH” AMERICANS, SO OFTEN DERIDED BY LEFTISTS?
How about ordinary Americans? Of approximately 100 million households, 3.5 million have net worth of $1 million or more. Interestingly, most millionaires buy used cars, and spend only a little more, on average, than the $21,000 average spent by all Americans on all cars.More on this story here.
PITCH FOR UNIVERSAL SAVINGS ACCOUNTS
Similar to IRAs, but with higher limits on contributions and fewer restrictions on withdrawls. USAs would emerge as a popular and economically powerful financial tool that would foster upward mobility and promote savings for families who do not save enough now.Full position piece here.
TERROR THROUGH THE LENS? POTENTIAL FOR ABUSE OF NEW POLICE POWERS MADE MANIFEST.
An amateur photographer was arrested on Tuesday in his home city of Denver - for simply taking pictures of buildings in an area where Vice President Cheney was residing. After snapping about 30 pictures of the hotel and the surrounding area - which included Denver police, Army rangers, and rooftop snipers, he was arrested, and later interogated by a Secret Service agent. Photographer was told that his “suspicious activities” made him a threat to national security, and that he would be charged as a terrorist under the USA-PATRIOT act. Eventually released without explanation, and without his camera. Police deny ever having held him.More on this story here.
GOOGLE HAS MADE SUPERSLEUTHS OF US ALL
By a winning combination of smart algorithms, hyperactive Web crawlers and 10,000 computer servers, Google has become a high-tech version of the Oracle of Delphi. It is now the 4th most popular Web site on the whole Internet. In the singles world “Google dating” -- running prospective beaus through the search engine -- is now standard practice. Have a funny feeling you’re being Googled? Get used to it.More on this story here.
A “CONSERVATIVE” STAND ON CIVIL LIBERTIES ISSUES
American Conservative Union’ and ACLU’s stands are pretty much the same, notwithstanding their partisan and narrow ideological differences. Two retiring Republican House members, Bob Barr and Dick Armey, are considering working actively with the ACLU on civil liberties projects. Barr was nearly unique among former prosecutors serving in Congress in looking skeptically at requests for more power from law enforcement officials and agencies. When a new Congress convenes, who will stand in their place?More on this story here.
WHY PANAMA REMAINS A PREFERRED TAX HAVEN
Interesting discussion highlights some differences between Panama and other offshore financial centers. European countries and the US could take some lessons from the country vis a vis bank client and legal structure oversight.Full discussion here.
FATF WARNS BANKS CHARGING UNNEEDED “CLEARANCE FEE”
“People wishing to make international transfers of funds are allegedly asked by the FATF to pay fees for fictitious services relating to verification of the origin of the funds,” warns FATF on its web site. More ominously, the funds of customers who fail to pay the fees are blocked, raising the possibility that bank insiders are involved in the scam. “In fact, the FATF does not provide any such services nor does it request fees or have the capacity to block any account.”More on this story here.
IDENTITY THEFT ALMOST IMPOSSIBLE TO AVOID, BUT TAKE PRECAUTIONS
No matter how careful you are, you may not be able to avoid having your identity assumed by someone who wants to go on a buying spree, using your credit card, bank account, Social Security number or other personal data. The biggest threat today comes from insiders, employees with access to large financial databases, more than from a thief stealing a wallet or pilfering your mail. “There’s an awful lot of bribery of insiders going on”, says FTC dentity-fraud program manager. Checking one’s credit ratings every three month’s would allow early detection of fraud. Consumers can also “opt out” of programs that allow financial institutions to share data, as well as those that allow credit card issuers to grant preapproved offers of credit.More on this story here.
CANADA: US “RAT-ON-YOUR-CLIENT RULES” WORRY LAWYERS
Canadian lawyers advising Canadian corporations could soon be required to blow the whistle on their own clients if they suspect a material violation of U.S. securities law -- putting them in breach of Canada’s rules on solicitor-client privilege, leading practitioners warn.More on this story here.
ACLU MEMBERSHIP SURGES IN POST 9/11 WORLD
Since last year’s attacks, the ACLU’s membership has increased 20%, to about 330,000 nationwide. Membership fees fund $3.5 million campaign that includes TV ads criticizing the Bush administration. New members from both the liberal and conservative political communities.More on this story here.
Just what is Poindexter up to at the Pentagon? Get it straight from the horse’s mouth here. Diagram of TIA schema here.
UNEXPECTEDLY LARGE CROWD OF 20,000 MARCHES AGAINST HONG KONG LAW
Beijing-sponsored “anti-subversion” law Article 23 arousing fears. People found guilty under the new law can be imprisoned for life. Critics say the law is so loosely written it would let the authorities trample on people’s freedoms or ban groups the government does not like. Pro-democracy politicians and human rights activists have been joined by businessmen who fear the legislation could damage Hong Kong’s role as a business center. Wealthy newspaper publisher Jimmy Lai, who joined the marchers on Sunday, said the law was like “an invisible, tightening collar”.More on this story here and here.
EAST INDIA COMPANIES FIRST OFFSHORE SCAMS?
Corruption, crime, chicanery. Economies are capable of recovering and making progress, not only from physical devastation, as with Germany and Japan after World War II, but also from grand-scale economic chicanery. After bubbles collapse and interfere with economic growth, the resulting loss of income stimulates efforts, honest and corrupt, to maintain and increase income. Large scale scams may have begun in 1600 with the establishment of the British East India Company. Litany of rogues has followed, as recounted by renowned economic historian.More on this story here.
LUXEMBOURG RULING COSTS U.K. TAX INCOME
Landmark ruling by the European Court of Justice could end up costing the UK government in excess of £1 billion, ruling that certain EU member states were wrong to try to close a loophole which allows multinational companies to shift their debt around solely for tax purposes. The ruling addresses the mechanism by which multinational companies can arbitrarily assign debt to subsidiaries in some countries. Profits generated by these subsidiaries can be channeled back to the parent in the form of interest payments against the debt, rather than as profit. [Note: This is just one of many ways multijurisdictional companies can shift profits among tax jurisdictions, as discussed here.]More on this story here.
SURVEILLANCE FOR ALL
Village Voice columnist says we will all soon be under surveillance. Without any official public notice or congressional hearings, the Bush administration — with an initial appropriation of $200 million — is constructing the Total Information Awareness System. It will extensively mine government and commercial data banks, enabling the FBI, the CIA, and other intelligence agencies to collect information that will allow the government — as noted on ABC-TV’s November 14 Nightline — “to essentially reconstruct the movements of citizens”. This will be done without warrants from courts, thereby making individual privacy de facto obsolete. Georgetown University law professor Jonathan Turley pointed out in the November 17 Los Angeles Times: “For more than 200 years, our liberties have been protected primarily by practical barriers rather than constitutional barriers to government abuse. Because of the sheer size of the nation and its population, the government could not practically abuse a great number of citizens at any given time. In the last decade, however, these practical barriers have fallen to technology.” In George Orwell’s 1984, “the telescreen [in everyone’s home] received and transmitted simultaneously”, so that the viewer could be seen and heard by Big Brother. Now under development are advanced forms of interactive television that will also make this prophecy real.
So far hands-on administrator Donald Rumsfeld has gotten a pass from the press in that he escapes mention as the Bush cabinet member who approved the hiring of John Poindexter to head the initiative. Poindexter “was the master architect behind the Iran-Contra scandal, the criminal conspiracy to sell arms to a terrorist nation, Iran, in order to surreptitiously fund an unlawful clandestine project in Nicaragua.” Queried about Poindexter’s Iran-Contra history, President Bush said, “Admiral Poindexter has served our nation very well.” Democrat Russell Feingold of Wisconsin — the only member of the Senate to vote against the USA Patriot Act — urges that the administration “immediately suspend the Total Information Awareness program ... until Congress has conducted a thorough review”, and cut off the funding until then. But why even consider continuing the funding at any point?More on this story here.
THE F.B.I.- DON’T MAKE IT THE SECRET POLICE
WASHINGTON: Former Virginia governor warns in a report by his federal terrorism commission that the government must guard against transforming the FBI into “a kind of secret police” focused only on preventing attacks. The commission recommends that the government dedicate the FBI to law enforcement, and create an independent intelligence fusion agency, staffed by intelligence analysts transferred from the FBI, CIA and other agencies, that would coordinate information about potential attacks and report to the president. An additional recommendation is that the military be used to fight terrorism in the United States only in support of civilian authorities. “Protecting democracy and individual liberties is paramount to achieving ultimate victory. Coming through this crisis without diminishing our freedoms or our core values of individual liberty is the entire game. If we pursue more security at the cost of what makes us Americans, the enemy will have won.”More on this story here. (Nonintrusive registration required.)
U.S. OFFSHORE TAX POLICES TO CHANGE?
WASHINGTON: Assistant Treasury Secretary Pam Olson describes tax policy alternatives. “Viewed from the vantage point of an increasingly global marketplace, our tax rules appear outmoded, at best, and punitive of U.S. economic interests, at worst.” Can no longer set policy without regard to what the rest of the world is doing.Full speach here.
MORE COUNTRIES LEGALIZE DUAL CITIZENSHIP
Dual nationality was once likened to bigamy. U.S. President Theodore Roosevelt called it a self-evident absurdity. Now, a revolution is occurring in citizenship law and policies. Spurred by increasing migration and a global economy, many nations now accept and even promote dual status. Since the 1960s, the U.S. Supreme Court has held that Americans taking citizenship abroad cannot be stripped of their U.S. nationality. The growth in dual nationality presents more opportunities than dangers, freeing individuals from irreconcilable choices and fostering connections that can further travel, trade, and peaceful relations. Marriage, rather than bigamy, is the better analogy.Complete article here.
U.S. passports & visas: Americans are required to have a passport when entering most foreign countries, and it is the preferred proof of citizenship when visiting Mexico and many Caribbean islands. Here is what the U.S. State Department says you need to do to get one.
TECH’S ANSWER TO BIG BROTHER
The Total Information Awareness database is an unsurprising result of having so much information about our lives archived on the computers of our credit card companies, our banks, our health insurance companies and government agencies. If our personal information, some of it extraordinarily sensitive, is archived in corporate or government databases and protected only by the weak shield of the law, it is vulnerable to federal snoops. Technology offers a better way to preserve our rights against government overreaching. Several basic ideas surveyed.Complete article here.
U.S. BILL OF RIGHTS 211 YEARS OLD
But is it a happy anniversary? Will it last another 100 years? Fourth Amendment protections against unreasonable search and seizure and Fifth Amendment right to due process of law under attack in recent legislation. “People don’t see this in their daily lives yet because it’s still in the implementation stages. It seems like a costless measure because the assumption is that these measures will be used only against terrorists ... but when you give unlimited authority to government in these areas, that’s the basis of creating a police state”, says CEO of libertarian think tank The Independent Institute. Is there a Jefferson or Madison out there who will step into the fray today?More on this story here.
STREAMLINED US BILL OF RIGHTS (SATIRE)
From The Onion: President Bush approved a streamlined version of the Bill of Rights that pares its 10 original amendments down to a “tight, no-nonsense” six. Fourth and Nineth Amendments eliminated. “Quite honestly, I could never get my head around what the Ninth Amendment meant anyway,” said outgoing House Majority Leader Dick Armey. “We’re not taking away personal rights; we’re increasing personal security,” says Attorney General Ashcroft.
According to Senator Larry Craig (R-ID), the original Bill of Rights, though well-intentioned, was “seriously outdated”. “The United States is a different place than it was back in 1791. As visionary as they were, the framers of the Constitution never could have foreseen, for example, that our government would one day need to jail someone indefinitely without judicial review. There was no such thing as suspicious Middle Eastern immigrants back then.”
“Any machine, no matter how well-built, periodically needs a tune-up to keep it in good working order,” President Bush said. “Now that we have the bugs worked out of the ol’ Constitution, she’ll be purring like a kitten when Congress reconvenes in January — just in time to work on a new round of counterterrorism legislation.”Full “story” here.
TAX CASES IN THE NEWS
Tampa US judge blocks alleged tax evasion scheme. A federal judge is expected to impose a preliminary injunction blocking two Sarasota area men from promoting a program that claims most Americans do not have to pay income taxes. Tax Informer Enterprises and other related entities say federal tax codes exempt American citizens who work for American companies. “Individual proponents of the tax-exempt theory can take their chances by not filing”, says judge. “It’s another matter to tour the country and take thousands of dollars persuading others to do so.”More on this story here.
MANY US COMPANIES RELEASE CUSTOMER RECORDS ON REQUEST
Almost a quarter of the corporate security officers in a survey said they would supply information about customers to law enforcement officials and government agencies without a court order. If an investigation concerned national security, the figure jumps to 41%. The security officers who took part in the survey work in financial, retail, health care and many other fields. “Growing concerns about government encroachments on privacy and civil liberties have not taken into account the degree to which people hand over information willingly”, said a former federal prosecutor who now works for a computer security company.More on this story here.
FLY AND GET HARRASSED
What happens when a man objects to the examination of his 7½ months pregnant wife at Portland, Oregon’s airport - a search which included having her breasts touched, and her having to lift up her shirt in front of the other passengers in line? Prison, falsified reports, and so on, through a story worthy of Kafka.Full story here.
CARNIVORE ON STEROIDS: US PREPARES COMPREHENSIVE NET MONITORING
The US government is assembling a plan to get ISPs involved in building the most comprehensive Net surveillance system yet created. A report called The National Strategy to Secure Cyberspace, due to be released early 2003, contemplates a government controlled, centralized system for monitoring the Internet, in defense against cyber terrorism as well as more routine threats such as computer viruses and worms. The system would be capable of real time surveillance of Net traffic. It is unclear if laws that currently apply to telephone wire taps will be extended for new Internet monitoring techniques.More on this story here and here..
JEROME SCHNEIDER INDICTED BY U.S. GOVERNMENT
Schneider, author of Complete Guide to Offshore Money Havens and self-described “world’s leading authority on offshore banking and investing”, and attorney Eric Witmeyer were indicted and charged with conspiracy to defraud the IRS, wire and mail fraud. The essence of the alleged scheme is that clients would purchase offshore entities - companies with banking licenses in Nauru - at Schneider’s behest, and would then pay an additional amount to Witmeyer to obscure the investor’s ownership through a “decontrol” process, which involved selling the ownership interest in the offshore entity to a “Independent Foreign Owner” (IFO) in exchange for a promissory note in an amount large enough to make it appear as if there was a bona fide and negotiated sale of the offshore entity to the IFO. The amount of the promissory note was arbitrarily set by the defendants. There were no negotiations between the U.S. taxpayer investor and the IFO as to the sale price of the offshore entity. The defendants advised the U.S. taxpayers that they could receive back the funds they had transferred to the offshore entity through tax free loans. [Apparently the contention is that the set of transactions was in substance a sham.]
The government alleges in court documents that Schneider and Witmeyer told U.S. residents that these entities would allow them “to evade the payment of income tax on income earned or gain realized by the offshore entity”. Schneider’s attorney maintains his client told people you cannot use offshore banks for tax evasion.More on this story here, here, and here.
BEWARE OF FAKE INSURANCE SALES TO SMALL BUSINESSES, SELF-EMPLOYED
In the scramble to save on insurance as premiums and health care costs march upwards, many are falling victim to sham insurance. For example, one woman ran up $110,000 in medical bills only to find that the insurance converage offered by an association she had joined was no good. When discovered and shut down, scam artists merely reopen under a different name.More on this story here.
WHERE TO INVEST IN 2003
Business Week special issue on investments for the new year. Articles stocks and mutual funds of all stripes, bonds, real estate, gold, art. Strategists and portfolio managers see a Dow rally in 2003. But they saw one in 2002, too.Start here.
HERE IS WHAT CAN HAPPEN IN A U.S. POLICE STATE
DENVER: The Denver police have gathered information on unsuspecting local activists since the 1950’s, secretly storing what they learned on simple index cards in a huge cabinet at police headquarters. After transferring the cards’ contents to a computerized database, word leaked out and people started asking for their files. Among those spied upon were nuns, advocates for American Indians, and church organizations. The software that interacted with the database labeled many of the groups, including Amnesty International, “criminal extremists”. The NYC police have recently purchased database/analysis software from the same company.More on this story here.
U.S. CITIES URGE GOVERNMENT TO PROTECT RIGHTS
Nearly two dozen cities around the country have passed resolutions urging federal authorities to respect the civil rights of local citizens when fighting terrorism. Efforts to pass similar measures are under way in more than 60 other places. Both liberal bastions such as Cambridge and Berkeley, and less ideological places like Chicago and Fairbanks, Alaska are among those passing resolutions. Many communities are getting help from the American Civil Liberties Union and the Bill of Rights Defense Committee.
In most places the resolutions carry no legal weight, merely affirming existing civil rights. But resolutions passed by some towns like Amherst, Mass. go so far as to direct city personnel not to help federal or state officials in activities that could be considered in violation of civil rights or liberties. A spokesman for the Justice Department insists that protection of civil liberties is built into all antiterrorism legislation, that “We are still living under the Constitution.”More on this story here.
HEDGE FUNDS HAVE WORST YEAR IN A DECADE
LONDON: According to consultants, 2002 will be the worst for the hedge fund business in almost a decade as slumping stock markets hurt performance and spurred a record number of closures. 20% of the hedge funds tracked by Tremont Advisers at the start of 2002 stopped reporting their results by the end of October, and most of those funds shut down. A slowdown in fund inflows to the $600 billion industry in 2002 came about in part because hedge funds, which are marketed as being able to profit whether markets rise or fall, have not produced strong returns.More on this story here.
SOROS TO REENTER HEDGE FUND MANAGEMENT
Legendary hedge-fund manager George Soros is reported to have unretired and reassumed control over the Quantum Endowment Fund and other funds in the Soros Fund Management stable, with assets totaling $11.5 billion. Last summer, Soros said he would not be surprised if the dollar loses a third of its value during the next several years. He also said that markets could go much lower if key governments, such as the US administration, do not take the right policy steps. [Note: These prognostications are worth incorporating into one’s investment planning.]More on this story here.
U.S. JOBS GO OFFSHORE TO INDIA
Outsourcing jobs to India grows. Contracts go beyond the software code writing of the last decade to include chip design, product development, call centers, consulting and other support and back-office services. Delta Airlines expects will save $12 million to $15 million annually by outsourcing reservation services. India has a large, well-educated, English-speaking work force with one of the world’s largest clusters of engineers and programmers. Thousands of young men and women work largely at night, synchronizing their work schedules with Americans halfway across the globe. The trend is saving the U.S. Government money as well.More on this story here and here.
A CLASSIC FROM GREENSPAN: “GOLD & ECONOMIC FREEDOM”
An essay from his days in Ayn Rand’s inner circle. Interestingly, the Federal Reserve chairman has repeatedly failed to disavow his old views.Background and complete essay here.
IS SAUDI ARABIA TOUGH ENOUGH ON TERRORISM?
A recent news item raised questions about links between terrorist groups and the Saudi Arabia’s Islamic charities. The Treasury Department’s under secretary for enforcement recently told the Senate Judiciary Committee that the Saudi government had taken only “baby steps” to stem financing of terrorist activities. Money from the Saudi government continues to go to the terrorist group Hamas. The Saudi government also refuses to cooperate with the families of the victims of 9/11. Appropriate actions going forward are suggested.Rest of opinion piece here.
LIFTING THE LID ON HOT MONEY
The scale of money laundering is huge: according to the IMF it involves between 2% and 5% of the world’s GDP (or £1.3 trillion). An investigation by the Scottish newspaper Scotland on Sunday found evidence that everything from back street tanning salons to high street banks are being used - usually unawares - by criminals ranging from small-time gangsters to big-time drug traffickers and international terrorists. “Suspicious” transactions are no longer so easily ignored, but, according to an expert in fraud, western governments are fighting an uphill battle, particularly as cyberbanking makes cleaning dirty money easier. An informative overview of the “industry”.More on this story here.
GOLD IS NOT MONEY ... YET
The public does not understand the case against government manipulation of the monetary system. Neither do most economists and politicians. The public does not even regard gold as money. Some central bankers still believe that gold is money, but only for central bankers. They stole it fair and square from commercial banks, who stole it fair and square from their depositors. The victims did not complain much in 1914, 1931, and 1933. The recent upward move of gold’s dollar-denominated price has to do with gold’s status as a well-known inflation hedge and war hedge. We are experiencing nothing like “a return to gold”. The public remains unfamiliar with gold coins, and this is not likely to change, short of an international economic catastrophe. Interesting history and discussion from well-known newsletter writer Gary North.Rest of article here.
US BANKRUPTCIES SMASH OLD RECORD AS FRAUD, POST-BUBBLE HANGOVER TAKE THEIR TOLL
U.S. public companies broke bankruptcy records - 186 public companies with $368 billion in debt filing, vs. last year’s record $259 billion - for a second straight year as accounting fraud and the last decade’s debt spree took their toll. Included were 5 of the 10 largest bankruptcies ever. It is likely to get worse before it gets better, partly due to the “domino effect” where companies that do business with the filers fun into difficulty. Power companies and retailers next?More on this story here.
COURT ORDER NOT NECESSARY
A recent study by CSO magazine found that many Chief Security Officers have or would turn over corporate, business partner and customer records just because a law enforcement or government official requested it, without a subpoena, court order, or any other formal legal process. The willingness of corporate agents to simply “turn over” our private personal records represents a much more significant threat to privacy and civil liberty than the USA-PATRIOT Act, the Homeland Security legislation, Carnivore, Magic Lantern, etc. One of the difficulties with the issue of voluntary dissemination of information to the government is determining who “owns” the information in corporate databases. A long line of cases has made it clear that, for example, ISP billing information - the subscriber’s name, screen name, address, telephone number, etc. - is information that belongs to the ISP, and not the subscriber, and therefore the ISP is generally free to disclose this to the government. There may be no way for a consumer to know in advance whether his or her service provider will simply capitulate, and turn any and all requested information to the government.More on this story here.
SHOULD YOU INVEST IN RUSSIA?
Russia is again being hyped as an investment opportunity. The reality is that Russia is a Third World country with First World pretensions (and nuclear weapons). It exhibits all the risks attendant to other medium-sized developing countries and emerging economies. Peaceful co-existence with the non-Chechnya regions is fraying at the edges. “Modern”, “stable” Russia is merely a glittering veneer beneath which lurk the old ills of authoritarianism, lawlessness, oligarchy, aggression, ignorance, superstition, and repression mingled with extremes of poverty and disease. Interesting summary of the situation.Full analysis here.
THAILAND IS THE PLACE TO BE
Doug Casey looks at Thailand, “probably the mellowest, friendliest and certainly one of the cheapest countries on the face of the planet.” $50,000 will get you an excellent house. Low cost of living, a friendly populace, political stability, free-market orientation, pleasant climate and scenery, and safety add up to a good case for investing in Thai property.Rest of analysis here.
GOODBYE TO THE $US AS THE WORLD’S RESERVE CURRENCY?
The US has been a major importer of foreign goods since the early 1980s. An increasing portion of these imports have been financed by debt, rather than exchanged for export goods and services. This has swamped the international monetary system with liquidity, and created a world-wide financial bubble. The net external investment position of the United States now is negative at more than $2 trillion, and the absence of private savings and growing government deficits drives a need of still more external financing. At some point the imbalance between this debt and the U.S. economy’s productive capacity will become too large, and the dollar will no longer be unquestioningly accepted as the world reserve currency.
Various factors that will contribute to reverse the past pattern of international capital flows into the US are already in place and gaining force. Europe, Japan, and Emerging Asia are not likely to retain their historical roles as suppliers of capital. A repatriation of assets out of the United States and back to its foreign creditors, would imply a weakening of the US dollar and probably lead to higher interest rates. The US economy would consequently face a severe economic downturn. A demise of the US dollar as the dominant global currency would mean that the current relation between domestic absorption and production could no longer be maintained. Given the time and difficulties it takes to build up adequate production capabilities, the immediate response would necessarily fall on private demand.
[Note: The basic elements and reasoning of this proposition have been noted and argued for years, starting in the 1980s. Are the theory’s predictions at long last imminent?]Complete article here.
THE STAKES FOR LIBERTY
The debate over how far to extend the government’s powers to fight terrorism has been frustrating, with the Bush administation’s claims that all its proposals are beyond reproach being met by civil libertarians’ alarmist characterizations of every such proposal. Lost is the context of what the stakes really are. The broad danger, in the editorial’s view, is that an alternative legal system has come into existence for an ill-defined category of offenses involving national security. It can try suspected terrorists in courts or in military tribunals or, if it chooses to designate them as enemy fighters, not try them at all. It can give or deny them lawyers. Without more clearly defined boundaries and restrictions, this alternative legal scheme could easily invade the traditional system and undermine its protections. With Congress so far unwilling to get involved in defining reasoned boundaries, the courts have been the only realistic check on the Bush administration’s unilateral assertions of power. This is a far-too-passive means of making law in such a fateful area.Complete editorial here.
THE ULTIMATE RAMPART AGAINST TYRANNY
In a fitting final clipping for the 2002 pages, Libertarian journalist Pierre Lemieux writes of how some early resistors to tyranny are sticking their necks out in Canada. The ability to effectively resist tyranny is crucially dependent on possessing arms for self-defense ... for those times “when the sanctions of society and laws are found insufficient to restrain the violence of oppression.” George Orwell succinctly wrote: “That rifle hanging on the wall of the working-class flat or labourer’s cottage is the symbol of democracy. It is our job to see that it stays there.” Many people like to think that they would start resisting before tyranny is well entrenched, but few actually would. Armchair resistors who imagine themselves as heroes adulated by the populace are usually wrong: They will be treated as marginals, cranks, outcasts, criminals. Only later will early resistors be seen as heroes.
On January 1-3 a few members and supporters of the Canadian Unregistered Firearm Owners Association (CUFOA) will post their “Declaration of Non-compliance” and go to Ottawa to present to the Prime Minister with the ashes from their firearms licences and gun registration certificates. If they have not yet been arrested, they will visit the offices of the Minister of Justice and the Attorney-General. As the infamous C-68 “law” comes into full force, owning firearms without a personal licence and a registration certificate for each gun are crimes that carry penalties of up to 10 years in jail. The demonstrators will either be arrested, showing the real nature of the law, or else they will prove that the state does not dare enforce its law against peaceful citizens. From those of us who are less brave, from those of us who believe in individual liberty, from our future descendants, these heroes deserve gratitude and praise.Full story here.
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