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(Especially noteworthy articles’ headings highlighted in gold.)
IRS ARROGATES STALINIST POWERS TO PUNISH DISSENTERS
In a precedent-setting case, the IRS wielded new power to punish the political speech of those who “espouse views” the government considers “inconsistent” with government-held beliefs. In a hearing originally closed to the public in a secret tribunal on a military island, but moved to a public location after protests from the press and the public, the IRS wants to wield this power against a former IRS whistleblower who was forced to resign upon his discovery of fraud in the agency.
The IRS, through the small office of “Director of Practice”, claims the authority to wield carte blanche authority over all the other powers of government -- the authority to monitor, surveil, and eavesdrop on political dissenters, the authority to pry into the private financial records of banks, businesses, and taxpayers, the authority to conduct secret investigations under a criminal grand jury, and the authority to censure political dissenters by branding on them a badge of infamy and stripping them of governmentally-protected licenses. In short, under the guise of a “practice” investigation, the IRS claims the right to wield all intrusive and invasive powers of government available.
The IRS claims it can exercise this authority in a secret proceeding without allowing a person the opportunity to cure any alleged mistakes, the opportunity to prepare a defense by knowing the exact facts they are accused of, without any opportunity for discovery, without any opportunity to call witnesses necessary for their defense, without any opportunity to cross examine their accusers, without any opportunity to testify at their own hearing about the merits of their position, without being forced to testify against themselves without such an assertion being held against them, and without even an opportunity for a hearing on the evidence.
Too Hoover-ish to be true in modern America? Just read the case of the IRS against Joe Banister scheduled for a “hearing” -- a hearing where the IRS prohibited Banister from introducing any witnesses or presenting any evidence as to his defenses, and even discussing the sincerity, the truth or the “reasonablenes”q of his positions -- on December 1 in the Tax Court chambers of the federal courthouse in San Francisco. History is being made.More on this story here.
SOME NON-TAX MOTIVATED REASONS TO GO OFFSHORE
[Every so often we reprise certain pieces from the web site of Vernon K. Jacobs that speak to the fundamental reasons for and mechanisms of going offshore. This piece was written before all of the post-9/11 legislation and technology that further restricts privacy and liberty came into being, and yet makes a compelling case for jurisdictional diversification.]
For those who are concerned or fearful about “going offshore” for asset protection, investments or even for business, it may be helpful to remember that risk is relative. Jumping out of a two-story window is certainly high on the risk scale, but if the building is on fire and you cannot get out any other way, the two-story jump is a lot less risky than staying where you are. Before discussing some of the ways in which you can reduce the risk of losing your assets by moving them offshore, let us look at some of the alternatives and the reasons why an increasing number of people in the US are moving some of their assets offshore.
There is a rancorous debate going on between those who believe there is "no place like home" (the USA) and those who believe the USA is rapidly becoming a police state in which our traditional liberties are being circumvented by a host of devious laws. The USA does continue to offer many economic and personal benefits not readily available in other countries. But there are cancers growing in the body politic and some fear they are irreversible. Those in the USA who are financially successful are not safe or secure in their possessions for many reason. Perhaps the best reason to have some assets offshore is the possibility that the USA will establish currency controls and will prohibit citizens from taking any assets out of the country. And -- there are other benefits in having some assets offshore.More on this story here.
PATRICK HENRY: ENEMY OF THE STATE
As Murray Rothbard has pointed out numerous times, the court historians of our age would have us believe that the American revolution was no revolution at all, but merely an unfortunate disagreement among refined compatriots. But for Patrick Henry -- and he was certainly not alone in such sentiments -- British rule was nothing short of barbaric tyranny, a despotism to be ripped from American soil no matter what the price in blood.
Henry never wavered in his support of American independence during the eight years of the Revolution, but perhaps his most valiant effort to preserve American liberties came with the ratification debates over the Constitution of 1787. Henry was a defender of the Articles of Confederation, the government formed during the waning days of the Revolution, and which had provided the colonies peace and international recognition ever since. Henry was not one to rely on parchment barriers to keep the grasping hand of the state at bay. To believe that mere laws, created by men, could keep a mighty government at bay is a delusion -- a fool’s game of wishful thinking. Reiterating his prophesy from before the Revolution, liberty would never be preserved by anything but force.
He had boycotted the Constitutional Convention of 1787 because, as he so eloquently put it, “I smell a rat” and suspected the worst: that the independent colonies that had thrived for over a century were to be herded under one consolidated government, a vast government apparatus founded not on liberty, but on the bureaucratic dreams of monarchists and mercantilists like Alexander Hamilton. And quite an empire it has become. Today, as Americans, half our incomes are taxed away to that consolidated government; we send our sons to die toppling dictators armed and financed by those same taxes; we bleat like sheep for protection from each other and every foreign bogeyman near and far, and we call it liberty!
“Fear is the passion of slaves” Henry tells us, for an armed and confident people are sure of their liberties, and not afraid to demand them. But we live in a country ruled by fear. Fear of terrorists, or criminals, or punishment by the state. How then, can we conclude anything other than that we are ourselves slaves? It would appear that we cannot, and Patrick Henry would no doubt agree.More on this story here.
PRICING AND VALUING FINANCIAL ASSETS -- IT’S A GREAT TIME TO SELL!
Determining the price of financial assets is far easier than determining their value. However, knowing there is a difference between price and value and having the wisdom to see the difference, is a pre-condition for making the right investment decisions. Over time, it is certainly wise to buy financial assets at a price below their long term value, and to sell them at a price above their long term value.
The current market price of U.S. stocks, as measured by the Wilshire 5000, is about $10 trillion -- down from a 2000 peak of $17 trillion, but still a considerable number. Credit market borrowings are approaching a pay-off balance of $34 trillion. With the US Treasury running $500 billion deficits a year and the single family mortgage market still growing at a rate of over $600 billion a year, the total debt owed is continuing to grow quite rapidly. In our economy, the vast majority of financial assets are nothing more than the ownership of someone else’s liabilities. The current total market price of financial assets (liabilities) is certainly over $47 trillion, or four times GDP. The cash flows from our $11.8 trillion economy will not support payments on this level of liabilities. Something has to give, and it will most likely be the real value of the assets.
Pricing stocks is easy while valuing them has a strong element of art and psychology. The Federal Reserve has made holding cash painful by dropping interest rates to 1% or less. This has propelled stock prices to inflate to extraordinary levels given all logical means of measuring value. With interest rates artificially pushed down, stock prices have “no anchor”. Current liquidity-driven P/E multiples on stocks are at 1929 levels.More on this story here.
Templeton trepidations, Buffett battle stations.
According to Gary Moore, who serves as a media spokesman for Sir John Templeton, the legendary investor “... Surprised even me [a few weeks ago] by suggesting that we avoid [U.S.] stocks altogether as the money that was in tech has moved to cheaper stocks around the world ... John primarily suggested sovereign debt from Canada, Australia and New Zealand. He’s been there the past three years, principally in Canadian zero coupon treasuries.” When a reporter who wrote the article “Templeton Feeling Bearish”, (Sarasota Herald Tribune, Oct. 14, 2003) asked about the prediction that the dollar would slide 40% in a special Economist report, Gary Moore assured the reporter that he had the feeling that Sir John wouldn’t waste much time arguing with that prediction. However, it is more Sir John’s style to say, “The odds are better than even ...” rather than give a specific number.
Billionaire investor Warren Buffett said in his Oct. 27, 2003 Barron’s interview that he sold $9 billion in long term U.S. Treasuries earlier this year and feels it is unwise to buy into the stock market at current levels. He has $24 billion in cash on the sidelines. There is no evidence that he has sold the 129.7 million ounces of silver that he accumulated in 1997. In regard to currencies, Buffett stated: “I am crying wolf again [about the impact of mounting trade deficits, having first started his warnings in 1987] and this time backing it with Berkshire Hathaway’s money. Through the spring of 2002, I had lived nearly 72 years without purchasing a foreign currency. Since then Berkshire has made significant investments in -- and today holds -- several currencies. I won’t give you particulars; in fact, it is largely irrelevant which currencies they are. What does matter is the underlying point: To hold other currencies is to believe that the dollar will decline.”More on this story here.
THE EURO AND EUROPE’S BLURRING BORDERS
The introduction of euro notes and coins, following the withdrawal of EU internal border controls, removed one of the key sensations of crossing from one country to another. If you set off from Hamburg, Calais, Malaga, or Brindisi you can now drive for days without necessarily ever finding out how many countries you have passed through. You pay in euros, and you can leave your passport buried in your luggage.
Europe’s unity, or at least the EU’s, is now almost as obvious as its diversity. How does this affect the way people think about Europe? Opinion polls conducted for the EU in 2002 found about 60% of people in euroland agreeing that by using euros “we feel a bit more European than before”. Other polls show that when people are asked what the EU means to them personally, the euro is one of the most common answers.More on this story here.
SLOVAKIA: HONG KONG OF EASTERN EUROPE
These success stories of Hong Kong and Ireland have a new rival. Slovakia, a small nation in Eastern Europe, has junked its class-warfare tax code and replaced it with a 19% flat tax. This reform, which will go into effect Jan. 1, almost surely will create the “Slovak Tiger” as entrepreneurs and investors from Western Europe’s stagnant, high-tax welfare states quickly shift productive activity to take advantage of this market-friendly tax system.
Some forms of double-taxation remain, but it is one of the best systems in the world. Corporate profits will only be taxed one time (at the same 19% rate) and the death tax will be abolished. And since the tax was approved by an 85-48 margin, including some support from opposition parties, there is every reason to expect the new system will have the necessary stability to attract long-run investment.
Led by a dynamic young finance minister, Ivan Miklos, the government also eliminated all special preferences and penalties in the value-added tax. This will help ensure economic decisions are based on sound economics instead of tax distortions. The Slovak government also is modernizing the nation’s Social Security system. The new plan, expected to gain final approval in the next couple of months, will allow workers to place 9% of their income in personal retirement accounts -- a number rivaled only by Australia, which also allows workers to invest 9%, and Chile, which permits workers to invest 10% of their income.More on this story here.
CONSEQUENCES OF A DOLLAR STANDARD
In a chapter of his book Economics and the Public Welfare dubbed “The Tyranny of Gold”, Benjamin M. Anderson offered the view of a wizened hard-money proponent who had glimpsed the essence of money and noticed irredeemable paper was not part of it. “Gold needs no endorsement,” Anderson wrote. “It can be tested with scales and acids. The recipient of gold does not have to trust the government stamp upon it, if he does not trust the government that stamped it. No act of faith is called for when gold is used in payments, and no compulsion is required.”
Since the end of the Bretton Woods agreement in 1971, the dollar has been an irredeemable currency, no longer defined or measured in terms of gold. Nonetheless, in an ironic twist, it has become the world’s dominant currency and the core reserve asset of central banks all over the world. It has replaced gold as an international currency. The transformation has not happened without consequences. One of these is that the discipline imposed by the gold standard is no longer operative. Another consequence, related to the first, is the profound effect this has had on international trade.More on this story here.
INTERPRETING THE CONSTITUTION CONTEXTUALLY
Both “strict constructionist” conservative and “loose constructionist” liberals ignore essential principles of the Constitution, principles that are stated clearly and explicitly in the document itself. The conservatives’ chief blind spot is the Ninth Amendment, which reads: “The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.” The amendment was intended by the Founders not only to protect unenumerated rights but also to ensure that rights provisions generally be interpreted as broadly as possible. Conservatives also tend to overlook, or to interpret too narrowly, the many provisions in the Constitution -- particularly the Due Process clauses of the Fifth and Fourteenth Amendments -- that explicitly protect property and liberty rights in all their aspects, including the so-called right to privacy and other rights of personal autonomy.
Left-liberals, on the other hand, are blind to the Ninth Amendment’s companion provision in the Bill of Rights, the Tenth Amendment, which affirms a fundamental feature of the Constitution: that it creates a national government of limited, enumerated powers. By dismissing the Tenth Amendment as stating a mere truism, as the Supreme Court did in its 1941 decision in United States v. Darby, liberal constitutionalism not only ignores the importance of the Amendment (which Thomas Jefferson regarded as the foundation of the Constitution) but also tends to render meaningless the Framers’ carefully crafted list of Congress’s legislative powers in Article I of the Constitution. The liberal jurisprudence reads these provisions -- particularly the Commerce Clause and the so-called General Welfare Clause -- so broadly as to give Congress virtually unlimited legislative powers and thus permit the federal government to regulate almost all aspects of Americans’ daily lives.
Context used to be a well-established canon of legal interpretation. It meant that each provision in a document ought to be understood in the context of the document as a whole and, especially, in light of the purpose of the whole document. In the case of the Constitution that purpose is to limit the power of government and to safeguard the rights of the individual. Unfortunately, the Supreme Court in the twentieth century has forgotten this basic canon of interpretation. Instead, the Court has engaged in the logical fallacy that Ayn Rand called “context-dropping”.More on this story here.
Neocons are the real Americans.
With the exception of the radical heroes of American independence, our national history is that of conquest, theft and empire. In fact, it is today’s warmongering neocons who represent true historical American values, as they fight to win back the country they lost to the socialists a century ago. The libertarians and their individualist heroes have been left on the sidelines for over 200 years.More on this story here.
FRIENDLY ADVICE FROM IRAN
We take our freedoms for granted. Thus we read with only mild interest what Iranians have to say about their own government, a government the majority of them worked to achieve, a government cloaked in Islamic justice. A government most Iranians today would not wish upon their worst enemy. Washington Post Foreign Service writer Karl Vick interviewed Iranians on the street, young and old, men and women. What they said about Tehran and the Iranian oligarchy is a wake-up call, and not only for Iraqis.
“They talk of Islam but they don’t act on it ... This government is not good at all. It’s full of problems. There’s all sorts of wrongdoing. It’s full of theft. They don’t think of the young people. They only think of their pockets ... In the beginning of the revolution, the objectives were very good. But afterward people appeared to act only in line with their own interests. They’re busy accumulating money. They don’t think of the people. They don’t think of international relations. Iran has lost a lot.”
Replace the words Christianity for Islam, “war on terrorism” for revolution, and America for Iran, and you could be listening to any average American on the street, speaking of the White House and Washington. The advice from our Iranian fellow travelers is a cool drink of water. Be wary of those who say they are good and wise because they are religious. Never doubt the ability of a state to enrich its politicians and friends over the best interests of its future generations, and to steal a nation blind of its treasure and the blood of its young men and women. Do not be surprised at what is lost for a whole nation when its leaders are arrogant, self-serving, and corrupt.More on this story here.
L’etat, c’est Ashcroft.
Ordinarily, anyone making the claim that the United States is slowly creeping toward becoming a police state would be expected to be seen wearing the latest in old holey garbage bags, surplus-store combat boots, and carrying a sign proclaiming the imminent demise of the planet. But when John Ashcroft is attorney general, these things are not solely the province of the mentally ill. Much as this administration enjoys doing whatever it wishes, without the inconvenience of answering questions posed to it via regular presidential press conferences, the attorney general actually goes out and takes it to those who dare question him. Leader of the “if you’re not with us, you’re with the terrorists” brigade, Ashcroft has made selective prosecution something of an art form in recent years.
Under this bunch, some feel the wrath of the law and some do not. So when Republican supporters break the rules, like last month when GOP staffers broke into Democratic Senate committee computers and released the memos they found there to partisan Fox News Channel talk-show hosts, do not be surprised if the incident goes nowhere. John Ashcroft knows who his enemies are, and where he stands. After all, he is the law.More on this story here.
THE IMPERFECTABILITY OF MAN
In his most recent book, On the Unseriousness of Human Affairs, James V. Schall contends that man is not now and cannot be master of all, but in his mad drive to be so has inverted the rational order of human affairs. Where once man might have pursued the simple pleasures of the virtuous life in a fallen world, modern man will not be content with anything less than the creation of heaven on earth, a material paradise where the problems of economics and politics have all been consumed by the end of history. Schall not only denies that such a thing is possible, but that the very pursuit of such perfection is dangerous and contrary to what man was created for: for happiness and for contemplation of the “higher things”, the things over which man has no control.
Throughout history, Americans in general have been remarkably immune to the pride and the temptations of bringing heaven to earth. Generally skeptical of messianic visions like Marxism, fascism, and utopian socialism, Americans have largely shrugged off the frantic claims of ideologues that all can be made perfect if we are only willing to abandon ourselves to the pursuit. In other words, Americans have been reluctant to embrace only the serious things. Reading Schall’s words, it is difficult to see how we can continue to tell ourselves that this is not the road down which American civilization is now headed.More on this story here.
CAR DEALERS SHOULDN’T BE CITIZEN SOLDIERS
One night I was half-watching a black-and-white, early 1960s episode of The Andy Griffith Show, when, all of a sudden, the homespun wisdom of Griffith as Sheriff Andy Taylor touched on today’s heated debate over how to balance individual privacy with security. Andy responded to a suggestion by his deputy Barney Fife by saying: “You can’t ask a private citizen to become a police spy. It’s too dangerous. Something could go wrong.” The statement jolted me, and I thought, if only Sheriff Taylor had been there to offer this profound piece of advice to the Republicans and Democrats writing the USA PATRIOT Act.
Title III of the act, which contains provisions to counter money-laundering, requires a host of private businesses to become “police spies” on their customers. These little-known provisions of the much-talked about law draft a substantial number of private-sector employees as citizen soldiers in the war on terrorism as well as on the broadly-defined crime of “money laundering”. Do you think I am exaggerating when I say “citizen soldiers”? Well, I am only using the very terminology of one of the chief defenders of these provisions
The PATRIOT Act also redefines the term “financial institution” to include a broad swath of businesses. The law gives the Feds the authority to apply “know your customer” requirements to securities firms, insurance companies, real estate brokers, auto dealers, jewelry stores, as well as any other business the government finds has “a high degree of usefulness in criminal, tax, or regulatory matters.” But what Title III requires of these businesses is more than just complying with search warrants or subpoenas. They must actively monitor their customers, report transactions over a certain amount and also file “suspicious activity reports” on certain transactions that deviate from customers’ normal patterns. Failure to report “suspicious activity” can result in civil or criminal penalties set by the Patriot Act.More on this story here.
AFTER GAINS, FOREIGN STOCKS MAY STILL BE CHEAP
As strong as the stock market has been this year in the United States, many foreign markets have done even better, helped by the weak dollar, which fell to a five-year low against the euro last week. Americans have taken notice and are on course to invest more money abroad than in any year since 1993.
If the past is an accurate guide, this wanderlust may be untimely. The enthusiasm for foreign investment a decade ago turned out to be a mistake, as comparatively weak American markets took off and handily beat most other markets throughout the 1990’s. Many professional investors are convinced, however, that history is not repeating itself. They glimpse opportunities abroad for owning cheaper companies with higher growth prospects. At the very least, they say, foreign investment is a way to avoid putting all eggs in one basket.
Alan Brown, the London-based chief investment officer of State Street Global Advisors, said the case for investing abroad rests not only on the merit of stocks in different regions but also on the currencies in which they are based. “The dollar has been declining and, in my view, is likely to continue to decline,” he said. “That will increase returns on foreign markets.”More on this story here.
The Russian parliamentary election, in which Vladimir Putin’s United Russia party (which seems to stand mainly for “we’re in power and handing out favors, so keep us in power”) got 37.1% of the vote -- which could translate into a working majority with coalition parties in the Duma and maybe even a two–thirds majority to amend the constitution so Putin can run for a third term -- has caused a certain amount of discomfort in the West. Much of the discomfort is probably warranted, but most of those who have expressed it seem to have trouble diagnosing the real problem.
What most Western observers tend to do is to conflate the term “democracy” with civil and decent governance. In fact, however, what they are often referring to are institutions and habits of thought that tend to moderate, even to put the brakes on pure democracy or raw democracy. In the United States, for example, the Bill of Rights was not designed to be subject to majority rule. Most of America’s founders, in fact, would have told you they opposed democracy, at least as they understood the term. What Russia lacks, then, is not so much democracy as such -- the election came off, although turnout was down, perhaps reflecting a certain burgeoning cynicism -- but the intermediating institutions that keep democracy from being two wolves and a sheep voting on what is for dinner.
Russia lacks what we call a civil society. A civil society is not an inevitable development in a democracy; in fact it is rather rare. And its function in society is to blur democracy, to stem the majoritarian impulse, to provide ways other than having political influence, PR, or being part of the majority to find both personal fulfillment and a way of making a living.More on this story here.
COURT IS ASKED TO BLOCK “FALSE” COMPLAINTS AGAINST I.R.S.
The Justice Department said nearly 2,000 bogus misconduct complaints against I.R.S. agents were filed as part of a long-running fraud by a group that calls itself a Christian ministry to obstruct the federal income tax laws, in papers filed in a court in Florida. The DoJ claimed that the false complaints were made to intimidate tax agents. The complaints cited the 1998 I.R.S. Reform and Restructuring Act, which requires the firing of tax agency workers who commit improper acts known as the “10 deadly sins”. Some complaints also asserted that I.R.S. agents had committed crimes.
Named as leaders of the plan were Milton Hargraves Baxley II, a lawyer in Gainesville, Florida; Eddie Kahn, a lecturer in Sorrento, Florida; Mr. Kahn’s wife, Kathleen; and Bryan Malatesta, a certified public accountant in Cleburne, Texas. Mr. Kahn, who tells clients that no law requires the payment of taxes, runs Guiding Light of God Ministries, which he transformed in August from American Rights Litigators.
The Justice Department lawsuit seeks an injunction barring the leaders and an associate, David Lokietz, from promoting tax evasion and obstructing enforcement of the tax laws. It said that the government would suffer irreparable harm if an injunction was not granted and that the defendants would suffer no harm by being required to obey the law. The lawsuit is the first instance of the government’s saying an organized plan exists to fabricate complaints for profit.More on this story here.
VOTING CAN BE HAZARDOUS TO YOUR PRIVACY
When U.S. citizens register to vote, the registration form generally asks for a name, address, birth date, phone number and party affiliation. Some states request other information -- such as race, driver’s license, Social Security number and mother’s maiden name. But the forms do not say what states plan to do with that information./
Unknown to many voters, election officials sell the information to political parties and candidates, as well as to data collectors, who combine it with census data, purchasing histories, credit reports and magazine subscription lists. In this way, George Bush and Wesley Clark can know the marital status, income level, race and even religious affiliation of voters they want to target for their campaign messages. They can also know whether a voter owns an SUV or subscribes to Soldier of Fortune magazine and buys lacy underwear from Victoria’s Secret. So can anyone else who buys the lists.
Nearly half of all states, according to a new study, do not prohibit marketers from obtaining voter records. And even states that restrict commercial usage cannot prevent the data from getting into the hands of marketers -- or anyone else, for that matter.More on this story here.
A vending machine for voter data.
Aristotle International, one of the nation’s largest commercial distributors of voter data, used a website to sell the lists, which contain details about registered voters from nearly every state. The data includes birth dates, home addresses, phone numbers, race, income levels, ethnic backgrounds and, in some cases, religious affiliations. Although voter-registration data is a matter of public record, more than 22 states have laws restricting the purchase or use of voter lists. Yet Aristotle, based in Washington, D.C., sold lists online to anyone who wanted to buy them.
Aristotle’s site asked only for a name, the state where the buyer resided, an e-mail address and a phone number. Fields for mailing address and company name were optional. By registering first as Condoleezza Rice and then as Britney Spears, a Wired News reporter purchased two lists containing data on about 1,700 California voters and 900 South Carolina voters.More on this story here.
DISTORTIONS FROM THE CURRENT MONETARY SYSTEM WILL INEVITABLY BE CORRECTED
Under the current system, the United States year after year imports goods from the rest of the world for consumption and pays for them with dollars. The dollars are then used by foreign central banks to purchase debt instruments from either the Fed or the private sector, in addition to U.S. stocks and real estate. Where these are treasury securities, they are created out of nothing, requiring no savings by any American consumer.
Under this arrangement, Americans are now freed from the ponderous burden of saving and the onerous requirement of first producing in order to later consume. Their consumption is offset by a growing indebtedness of the private sector and the Fed to foreigners. This state of affairs is unsustainable, and will come to an end with a deep fall in the exchange value of the dollar relative to other currencies. That is the argument of a provocative new book, The Dollar Crisis: Causes, Consequences, Cure by Richard Duncan.
The Dollar Crisis traces the flow of dollars into Japan and Asia, which suffered their own asset price bubbles in the 1980s and ‘90s respectively. As dollars enter foreign banking systems in exchange for exports to the U.S., they increase the monetary base, which leads to more a domestic credit expansion. The recycling of these dollars back into America drives a series of asset price booms here. Duncan writes, “Consequently, [America’s trading partners] acquisitions of U.S. dollar-denominated stocks, corporate bonds, and U.S. agency debt have helped fuel the stock-market bubble, facilitated the extraordinary misallocation of capital, and helped drive U.S. property prices higher.”
Duncan forecasts a “New Paradigm Recession” following the collapse of the dollar, which he compares to the Great Depression of the 1930s. The New Paradigm Recession will emerge out of the continuing U.S. downturn (which Duncan views as only a warm-up for the real thing) as the U.S. economy can no longer service the massive debt load that exists in the consumer, corporate, and government sectors. The recession, when it comes, will be global in scope. It must come, Duncan argues, because of the unsustainability of current trading patterns and exchange rates.More on this story here.
“PROFESSIONAL PARANOID”: THERE ARE NO TERRORISTS IN THE UNITED STATES
In my “day job” I am an information systems security specialist. My job is to be a professional paranoid. My clients pay me to think up ways that an individual might compromise sensitive data, and then to mitigate against that risk. This ranges from physical security to network security to procedural security. I have been doing this kind of work for something like ten years, now, and I don’t mind saying that I am good at what I do.
In my capacity as a professional paranoid, I have occasionally turned my mind to notions of more general physical security. I have marveled at the occasional stupidity of America’s few terrorists. From a tactical perspective, Timothy McVeigh was a low-grade moron. Someone with my training would have bombed a much larger building and never been caught. Since September 11, the FedGov has used the claim of terrorists insinuating themselves into every fabric of American life to justify all manner of draconian “security” measures. As to the “security” of these measures, in my professional opinion, they are worse than useless.
In any case, there are no terrorists in the United States, and the proof of this is simple. There is nothing -- literally NOTHING -- preventing the devious terrorists the FedGov claims exist from performing such acts as planting a bomb in the middle of the evening lighting ceremony at Mount Rushmore every day. And yet, such acts never occur. Not today, not yesterday, and not ever. Terrorists are not stupid -- the ease with which they took advantage of the way the FedGov immorally disarms airline passengers proves this. If they wished to plant a bomb in the middle of the evening lighting ceremony at Mount Rushmore, they would have done it long ago.
How can we account for this discrepancy? How can there exist terrorist in the United States -- each capable of coming up with schemes far more nefarious than my paranoid musings -- and yet, no terrorist acts of this type have ever been committed? The answer is simple: there are no terrorists. If there were, we would see their acts every day. Terrorists in the United States are a stark, raving, paranoid fantasy -- at best. More likely, it is a cold, calculated attempt on the part of those in power to terrify Americans into rash actions that they otherwise would never take. There is no war on terrorism because there are no terrorists in the United States. There is a war on your freedom, being waged from the office of the President, his cronies and accomplices all through Washington, DC, and in every Federal building in every town and city in America.More on this story here.
LAWLESS SUPREME COURT
Lawlessness usually conjures up images of a wild frontier or mobs in the streets. But the painful reality is that the supreme examples of lawlessness in our times are in the august and sedate chambers of the Supreme Court of the United States. If you think the issue in the recent Supreme Court decision upholding campaign finance legislation is whether campaign finance reform is a good idea or a bad idea, then you have already surrendered the far more important and more fundamental idea of Constitutional government.
The Constitution says plainly, “Congress shall make no law abridging the freedom of speech.” Just what part of “no law” do the Supreme Court justices not understand? The sad -- indeed, tragic -- fact is that they understand completely. They just think that this legislation is a good idea and are not going to let the Constitution stand in their way. Moreover, they know from experience that if they can snow us with huge amounts of pious rhetoric, saying the kinds of things that the mainstream media will echo, that their wilful exercise of power will go unchallenged. In short, the Constitution be damned, we’re doing our own thing.
At least the people who engaged in wild west shootouts or lynch mob violence spared us the pretence that they were upholding the Constitution. Other courts, taking their cue from the top, have likewise behaved like little tin gods, imposing their own notions disguised as law. One of the tragedies of our time, and a harbinger of future tragedies, is that court decisions at all levels have come to be judged by whether we agree or disagree with the policy that is upheld or overturned.More on this story here.
EXPORTING HIGH-TECH JOBS: THE TIPPING POINT
Citing research by International Data Corp., the Wall St. Journal estimates that by 2007, 23% of all information-technology services jobs will move to “emerging markets”. If the trend continues, we may see a dramatic shift in the labor landscape: more retail jobs, fewer knowledge jobs.
Understanding this impetus begins with a recognition that we do not have a free market. Like the Aliens in the Sigourney Weaver sci-fi films, the tentacles of the interventionist state innervate and enervate everything. Because we live and work ensnared in a seamless web of statism, market solutions are often circuitous responses to the government’s laws and wars. These statist assaults on our prosperity ought to be the proper focus of the fight.
Without belaboring how government spending and the Federal Reserve System brought about the current state of affairs, suffice it to say that if not for the inflation caused by their money-printing, credit-creating profligacy, U.S. wages and domestic prices would probably be falling now, making offshoring far less attractive. If the ratio of lawyers to engineers in an economy is a measure of statism, then the preponderance of lawyers we suffer gives our competitors yet another edge. When indicting culprits who gum up the economy and drive business offshore, please find against tort lawyers.
There is something to be said about the concept of a “tipping point”. It is not one thing that causes a rivet to pop in an economy, but many (although the state is invariably involved) -- and it is not their added effects that bring about a fundamental change, but their synergistic workings over time.More on this story here.
WHAT (EU) CONSTITUTIONAL CRISIS?
The European Union’s attempt to manufacture an impossible consensus on an incomprehensible constitution came to a predictable sputtering halt last week. The various peoples of Europe would have breathed a deep sigh of relief had they not been yawning as their leaders busied themselves with an exercise more akin to an exchange of incompetent sleight-of-hand tricks than statecraft.
The representatives of the 15 current and 10 future member states of the EU, embroiled in the desperate final stages of fashioning (when not resisting) an ingeniously opaque enabling document designed to unleash a pseudo-nation on an unsuspecting continent, suddenly acknowledged the futility of the effort at this juncture and went their separate ways to ponder What Comes Next.
The European identity, for want of a better term, is one defined by location and varying degrees of interdependence, not one born of a shared and natural polity. Europeans are not European in the same way that Americans are Americans: Americans are citizens of a single, distinct nation, and have been from the moment we started to steal the place fair and square from the natives. No summit or charter will alter the reality of the European identity, even though the EU constitution was clearly intended (but seldom admitted) to lay the foundation for a superstate somehow capable of exerting sufficient influence to challenge the United States as a global force.
It is as though Europe’s governments are entering into a process of merger and acquisition in a bid to compete with American Foreign Policy, Inc. But as a purely economic entity, today’s EU, operating without the supposed benefit of a constitution, is already immensely successful. Tomorrow’s enlarged EU, with an expanded pool of affordable labor and resources but still no constitution, will be even more so. Nevertheless, despite the initial setback, the desire amongst the would-be European Founding Fathers to have a Philadelphia Miracle of their own will impel them back to negotiations in a matter of months.More on this story here.
A SURGE IN NON-EU IMMIGRATION HAS TRANSFORMED IRELAND
Forget those sepia-tone images of Dublin. The prewar city of James Joyce is, of course, long gone. Even the mid-1990s seems a distant memory on Moore Street. Dublin today is the base of an immigration surge that is transforming Ireland at a rate un-paralleled in speed and scale anywhere in Europe. And that has made the Emerald Isle a test case for how Europe will deal with one of its greatest dilemmas: the need for, and discomfort with, immigrant labor.
Ireland was until recently a nation of emigrants, and one of the most homogenous states in the European Union. As late as the 1980s, with the economy sagging, one sixth of the republic’s population emigrated, peaking in a 12-month period in 1988-1989, when 70,600 Irish, or 2 percent of the population, went abroad. Today the trend has reversed. The country of 4 million people is absorbing nearly 50,000 immigrants a year. Per capita, that is four times the immigration rate in what we think of as the world’s greatest melting pot, the United States. One example: in 1997 one Dublin secondary school took in its first non-Irish student ever, a boy from Angola; today 25% of the student body is foreign-born.
Perhaps that is what the country needs. Ireland needs workers. Like the rest of Europe, it is in a demographic bind, with fewer and fewer young people supporting more and more old folks. Unemployment has been at historic lows in recent years, so there is very little elasticity in the labor market. But the reshaping of the job market, and the rapid cultural transformation that has come with it, has caused resentment among natives.More on this story here.
INVESTORS SHOULD UNDERSTAND THE BASICS OF PORTFOLIO MANAGEMENT
Understanding the basics of portfolio management is critical if investors are to avoid managers who do not even make enough to cover the fees they charge for running a badly- performing fund. Recently, I read a horrifying account of an expatriate couple who opted for an enthusiastic 25-year-old who had no experience of prolonged bear markets, and after much aggressive churning and some forays into US over-the-counter technology stocks, the couple’s $25 million had halved to $12.5 million. The couple believed their savings would perform better in the hands of the professionals, but they would have done better with a direct, balanced investment in shares, bonds, property and gold.
The reasons behind poor performance by even the bluest of blue-chip managers are simple. When a fund outperforms the rest, it is commonly because the fund happened to be in the right market at the right time. But fund managers are rarely able to take advantage of neglected, udervalued opportunities as they are seldom fleet of foot, owing to structural constraints. There are also human constraints: fund managers are likely to stay with sectors they are familiar with. The fact that their sector happens not to be performing well is of secondary importance. Another law of fund management is that low returns are an inevitable product of risk-averse fund managers, who will be striving to avoid criticism from clients, their own managers, their peers and perhaps even regulators. Finally, fund managers are generally optimists.
Market studies emphasise that index tracker funds will outperform an individual portfolio manager more than 90% of the time. Trackers will also be cheaper. A manager of managers will discuss your objectives and market strategy. The best adviser will custom-manage your portfolio. The alternative is an investment off the shelf.More on this story here.
RETIRING BATF HEAD RECRUITED BY RIAA -- SATIRE (KIND OF)
Bradley A. Buckles, director of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, has announced his plan to retire in January and enter the private sector. He will head the Anti-Piracy Unit of the Recording Industry Association of America, which has already filed some 300 lawsuits, in just six months, against computer users who may have used the Internet to share copyrighted music files. “We’re thrilled to have Director Buckles joining us,” announced RIAA spokesman Norm DePlume. “He brings to the RIAA the gravitas that will strike terror in the hearts of all who might contemplate the illegal copying of music.”
DePlume explained that “Thanks to the ATF, every American now knows that simply being charged is practically a guarantee that your life is ruined. The agency’s pioneering use of techniques such as entrapment and hiring informants to commit crimes others can be charged with -- well, it has all but eliminated the uncertainty of being able to convict anyone you like without specific evidence of wrongdoing. Those are techniques we hope will transfer successfully to the civil cases we need in order to make examples of ... well, just about anyone will do. Hang enough of ‘em out to dry and you’ll see people falling in line, believe me.”
Asked whether juries present an obstacle to the ATF techniques just described, DePlume laughed. “Juries? They’re a joke. First, the government gets to stack the jury with only those who say they could convict -- the process is called ‘voir dire’. Then the judge instructs the jury that they can’t follow their consciences, but must accept the law as he interprets it for them. That’s in criminal cases; in civil cases we have the advantage of a relaxed standard of evidence: you can convict on a ‘preponderance of the evidence’ rather than ‘without a reasonable doubt.’ Here’s just one example, the Georgia Militia case of ‘96.”More on this story here.
INVESTORS BEWARE OF “THE CHINA PLAY”
The brokers’ circulars have long been dusted off for the punt of the century: the China Play. It is, if memory serves, the third instalment and was the punt of the last century too. Twice before, in the early and mid-1990s, have investors found the lure of China irresistible. In the first euphoric wave, Barton Biggs, Morgan Stanley’s head strategist, pronounced himself “maximum bullish” on the country and its stockmarkets. Suffice to say that this did not turn out to be the wonderful investment opportunity for which he had hoped. Nor did the second wave.
But the China story is back, and so are the hoards of foreign investors, unable to resist the lure of shares of leading companies in the world’s most populous, dynamic economy -- and one, furthermore, that is set to be the world’s biggest in not too many years. So-called H shares -- companies that are based in mainland China but listed in Hong Kong -- have doubled this year, outperforming the Hang Seng index by 55%. China Life, an insurance company, last week raised $3 billion in the biggest IPO in the world this year, and will be listed in New York and Hong Kong. So great was the deal’s allure that several local brokers ran out of cash to lend to Hong Kong-based investors who wanted to buy on margin. The company received orders for some $80 billion of stock.
The trend, recent investors in Chinese shares will be disappointed to hear, is down. But it is still better to cash out quickly, for as long-term investments the shares are eminently resistible. Of the country’s growth potential, there is little doubt. As ever with emerging markets, the question is whether investors will see any of this growth, and the question is especially pertinent with China, a perennial graveyard for foreign hopes. The answer is: almost certainly not.More on this story here.
CAN WESTERN UNION KEEP ON DELIVERING?
A worldwide army of some 80 million work in one country and support dependents in another. Together they will send more than $150 billion in cross-border remittances this year, $100 billion of which goes anonymously to families in developing countries. To put the amount in perspective, that is more cash than international investors collectively invest in those countries’ bonds and equities each year. Talk about hot money. Indeed, remittances are such a hot business that Western Union, long dominant, suddenly has a lot more rivals. Commercial banks, credit unions, even supermarkets are trying to wrest share from the company.
It is no secret why Western Union, which started life in 1851 as a telegraph company, is coming under pressure. Commissions on most transactions run 10% or higher, making Western Union a most reliable profit generator for its parent, First Data Corp. Analysts expect the wholly owned unit, which almost collapsed a decade ago after fax machines undercut its Telex business, to make more than $1 billion in operating profits on revenues of more than $3.5 billion this year. Although Western Union controls 80% of the market in regions such as Latin America, it can no longer take its position for granted.
Of course, banks have long sent money across borders through standard interbank wire transfers for corporate and individual clients. But those transactions were limited to customers with accounts and government-issued identification -- in line with strict anti-money-laundering and, now, anti-terrorist regulations. Money-transfer outfits do not require I.D. for remittances under $1,000. That left the market to specialists such as Western Union, MoneyGram Payment Systems, and eBay subsidiary PayPal. But after September 11, when Mexican consulates in the U.S. began issuing so-called matricula identity cards to undocumented workers, Wells Fargo & Co. became the first bank to accept such cards as a basis for opening accounts. Since then, more than 150 other institutions have followed suit. In addition, as of Dec. 9, a select group of U.S. banks have been allowed to transfer funds to Mexico through the Federal Reserve’s National Automated Clearing House, which means transactions will cost little more than a transfer within the U.S. Assuming the scheme works well, it will be extended to all U.S. banks, probably late next year.More on this story here.
A TALE OF TWO ASIAN EXPAT HAVENS
Thailand and Singapore are close geographically, share a hot, humid climate, and both are popular destinations for expatriates. Beyond these superficial similarities, however, the two countries are very different. If you are looking for a laid-back and inexpensive tropical lifestyle largely free of “Big Brother”, in an environment friendly to westerners, Thailand is worth considering. In contrast, the tiny island of Singapore is rigorously efficient. It is also one of the world’s cleanest places with an extremely efficient infrastructure and high quality of life. The price for this efficiency, though, is one of the highest costs of living in the world, along with a hefty dose of Big Brother.More on this story here.
ON THE JOY OF SEEING THE EXTRAORDINARY IN THE ORDINARY -- LIKE GOOSEBERRIES
In my line of work, it is rather hard to think of reasons to be cheerful. On the contrary, it requires quite a lot of concentrated intellectual effort: one has the sensation of scraping the bottom of one’s skull for thoughts that just are not there. Of course, since lamentation about the state of the world is one of life’s unfailing pleasures, the world is a greater source of satisfaction than ever. Another consolation is that most people are not nearly as miserable as they ought to be, or would be if they saw their own lives in a clear light. I meet more than 1,000 people a year who have tried to do away with themselves, and the wonder is not that they should be so many but that they should be so few. Reasons to be cheerful? Is that reasons for me to be cheerful, or reasons for one, that is to say for humanity in general, to be cheerful?
A man who interviewed me pointed out that I was never bored. I had not thought of that before, but it is true: I am never bored. I am appalled, horrified, angered, but never bored. The world appears to me so infinite in its variety that many lifetimes could not exhaust its interest. So long as you can still be surprised, you have something to be thankful for (that is one of the reasons why the false knowingness of street credibility is so destructive of true happiness).
Dutchman Adriaen Coorte specialized in the humble art of painting gooseberries. The translucence of this fruit now strikes me as so beautiful that I can gaze at them with intense pleasure, if not for hours (that would be an exaggeration), at least for minutes. I suspect that this reflectiveness is one of the consolations of age.More on this story here.
THE TWELVE LIBERTY-MINDED DAYS OF CHRISTMAS
On the first day of Christmas, the Free State gave to me: A shining city o’freedom on the hill. (And so on ...)More on this story here.
THREE CHEERS FOR HOLIDAY LIGHTS
Though it is a season of good cheer and goodwill toward all, it is also a time of conspicuous energy consumption. To many people, America the Beautiful is at her best in December when so much of the nation is illuminated by billions of tiny stringed light bulbs. Holiday lighting is a great social offering -- a positive externality, in the jargon of economics -- given by many to all.
Should good citizens think twice about holiday lighting, given global warming and other suspected climate changes supposedly caused by increasing atmospheric concentrations of carbon dioxide? Hardly.More on this story here.
STATE CONS -- THE FED AND INCOME TAX ARE 90 YEARS OLD
The State continually fails and destroys, yet it persists. You say, “Of course it persists -- it has the guns.” True, but it is not like we are standing around with our hands up, nor is that what the State wants us to do. Its destructive interventions notwithstanding, it wants us to create as much wealth as possible so it will have an ample source of plunder. How it goes about the plundering process is critical to its success. The golden rule is: the victims must approve of it.
Let’s look at how this works with its two greatest sources of loot, income taxes and central banking. Government created both in 1913 -- erecting in effect its two main pillars. Without them, the State is a pussycat, begging for a dish of milk. With them, the State, in a country as rich as the U.S., becomes the greatest destructive force of all time.
Under altruistic guidelines, taxing the rich to extinction is morally acceptable because being rich is proof of moral degeneracy. But there’s a problem: the rich are a minority, and even if their wealth is confiscated, it cannot support the unlimited power lust of state rulers. Besides, most of the rich are politically active, which means they write the laws or influence how the laws are written, and they are not about to legislate themselves into oblivion. This leaves the ever-so-plump middle class. They are the ones who buy most of what the rich produce, so it would not work to tax them out of existence. The problem becomes how to keep the people servile while transferring their wealth to state coffers.More on this story here.
KANTIANS WITH CRUISE MISSILES: THE HIGHEST STAGE OF “LIBERAL” IMPERIALISM
Our neo-mercantilist elites are busy as ever turning political power into privileged market opportunities for themselves and their friends. Political-military and economic power, as we have known them, are alive and well, but having won most of their gambles, stand in more need than ever for comforting ideological cover.
In a long and active lifetime of reflecting and writing on politics, the late Murray Rothbard paid much attention to the role of ideology and, therefore, to the role of intellectuals in state-level political systems. He writes that the rulers’ handing out of economic benefits, “only secures a minority of eager supporters” and “still does not gain the consent of the majority.” Thus, “the majority must be persuaded by ideology that their government is good, wise and, at least, inevitable... Promoting this ideology among the people is the vital social task of the ‘intellectuals’.”
For at least twenty years, political scientists and international lawyers effectively in the employ of power have been donning philosophical garments to justify great-power interventionism, and a few philosophers have repaid the compliment and taken up the same project. The peculiar thing about some of the new liberal imperialists is their attempt to ground their system on the philosophy of Immanuel Kant [1724-1804].More on this story here.
What a tangled web the neocons weave.
While most of the world is still trying to come to terms with the neo-imperial ambitions of the post-Sept. 11 Bush administration, U.S. political analysts, particularly those on the libertarian right and the left, have been trying to map out the various forces behind the administration’s hawks in order to better understand and counteract them. While these forces are often depicted in the abstract, they constitute a network of flesh-and-blood people who have worked together closely and openly -- both in and out of government -- for more than 30 years in some cases.
Two of the structure’s most remarkable characteristics are how few people it includes and how adept they have been in creating new institutions and front groups that act as a vast echo chamber for each other and for the media, particularly in Washington. In this, the neo-conservatives, who lack any grassroots constituency, have been especially effective. In fact, the network consists of a very small elite, much smaller for example than the post-World War II internationalist “establishment” who have long dominated US foreign policy.
The Interhemispheric Resource Center compares the network to a spider’s web -- hence the name of their latest Internet website, Right Web, probably the most comprehensive and integrated effort yet to link the various connections and relationships that have given the “Right” its power and influence. Even a brief meander through the site demonstrates both just how small and incestuous this network has been and how ambitious are its goals, both in foreign and domestic policy.More on this story here.
IDENTITY THIEVES DUMPSTER-DIVING FOR YOUR CRITICAL INFORMATION
The Federal Trade Commission estimates that identity theft costs nearly $53 billion annually. Some seven million people were victimized in 2002. Yet little is known about how the perpetrators actually operate. It is a popular perception that most identity theft happens on the Internet, but over the course of dinner, convicted identity thief Stephen Massey quickly made it clear that low-tech methods of getting people’s personal information are far more effective. His identity-theft crimes depended on the work of a carefully built ring, one that employed hordes of petty thieves and drug addicts. The crimes originated in dumpsters and garbage cans, where information can be culled from discarded personnel files and other trash.More on this story here.
IS YOUR CELL PHONE IS KEEPING TABS ON YOU?
Driven by worries about safety, the need for accountability, and perhaps a certain “I Spy” impulse, families and employers are adopting surveillance technology once used mostly to track soldiers and prisoners. New electronic services with names like uLocate and Wherify Wireless make a very personal piece of information for cellphone users -- physical location -- harder to mask.
But privacy advocates say the lack of legal clarity about who can gain access to location information poses a serious risk. And some users say the technology threatens an everyday autonomy that is largely taken for granted. The devices, they say, promote the scrutiny of small decisions -- where to have lunch, when to take a break, how fast to drive -- rather than general accountability. A federal mandate that wireless carriers be able to locate callers who dial 911 automatically by late 2005 means that millions of phones already keep track of their owners’ whereabouts. Analysts predict that as many as 42 million Americans will be using some form of “location-aware” technology in 2005.
But it is not just the unnerving effect of uncovering small lies that has some users of the technology worried. Like caller I.D., location devices lift the curtain on a zone of privacy that many Americans value, even if they rarely have anything serious to hide. Advocates of location-aware technology insist that its safety benefits -- like locating a 911 caller or a stolen car, or an Alzheimer’s disease-afflicted loved-one -- outweigh the privacy issues. Critics of the new technology do not dispute its usefulness, but worry that it will become ubiquitous before legal guidelines are establishedMore on this story here.
THE LOOPHOLE ARTIST
Few Americans have heard of Jonathan Blattmachr. But among the 16,000 or so lawyers in America who specialize in trusts and estates, which is to say in the passing of wealth from one generation to the next, he enjoys the status of a Hollywood star. In these circles, his first name alone prompts recognition. The Rockefellers are among those who seek his counsel.
Because his specialty is maintaining wealth across time, he needs to know more than just the size and shape of his clients’ fortunes. His work requires knowing whether a marriage is an enduring bond of love or a commercial relationship, or whether heirs can be trusted with fortunes or only allowed a stream of income. He knows of prodigal sons and promising granddaughters, of executives at family-owned businesses who will not learn for years that the brass ring was never going to be theirs. His clients reveal these things to Blattmachr because he can help them maintain their wealth now and for their children. He can chart clandestine routes through the maze of the tax code, making a man who appears as a Midas to his bankers look like a pauper to the tax man.
Blattmachr’s practice exists because America has two tax systems, separate and unequal. One is for wage earners, and most of us know firsthand that that system works effectively. The other is for the wealthy, who control much of what the I.R.S. knows about their finances and who in recent years have paid a shrinking share of their incomes. Blattmachr is not ashamed of this. In fact, he sees himself not as someone who exploits the system for the benefit of the few but as the guy who keeps the system honest for everyone.More on this story here.
ANOTHER COVERUP DECONSTRUCTED: WHO KILLED THE RED BARON?
The Red Baron’s all red triplane is synonymous with chivalrous knights of the air gallantly fighting in the skies over France during “the Great War” of 1914-1918. Rittmeister Manfred von Richthofen was a Prussian of noble lineage who became the most effective, the most feared and ultimately the best known exponent of air combat in World War I.
The memory of Richthofen has been mythologized in modern media, as has his death. The mystery surrounding his death is due to the uncertainty of the events in the last hour of his life. This mystery has led to disputes, past and present, over who actually shot Richthofen down. The basis for the confusion lies largely at the hands of the Royal Air Force. The controversy began with a mistake by the Royal Air Force. This mistake, rather than being corrected was perpetuated by the RAF for their own purposes.
One of Richthofen’s rules was to never chase an enemy aircraft on your own in enemy territory. Richthofen broke that rule with fatal results. Historians have studied his final flight in depth. More recently Norman Franks and Alan Bennett published The Red Baron’s Last Flight. In the light of this recent publication and their authoritative research, it is timely to ask the question again: Who killed the Red Baron?More on this story here.
“BOLD” ECONOMIC PREDICTIONS FOR 2004 FROM FORBES
What to expect from business in 2004? Here is a healthy serving of bold predictions for the coming year from our editors on the state of the global economy, the markets and a handful of important industry sectors.More on this story here.
LIFE INSURANCE CAN BE USED TO AVOID ESTATE TAXES
A general rule is that if a person retains the right to the income or the enjoyment of an asset during his lifetime, or even the right to completely give it away to someone else, then the value of the asset is a taxable asset of his estate and is taxed at its full fair market value as of the date of his or her death.
There are some plans and valid trust or gift arrangements that avoid the estate-tax bite, but they are subject to strict requirements that have been established either in the Internal Revenue Code and regulations or by case law. Life insurance trusts can be used to provide for ample funds for education of the children and support of a surviving spouse in any family, and especially to afford protection against an untimely death of a parent in a younger family. These trusts continue to be used with regularity by estate planners, and they will produce favorable tax treatment if the rules are followed.
The typical life insurance trust is irrevocable and is used to own an insurance policy that will pay off on the death of the owner or on the death of the survivor of the owner and spouse The trust is both the owner and the beneficiary of the policy. The trustee pays for the insurance with annual gifts from the father to the trust in amounts that will qualify for the annual gift tax exclusion, presently $11,000 per donee.More on this story here.
The proper use of living trusts in estate planning.
In the right situations, revocable living trusts can pave the way for a smooth, quick transfer of assets at death without the hassles of probate, the court-supervised process of settling an estate. But revocable living trusts, which are trusts that you can revoke or change while you are alive, are also widely misunderstood and often aggressively marketed to the wrong people. The hard sell is most often targeted at retirees. Financial planning and law firms, for example, may sponsor coffee-and-donut seminars to drum up business.
Meanwhile, so-called trust mills pump out poorly drafted, one-size-fits-all living trusts that are promoted as essential estate-planning tools for everyone to avoid the supposed horrors of probate and reap tax benefits that will not actually materialize with the run of the mill trust. Here are some FAQs to help you put them in perspective for your estate.More on this story here.
PATRIOT ACT USED TO SNAG RUSH LIMBAUGH?
It was widely reported as an outrage, a use of the USA PATRIOT Act by the puritanical Attorney General John Ashcroft and his Justice Department to go after a crime that had nothing to do with terrorism. FBI agents conceded using Title III, the section of the USA PATRIOT Act that covers money laundering, in Operation G-string -- an investigation of corruption allegations against a strip-club owner in Las Vegas. However, Republican House leaders and the Bush administration wanted the Title III provisions considered only as separate legislation but it was Democrats who were adamant that it be attached to the USA PATRIOT Act. Justice Department spokesman Mark Corallo says although the Ashcroft team did not ask for the anti-money-laundering powers, it will use them whenever feasible to fight crime.
Radio commentator Rush Limbaugh reportedly is being investigated by Florida authorities for “structuring” -- that is, withdrawing money from his bank accounts just below the $10,000 threshold under which banks are required to report cash transactions to the government. There are provisions against “structuring” in both federal and Florida money-laundering laws. “I was not laundering money,” Limbaugh protested, just after coming back from treatment for addiction to prescription pain pills. “I was withdrawing money, for crying out loud!” That does not matter, says Charles Intriago, publisher of the Money Laundering Alert newsletter, and it also does not matter for what Limbaugh was withdrawing his money.
There are increasing numbers of prosecutions in which a money-laundering charge appears to be added just to beef up cases where the underlying charges are minor, say critics. In a case that now is on appeal to the Supreme Court, money-laundering charges were added to the weak “environmental-crime” case of David McNab. The fisherman was charged in 2000 with violating the Lacey Act, which makes it a crime to “import fish or wildlife taken in violation ... of any foreign law.” The foreign law in question was a Honduran regulation that made it a crime to harvest lobsters with tails less than 5.5 inches long. While Honduran government officials testified that the law actually was null and void, and only about 3% of McNab’s lobsters had tails less than 5.5 inches, prosecutors somehow convinced the courts that McNab’s depositing of the proceeds of this “crime” in his bank account constituted money laundering. Civil-liberties groups have signed a letter urging the Supreme Court to hear the case and free McNab, who has spent the last four years in prison.More on this story here.
WHY THE STATE IS DIFFERENT
A common accusation against libertarianism is that we are unnaturally obsessed with tracing social and economic problems to the state, and, in doing so, we oversimplify the world. If you let the people who say this keep talking, they will explain to you why the state is not all bad, that some of its actions yield positive results and, in any case, the state should not always be singled out as some sort of grave evil.
It is not inconceivable, they say, that the state is performing actions that weave themselves into the normal operation of society. The state is not always exogenous to the system but is sometime intrinsic to it. To constantly blame the state for our ills is as cranky as those who single out the Bilderbergers for all the world’s ills; it is a half truth gone mad. Without attempting a wholesale refutation of this position, what this criticism overlooks is the uniqueness of the state as an institution.
Among the state’s unique characteristics is that it is exempt from the laws it claims to enforce, and manages this exemption by redefining its criminality as public service. What is considered theft in the private sector is “taxation” when done by the state. What is kidnapping in the private sector is “selective service” in the public sector. What is counterfeiting when done it he private sector is “monetary policy” when done by the public sector. What is mass murder in the private sector is “foreign policy” in the public sector.More on this story here.
THERE ARE NO NEOCONS IN FOXHOLES
It is said that there are no atheists in foxholes. It is also clear from the collective wartime contribution of the War Party that there are no neoconservatives in foxholes either. Fighting the wars they agitate for is a task for the “great unwashed”, not the Philosopher-Kings of neoconservatism. Perhaps this is why the neoconservatives are more concerned about the porous borders in Iraq than in the United States. Perpetual wars need perpetual sources of men, and is there any better source of cannon fodder for America’s wars than her own porous borders?
Whilst neoconservatism may owe its neo-Jacobin impulses of “global democratic revolution” to the Trotskyite pedigree of many of its principal ideologues, it owes much of its core political philosophy to Professor Leo Strauss. Strauss moved to America from Germany in 1938 on the suggestion of the Nazi legal theorist Carl Schmitt, taking up residence at the University of Chicago and developing a political philosophy that drew heavily on the writings of Plato, as well as the ideas of Nietzsche, Heidegger and Schmitt.
Strauss believed, like Plato, that the ideal society was one guided by the wise and not by the masses. Whereas Plato had recognized the impracticality of such a solution and instead settled for a rule of law, Strauss believed that the “wise” could indeed rule by implementing a policy of “perpetual deception” where the “populist” masses would be continually deceived for their own good and to protect the ruling elites from popular reprisals. Although Strauss remained relatively unknown outside academic circles until recent years, a cult formed around the Professor and today some 60 members of the Bush Administration are identified as Straussians.More on this story here.
THE CURRENT SYSTEM IS TO CAPITALISM AS MUSSOLINI IS TO JEFFERSON
Libertarians often find themselves squirming to explain why they are not apologists for the rich, protectors of the powerful and defenders of the privileged. This predicament usually comes when we face off against the left, the self-styled defenders of the little guy and the powerless. I suppose we have ourselves to blame for not making ourselves clear. We have not marketed ourselves well. Though we are thought to be spokesmen for billionaires, none of them to my knowledge gives us (non-beltway libertarians) any money. While we do in fact speak for the interests of the individual, often poor or struggling, few of them know it or identify with our (their) cause.
It was a recent letter from a nice fellow responding to one of my articles that prompted this essay. He asked, as we have all been asked a million times, who is going to take care of the poor in a libertarian society? I responded, in substance, you are under the false impression that the current system is designed to help the little guy when in fact, it is designed to screw the little guy. That is why there are so many of them (us).
The left thinks the current system is capitalism. It is not, unless they view Mussolini as a capitalist. No, it is corporatism or the corporate state, a marriage between big government and big business with big labor as a junior partner. This system is dominated by small, cohesive groups -- political machines -- out for graft, whose superior organization, discipline, greed and ruthlessness allow them to seize control of the state and use it for their own confiscatory purposes. This system is far from free-market capitalism. In fact, it is precisely engineered to eliminate the individual freedom and competition of the free market.
The political left often complains about the disparity in wealth between the rich and the rest of us. It is the corporate state, not the free market, that has created a society where a few at the top are doing very well while the bulk of the population struggles. We can break down the corporate state into three main elements...More on this story here.
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