Wealth International, Limited

February 2004 Selected Offshore News Clips

(Especially noteworthy articles’ headings highlighted in gold.)


Last year the consensus called for a rate rise, a weak market and weakened pension plans hurting earnings. But none of these things happened. Last year was probably my best in 20 years as a columnist here [at Forbes]. Beginning with my Jan. 6 column, I remained unwaveringly bullish. My forecast at that point called for the stock market to be up 35% in 2003, which would make it one of the best years ever. I was the most bullish forecaster in America publishing in a periodical of wide circulation. I was too optimistic -- but amazingly lucky.

My 2004 forecast is for a very positive year, too, with the Morgan Stanley World Index (in dollar terms) up 20% -- less blessed than 2003 but rosy nonetheless. The S&P 500 should do about 20%, too. Next month I will detail my reasoning behind this bullish forecast. The interest rate professionals are again saying rates will rise materially in 2004. But rates will not change much at all.

Link here.


I have no hope of condensing Santayana into a short article, but I do hope to sketch here my appreciation of a primary theme that runs through his life’s work. That theme is egotism, which Santayana thought the primary mistake that riddled the whole of Western philosophy. In his very last book and on its very last pages he wrote: “Often things as they are become intolerable; there must be insurrection at any cost, as when the established order is not only casually oppressive, but ideally perverse and due to some previous epidemic of militant madness become constitutional. Against that domination, established in willful indifference to the true good of man and to his possibilities, any political nostrum, proposed with some rashness, will be accepted with the same faith. Thus the blind in extirpating the mad may plant a new madness.

“That this is the present state of the world [in the 1930s and 1940s] everyone can see by looking about him, or reading the newspapers; but I think that the elements in this crisis have been working in the body-politic for ages, ever since the Reformation, not to say since the age of the Greek Sophists and of Socrates. For the virulent cause of this long fever is subjectivism, egotism, conceit of mind [my emphasis].”

It would appear that a detailed, abstract rationale has been developed by philosophers over the last half-millennium to permit men and nations to adopt the very simple stance that any mere animal adopts instinctively. It is a rationale that argues, indeed insists, that the only reality there is, is my reality. The latest public manifestation in America of this high-toned philosophy of egotistical greed and force is so-called “Straussian neo-conservatism”; but it is really just an old, old, sorry story of force as its own justification. Might makes right.

More on this story here.


“Division of labor” is one of those expressions that people use and politically misuse so frequently that its conceptual significance gets left in the dirt. Division of labor makes my life easier in many ways: I earn money doing something I am reasonably good at, and hire other people to do things I am not good at. Too little use of division of labor will make my life difficult, as will too much reliance on it. I may not want a career as an auto mechanic, but knowing how to change a flat tire will leave me less dependent in an emergency.

Thanks to the menagerie of bureaucrats known as government the more I rely on division of labor, the more subtly expenses begin to multiply. If I buy furniture or a car or a coat, the invisible palm of government reaches out to collect sales tax. That unseen palm may have lined itself with sales tax many times along the path these items traveled to the market -- taxes on imported materials, taxes on fuels used to transport the materials, taxes on wages earned by laborers, property taxes on warehouses and factories.

The men who would govern us are pros at cons to deprive us of voluntary divisions of labor, setting up fines, licenses, regulatory agencies and even prohibitions to serve as “tollbooths” between persons A and B. Civilizations crumble when governments weigh heavily on the backs of laborers -- people grow so tired and dispirited that they despair and cease to labor. When will we learn to expect more from ourselves and less from governments? Would anyone like to prove Darwin’s theory of evolution has a point? At least creationists can blame Satan for the mess we are in -- isn’t that better than apologizing for governments?

More on this story here.


Studies show Americans close to being the worst educated and least aware population among first-world countries. Americans easily stumble into war and give up their rights because of exaggerated fears of terrorists and criminals. Americans have been losing accountable government, liberty and justice for a long time. At some point these values become irretrievable.

Consider justice. The US has the highest rate of incarceration in the world and imprisons 6 to 10 times as many people as any other industrialized country. Between 1990 and 2000 the US population increased 13%. The US prison population more than tripled. There are hundreds of thousands of innocent Americans in prison. They are there because the criminal justice system no longer works to discover the truth of a crime, but to convict at all cost whoever happens to be charged with a crime. And they are there because the US criminalizes more acts than any other country in the world, including tyrannical police states.

In the US there are three categories of prisoners: the guilty, the innocent, and those convicted as a result of prosecutors’ interpretations of vague and broad statutes that deem conduct to be criminal that reasonable people -- and every other country -- do not recognize to be criminal. For example, in the Martha Stewart case, the prosecutor criminalized her exercise of her constitutional right to declare her innocence. He said it constituted fraud for her to declare her innocence and tacked on the charge. Remember that if you ever stand before a judge.

Almost everyone in prison is wrongfully convicted, even the guilty. According to the US Dept. of Justice (sic), 95% of criminal convictions result from plea-bargains. What is a plea bargain but self-incrimination, conviction without a trial by jury and without a test of the evidence against the defendant. An uninformed public believes plea bargains to be sweet deals for criminals. Sometimes they are, but more often pleas result from prosecutors piling on charges until the defendant, innocent or guilty, cries “uncle” and gives up. Prosecutors not only coerce defendants, they coerce witnesses to give false testimony. Sometimes coercion takes place behind closed doors. Other times it takes place in full public view.

More on this story here.


A very interesting article -- in exploring what is called for in recovering hidden dishonestly-acquired assets the author also shows what works for protecting assets of normal, non-criminal origin.

As the term implies, “concealed asset recovery” involves the recovery of wealth from a dishonest obligor, where such wealth has been laundered, camouflaged or hidden. This simple explanation, however, belies the complexity which accompanies the process. It is a difficult and time-consuming activity. Any effective civil recovery model involving a dishonest obligor and substantial value requires the employment of a serious, professional recovery team which is comprised of an appropriate blend of forensic accountants, investigators, multi-jurisdictional pre-emptive remedy lawyers, information technology experts and fraud experts. The process requires the investment of substantial financial and human capital.

The five cornerstones to a well-constructed asset protection fortress include the following components: a trust, a company, structuring, multi-jurisdictional nature, protection of “confidential” information.

More on this story here.


Bars and convenience stores were the first to utilize license scanners in the name of age and ID verification. These businesses, however, admit they reap huge benefits from this practice beyond catching underage drinkers and smokers and fake IDs. With one swipe -- which often occurs without notification or consent by the cardholder -- a business acquires data that can be used to build a valuable consumer database free of charge. Post 9/11, other businesses, like hospitals and airports, are installing driver’s license readers in the name of security. And still other businesses are joining the rush to scan realizing the information contained on driver’s licenses is a potential gold mine.

SWIPE brings attention to this practice and enables people to see exactly what is stored on their mysterious strip. Many people are unaware that personal data is even encoded on their license, and, if they do realize this, they probably do not know exactly what information is there. SWIPE also illustrates how this information is used and why businesses crave it. Our hope is to encourage thinking beyond the individual self (“I do not care if a bar database has my name and address and time of visit...”) toward understanding databases as a discursive, organizational practice and an essential technique of power in today’s social field. With public knowledge there is a chance for public voices, and ultimately resistance.

The SWIPE Toolkit is a collection of web-based tools that demonstrate the value of personal information on the open market and enable people to access information encoded on a driver’s license or stored in some of the many commercial data warehouses.

More on this story here.


The market is overvalued on just about every measure. Yet it is not falling. Your neighbors are once again boasting about their gains from four-letter stocks that are trading at 100, 200 and even 300 times earnings. We are in Bubble land again, without a doubt. But, as far as bubbles go, they all share two things in common. They end badly... and no one knows how big they will get before they end.

So, you are stuck in one of two camps: you can sit in cash and earn a piddly return at best, or you can invest in a “musical chairs” market and hope that you have a seat left at the end. Or you could USE the market to enjoy the best of all worlds: low dollars at risk, a long time horizon, and unlimited upside with a very limited downside. All in a very convenient little tool called a LEAP option. Long-Term Equity Anticipation Products are options that expire in one, two, or three years.

Link here.


The Asset Forfeiture Unit intends recommending that the minister of justice close a loophole used to contest legislation that the AFU uses to assist other countries by freezing proceeds of crime hidden in South Africa. AFU head Willie Hofmeyr said what the legislation envisages is that when someone’s assets are frozen overseas, then foreign authorities merely need to send a copy of their court order to their South African counterparts, who in turn can approach the High Court to register the order.

“This would mean that it’s not necessary for evidence and a trial to be heard in South Africa ... Our courts then accept the foreign court’s order to freeze assets,” he said. However, the problem at the moment is that this can only be done when the court order is a “final order” and not subject to review or appeal. Hofmeyr said the difficulty is that if an appeal is lodged, it could take “months or even years to be completed”. He said the AFU is to ask the minister of justice to delete the requirement that the order be final.

More on this story here.


Jim Bovard, in the words of the Orange County Register, is “Washington’s most hated truth-teller.” In his latest book, Terrorism and Tyranny: Trampling Freedom, Justice, and Peace to Rid the World of Evil, he sustains that long-standing reputation with surefire dignity and aplomb. You get a feeling about a book and its author, when, in the book’s very first sentence, he rivets you to your chair with jackhammer force by stating that “the war on terrorism is the first political growth industry of the new millennium.” The rest of the book falls out from that thesis, as Bovard takes the reader on a journey through the war on terrorism, starting with the mostly forgotten Reagan crusade, and onward through to the Bush anti-terror campaign.

Jim Bovard is, without a doubt, the best political researcher-writer in politics today. While most writers add a few footnotes to their writing, Bovard adds some first-rate writing to his immaculate set of footnotes. He does not make wild judgments or blanket allegations. Instead, he provides an encyclopedia’s worth of timely quotes laid out in chronological fashion, to funnel the reader through an extensive framework of US government double-dealing, coercion, corruption, and propaganda milling. Occasionally, he provides us with a timely comment or two, enabling the reader to discern that this author clearly separates opinion from fact.

For starters, perhaps the most unforeseen and brilliant facet of Bovard’s chronology is his application of the war on terror’s inauguration as being firmly planted in the Ronald Reagan camp. It is as if he expected the reader to forgive and forget, or at least not conjure up those deep-rooted memories in light of the Bush administration’s present tyranny spree. The October 1983 attack on the Marine barracks in Beirut, Lebanon took place in a combat zone, however, the surprise attack was immediately portrayed as an act of “terrorism”. Fast-forwarding to the Bush Era, the grab for federal power reached an all-time high. As Bovard calls it, “safety through servility”. Unlike Bill O’Reilly’s books, between these covers lies a genuine no-spin zone.

More on this story here.


Contrary to the mythology from movies and novels, Cayman did not become rich by catering to criminals. The truth is just the opposite. Think about it for a moment. If you were looking for a place to put your money, would you choose a bank run by incompetents or criminals in a jurisdiction run by the mob, or would you put your money in a bank run by honest and competent bankers in a country with the rule of law?

The fact is that big offshore financial centers, such as Cayman and Bermuda, and other big financial centers, such as Switzerland, the U.K. and the U.S., are all characterized by having honest courts and competent administrators. Most of the money in Cayman is institutional rather than individual, and it is more difficult for an individual to open an account in Cayman than in the U.S. Cayman also has agreements with the IRS and the U.S. Justice Department for exchange of information on suspected criminals, tax evaders and terrorists. If you are a crook, it is not wise to try to open an account in well-run jurisdictions like Cayman and Switzerland, because neither the banks nor the governments will protect you.

Honest people, however, do benefit from reasonable bank privacy in these jurisdictions. Another fact is that more money is “laundered” in New York and London than in places like Cayman and Switzerland. What Cayman and some of its competitors provide is a place for large companies and financial institutions to consolidate funds -- in electronic form -- without being taxed or subject to unnecessary costly regulation, until these funds are productively reinvested. Most of the money that flows into Cayman is invested in the United States. It is not well understood that the world would be poorer and there would be more people in poverty if places, such as Cayman, did not exist.

More on this story here.


I am not advocating cheating on your taxes. What I am suggesting is that there are situations where the tax law may be vague or subject to different interpretations and, with good substantiation, you can use the law to trim your tax bill. But there is risk in the strategy. The IRS might disallow your move, and you have to pay up. Remember, our tax code is not known for its clarity or its simplicity. There have been many tax decisions where four out of nine of our top jurists on the Supreme Court got the answer wrong!

In a study by IRS investigators from July to December 2002, IRS Service Centers gave incorrect answers to 43% of the tax law questions. About 500,000 taxpayers who visited the Centers during that period were estimated to have received incorrect responses. So, if you are going to push the envelope, will you get audited? Probably not, but you need to understand how people come to be audited. Here is what you need to know.

More on this story here.


“I am from the government and I am here to help you,” is a well-known oxymoron again proving to be true. A decade ago, we had a mean IRS that did all sorts of terrible and unjustified things to innocent taxpayers. The people got mad, and the people’s representatives -- the House and the Senate -- held hearings where they beat up on the IRS, and the IRS folks pledged to reform. They promised a new, kinder and gentler IRS that would be helpful to taxpayers.

We, the taxpayers, actually did get a nicer and more helpful IRS for several years, but it was not to last. To help protect us, Congress passed the Taxpayer Bill of Rights. As part of this legislation, Congress established an independent office within the IRS, called “The Taxpayer Advocate Service”. The goals of this Service were “to protect individual and business taxpayer rights and reduce taxpayer burden.” On Jan. 18, the National Taxpayer Advocate, Nina E. Olson, sent a report to Congress that identified “sole proprietor tax noncompliance” as one of the “top two” problems faced by taxpayers. Ms. Olson then went on to recommend that “Congress enact a withholding requirement on payments to independent categories of nonwage workers.”

In other words, the “taxpayer advocate” is saying small businesses need to be taxed more and also suffer an increased paperwork and compliance burden. Advocates for small business are justifiably outraged. The office has been hijacked by the pro-tax mafia at the IRS. The IRS presented no data to show the proposal would satisfy sound cost-benefit analysis, nor unduly interfere with civil liberties. One suspects the IRS did not provide such information because it would contradict their costly proposal. The Bush administration should immediately remove Ms. Olson as Taxpayer Advocate because she clearly does not understand her job description. In addition, it should set up a truly independent office within Treasury staffed by competent economists and civil libertarians with the authority to review and block any IRS or Treasury regulation or legislative proposal that does not meet sound cost-benefit and civil liberties tests.

More on this story here.


The drumbeat of litigation against doctors, accountants, business executive and other professionals is prompting a growing number of people to play defense: They are putting their money where creditors cannot get to it. A key technique is the so-called asset-protection trust. The idea is to put a big chunk of your money in an irrevocable trust. The trust is run by an independent trustee, who may opt to give you payments from time to time. If done correctly, the trust -- which has to be located in a jurisdiction that has passed special laws -- generally cannot be touched by creditors if you are sued or file for bankruptcy protection.

Doctors have been setting up asset-protection trusts for years to protect themselves from malpractice litigation. But with the latest round of corporate scandals and the passage of the Sarbanes-Oxley Act, which makes top executives and directors accountable for their company’s financial results, more executives are seeking asset-protection trusts. Nobody tracks exactly how many asset-protection trusts are drafted each year, especially since many are located in offshore jurisdictions, which have attracted sizable trust business by enacting laws that protect trusts from U.S. creditor claims. But the number of U.S.-based trusts is now picking up as states change their laws, partly to lure people who are worried about putting their wealth abroad.

Domestic asset-protection trusts are controversial, because they have not yet been tested in court and it is still unclear how well they will hold up. Article IV of the Constitution says that each state should have “full faith and credit” in the legal judgments made in other states. Lawyers, therefore, worry that a plaintiff who wins a judgment in a New York court might be able to enforce the ruling against an asset-protection trust created in Delaware. While creating an offshore asset-protection trust may sound sketchy, they are legal as long as they are not used to evade income taxes. Another caveat: People should not set up an asset-protection trust if you know you have a potential legal action looming on the horizon. Courts are likely to rule against such a trust, calling it a “fraudulent conveyance”, if it is set up right before a lawsuit, bankruptcy or divorce.

Domestic asset-protection trusts also can also be used to ease estate taxes. Because you give your assets to the trust, the funds are out of your estate for estate-tax purposes. However, the trust cannot make payments to you on a regular basis, or that would invite the scrutiny of the IRS.

More on this story here.


This article is based upon an offshore jurisdiction’s perspective, in particular the Republic of the Marshall Islands. Over the last decade, I have spoken to many lawyers, accountants, management & service companies, bankers and end-users worldwide about the offshore jurisdiction industry. This article is based upon that information. I would like to discuss 1.) the information necessary to review the choices when considering an offshore jurisdiction, 2.) the challenges that offshore jurisdictions are confronted with, and 3.) the changes facing the offshore industry.

The use of a tax haven, or as those in the industry prefer to call it an “offshore jurisdiction”, has been an accepted part of tax and estate planning and asset protection arrangements since World War I. Today, offshore jurisdictions exist for a variety of reasons. The most important reason is that as our world becomes smaller, and fewer businesses are local, there is an increasing need for internationalization. We think, plan and work with an eye toward expanding our horizons both at home and abroad. No longer will a domestic corporation satisfy the needs of a beneficial owner. Corporate structuring and planning have achieved higher levels of complexity than ever before, while the need for anonymity remains strong.

Since there are so many offshore jurisdictions an initial problem is how to select from the available options. Professionals and ultimately beneficial owners must keep pace and have a clear understanding of the characteristics of offshore jurisdictions. Therefore, it is important to identify some of the necessary choices that should be reviewed when considering an offshore jurisdiction.

More on this story here.


Bankers, especially those of us in community banks, are guardians of community financial vitality and gatekeepers of individual economic opportunities. We bankers decide who deserves credit and who does not. When we perform this credit rationing function well we fulfill a social good by apportioning scarce credit to those individuals and enterprises which put it to best use. Sound credit decisions result in fewer failures and more successes. Our communities are more likely to thrive when we bankers do our jobs well.

This loan making function, so central to the essence of community banking, has been transformed during recent years. Especially so during the ebullient late 1990’s. The new leniency in credit granting was in keeping with the times, of course. Recall how behavioral standards were stretched and then shattered in government entities, corporations, professional accounting firms, investment advisory businesses and in banks.

During the economic run-up and soaring stock markets of the late 90’s we behaved as though we could spend without compunction and invest without caution. We knew we were in a “New Economy” which no longer respected time honored standards of business practice. New thinking, if it could honestly be called thinking, required us to modify our standards to fit our expectations. We knew the stock markets “always go up in the long run”. Our expectations were soaring. Little did we realize we were replicating behaviors common in earlier periods of economic and market history. These were periods when herd thinking prevailed and they are generally referred to as “manias”. That is, when collective human emotion obliterates rational thinking.

We bankers are sitting on a mountain of consumer debt precariously supported by bubble induced real estate values. This mountain may well crumble during the ensuing declines in the stock markets and the economy. It perplexes me that so few bankers learn so little from history. It is as though collective manias have not previously occurred because we act as though we know so little about them.

Link here.


Cybersecurity experts say an increasing number of private or putatively secret documents are online in out-of-the-way corners of computers all over the globe, leaving the government, individuals, and companies vulnerable to security breaches. At some Web sites and various message groups, techno-hobbyists are even offering instructions on how to find sensitive documents using a relatively simple search. Though it does not technically trespass, the practice is sometimes called “Google hacking”.

In the decade they have been around, search engines like Google have become more powerful. At the same time, the Web has become a richer source of information as more businesses and government agencies rely on the Internet to transmit and share information. For a variety of reasons -- improperly configured servers, holes in security systems, human error -- a wide assortment of material not intended to be viewed by the public is, in fact, publicly available. Once Google or another search engine finds it, it is nearly impossible to draw back into secrecy. That is giving rise to more activity from “Googledorks”, who troll the Internet for confidential goods, security engineers said.

More on this story here.


In the course of 12 months, 13 years ago, more than 20 innocent Irish men and women were branded “terrorists” and convicted by English courts. That the evidence was false was known only to the accused and their accusers. For the accusers, even that clarity undoubtedly became blurred, since in their minds the means -- twisting and coercing evidence -- justified the ends: combating terrorism. Brutality, falsification, exaggeration of scientific evidence, concealment of prosecution evidence and of intelligence pointing in a different direction was the order of the day.

So is it possible that the Home Office is suffering from collective amnesia? What lessons should any home secretary have learnt from these terrible cases? David Blunkett, adopting the same dangerous justification of the means justifying the end, this week proposes trials based on evidence that will never see the light of day, the abolition of juries, substitution by judges, and a reversal of the burden of proof so that suspicion is enough.

The lack of protest over the imprisonment of innocent men and women in 1974 is a badge of shame for this country. The confidence with which this home secretary can express so unchecked an appetite for further powers that violate every international minimum norm is in itself a further badge of shame that hardly needs legislation to compound it. For this time, unlike those convicted in 1974, the men and women detained or convicted now will never have the possibility of knowing, let alone undoing, the false testimony that has buried them alive.

More on this story here.


Our founding fathers gave us a republic, if we could keep it. The United States’ Constitution was crafted to strictly limit government so as not to deprive citizens of their natural rights to life, liberty, private property, and the pursuit of happiness. Ever since the Civil War (which it really was not), the founding of the Federal Reserve, two world wars, FDR’s New Deal, and LBJ’s Great Society, American government has transformed into a democracy. So now we must worship, and abide by, the will of the majority at the expense of our liberty. This is a particularly frightening thought considering that what passes for wisdom today is based upon feelings and emotions while logical and rational thinking have been eviscerated. When combining democracy with a dazed and confused citizenry, the United States has devolved into a dadacracy.

From where does the term “dadacracy” come? The Dada movement, which began in 1916, and, in essence, survives to this day, embodies what it means to be illogical, self-referential, and emotional. Dadaism was an artistic and literary movement that was nihilistic and anti-Western civilization. For those who shared the Dada state of mind, the following were considered to be positive attributes of Dadaism: All forms of modern civilization were found to be disgusting, one of its aims pertained to the relativization of all values, it sought a complete break with tradition, and it sought the systematic destruction of culture and of civilization.

When examining moral relativism, multiculturalism, and political correctness, it is quite apparent that those who are part of today’s alleged intellectual vanguard are simply modern-day Dadaists. These college professors, public school teachers, newspaper editors, television anchors, and countless others, undermine Western civilization every time they open their mouths or put pen to paper. With enough repetition in the classroom, on the TV, in the newspaper, and elsewhere, Dada indeed does become a state of mind. Emotion and feelings are celebrated as the pinnacle of intellect while logic and true scholarship are eschewed as worthless relics. The mind dies as it becomes infected by illogic.

In the United States, Dada has become a state of mind. Right under our noses, the Constitution has become a joke. It has become more like a menu from which our guardians (politicians and judges) can pick and choose which rights shall and shall not be granted to citizens. Ah, but the Dadacrats are carefree. They feel great about themselves. In this soil, fertilized by smug and sterile minds, the seeds of totalitarianism have been planted. In an election coming soon, Americans may prove capable of voting for their own masters.

More on this story here.


As they listened to the taped voice of a courageous flight attendant as she calmly narrated the doomed course of American Airlines Flight 11 there was scarcely a dry eye in the Senate hearing room, where 10 commissioners are probing the myriad failures of our nation’s defenses and response to the terrorist attacks of 9/11. But answers? Not many. The most shocking evidence remains hidden in plain sight.

The politically divided 9/11 commission was able to agree on a public airing of four and a half minutes from the Betty Ong tape, which the American public and most of the victims’ families heard for the first time on the evening news of Jan. 27. But commissioners were unaware of the crucial information given in an even more revealing phone call, made by another heroic flight attendant on the same plane, Madeline (Amy) Sweeney. They were unaware because their chief of staff, Philip Zelikow, chooses which evidence and witnesses to bring to their attention. Mr. Zelikow, as a former adviser to the pre-9/11 Bush administration, has a blatant conflict.

More on this story here.


A wise consistency is the foundation of a free society. Yet everyone knows, or thinks they know, that consistency is the hobgoblin of little minds. How many times has Ralph Waldo Emerson been quoted to belittle a consistent philosophy defending freedom? Even on this floor I have been rebuked by colleagues with this quote, for pointing out the shortcomings of Congress in not consistently and precisely following our oath to uphold the Constitution.

It is quite a distortion of Emerson’s views to use them as justification for the incoherent and nonsensical policies coming out of Washington today. But, the political benefits of not needing to be consistent are so overwhelming that there is no interest in being philosophically consistent in one’s votes. It is a welcome convenience to be able to support whatever seems best for the moment, the congressional district, or one’s political party.

Emerson clearly explained the consistency he was criticizing. He was most annoyed by a foolish consistency. He attacked bull-headedness, believing that intellectuals should be more open-minded and tolerant of new ideas and discoveries. To Emerson, being unwilling to admit an error and consistently defending a mistaken idea, regardless of facts, was indeed a foolish consistency. His reference was to a character trait, not sound logical thinking.

Since it is proven that centralized control over education and medicine has done nothing to improve them, and instead of reassessing these programs, more money is thrown into the same centralized planning, this is much closer to Emerson’s foolish consistency than defending liberty and private property in a consistent and forceful manner while strictly obeying the Constitution. The truth is that Emerson must be misquoted in order to use him against those who rigidly and consistently defend a free society, cherish and promote diverse opinions, and encourage nonconformity. A wise and consistent defense of liberty is more desperately needed today than any time in our history.

More on this story here.


“No property taxes, no personal income taxes, no corporate taxes... no capital gains taxes, no inheritance or estate taxes...” No wonder residences in Veranda, a luxury resort village in the Turks and Caicos Islands, a British dependency in the Caribbean, are changing hands so fast. Last month, 45 were sold within 45 minutes, in a frenzy of buying that echoed the excesses of the dotcom boom. It is a tropical Eden from which the taxman has been banished, like Lucifer, never to return. Perhaps the oddest thing about Veranda is that it does not exist -- or not yet. Building starts this April and will be completed by December 2005. So the punters who have already snapped up more than half the 116 properties in Veranda are not buying bricks and mortar. They are buying a concept, a vision, a blueprint.

So why are people doing it? Partly for hard-headed financial reasons. The Turks and Caicos are not just a tax haven, but a fast-growing property market, with prices rising by 20% a year. You may never clap eyes on your luxury home, never set foot in the Turks and Caicos, yet still make a handsome profit. But also, one suspects, because Veranda has been so slickly and skilfully packaged. Properties are not given numbers, but names redolent of the tropics. Hibiscus, Oleander, Spider Lily, Bananaquit... Images of an exotic lifestyle are force-fed to would-be purchasers. The fact that Veranda is just one new development among many on Grace Bay gets lost in a haze of tropical hooey.

More on this story here. CIA background publication on the Turks and Caicos here.


When it comes to the middle east, the eyes of the world focus mainly on Iraq and on the Israeli-Palestinian conflict. Yet in coming months Egypt will be initiating reforms that should dramatically transform its economy into a wealth-creating, wealth-distributing dynamo that will lead millions of Egyptians into avibrant, increasingly democratic middle class. The country is set to become an economic miracle rivaling Ireland or Hong Kong. In doing so, Egypt will deal a devastating blow to global terrorism.

The catalyst is something that is prosaic yet absolutely essential for a sustained, innovation-oriented economic takeoff: property rights. We in America and the rest of the West take our inclusive, easy-to-access property systems for granted. You own land, for instance, and everyone recognizes it. You can readily mortgage it. Want to start a business? The legal requirements are easy. Want to sell bonds or shares or use other capital-raising instruments? The legal structures to do so are open to anyone who can meet standard requirements. Commercial contracts? They are widespread, and the courts are there to enforce them and to adjudicate disputes.

Incredibly, most of the world has no such property rights or common rule-of-law system. Japan did not until after World War II, when, under General Douglas MacArthur’s occupation, it shucked off its medieval social structure and put in place institutions and laws with principles long familiar to Americans. This dramatic change played a critical, oft-overlooked role in Japan’s rapid postwar modernization and economic expansion. After several years of preparation, Egypt is about to commence a Japanese-like makeover of its society, one that will profoundly and positively impact the rest of the Middle East and the developing world.

Link here.


If you are wondering whether your investment portfolio is going to retain its value in these uncertain times or whether your retirement savings are safe, there is an almost fail-safe way to assure that you do not get hurt -- whatever may come. In the late 1970s, I devised a concept that has been proven to accomplish this goal. It is called a Permanent Portfolio, because once you set it up, you do not have to continually reevaluate it, alter it, or even think about it. And it does not matter whether the future brings prosperity, inflation, recession, or even a depression; you will know you are safe no matter what.

Over the decades, the portfolio has achieved an average annual gain of 9.2% and has had only four losing years. For individuals concerned above all else with capital preservation, this is a truly “sleep at night” investment strategy.

The goal of the Permanent Portfolio is simple: to deal effectively with uncertainty, with a minimum of effort. In the 35 years I have been following the markets, I have found no one who can reliably predict future gold prices, stock valuations, the direction of the economy, or anything else that has to do with human action. The bottom line is that you have to accept uncertainty and handle investments as though you have no idea what is coming next -- even when you think you do.

The general premise of this approach is that anything that happens -- war, peace, civil unrest, instability, good times, bad times, etc. -- will translate itself into one of four economic environments: prosperity, inflation, recession, or deflation. Stocks and bonds both profit during prosperity; gold does well during inflation; bonds do well in deflation. And although nothing does well in a recession, cash helps to cushion the fall in other investments. A portfolio consisting of equal parts of each of those four types of investments is not volatile and has a relatively consistent rate of return.

Link here.


There is nothing subtle about this tax haven. Websites boast how easy it is to create a limited-liability company here in 24 hours, by phone, by fax or online -- no need to show up in person. Unlike some other offshore centers that require at least two people to form a corporation, only one is needed here. And for a fee, anonymity is assured. “We have a large database of shelf corporations available so that you can establish a history for your company,” touts an ad for one service firm on the territory. Cayman Islands? Monaco? The Bahamas? No, it is the U.S. state of Delaware, and the services offered there are entirely legal. No wonder success is so elusive in the growing international effort to crack down on tax fraud: one man’s shady haven is another man’s low-tax financial-services center.

Tax havens have been around almost as long as taxes. They have mushroomed in size and importance since the 1970s, when large corporations and international banks started developing sophisticated offshore financial markets out of the reach of national regulators. Last week tax officials from the U.S., Germany, France and four other Western countries met in London with representatives from seven havens in an attempt to revive talks about increasing cooperation and transparency.

Much of the offshore money is legitimate, but it is certainly a tempting political target. The U.S. alone estimates that it loses between $54 billion and $70 billion in tax revenues to tax havens every year. Of the more than 30 tax havens originally identified by the O.E.C.D. in 1998, only five have yet to agree to open up their books a bit. Even those efforts have stalled. One reason is that some havens now feel they are being discriminated against; while they have started to clean up their acts, they argue, places like Switzerland and Delaware have not. At a tense meeting in Ottawa last October, the havens insisted that the rules they signed up for should apply to all.

More on this story here.


Most airlines outsource their domestic reservation databases, known as Passenger Name Records. “With the cost of storage dropping, retention times have been increasing, but they’ve always been at least three to five years,” said Edward Hasbrouck, the travel guru at Airtreks.com, an Internet travel agency. “PNRs are kept in live storage until the completion of travel, after which they are moved to permanent archival storage.”

Since 9-11, the government has been closely eying that domestic travel data through the jurisdiction of the U.S. Patriot Act and other measures. As a result, travelers in the United States “shouldn’t have confidence in the privacy of their reservations,” said Hasbrouck. Experts believe that, unless the U.S. Congress passes an act to ensure privacy of travelers -- unlikely, due to national security concerns -- collection of data about travelers will intensify, giving government users and some commercial entities the ability to track your travels and expected comings and goings.

“There’s an ‘if you build it they will come’ aspect to data collection and maintenance in such systems,” said Hasbrouck. “Unless the records are destroyed, data can be used for purposes that weren’t anticipated or authorized when it was collected... The distinction between data retained by the government and by the private sector is largely meaningless in light of the Patriot Act provisions for the government to demand privately held data, in secrecy, without the need of a court order,” said Hasbrouck.

More on this story here.


A crackdown on abusive and fraudulent offshore trusts began in the late 1990s. Those kinds of trusts, and related offshore financial manuevers, account for one of the largest losses of tax revenue each year, experts say. Despite the increased scrutiny, new offshore trust promotions pop up weekly on the Internet. And the secrecy that shrouds many foreign banking systems makes convictiond the exception, not the rule. Most people get away with it.

The mention of offshore bank accounts often evokes images of drug dealers or the ultrarich stashing loads of cash and other assets in some tropical paradise. Setting up and managing such trusts was thought to be complicated, time consuming and expensive. No more. Tax havens such as Belize, Grenada and Aruba have made moving money out of the IRS’s grasp as easy as renting a car, according to Donald Barlett and James Steele in The Great American Tax Dodge.

It is not illegal for Americans to move money into offshore accounts, but anyone who opens one must, by law, report it to the IRS. And any investment income earned from the assests in the trust must also be reported because it is taxable. Shifting untaxed income into a tax haven without declaring it to the IRS is tax evasion. [Ed: This is an oversimplification. Go here for a comprehensive overview.] The problem for investigators is following the money. The tax havens have strict confidentially laws about disclosing financial and banking information. For the most part, the countries do not require that the trusts be recorded, so tracking a specific trust is close to impossible.

More on this story here.


If you get the urge to fudge a bit on your taxes this year because you think, “Who is going to notice?” think again. The Massachusetts Revenue Department has launched a technology offensive with the goal of pulling together stray bits of information about every state taxpayer, searching for clues that would indicate who is not paying the taxes they owe.

State officials dismiss the notion they are playing Big Brother, but the potential is rather Orwellian. In theory, said Revenue Department Commissioner Alan LeBovidge, the state may eventually be able to track down so much information about a resident’s finances that the state, rather than the individual, could complete the individual’s tax return. It works by linking information the state has on each taxpayer to more than a dozen public databases to complete a financial puzzle, piece by piece, about each individual. The databases have been around for years, but new technology is allowing the state to assemble and review the information in a time-efficient manner.

The data-crunching can flag someone who declares a $4,000 painting to US Customs when reentering the country but neglects to pay tax on it. An individual reporting only $20,000 in annual income yet identified by Registry of Motor Vehicle records as having a $60,000 car would merit a second look. So would a plumber with a low reported income but a lavish lifestyle. The public databases include information from the IRS, Customs, state licensing boards, the RMV, state incorporation records, and other sources LeBovidge will not even discuss.

More on this story here.


Two starkly different scenarios help illustrate a debate that is intensifying in Delaware and across the United States. Both involve security, safety and freedom. The first envisions exacting, covert and superior intelligence gathering that helps abort a terrorist attack somewhere in America. Quick and decisive action by government agents averts the slaughter of thousands of innocent people.

The second depicts dark characters invading an innocent person’s home, rifling through his belongings, tapping his telephone and seizing his personal records without probable cause or acknowledgement. The victim of the search can later be detained, spirited away in secrecy, without any disclosure of the grounds for detention. Both are possibilities under the USA Patriot Act -- depending on who is speaking.

As the debate continues, increasing numbers of local governments and some states have passed or are considering resolutions questioning the appropriateness of the act. Some ask that certain sections be deleted. Others seek further review. According to the National Council of State Legislatures, nine states -- Arizona, California, Hawaii, Illinois, Michigan, New Hampshire, Vermont, Virginia and Washington -- have bills asking Congress to revise portions of the act. Two municipalities in Delaware have followed suit.

More on this story here.


There was a time not that long ago when Chalmers Johnson might have fit in nicely with Bill O’Reilly out on the right flank of political discourse. He was, in his words, “a spear carrier for the empire.” So how did he wind up sounding like Al Franken? His book Blowback: The Costs and Consequences of American Empire, released in the spring of 2000, harshly criticized American foreign policy and warned that the country was ripe for retaliation. It took its name from a CIA term for the unintended consequences of covert actions, and it turned some heads. When terrorists flew airplanes into buildings on a blue September day a year later, he looked like a prophet. Blowback became a best seller.

Now he is out with a new book, The Sorrows of Empire: Militarism, Secrecy, and the End of the Republic. It is a scathing and scary indictment of America’s military expansion to all corners of the globe. He sees a future of perpetual war and constitutional ruin and financial bankruptcy. At public appearances, he is even more direct. Inevitably someone raises a hand and says, “OK, I buy your analysis, and I think the situation is serious, so what should I do about it?”

And Johnson, speaking in a resonant, almost musical voice cultivated over more than 30 years of lecturing in college halls, will sometimes answer: “If you have a little money, I’d prepare your escape route. You might want to go up to Vancouver and buy yourself a condo.”

More on this story here.


On the dust jacket of his book An End to Evil: How to Win the War on Terror, Richard Perle appends a Washington Post depiction of himself as the “intellectual guru of the hard-line neoconservative movement in foreign policy.” The guru’s reputation, however, does not survive a reading. Indeed, on putting down Perle’s new book the thought recurs: the neoconservative moment may be over. For they are not only losing their hold on power, they are losing their grip on reality.

“[A] radical strain within Islam,” says Perle, “ ... seeks to overthrow our civilization and remake the nations of the West into Islamic societies, imposing on the whole world its religion and laws.” Well, yes. Militant Islam has preached that since the 7th century. But what are the odds the Boys of Tora Bora are going to “overthrow our civilization” and coerce us all to start praying to Mecca five times a day?

More on this story here.


Law and order continues its rapid collapse in the United States, not only because of criminals but also because of prosecutors and police. Two Alabama seafood importers are currently serving eight years in prison because lobsters that they imported from Honduras arrived in plastic bags instead of cardboard boxes, and 3 percent of the lobsters were one-half inch too short in length. Moreover, the cardboard/size regulations were Honduran, not American, and have been overturned in Honduras. Many Americans refuse to believe that US law enforcement would put Americans in prison for such flimsy reasons, but the case is now before the US Supreme Court.

Many of the worst crimes are committed by police and prosecutors themselves. Congress just released a transcript that shows that FBI agents protected their mob informants from indictments, helped mobster gunmen to murder their rivals, and then framed innocent men for the murders. And this was 40 years ago when honor and integrity were still words with meaning.

Today law enforcement integrity has hit rock bottom. Steven and Marlene Aisenberg reported their five-month year old daughter missing on Nov. 24, 1997. Instead of looking for the baby and the abductor, the police in Hillsborough County, Florida, decided to frame the parents. Police eavesdropped on the couple’s conversations for two years, wrote out a transcript allegedly based on the recordings and indicted the couple. When a federal district judge demanded the actual recordings and compared them with the police transcript, he found “the disparity was shocking.”

Police and prosecutors are increasingly aggressive and unaccountable. The purpose of “criminal justice” is to protect the government, not the innocent public. In the meantime, smile no matter what the provocation as you undergo airport security screening. You can now be arrested for “having an attitude”. A snide remark can get you placed on a “no fly” list for life. A bride recently drew a $150 fine for having a wedding gift in her baggage -- a silver cake server. The brand new Transportation Security Agency has already turned fighting terrorism into the business of robbing the public.

More on this story here.


At first glance, it seems disappointing that no one has mounted a right-wing challenge to George W. Bush for the Republican nomination. His father got one from Pat Buchanan, and the son has been even worse than the father. Would it kill him to veto a spending bill or two? But upon more reflection, it is probably good that there is not a challenge. The good news, however, is that this movement is not about electoral politics, not even Presidential politics. And it is not really about abolishing the government, or restoring the monarchy, or bringing back the Confederacy -- although any one of those is preferable to what we have now.

From the so-called fever swamps of the far right, we are hearing voices of truth, of common sense, of revisionist history. This is an educational campaign for the future of America. This is not a political campaign for one leader or one party. This alliance of libertarians and so-called paleo-conservatives makes us a diverse lot indeed. But we have one thing in common. We are the New Opposition. I am not saying we are the loyal opposition, like the minority parties in Canada’s Parliament. We are not a party seeking power in the next election. This is a bigger deal. This is about civilization. This is about education. About values. About liberty. What we are seeking is a cultural transformation before we can even expect top-down political change.

Because politicians cannot “fix” our problems. That is the point. What we are seeing is a decline in our civilization. What unites the New Opposition is the recognition of a basic fact that no Democrat whatsoever and almost no Republican politician will acknowledge: that large, intrusive, bureaucratic government is the cause of, not the solution to, this decline. State power vs. social power. This is the struggle. This is what unites the New Opposition. This is what we are about. We are for social power.

More on this story here.


Getting a diagnosis on the health of the economy from Alan Greenspan or Wall Street is like asking the Tsetse-fly how your malaria is. Greenspan’s actions and Wall Street’s schemes are the diseases that sickened the economy. They are not going to be the best sources for an unbiased analysis on its health. Greenspan’s easy money policy is responsible for the huge debt levels, declining Dollar and growing trade deficit. His prescription for keeping the economy going is more of the same. In other words, keep the drunk drinking and you can prevent a hangover. It is effective for only so long. The economy got drunk on easy money. More of it does not cure the problem

Below are the results of a recent check-up on the economy. It would seem the patient is much sicker today than 4 years ago. Measured by the P/E ratio, the stock market is still as overvalued as it was when it peaked in 2000.

Greenspan will say that all of this shows an increased confidence in the US recovery. People are borrowing more money and foreigners are selling their stuff over here. They must be confident about the future. No Mr. Greenspan, your strategy is comparable to feeding double banana splits to dieters. They are going to love the plan, but they will be worse off because of it. Adding all of the symptoms together, increased debt levels, poor earnings, a weak recovery, a ballooning trade deficit and declining Dollar and you get unhealthy fundamentals. Add on top of that a market that is as overvalued as it was in 2000 and you get an investment environment that is actually riskier today than 4 years ago. The only conclusion is that we are going to have to go through it all over again, and this time it may be much worse.

Link here.


Nearly half of the estimated $233 billion US corporations earned abroad in 2001 is held in foreign tax havens, up from 38% in 1999 and 23% in 1988, according to an analysis of recent Commerce Department data. The numbers come as the IRS and Treasury Department are intensifying efforts to reap more corporate taxes in the face of huge federal budget deficits. Corporate taxes last year accounted for only 7.4% of total federal tax receipts, the second-lowest level on record behind 1983.

Treasury officials say globalization makes it increasingly difficult to track money American companies earn abroad. Fraudulent accounting has grown along with the global reach of US business, while tax lawyers are finding new ways to legally finesse obsolete and porous reporting laws to their advantage. New legislation has further hampered tax collectors by making it easier for US companies to claim foreign countries with low tax rates as their headquarters.

A favorite tactic for corporations angling to park income abroad is known as “cross-sharing”, in which a parent firm licenses its trademark or copyright to an affiliate in a country with low taxes. Companies will also sell their products at artificially low prices to subsidiaries based in a tax haven, keeping the corporation’s US tax exposure to a minimum. Conversely, a US company may buy a product from a foreign subsidiary at an artificially high price.

More on this story here.


Until the middle of the nineteenth century no one ventured to dispute the fact that the logical structure of mind is unchangeable and common to all human beings. All human interrelations are based on this assumption of a uniform logical structure. We can speak to each other only because we can appeal to something common to all of us, namely, the logical structure of reason. Some men can think deeper and more refined thoughts than others, but as far as a man is able to think and to follow a process of discursive thought, he always clings to the same ultimate principles of reasoning that are applied by all other men.

Yet, in the course of the nineteenth century this undeniable fact has been contested. Marx and the Marxians taught that thought is determined by the thinker’s class position. What thinking produces is not truth but “ideologies”. This word means, in the context of Marxian philosophy, a disguise of the selfish interest of the social class to which the thinking individual is attached. It is therefore useless to discuss anything with people of another social class. Ideologies do not need to be refuted by discursive reasoning; they must be unmasked by denouncing the class position, the social background, of their authors. Thus Marxians do not discuss the merits of physical theories; they merely uncover the “bourgeois” origin of the physicists.

The Marxians have resorted to polylogism because they could not refute by logical methods the theories developed by “bourgeois” economics, or the inferences drawn from these theories demonstrating the impracticability of socialism. As they could not rationally demonstrate the soundness of their own ideas or the unsoundness of their adversaries’ ideas, they have denounced the accepted logical methods. The success of this Marxian stratagem was unprecedented. It has rendered proof against any reasonable criticism all the absurdities of Marxian would-be economics and would-be sociology. Only by the logical tricks of polylogism could etatism (statism) gain a hold on the modern mind. The principle of polylogism would lead to the inference that Marxian teachings also are not objectively true but are only “ideological” statements. But the Marxians deny it. They claim for their own doctrines the character of absolute truth.

More on this story here.


The government is still financing research to create powerful tools that could mine millions of public and private records for information about terrorists despite an uproar last year over fears it might ensnare innocent Americans. Congress eliminated a Pentagon office developing the terrorist tracking technology because of the outcry over privacy implications. But some of those projects from retired Adm. John Poindexter’s Total Information Awareness effort were transferred to U.S. intelligence offices, congressional, federal and research officials told The Associated Press.

In addition, Congress left undisturbed a separate but similar $64 million research program run by a little-known office called the Advanced Research and Development Activity (ARDA) that has used some of the same researchers as Poindexter’s program. “The whole congressional action looks like a shell game,” said Steve Aftergood of the Federation of American Scientists, which tracks work by U.S. intelligence agencies.

More on this story here and here.


Dudley Hiibel, a Nevada rancher who covets his privacy, did not want to hand over his identification to a police officer in 2000. His refusal landed him in jail and his name on the U.S. Supreme Court’s docket. At issue in the case, which will be heard March 22, is whether individuals stopped during an investigation of a possible crime must identify themselves to the police. Nevada state law says that individuals must do so if a police officer has reasonable suspicion that a crime has been or will be committed. Hiibel’s attorneys argue that in such situations individuals already have the right to not answer questions and that requiring individuals to show identification violates the Fourth and Fifth Amendments’ protections against unreasonable searches and self-incrimination.

Harriet Cummings, one of three Nevada public defenders working on the case, said that while the case might seem like “no big deal,” the legal issues at stake are huge. “This goes to the very nature of what our society is going to be like,” Cummings said. “We believe that exercising your right to remain silent should not be something that can cause you to be imprisoned.”

The Solicitor General’s Office and the National Association of Police Organizations also filed briefs supporting the identification requirement, arguing that it was a necessary and not overly intrusive tool in fighting crime and terrorism. A diverse group of organizations, including the libertarian Cato Institute, the American Civil Liberties Union, the National Law Center on Homelessness & Poverty and the Electronic Frontier Foundation also are backing Hiibel’s challenge with friend of the court briefs.

More on this story here.


Interesting and wide-ranging interview with Austrian economist and libertarian thinker professor Hans-Hermann Hoppe. Two of his recent books, Democracy: The God That Failed, and The Myth of National Defense explain how state-less societies (no central government) would operate and generate unrivaled prosperity.

If democracy or democratization is not the answer, nor is centralization -- as it is happening in the EU -- then what? He argues that the greatest hope for liberty comes from the small countries: from Monaco, Andorra, Liechtenstein, even Switzerland, Hong Kong, Singapore, Bermuda, etc.; and as a liberal one should hope for a world of tens of thousands of such small independent entities. The apologists of the central state (and of superstates such as the EU) claim that such a proliferation of independent political units would lead to economic disintegration and impoverishment. However, not only does empirical evidence speak sharply against this claim -- the above-mentioned small countries are all wealthier than their surroundings -- but theoretical reflection also shows that this claim is just another statist myth.

More on this story here.
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