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(Especially noteworthy articles’ headings highlighted in gold.)
LEW ROCKWELL’S NEW BOOK: SPEAKING OF LIBERTY
Speaking of Liberty is Rockwell at his best. The Rockwell who muffles “loud-mouthed” statist, talk-show hosts. The Rockwell who turns collectivist environmentalists green. The Rockwell all the neocons, from David Frum to Bill Bennett, hate and fear. The Rockwell who is quick and funny -- and deadly -- when tossed into the lion’s den. The Rockwell who brings a steel-edged consistency to the defense of liberty.
The essays cover a huge diversity of topics, but are united by a set of fixed principles: the corruption of politics, the universality and immutability of the ideas of freedom, the centrality of sound money and free enterprise, the moral imperative of peace and trade, the importance of hope and tenacity in the struggle for liberty, and the need for everyone to join the intellectual fight.More on this story here and here.
AMERICA: THE REAL DANGER LIES WITHIN
The year 2003 dramatically and dolefully illustrated Lord Acton’s famous dictum that absolute power corrupts absolutely. An almighty United States, unrestrained by any rival, international body, or world opinion, bestrode the globe, a belligerent colossus determined to monopolize global oil reserves and use its vast military power to crush lesser nations or malefactors that disturbed the Pax Americana.
For America’s hard right -- a curious farrago of Armageddon-seeking southern Protestants; neo-conservative supporters of Israel’s right-wing Likud party; and the military-industrial-petroleum complex -- the Bush administration’s aggressive foreign policy of world domination, and utter contempt for international laws and old allies, marks a new era of national greatness. But for those Americans whose primary loyalty was to their country, rather than to religious cultism, foreign nations, or financial profit, the rapid emergence of the U. S. as an imperial power waging two hugely expensive colonial wars in Asia was a disaster, both for America’s democratic system and for the rest of the world.
Those who truly love and respect the United States, like this writer, a conservative and U.S. Army veteran, see the very qualities that made America a beacon to the world -- its very soul -- now under heavy assault by a cabal of religious fanatics, foreign-leaning ideological extremists, and self-enriching Enron-Republicans. That is a danger considerably greater than al-Qaida.More on this story here.
MUTUAL FUND SCANDAL PUSHES HEDGE FUNDS OUT OF THE SHADOWS
Hedge funds are for rich people only ... or the old story went. But investors who have far less than the $1 million or so in assets required to invest are learning just how much impact these funds can have on the stock market and ordinary mutual funds. As New York state Attorney General Eliot Spitzer revealed in September, mutual fund managers have been cutting secret deals that allow hedge funds to make short-term predatory trades and profit at the expense of other mutual fund investors. One hedge fund has paid $40 million in penalties and the manager of another has pleaded guilty to fraud. Alliance Capital Management LP agreed to pay $250 million in restitution.
The pools initially gained popularity when wealthy people and companies wanted to find a way to “hedge”, or protect themselves, when the stock market went down by selling securities “short” -- a practice that mutual funds are sharply limited in their ability to do. As more hedge funds were created, they also began to employ strategies that had nothing to do with selling short, but they continued to limit their investor pools to relatively small numbers of wealthy people to avoid SEC oversight. The SEC, with limited resources, has generally exempted small investment companies that serve rich customers from regulation, because those clients are considered more sophisticated and less in need of government protection. [Thank you SEC. Our gratitude is boundless!]
The SEC estimates that there are currently 6,000 to 7,000 hedge funds, managing between $600 billion and $700 billion in assets -- one-tenth the size of the mutual fund industry but a notable increase from 1990, when fewer than 2,000 funds managed less than $100 billion. Hedge funds are popular because the good ones produce high returns: the Van Global Hedge Fund index has averaged 15.8% a year since 1988, compared with 11.9% for the Standard & Poor’s 500 stock index. Providers like hedge funds because they can charge higher fees for managing them -- they generally get to keep a percentage of profits, on top of standard fees -- and the reduced regulatory oversight.More on this story here.
Hedge funds cost more, says report.
London-based fund monitoring company Fitzrovia International has released a study of hedge fund investor pricing which shows that hedge funds can charge, on average, 80% higher annual fees than actively managed offshore equity funds. Fitzrovia has produced the first analysis of the annual charges for hedge funds -- including management fees, Total Expense Ratios (TERs) and performance fees.
TERs of 2.00% (excluding performance fees) rank in the second lowest fee quartile for hedge funds, while management fees of 2.00% rank in the highest quartile. For hedge funds in particular, says Fitzrovia, it is also crucial to examine performance fees, which can range from 5% to 30% of net gains. When all annual fees are taken into account, investors selecting a random hedge fund in this report could have paid 3.94% a year in all annual fees (over the latest accounting period). When this average is weighted by fund assets the figure is reduced to 3.23%, compared to an equivalent figure for equity funds of 1.79%.More on this story here.
THE SILENCE OF THE CEOS: STICK UP FOR MARTHA, FOR YOUR OWN SAKES
If only Attorney General John Ashcroft could cow Al Qaeda as successfully as he has CEOs of publicly-traded companies, the U.S. might be making more progress in the war against terror. How else to explain the silence with which corporate chiefs -- woman CEOs included -- around the country greeted the chilling criminal indictment of Martha Stewart on the charge of professing her innocence of insider trading allegations leaked to the media by anonymous government sources?
The silence is ominous because the government’s criminal case is transparently thin. Yet the implications for officers of public companies are enormous. The SEC’s civil insider trading charges against Stewart are flimsy, and the Justice Department has decided against pursuing criminal charges of insider trading. Yet Stewart could now go to prison for making a public statement during the investigation of those charges. The perversity of this situation does not faze U.S. Attorney General John Ashcroft, who personally selected Stewart’s prosecutor to be his new number two man at the Justice Department.
Ms. Stewart has been charged with criminal securities fraud because she and her lawyers publicly declared her innocence in connection with her sale of a small amount of stock in another company. This exercise of pure free speech, Ashcroft’s Justice Department contends, was a “material false statement” made to influence the stock price of her company, Martha Stewart Living Omnimedia, in violation of SEC Rule 10b-5; for that, Ashcroft believes, she should go to prison. What Ashcroft has done by approving the indictment is to threaten prison terms for officers of companies who dare to exercise their First Amendment rights. This is bad for publicly-held companies and worse for their officers.
To paraphrase Bob Dole in another context: Where is the outrage? Make no mistake. This is the most blatant attack by government on pure free speech in recent memory, made more chilling by the prominence -- and wealth -- of the target. If they can do it to Martha, they sure as hell can and will do it to the average American.More on this story here.
HOW 2004 LOOKS FROM POTSDAM
At the beginning of a new year, it is traditional for columnists, commentators and other harmless drudges to take a look at their crystal ball and forecast what the year may bring. Fortunately, I have superior technology. My home telephone was made in 1918. When I need to see down the road a bit, I just call the Kaiser. I got through to Potsdam a few nights ago, and here is what der Allerhoechste thinks may be in store for us in 2004.More on this story here.
MORE INEPT UK MONEY LAUNDERING REGULATIONS FROM HM TREASURY?
Money laundering legislation is already generating an increase in demand for people resources, skills and technology to detect and report what may be described as suspicious transactions in the financial services sector. Are further ill-considered regulations, “a sledge hammer to crack a nut?” Although not yet officially published, it has emerged that changes to wording of the Money Laundering Regulations 2003 “companies providing business services in relation to the formation, operation of a company or trusts” will be required to appoint money laundering advisers and train staff to identify and report suspicious transactions. The regulations have little sense of proportion. There is no minimum limit to the value of any suspicious transaction.
The legal profession is as always ready to deploy the “fear” factor, take the widest interpretation rather than a strict constructionist view of the regulations. There are suggestions the provisions encompass companies, which provide services to companies beyond lawyers, accountants and professional advisers. There is concern that those who provide cleaning, advertising, auctioneering and management consultancy services are enmeshed by the regulations. They have three months to comply with the regulations. If in doubt they probably will have to comply.More on this story here.
YOUR BANK ACCOUNT, YOUR LIBERTIES
I went to the bank today. My debit and ATM card had stopped functioning on New Year’s Eve. I was told, in no uncertain terms, that I must visit the bank to review my account because of “possible fraud”. I arrived at the bank and went to my banker’s office. Once pleasantries were out of the way he asked how he could help me. I explained that my card had stopped working and that I had been informed over the phone that I would have to come in and look over my past transactions, that I would have to look for anything suspicious. That only then could my ATM card -- my sole link to cold, hard cash -- be reactivated. So he pulled up my account on his computer and rotated the monitor so that we could both see the details of my financial life. He rolled the history back several months and, together, we set to find anything suspicious. As the pages -- the days -- rolled by on-screen I realized that these transactions, these little digital notes, brought back memories. There was that time, at that place, where I was with that person. It was all there, in green and black.
Once we had examined the sum of my daily financial life spanning several months we determined, together, that no fraud had been perpetrated. It was at this point that my banker reactivated my ATM card. I thanked him very much for the service. As we returned to unrelated conversation I noticed a small sign on his desk. It was a small advertisement, designed like a piece of campaign literature, as if it were trying too hard to appear patriotic. It read “USA PATRIOT Act compliance by...”
My time with my banker today was innocuous. His hopefully brief foray into the details of my life were largely at my request, largely for my protection. But the USA PATRIOT Act requires financial institutions to report “suspicious activity” to federal law enforcement agencies. As the Web site of Aquilan, which offers a product it calls Aquilan Patriot Manager, notes, “For most financial institutions, complex distribution channels, clients with multiple relationships, and disparate adminstration and transaction systems make compliance with the USA PATRIOT Act expensive and nearly impossible.” But here Aquilan’s software -- and the software of so many other companies, including the one that provided that patriotic sign to my banker -- make the “impossible” possible.
Aquilan’s software works, I am sure, much the same way as the software that identified possible banking fraud. It works quite the same way as the software that prevented me from removing cash from my own bank account, the software that forced me into my bank branch for a half-hour long meeting with my banker. The software that was wrong, that “red-flagged” my account as showing fraudulent activity when, in fact, it did not. Aquilan’s software, and, I am sure, all other PATRIOT Act verification software, is deeply flawed. This software is prone to false positives, just like the fraud detection software that brought me into the bank on my day off. The PATRIOT Act verification software is as likely to bring the FBI to my door as the fraud detection software was to bring me to my bank branch. It is likely to necessitate a full government examination of my finances, of my habits, of my life. It is likely to cause the FBI to pour over my financial records just as my banker and I did today. And those little innocent vignettes, those little guesses at my life that my banker engaged in... it is likely to cause the FBI to construct similar vignettes, to “watch” as I have coffee with a friend and later take in a show.More on this story here.
MINIMIZING POLITICAL RISK -- OFFSHORE
The ideal investment portfolio is designed around a careful evaluation of the economy and interest rates. However, there is another factor you must keep in mind -- one that receives almost no attention in the mainstream media, but which is nevertheless a determinative influence in the investment world: political risk. Nowhere is political risk more pronounced, and less acknowledged, than in the U.S., where investors must consider: (1) Legal risks -- laws such as the USA Patriot Act give the government power to secretly confiscate property without a hearing. (2) Regulatory risks -- government regulations can devastate an industry or adversely affect property rights. (3) Tax risks -- changing the tax treatment of an investment can dramatically affect its value. (4) Monetary risks -- U.S. monetary policy overshadows all investments. We believe monetary risks will have the most immediate impact on investors in 2004.
The most obvious way to minimize political risk to your investments is to diversify your portfolio internationally -- particularly through offshore investment options. Yet many investors are uncertain how to choose offshore investments. Part of the problem is confusion about what it means to invest offshore. A second and greater part comes from a failure to understand how to structure a rational financial plan.More on this story here.
HOW TO IDENTIFY A BUBBLE
In a balanced economy, credit expansion is fully matched by available domestic savings. This used to belong to the elementary knowledge of economists. Mr. Greenspan shocked us with his public remark that an asset bubble can only be recognized after it has burst. Outrageous credit inflation was the infallible and most spectacular hallmark of America’s equity bubble in the late 1990s. But instead of feeding into the price indexes of goods and services, which continued to fall, it fed into soaring imports and soaring stock prices.
To repeat: All asset bubbles and bubble economies have their highly visible and also compelling trademark in exploding credit. The distinction between the two is important. An asset bubble simply reflects a rise in asset prices out of proportion to underlying yields. A bubble economy is an economy where soaring asset prices fuel a borrowing/spending binge that may be concentrated in real estate, business fixed investment or consumption.More on this story here (scroll down to Kurt Richebächer piece).
FOREIGN BONDS OFFER WAY TO PLAY THE FALLING DOLLAR
In the past two years, the dollar has tumbled about 44 percent against the euro and has hit multiyear lows against other major currencies. The result: Even relatively conservative foreign investments are delivering big returns to U.S. investors just now. Traditionally, Americans play a weakening dollar by buying foreign stocks and foreign-stock funds, which they are still doing. But foreign bonds -- which tend to be less volatile than stocks -- can offer a safer way to play a weakening dollar. That is a draw for investors who want to play the currency market without the risks and hassles of directly trading currencies.
World bond funds, even though they often include a bit of U.S. bond exposure, are up 16% in the past 12 months. Emerging-market bond funds, which invest in more volatile debt like the bonds of Brazil and other emerging nations, climbed more than 32%. Is it too late to jump on the bandwagon? Certainly, if the dollar rebounds, any investments in foreign bonds -- or any foreign-denominated investment -- would be pinched. Still, currency movements often last for years.
Investors can buy bonds directly or foreign bond funds. Both have quirks to consider. Foreign-bond mutual funds come in a variety of styles, and if investors are not careful, they will not benefit from the dollar’s slide. Many funds are hedged to offset the risks and volatility of currency movements. Many “global-bond” funds own U.S. bonds, diluting the foreign currency exposure. Does the fund invest in government or corporate bonds, or both? Does it invest in big industrial markets like the United Kingdom -- or in volatile emerging markets like Argentina?More on this story here.
NAMELESS DREAD: THE FUNCTION OF FEAR IN A CONTROLLED SOCIETY
Turn on the TV news: hate crimes, hurricanes, and homicides. Open the paper and you are buried in an avalanche of despair: disaster, terrorist plottings, political playpen squabbles, famine and far-off genocide. Leaf through Time and Newsweek and you are subjected to the same message: The world is a place of extreme danger and you are helpless to make a difference.
What is the real message behind this? Be afraid -- you are helpless. Only Big Daddy or Big Mommy can keep you from harm’s way. But you must submit yourself to infantalization order to be safe. Even coffee cups now carry dire warnings, as though McDonalds’ customers were not told “hot, hot!” by their mothers when they touched the stove at age two. Another requirement for “personal safety” is ever increasing depersonalization. It is hard to believe now, when bureaucracies do not even ask for your name, just your Social Security number, but the only way the federal government could get America to originally accept the numbers was to promise that they would never, absolutely never, be used for identification. In order to be safe you must also submit to humiliation such as surveillance cameras in public bathrooms. The message is constant: You must submit and you must obey. You are a little child, dependent on the goodness of the Big People for your very survival. It was not always that way.More on this story here.
SCARED NEW WORLD
The U.K. security forces are being given dramatic new powers to fight terrorism. The Government is testing biometric ID cards and building a huge database that will reveal our lives at the touch of a button. An Independent reporter looks into the future and finds it is already here.
Luckily most of us never experience anything like a police state (unless we happen to be the wrong color in the wrong place, or our name sounds vaguely like an entry on a list of suspects as was the case for several innocent airline passengers recently). Opponents of the creeping restrictions on our freedom and privacy are worried about how easily our happy state could change. It was Lord Justice Judge, the second most senior judge in England, who responded to the first version of the Civil Contingencies Bill last year with a warning: “There are nasty people out there and there is no guarantee that because we are Great Britain none of them will ever, ever come to power.”More on this story here.
MAURITIUS SEEKS TO BECOME A GLOBAL CYBER ISLAND PARADISE
First came California’s Silicon Valley, then India took the honours. Next, if all goes according to plan, the tiny Indian Ocean nation of Mauritius hopes to lead the way in Africa, by transforming itself into a “cyber island”. The dream is to create a hi-tech paradise, dubbed “cyber city.” The 12-story tower, surrounded by a ring of mountains, rises out of the sugar cane plantations that were once the bedrock of Mauritian economic prosperity.
But it is not to the West that Mauritius is looking for its example of cyber supremacy. That falls to India. The island may be a dot on the map in the Indian Ocean, but it is strategically located between Africa and the east and has close links with India. “Through the cyber city project, we want to forge triangular cooperation involving India, Mauritius and Africa, to develop synergy and facilitate Africa’s march towards an e-economy,” then finance minister, Paul Berenger, told a conference last year, before he became the island’s prime minister in September.
Mauritius, with 1. 2 million people, is home to a large population of Indian descent, which accounts for most of the island’s political elite, though Berenger, a veteran politician, is himself a Franco-Mauritian and, therefore, a notable exception. Although the country is officially bilingual in English and French, the local language Kreol is even more widely spoken by islanders. Hindi and other Indian languages are also popular among the different communities.More on this story here.
WHAT IS GOING ON WITH THE SHRINKING U.S. MONEY SUPPLY?
Something very strange is going on. Since August the U.S. money supply is shrinking, as measured by “money of zero maturity” (MZM) and M2. The adjusted monetary base is the one that the Federal Reserve System controls. It reveals the FED’s holdings of assets, mainly U.S. government debt certificates, and is what Friedman has called high-powered money. This base supplies the reserves that the commercial banking system uses to create loans, and hence money. Here, things are less clear. The general trend was upward until November, it stabilized through December, and has now started down.
If the monetary base is stable, at least peak to peak, but MZM and M2 are falling, what is causing the disconnect between FED monetary policy and the market’s use of monetary reserves? One answer is the rise in the supply of currency, i.e., pieces of paper. There was a steady upward move until late July. Then the rate of increase accelerated. When a depositor goes to his bank and withdraws currency, that bank can no longer use his money to make loans. When he pulls out currency and fails to deposit it in another bank, the banking system cannot make new loans. The fractional reserve money-expansion process reverses, imploding the money supply by multiples of the face value of the currency withdrawn. The public is pulling currency out of the banking system by cashing in (i.e., cashing out) its small time deposits. While no one is using the terminology, we may be witnessing a bank run. This is not a panic-driven bank run, like something out of the Great Depression. This is a steady bank run that is motivated by something other than fear. The FED decided to stimulate the economy in 2001 by pumping in new money. Lo and behold, this policy is now backfiring. It has produced such low rates of investment return for savers that they are pulling currency out of the banks.
The economy seems to be recovering. The stock market is up. Gold is up. The euro is up. The dollar is down internationally. Yet from the statistics, we learn that the FED is not inflating, the money supply is falling, and prices are rising, but only mildly. The rise in gold’s price is not taking place as an inflation hedge. It is taking place parallel to the decline of the dollar against the euro. There is something more fundamental going on here than traditional inflation hedging, or so it seems to me. There is a move against the dollar that is not based on fear of inflation. I think we are seeing the beginning of a shift away from the dollar as the world’s primary reserve currency. What has prevailed since 1940 is beginning to change.More on this story here.
NEW BOOK -- FINANCIAL RECKONING DAY: SURVIVING THE SOFT DEPRESSION OF THE 21ST CENTURY
It is easy to wave off tales of upcoming economic collapse. After all, Chicken Little stories have been around since the beginning of time. In their new book Financial Reckoning Day, Bill Bonner and Addison Wiggin use demographic evidence and a substantial review of economic and political history to show that fiat currencies eventually collapse and suggest that the dollar is next. Bonner and Wiggin are certain that Fed Chairman Alan Greenspan is, at best, incompetent. In their view, Greenspan has made the almost total transformation from an Ayn Rand disciple, a free market adherent ne plus ultra, to the consummate Washington insider, one whose overarching concern at this point is his legacy as a master economic Sherpa.
The dictionary defines reckoning as “a time to account for or be punished for wrongs.” And according to Bonner and Wiggin, Americans have got it coming. We have been living gluttonously on debt -- personal, corporate, and government -- subsidized by the kindness of foreigners who take their truckloads of dollars and invest them in American assets. One cannot live forever on debt. Foreigners will not forever regard depreciating dollars as smart investments. Such debt bubbles will burst and then ... what?
If you are encouraged by the book’s subtitle to paw through the pages looking for investment advice, you will not find much beyond “Buy gold”. What they offer is an entertaining presentation of how money and markets work, and how people tend to react when the Fed’s dollars show up in every tree and cereal box.More on this story here and here.
OLD BOOK -- THE HYPERINFLATION SURVIVAL GUIDE: STRATEGIES FOR AMERICAN BUSINESSES
In the early 1980s, Harry E. Figgie, Jr. (the founder of Figgie International) became concerned that the United States’ Government was following the same destructive path that lead countries such as Argentina, Bolivia, and Brazil into hyperinflationary economic collapse. In the 1980s, each of these South American countries were running massive annual deficits, were accumulating unmanageable national debts, and each respectively had a central bank creating money (out of thin air) at a reckless pace. In looking at the frighteningly similar profligate behavior, on the part of the U.S. Government, Mr. Figgie became concerned that hyperinflation could emerge in the United States as well.
As a businessman and an entrepreneur, Harry Figgie was concerned that his business enterprises may not survive if his management teams were not prepared to operate under the unstable conditions wrought by heavy inflation. Since little had been written about managing a business under hyperinflationary conditions, Mr. Figgie initiated a research project to find out what a business must do to survive the ravages of inflation. A three-person team headed by Dr. Gerald Swanson, a University of Arizona economist and director of the Academy for Economic Education, went to South America four times over a two-year period to study the development of inflation and its impact on businesses, individuals and governments. They interviewed 80 leading bankers and industrialists and a considerable number of ordinary citizens throughout Argentina, Brazil and Bolivia.
As a result of this research, Dr. Swanson wrote The Hyperinflation Survival Guide: Strategies for American Businesses (which was first printed in 1989). The superb content of this book can be attributed to Mr. Figgie’s foresight and to the outstanding research and writing of Dr. Swanson. What follows are a brief “Austrian” perspective about this book and then specific details about the book’s content.More on this story here.
A WORLD RECREATED
Heads up on the content of this column: it contains big thoughts in a short space. The market economy -- globalized, enormously powerful, breathtaking in scope and breadth -- is remaking the world in ways that far surpass any existing political development in the US, from the crafted blather of the State of the Union to the mad rush to grab the Democratic nomination. We are living through changes that may appear slow if observed from the point of view of the daily headlines, but which are momentously fast and completely transforming when looked at globally and from the point of view of years and decades into the future.
These developments are going to bring about surprising political shifts, profound upsets in rooted cultural assumptions, and an eventual and merciful end to the US imperium. These changes will touch everyone in ways that will be both stunning and glorious for average Americans, and deeply disturbing for the American regime that aspires to unchallenged global hegemony.
What is the underlying cause? The unleashing of human energies in nations that have been isolated, regimented, and closed for centuries. China, Malaysia, India, the countries of Latin America, and the new economies of Eastern Europe, among many others, are expanding at as much as twice the rate of American and European markets. This is not only remaking their nations, but the way we perceive the geographical distribution of wealth and power. Over time, and extended far into the future, this trend is going to mean dramatic upheavals in the way Americans perceive their role in the world.More on this story here.
AMENDING THE AMENDMENTS, POST 9/11
Reading the various newspapers from around the world it seems that everywhere one looks there is evidence of a gestating police state. That totalitarian governments could take over in places like Britain is unsurprising, since its parliament is able to legislate about any matter it chooses. This is in contrast to countries such as the USA which have written constitutions and Supreme Courts to enforce them. The US courts could be expected to strike hard and repeatedly against some of the more repressive acts of the state. Sadly it appears otherwise.More on this story here.
THE CHINESE FEAR INFLATION; THE JAPANESE LONG FOR IT
The Chinese celebrated the lunar new year on Thursday January 22nd, gladdened by the news that the economy grew by 9.1% in 2003. But this heartening performance has stoked fears that the Chinese economy is overheating. It would not be the first time. During the last year of the monkey, in 1992, China’s then leader, Deng Xiaoping, made his famous tour of the south, urging the country to make the most of its new economic liberties. Liberty soon slid into licence, however, and within a year or two the economy was struggling to cope with rampant over-investment and inflation over 20%.
This year marks an equally troubling anniversary for China’s neighboring economic giant, Japan. It was ten years ago that the economic superpower fell into a deflationary quagmire from which it has yet to escape. Core consumer prices registered a small increase in October, but fell again in November. The GDP deflator, a broader measure of prices, continues to fall by over 2% a year. While the Chinese authorities are acting smartly to head off inflation, the Japanese authorities are actively seeking it.More on this story here.
BUSH PUSHES PLAN TO PERMIT INTERNET SURVEILLANCE
The Bush administration is pushing to ratify an international convention that civil libertarians say would pose serious threats to privacy rights at home and abroad. “It promises to be an effective tool in the global effort to combat computer-related crime,” said the president. But independent legal experts and right activists on both sides of the Atlantic are sceptical about such claims.
The treaty criminalizes acts such as hacking and the production, sale or distribution of hacking tools, and expands criminal liability for intellectual property violations that nations must have on their books as crimes. The agreement also makes it mandatory for each participating nation to grant new powers of search and seizure to its law enforcement authorities, including the power to force an Internet service provider to preserve a customer’s usage records and to monitor his or her online activities as they occur.More on this story here.
THE BANKRUPTING OF AMERICA
An analysts sobering take on the recent (and very important) study which shows the US government is $44 trillion dollars in debt. Ironically, the people most threatened by the hydra-headed financial and political monster are the very same people these programs were designed to benefit: the middle class. The financial imbalances stem from direct wealth redistribution, from one generation to the next. They are a disincentive for saving and investment, hindering current growth today while bankrupting America tomorrow. But politically they are sacred cows.
And it is not just the government who is borrowing with reckless abondon. Household borrowings now total $8.2 trillion and they continue to grow at near double-digit rates. Only twice in the last 25 years has debt service taken as large a chunk of America’s income as now -- and that is despite the lowest interest rates in fifty years. So...what will happen? What is the financial endgame? What are the consequences of America’s bankruptcy...? Sooner or later, inflation will be back -- and in a big way.More on this story here.
JANUARY ISSUE OF ESCAPE FROM AMERICA MAGAZINE IS OUT
Sample articles from this issue include:
Affordable Caribbean: Restrite Sea Gardens Guest House is an establishment I guarantee is not to be found in any guide books to the Caribbean; nor does it exist, even in theory, in the cyberspace fantasyland of travel agent computers. You do not make reservations for the Restrite; you just show up, which is what I did. I in fact have no reservations for any of the seven nights I will spend on the island. This is part of my plan, or non-plan, in proving that a Caribbean vacation can be had for $25 a day. Whaddam I, nuts?
Hiding Out In Panama: There have been a number of famous people who have hid out in Panama in order to escape trouble elsewhere: The Shah of Iran, Graham Greene, Billy Carter. Now Panama is a great place to lay low. Panama has always been a place where you could come and be whatever you want. If you are sick of living inside your skin, sick of your life, your personality, your friends, your name, and if you want to shed you identity for a while, then you will be welcomed in Panama. For the most part people in Panama will welcome you as you are. But the price of entry is that you also must respect what other people like.
Traveling Through Costa Rica: “Pura Vida”. In Spanish it means “Pure Life” and is a phrase you will hear and see, everywhere in Costa Rica. The locals live this expression to the fullest and their love for life is evident on their smiling faces and in their kind actions to strangers. Some of the happiest people I have ever encountered were Costa Ricans. And why wouldn’t they be constantly cheerful? You would be too if you could call one of the world’s most beautiful and exotic countries home.Issue table of contents here..
AIRLINE SECURITY PROGRAM HAS “SLAVE” OVERTONES
Despite strong opposition from civil libertarians and civil rights activists, the Department of Homeland Security’s Transportation Security Administration is pushing ahead with the so-called CAPPS 2 program with hopes it will be in full operation within a month. It is a heightened version of the Computer Assisted Passenger PreScreening program (CAPPS 1), instituted to heighten security following the Sept. 11, 2001 terrorist attacks.More on this story here.
DESTROYING THE BILL OF RIGHTS
During the last century, governments given totalitarian powers killed an estimated 169 million people. If you think it cannot happen here, I would remind you of the flames that destroyed the Waco, Texas compound of a religious cult that, by most accounts, did not represent a threat to anyone, was not engaged in any illegal acts, and, in which, more than 90 men, women and children were gassed and incinerated. This would suggest that no one is safe from a government intent on serving a subpoena, even if it has to kill you to do it. It was our introduction to the Clinton administration, but no one would have guessed that a conservative, Republican-controlled government would serve up The Patriot Act that became law on October 25, 2001.
I am not a lawyer and I am not trained in the interpretation of law. However, I know the Fourth Amendment of the Constitution says, “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probably cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or thing to be seized.”
The Patriot Act, however, permits the government to delay notice of the execution of a warrant to parties under suspicion of “domestic terrorism”. If the government can conduct such an investigation of a suspected terrorist, what protects any citizen from being identified as a terrorist and thus subject to “sneak and peak” surveillance? The Act is so broadly written that nothing protects a citizen with the provisions and intent of the Fourth Amendment. It renders anyone subject to a “sneak and peak” investigation in which all actions, communications, and personal records become fodder for prosecution.More on this story here.
TAXATION THROUGH THE AGES
In the summer of 1965, when I had just finished my freshman year in college, I was reading a little book called The Law -- a long pamphlet, really -- by the nineteenth-century French legislator Frédéric Bastiat, when I was riveted by a single sentence: “Look at the law, and see if it does for one man at the expense of another what it would be a crime for the one to do to the other himself.”
In Bastiat’s view, government, beyond the strictest limits of justice, became “organized plunder,” a device by which “everyone seeks to enrich himself at the expense of everyone else.” In other words, government itself tends to become the very evil it is supposed to prevent: crime. But it confuses people because it enacts criminal acts under the forms of law. The simple insight rocked me. It upset my faith in my country and its basic justice. If Bastiat was right, the United States was already profoundly corrupt. It took me years to come to terms with this idea. Today it seems to me almost self-evident. I marvel that anyone with common sense thinks otherwise.
Bastiat, a devout Catholic, reasoned about the state from a natural law philosophy. He concluded that the state violates the most basic principles of natural justice. Once you start thinking that way, you can hardly avoid thinking of politics as a largely criminal activity. At what point, short of taking 100% of our earnings, do our rulers feel they are taking too much from us? The obvious answer is that they recognize no limit. The subject never comes up. They view the taxpayer as an inexhaustible resource. And why shouldn’t they? The sad fact is that the American taxpayer is a remarkably passive creature.More on this story here.
THE RISKS YOU RUN WHEN YOU OWN GOLD, AND THE DANGER YOU FACE IF YOU DON’T
Some folks think that the greatest risk of all to the gold owner is confiscation. They use 1933 and the events that took place that year as their evidence. I do not share the view that confiscation is that great a threat. The situation today is unlike 1933. Gold is not circulating money and those who own gold are regarded as wackos. Let them go unnoticed seems to be government strategy.
I am not minimizing the threat government poses to assets and privacy. They can come and take your living room furniture, but I do not think confiscation would be their weapon. Some who contend that there is safety in holding gold coins dated prior to 1933 have not thought out the premise. Can you imagine the absurdity of a bureaucrat standing at your front door with an eye loop examining your gold coin to see if it is legal or not?
Let’s review what happened that fateful year. On April 6, 1933, a month after his inauguration, FDR demonetized gold. The $20 gold piece was no longer money. Well, since it was not money any longer, bring it to the bank, they said, and we will give you a $20 bill for it. That is called theft. In January of 1934, The Gold Reserve Act changed the value of an ounce of gold from $20.67 to $35. Somebody almost doubled their money! Anybody we know?More on this story here.
FREEDOM PROPONENT FREE THYSELF FIRST
Provocative Web site explores liberty in a new and different way.
Taken from the “About” page: TakeLiberty.com was established on the premise that political liberty is not only a workable and practical goal, it is also a natural right. We do not need permission to have liberty. We are within our natural rights anywhere on the planet to simply take it -- and not bother either asking permission, nor trying to win consensus. Each individual has the power to take liberty and make it a reality in his own life.
We are not a group of people gathering the disgruntled masses. We do not want the masses. We do not want a group. Does nobody any good. We address this website to individuals. Presumably more than one. Perhaps one at a time. Read a bit, then go away. Think a bit.Home page here. Selection of essays here. Why the liberty movement (as such) is doomed here.
Carl Jung’s prescription for unchaining liberty.
Carl Jung’s writing focuses upon the psychological transformations that must occur if we are to transcend the fears and the violence that are tearing apart our world. He states: “If the individual is not truly regenerated in spirit, society cannot be either, for society is the sum total of individuals in need of redemption. I can therefore see it only as a delusion when the Churches try -- as apparently they do -- to rope the individual into some social organization and reduce him to a condition of diminished responsibility, instead of raising him out of the torpid, mindless mass and making clear to him that he is the one important factor and that the salvation of the world consists in the salvation of the individual soul.”More on this story here.
FBI SPECIALIST CLUES IN A TECHNOLOGY CLASS ABOUT COMPUTER SECURITY
Dave Thomas, former chief of computer intrusion investigations at FBI headquarters, and current Assistant Special Agent in Charge of the St. Louis Division of the FBI had this to say: “I have spent a considerable amount in the computer underground and have seen many ways in which clever individuals trick unsuspecting users. I don’t think most people have a clue just how bad things are.” He spent quite a bit of time talking about the intersection of Trojans and viruses.
I am a civil libertarian at heart, and that brings with it an innate mistrust of governmental authority -- but I am glad people like Dave Thomas are in the FBI. He is a good man, and he has a good understanding not just of technology, but also of the complexities of the moral and ethical issues surrounding technology in our society today.More on this story here.
A SEARCH THE ROYAL CANADIAN MOUNTIES WILL COME TO REGRET
By figuratively kicking down an Ottawa Citizen reporter’s door, the RCMP did two things it will regret: It pushed Paul Martin’s new government into its first home-grown crisis and focused public attention on intrusive security measures that the country had until Wednesday chosen to largely ignore. Only hours after the raid, the first results landed with a thud. Speaking to reporters in Davos, Switzerland, the Prime Minister again promised to get to the bottom of the case that sent Canadian Maher Arar to a Syrian jail and the RCMP to Juliet O’Neill’s doorstep. Then he went a significant step further, suggesting security legislation written in fear and haste after Sept. 11, 2001, may need revision. None of that is good news for the RCMP and its keenly political commissioner, Giuliano Zaccardelli.
An independent inquiry into the Arar affair is now all but inevitable. It will almost certainly embarrass the RCMP and perhaps other agencies, raise difficult questions about the cross-border exchange of information between government agencies and strain relations with the U.S. that Martin has been trying hard to repair. Demonstrating how fast that pressure is rising, Martin was forced into an awkward denial that Canada is becoming a police state.More on this story here.
IRS WITHHOLDING PROPOSAL IRKS SELF-EMPLOYED
Withholding is necessary to collect $81 billion a year in taxes that the IRS is missing due to underreporting of income by self-employed people, said Nina Olson, national taxpayer advocate. Olson recommends a 5% withholding rate on payments to independent contractors who do not maintain inventories and a 3.5% withholding rate for independent contractors who maintain inventories or receive payments for materials and supplies.
Robert Hughes, president of National Association for the Self-Employed, says Olson’s recommendations are “a departure” from the taxpayer advocate’s mission of protecting taxpayers’ rights and reducing their tax burden. But Olson says businesses that fully report their income are being penalized if sole proprietors get away with cheating on their taxes.More on this story here.
BIO-SECURITY STILL A FANTASY -- AIRPORT SCREENING WILL NOT WORK SAY EXPERTS
It is going to be expensive and it is going to be inconvenient. But, mainly, the high-tech border security introduced by the United States this month is going to be ineffective. At least for its stated intention. Protecting against terrorists by biometrically identifying every person who enters the country is a fantasy, say leading experts in the field, and a potentially dangerous one.
George Tomko, a Canadian biometric pioneer regarded as one of the fathers of the technology. Even a 99.99% accuracy rate -- which does not exist -- could leave millions of people vulnerable to mistaken identity. Biometrics works effectively on “one-to-one” identification, Tomko says, where a scanner reads a fingerprint on a passport or card, compares it to the real finger in front of it, and determines that you are you. “But there are too many errors when it’s used on `one-to-many’,” he says. “Biometrics doesn’t have the accuracy needed to identify passengers against a huge database of bad guys.” Not that such a database exists.
“So now they’ll be collecting the identities of millions of people and comparing them to -- what?” asks Peter Hope-Tindall, technical director at Toronto’s dataPrivacy Partners, leading biometric consultants. “Who the hell are they going to catch? Not terrorists. It’ll catch people who haven’t paid parking tickets, who haven’t paid child support.” Or, on a bigger scale, money launderers and tax evaders.More on this story here.
IS YOUR FUND MANAGER ANY GOOD? THE FORBES MUTUAL FUND GUIDE IS HERE TO HELP YOU FIND OUT
As the stench of the mutual fund scandal lingers over the land, anxious investors ask where they can find good, clean funds. The answer is to look for good, clean managers. Like other mortals, managers range from saints to sinners. Some are seasoned pros with superb instincts and analytical skills who want to do their best for investors. Others are content to do little more than rake in lush fee income.
Questions to ask when vetting managers: Are they frugal? High expenses eat away at returns. How have they performed over the long term in their current funds -- and in previous funds? There are a lot of funds out there, so you do not have to put your money with a neophyte. Do they maintain a consistent investment style you can count on? You should not buy a self-labeled value fund that is really into go-go Net stocks. Do they buy and sell shares at a dizzying pace? High turnover means hidden costs in the form of commissions, bid/ask spreads and, outside a retirement account, capital gains taxes. Our Mutual Fund Guide offers unique advice in answering these questions.More on this story here.
SO CALLED INDEX OF ECONOMIC FREEDOM PULLS THE WOOL OVER OUR EYES
The Heritage Foundation and Wall Street Journal’s tenth annual Index of Economic Freedom pulls the wool over our eyes. The deception is unintentional and arises from a fatal flaw in the index. The index delivers the comforting conclusion that the US is the 10th most free country, far ahead of 155th ranked North Korea. However, the index ignores the simple truth that people who do not own the product of their labor are not free. People subject to an income tax do not own the product of their labor. Serfs and slaves are not free, because they do not own their labor. Any American who thinks he owns his labor can test the proposition by refusing to pay his income tax. He will quickly discover that he is not a free person.
The Heritage index is ahistorical. It is blind to the enormous loss of freedom in the 20th century, especially in the US and the UK. It takes as its starting point the re-enserfment of populations and predicates a “freedom” index on unfree labor. This extraordinary failing reduces a valuable study to a propaganda device.
A broader index of freedom, one that not only includes self-ownership, but also the Bill of Rights that defines our civil liberties and the 14th Amendment that insists on equality before the law, would reveal that the US is a stunningly unfree country. The lowest federal tax rate in combination with the Social Security and Medicare tax confers serf status upon lower income groups. The top tax rate, federal and state, converts successful Americans into government’s slaves. The delusion that America has a monopoly on virtue and the right to impose American values on the world prevents a realistic look at the deplorable state of freedom in America today. It is a paradox that a country that has abandoned freedom and re-enserfed its population sees itself as role model for the world.More on this story here.
GET READY FOR THE U.S. NATIONAL ID CARD
It is only a matter of time before driver’s licenses become the de facto U.S. identification card. Our licenses already have most of the features of a national ID card, and state governments are hard at work improving what little they lack. From there, it will be only a small step for America to adopt a full-fledged national ID card. What should freedom-lovers do about it? Reread the Constitution and 1984, and then buckle down for an impassioned debate that might challenge the way you think about the issue.More on this story here.
DOES MORALITY REQUIRE A SOUL?
As scientists continue to confirm that human beings are just an especially clever species of animal, philosophers have hammered away at the old picture of the mind as an immaterial, unconstrained substance for which the body is merely a fleshy garment. On the scientific front, souls seem increasingly in danger of being banished to the trash heap of redundant hypotheses. The problems on the philosophical end are, in a sense, still more disturbing to the conventional picture, because they go to the conceptual root of the manifest image. Many philosophers now believe that radical free will or fixed “true selves” are incoherent concepts.
It would be a mistake to suppose that the tension between the two worldviews presents a problem only for religious believers. Core tenets of liberalism, such as the emphasis on free, autonomous choice and individual rights, were originally closely tied to the Christian doctrine of the salvation of the individual soul and still bear the mark of that origin. Indeed, in a thoroughly secular age, the main challenge of Owen Flanagan’s book, The Problem of the Soul: Two Visions of Mind and How to Reconcile Them, is really directed at people who trace their political ideology to the Enlightenment’s classical liberal tradition. But if naturalism leaves us with a new set of problems in place of our old and comforting myths, it also leaves us with a new opportunity to create meaning. That, too, is a kind of freedom.More on this story here.
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