May 2005 Selected Offshore News Clips

(Especially noteworthy articles’ headings highlighted in gold.)

AUTOMATING CAMERA SURVEILLANCE FOR SOCIAL CONTROL AND MILITARY DOMINATION

Though some organizations have objected to video surveillance of cities and borders, the public is less aware that recent computer vision innovations are making it possible to data mine surreptitiously acquired movie data in possible defiance of the Fourth Amendment. The U.S. government has lavished generous funding upon video surveillance technology in hopes of revolutionary advances in data mining and robotic vision that would allow nationwide surveillance of public areas. Defense industries attempt to apply such technology to autonomous, robotic combat vehicles that can fight “bloodless” wars, ostensibly sparing the lives of American soldiers.

To a casual observer, surveillance cameras resemble lampposts. Some of the cameras have a 360º view and magnify by a factor of 10–17 compared to human sight at that range. Some are equipped with night vision; they can zoom in on a target well enough to read text on a written page or look into a building. In reaction, privacy advocates who view these surveillance measures with alarm have begun to publish the locations of surveillance devices in major American cities, to allow others who object to the technology to chart surveillance-free paths through the streets. Even if someone were willing to take this precaution, there is no guarantee against hidden or fake cameras unaccounted for in planning the route.

Recent developments in computer vision, robotics, and pattern matching increase the possibility of drastic social transformations. The application of data mining methods to massive video data sets enables a sufficiently organized power to outmatch humans in carrying out surveillance. Though the robot soldier and the robot policeman are not yet reality, present technological achievements can lead to this future possibility.

THE ORACLE SPEAKS

Warren Buffett and Charles Munger warn of real estate “bubble”, the risk of terrorist nukes.

Inside the Qwest Center arena in Omaha, Nebraska, roughly 20,000 shareholders gathered from around the world to hear Buffett and his vice chairman, Charles Munger, answer questions for nearly six hours. Not a single individual shareholder asked whether Berkshire might be implicated in the widening scandal about alleged earnings manipulations at American International Group – and even the money managers in the audience whose questions touched on the subject approached it gingerly. Buffett’s shareholders are true believers; to them, the idea that he could have done (or known about) anything wrong is absurd.

In his answers to shareholders’ questions, Buffett made it clear that he remains concerned about the trade deficit and the U.S. dollar, although he is bullish on the long-term strength of the U.S. economy. But he and Munger issued stern new warnings about the residential real estate “bubble”, the destabilizing effect of hedge funds on the financial markets, and the possibility of another terrorist strike against America. They also warned that they do not see a clear future for pharmaceutical stocks, that GM and Ford face severe trouble over pension and health costs, that hedge funds could wreak havoc in a market decline, and that the New York Stock Exchange is doing a disservice to investors by going public.

As always, Buffett spoke in elaborate paragraphs when replying to shareholders’ questions, while Munger spoke in terse, tart sentences. The two often disagree about political and social policy, but for much of this meeting they sounded like identical twins. What follows is an edited and approximate transcript of their remarks.

BUSH AND BOREDOM: THE BURDEN OF THE HOUR

I have an enormous sense of ennui vis-à-vis the regime that rules us. It is a horrible boredom, rather like what I would guess is the boredom and hopelessness of hell. May I never get any closer to it than this. I think the boredom serves to cover over and even somewhat suppress my now almost wordless rage at the immense world-girdling horror in which we are all implicated: the really hell-like war in Iraq following the illegal invasions of Afghanistan and Iraq, the blood-sucking nature of increasingly invasive government at home, and the life-destroying Drug War, which has us monkeying with the internal affairs of any number of nations and throwing hundreds of thousands of our own people in jail for crimes that a century ago were not crimes at all.

Over several centuries the free American polity, the best governed in the world because the least governed (until Lincoln), built a fabulous infrastructure and spread real wealth among a larger population than had ever had any before. Now we are in the final stages of hollowing that out, replacing wealth with debt, infrastructure with munitions, freedom with tyranny, pride in our nation and its government with shame for its murderous behavior wherever it goes to meddle.

For some years I was involved in a close study of the teachings of G.I Gurdjieff and P.D. Ouspensky, sometimes called the Fourth Way. I still regard it highly and now employ without thought many of its insights. One of Gurdjieff’s rather shocking points was that “man cannot do”. That is, we delude ourselves with our notions of the plans we will put into action, the effects we will have, the results we will achieve, all as the result of our deliberate and of course quite intelligent volitions. Not so, said Gurdjieff, it is all the action of an automaton. What! Was Gurdjieff then a mere behaviorist, a sort of glorified B.F. Skinner? Almost, in that he viewed men as mostly and most of the time so many pigeons or dogs responding to stimuli. But only most of the time and not necessarily. We have a glorious, built-in potential, to become fully human, fully man – but this takes immense work, immense wakefulness, a coming out of the dreadful waking sleep that engages most of us most of the time. Gurdjieff’s question: Is anybody up for the task?

TAX ADVISORS VS. TAXPAYERS

New legislation passed in October 2004 (American Jobs Creation Act) and revised regulations issued by the IRS in early 2005 (Circular 230) will effectively prevent taxpayers from avoiding potential penalties by seeking advice from tax professionals. The legislation and regulations will require anyone offering any tax advice to either issue a prominent disclaimer that the advice can not be used to avoid penalties – or – to issue a written opinion that covers all relevant and potentially relevant legislation, regulations, court cases and IRS rulings that may have any bearing on the subject for which the opinion is being given. The effect is that written tax opinions will be become extremely expensive as a way to secure some assurance that a proposed transaction is not likely to lead to any penalties.

If construed aggressively by the IRS, these rules could apply to financial planners, insurance agents and stock brokers as well as to tax preparers, tax lawyers and public accountants who are not tax specialists. The regulations could also be applied to lawyers who are not tax specialists but who give advice that have tax implications – such as divorce law or asset protection law. Appraisers who certify to the value of various assets for the purpose of making charitable deductions or allocating the cost elements of the purchase or sale of a business could also be affected by these regulations. Some legal commentators have gone so far as to suggest that the IRS could conceivably attempt to apply the regulations to authors, reporters, editors and publishers of any tax information, as well as to anyone who expresses any written opinion regarding the tax consequences of any transaction. Some commentators believe that these rules will cause many of the professionals who now give tax advice to refuse to do so and that many tax lawyers and tax accountants will find another specialty with which to make a living.

The required content of a disclaimer in a written tax opinion must include the following. 1.) That additional tax issues may exist that could affect the tax treatment of the tax shelter (transaction) addressed in the opinion (see the broad and ambiguous meaning of a tax shelter later in this article), 2) that the opinion does not consider or reach a conclusion with respect to those additional issues, and 3.) that the opinion was not written and cannot be used by the recipient for the purpose of avoiding penalties under IRC section 6662(d) with respect to those issues outside the scope of the opinion. The following is a detailed discussion of the changes in the rules affecting tax practitioners.

CONSTITUTIONAL CHAOS: WHAT HAPPENS WHEN THE GOVERNMENT BREAKS ITS OWN LAWS

Beltway pundits tell us the Bush presidency will be remembered for two overarching issues, the Iraq war and Social Security reform. Don’t believe it. It is way too early for such predictions. Few people seem to recall that, prior to 9/11, the issue of the day was stem cell research. Before al Qaeda’s attack, Bush himself thought his stem cell policy would likely be the most important decision of his presidency. The political scene can change very rapidly – so be forewarned that a political earthquake is looming on the horizon. Just watch what happens once the news wires report the resignation of a Supreme Court justice. Virtually all of the attention that is now on Iraq and Social Security will turn to the president’s nominee, the confirmation battle in the Senate, and constitutional law.

Several new books on the Constitution and the judiciary are hitting the bookstores in anticipation of the coming political and legal battle. One of these is Constitutional Chaos: What Happens When the Government Breaks Its Own Laws, by Andrew Napolitano. Judge Napolitano is the senior judicial analyst on the Fox News Channel where he does a terrific job of cutting through legal jargon to explain cases and controversies to laypeople. He has now written a primer on constitutional law for a lay audience.

But Napolitano’s book is not a disinterested, this-is-how-the-law-has-developed-over-years type of book. The judge has a definite point of view, that the Bill of Rights has been under relentless assault from government officials who have no compunction about breaking the legal charter that they are sworn to uphold. Napolitano believes that this constitutional corruption is rampant, but that most citizens are blissfully ignorant of the problem because they simply assume that their rights are “guaranteed” on the off chance they would ever really need them. To remedy the widespread naivete, Napolitano presents vivid horror stories of government agents running amok in the U.S.A. Everyone knows that abuses occur from time to time, but the picture that Napolitano paints is downright depressing.

Napolitano has earned respect from lawyers across the political spectrum because of his nonpartisan approach to legal and constitutional analysis. He has wisely brought the neutrality that everyone expects from a judge to his job as a commentator at the Fox Network and to his book about the Constitution. He calls ‘em as he sees ‘em. Thus, in some places he criticizes Janet Reno; in other places, John Ashcroft. And it is refreshing to see a judge defend not only the First Amendment, but the Second Amendment as well. Napolitano reminds the reader that we ought not to take a cafeteria approach to our constitutional liberties. Hear, hear.

SO MANY TAX HAVENS AND SO LITTLE TIME

Feeling jaded after the (U.K.) election? Looking to escape higher tax? And desperate to avoid the Holyrood election in just two years’ time? Then join what may well be Scotland’s fastest-growing club this morning, the Escape Club. There are no fees or dues. Membership simply comprises those looking for a quick exit and prepared to travel to the furthest corners of the world. High on the escape list must be the South American republic of Paraguay, a haven, of sorts, for political refugees in the past. The economy there is so “informal” it is hard to work out whether it is growing or slowing. Paraguay does have taxes. But judging by the large number of people with guns, it seems these may be optional. Fraud and corruption are rife. And you never know who you might bump into. There is a risk the harmless old codger next door has a disconcerting line in Nazi memorabilia.

More alluring, surely, have to be the Cayman Islands, an English-speaking dependent territory of the UK with a population of 30,000, some of it intermarried. There are no taxes in the Cayman Islands. Government revenue comes from customs duties and annual fees on corporations. But opening a bank account can be tricky. Having filled in a detailed form at a bank in the capital, George Town, a few years back to open an account, I was asked to pay in a minimum deposit … of $50,000. Stamp duty is also a little steep, at 5%. The problem here is that, as last year sadly proved, the islands can be vulnerable to hurricanes that could blow your biggest investment away.

Alternatively, there are the British Virgin Islands (population 22,000). There is no capital-gains tax, wealth tax or gift taxes. Income tax is being scrapped this year and replaced by a payroll tax of 14%, of which 8% is payable by employers. However, like the Cayman Islands, it has chosen to apply a withholding tax on savings paid to nationals of EU member states. Not so good. The Seychelles (population 80,000) are a byword for tropical beauty. They comprise 115 islands near the Equator and outside the cyclone belt. There is no income tax to speak of, but social-security payments and tax on locally sourced businesses can range up to 40%. High on any tax refugee’s list must be Vanuatu, a group of 80 mountainous tropical islands on the eastern seaboard of Australia. There is no crime of tax evasion on Vanuatu, since Vanuatu has no taxes. Economic growth is slow because of adverse climatic conditions, most goods are imported and import duties are high. More worrying still is that some of the islands have active volcanoes.

My personal favourite, both for its topographical similarity to Scotland and ease of entry (and exit, should things go wrong) is the American state of Wyoming (population 501,000). The landscape is in many parts similar to Scotland, but the state website instantly proclaims the difference. Wyoming does not levy a personal or corporate income tax, there are no taxes on bank accounts, stocks or shares. The state does not assess any tax on retired income earned or received from another state. So where is the catch? Those familiar with the wonderful stories of the writer Annie Proulx will know the feeling. When you start reading her description of the awesome beauty of Wyoming, you cannot help but wonder why so few people live there. But after describing what “bad dirt” life can really be like for its inhabitants, you end up puzzling why anyone lives in Wyoming at all. Better surely, then, to stay put at home. But sadly, staying home in Scotland is not at all the same as staying put. For we are slowly drifting north-east towards Sweden. This is the cradle-to-grave welfare model our politicians crave.

If you are feeling restless this morning and in need of a change, there is no lack of places to choose from. The good news is, the grass certainly looks greener on the other side. The bad news? Perhaps it really isn’t.

INTEREST-GROUP CONSERVATISM

In the late 1960s, the great political scientist Theodore Lowi coined the phrase “interest-group liberalism” to describe an emerging system of government he viewed as untenable. In a classic book, Lowi argued that national policymaking had become the province of organized lobbies, which worked to the detriment of the overall public interest and spawned an uncontrollable, amoebalike federal bureaucracy.

Interest-group liberalism survived the presidencies of Richard Nixon, Gerald Ford, Jimmy Carter, George H.W. Bush, and even Ronald Reagan. When Republicans occupied the White House, liberal lobbying groups pursued their goals of creating new programs, adding regulations, and expanding legal rights through Democratic allies in Congress, pliant federal agencies, and the courts. Only the antagonistic combination of the Clinton presidency and the Gingrich Congress reversed interest-group liberalism’s momentum. Under eight years of Clinton, the size of the federal government actually shrank substantially in relation to the economy.

In this, the third year that Republicans have controlled everything, a variation on the old interest-group liberalism has emerged as the new governing philosophy. One might have expected that once in command, conservative politicians would work to further reduce Washington’s power and bury the model of special-interest-driven government expansion for good. But one would have been wrong. Instead, Republicans have gleefully taken possession of the old liberal spoils system and converted it to their own purposes. The result is the curious governing philosophy of interest-group conservatism: the expansion and exploitation of government by people who profess to dislike it.

When Democrats held power, liberal officials became beholden to the party’s biggest financial and political backers. These included unions (in particular public employees and teachers unions), women’s lobbies, civil rights lobbies, lobbies, senior citizens, welfare advocates, the entertainment industry, and trial lawyers. Today the dominant conservative interests form a rival constellation: corporations, especially in the energy and military contracting sectors, evangelical Christians, wealthy investors, gun owners, and the conservative media. In the daily business of Washington, the old pattern remains in place, only with the substitution of these new supplicants and their new benefactors in the GOP. As in the old days, lobbyists work the halls of Congress and the regulatory agencies, functioning like carpenter ants to build a federal government ever bigger in size and more intrusive in scope.

DESTROYING THE AMERICAN DREAM

Well he has done it. I did not want to believe it, but it is true. Greenspan of course has transmogrified attractive interest rates of recent years into outrageously negative real interests for so long that he has nursed into being a virtual Godzilla of real estate speculation the likes we have not seen since Og traded a club and mammoth skin for his friend’s cave. Welcome to LA’s housing nightmare. Well, what exactly did he do? Only destroy the American Dream for many. Yes, I know, I can always afford a house in Oklahoma, provided I can find a job that is one step above the Quickie Mart. (No offense to Oklahoma, as you have lots of land, or to Quickie-Mart workers for that matter as your work is more respectable than counterfeiting.) What I am talking about are places on the coasts where a lot of people have no choice but to live and work.

When Alan and his merry band of counterfeiters pursued a policy of “making the world safe for speculators” at the expense of working, middle class, and yes, even upper middle class people (100k a year is not sufficient income for a first time homebuyer in LA) he destroyed the value of their savings and returns on their labor. The new rules of the game are simply this: “He who speculates first wins.” And those who have assets to begin with are in the best position to speculate first when the conditions for speculation are risk free as opposed to those who are just getting started in life and are scrimping and saving for that 20% down payment, as in the old days.

So the rich get richer, and you can finish the sentence. When budding LA real estate tycoons in the making rapidly piece together, 3, 5, 10 residential houses at inflated prices, and then raise the rental rates, as what can happen in a difficult supply-demand situation in LA, not only does the entire cost structure of the rental market increase to the detriment of working people, but there are now fewer available homes for people who just need a place to raise their families. Result, rewarding speculators at the expense of everyone else. Great, just great.

Alan, congratulations by making the world safe for speculators and enriching the few at the expense of many, by encouraging the misallocation of capital and punishing savers, by destroying the returns of labor in relation to the returns of financial speculation. Yes, Alan, for many, you have destroyed the American Dream. Go east young man, go east young woman, but not too far. Be sure to stop somewhere in the middle!

YOUR IDENTITY, OPEN TO ALL

A search for personal data on ZabaSearch.com – one of the most comprehensive personal-data search engines on the net – tends to elicit one of two reactions from first-timers: terror or curiosity. Which reaction often depends on whether you are searching for someone else’s data, or your own. ZabaSearch queries return a wealth of info sometimes dating back more than 10 years: residential addresses, phone numbers both listed and unlisted, birth year, even satellite photos of people’s homes. ZabaSearch is not the first or only such service online. Yahoo’s free People Search, for example, returns names, telephone numbers and addresses. But the information is nothing more than what has been available for years in the White Pages.

Far more personal information is available from data brokers, including aliases, bankruptcy records and tax liens. That access typically requires a fee, however, which has always been a barrier to the casual snooper. But ZabaSearch makes it easier than ever to find comprehensive personal information on anyone. ZabaSearch may give away some data for free, but it charges for additional information – like background checks and criminal history reports, which may or may not be accurate. The company also plans to sell ads and other services on the search site, much like Google or Yahoo.

Launched in February, the site has emerged during a period of heightened sensitivity about data privacy and identity theft, now among the fastest-growing crimes in America. Critics say ZabaSearch is exploiting the lack of data privacy in America. We unknowingly leak personal information in countless ways, the argument goes, and neither the government nor private industry provides effective ways for us to control how our digital identities are shared or sold. But the founders of ZabaSearch maintain they are not villains, and that their service is a step toward data democratization. If your information is already out there, the logic goes, at least now you will know about it. Wired News sat down with Robert Zakari, ZabaSearch president and general counsel, and chairman Nicholas Matzorkis, to talk about ZabaSearch.

VIETNAMESE ECONOMIC GROWTH SPRINGS FORWARD

In a country where the average per-capita income is $450 a year, a newly well-to-do elite is emerging as the economy races ahead at an average annual growth rate of more than 7%. “The place is booming,” says Jonathan Pincus, an economist for the U.N. Development Program here. He notes that it is one of the fastest-growing economies in Asia. The boom reflects what business people and analysts say is a carefully planned reversal in policies since the first decade or so of economic hard times after the final defeat of the U.S.-backed South Vietnamese government on April 30, 1975. The U.N. team here dates the economic surge from the onset of reforms known as “doi moi” – renovation – in the late 1980s.

U.N. and World Bank economists worry that the wealthiest Vietnamese are seeing their incomes grow most rapidly. But, they say, most of the country’s 83 million people are sharing in economic success. “The incidence of recorded poverty has fallen sharply, and living standards are now more than three times higher than they were 20 years ago,” says a U.N. report. It adds that Vietnam “is increasingly integrated into the global economy.” Raymond Mallon, a consultant for the World Bank, recalls “abject poverty” in 1988 as the economy hovered on the brink of disaster. A critical change at the time was designating the household, not the commune, as the basic economic unit, encouraging families and individuals in small and medium enterprises. “You don’t see much poverty now,” says Mallon. “The changes are fairly dramatic.”

Vietnam shows remarkable promise in areas that are expected to keep growing for years. From such labor-intensive industries as footwear and clothing, Vietnam is moving into electronics. Crude oil, most of which was imported before and during the war, is now drilled offshore and ranks as the country’s biggest export, followed by textiles, shoes, fish products, rice, coffee and rubber.

GLOBAL TAX ALMOST A REALITY

At the spring meeting of the IMF/World Bank in Washington, D. C. it was announced that a number of countries will be used to test a $1 tax on airline tickets. This global tax idea has been around for the last twenty years and is now back as a tax that would be relatively easy to put in place. Furthermore, an “International Financing Facility” for immunization will also be set up on a test basis. How could we be this far?

With regard to global tax recommendations that are on the table for serious consideration, the greatest money makers are the Global Carbon Tax and the Tobin tax followed by the international aviation fuel. A general financial transaction tax was rated as having a high income stream. Those easiest to collect would be the global carbon tax, the international aviation fuel, the maritime pollution tax, a tax on arm sales, and a tax on the global commons.

A global tax would not be possible if the barriers between the nation-states had not been dismantled. The economic barriers fell with the creation of the IMF/World Bank in 1944; the political barriers fell with the creation of the United Nations; the trade barriers fell with the creation of the World Trade Organization; and the legal barriers fell with the creation of the International Criminal Court. These ideas will be on the table at the G8 in June and at the UN in September. Has the UN found a way to justify their existence? Yes. Can UN official Dr. Inge Kaul, co-author of the Human Development Report, feel gratified that she has done her job well? Yes. Will the people of the world ever recover? No.

ARE THE STORM CLOUDS ON THE HORIZON THE HARBINGERS OF DOOM?

The doomsday theme is seeping into the normally circumspect world of economics. In April, Arjun Murti, a veteran analyst at the investment bank Goldman Sachs, warned that oil could “super-spike” to $105 a barrel. And increasingly, economists are prophesying that the U.S. economy as a whole may be sailing into stormy waters. The government and consumers each year spend much more than they make, leaving the country with large and growing budget and trade deficits and personal debt load. The forces propelling and buffeting the economy are like a series of interrelated and interconnected weather systems. Could they be setting the conditions for a perfect storm – a swift series of disturbances that causes lasting damage? If so, what would it look like?

IS AMERICA GOING BROKE?

David Walker can see the future, and it scares the hell out of him. That would not be terribly unusual if he were one of the thousands of lobbyists, legislators and activists crawling all over Washington on any given day, pontificating about the urgency of their pet issues. There is a thriving industry here built on pushing policy prescriptions for every ailment, real or imagined. But Walker is not a lobbyist or an activist – he is an accountant. His title is comptroller general of the U.S., which makes him the head auditor for the most important and powerful government in the world. And he is desperately trying to get a message out to anyone who will listen: the United States of America’s public finances are a shambles. They are getting rapidly worse. And if something major is not done soon to solve the country’s intractable budget problems, the world will face an economic shakeup unlike anything ever seen before.

Seated in his wood-panelled office in downtown Washington, Walker measures his words, trying to walk the fine line between raising an alarm and fostering panic. He cringes when he hears prominent economists warning about a financial “Armageddon”, but he makes no bones about the fact the situation is dire. “I don’t like using words that are overly inflammatory,” he says, leaning forward in his chair. “At the same time, I think it is critically important that the American people, as well as their elected representatives, get a better understanding of just how serious our situation is.”

The numbers are staggering – a $43-trillion hole in America’s public finances that is getting worse every day. And the stakes are almost inconceivable for a generation of politicians and voters raised in relative prosperity, who have never known severe economic hardship. But that plush North American lifestyle to which we have all grown accustomed has been bought on credit, and the bill is rapidly nearing its due date. If the U.S. cannot find a way to pay up, the results will spill beyond national borders, spreading economic misery far and wide. In Canada, the country whose financial well-being is most tightly tied to trade with the U.S., there would not be a single region or industry left untouched by a fiscal shock south of the border.

It is the looming presence of this potential crisis that brings Walker to this office every day, through the doorway with the words “Honesty Accountability Reliability” inscribed above, in hopes that someone will listen and take up the challenge before it is too late. “The sooner we start fixing this, the better,” he says, “because right now the miracle of compounding is working against us. Debt on debt is not good. We have to first stop digging, and then figure out how we’re going to fill the hole.”

IS SURVEILLANCE PROTECTION?

One of the biggest threats to our democracy is the loss of privacy protections. They have eroded under government attacks on our right to privacy, and they have eroded from corporate attacks on our privacy. Since one of the major customers of the corporate personal data collectors is the U.S. government, the two are intimately part of the same problem. The extensions of “surveillance” and “personal data collection” have reached alarming proportions. I fear that this creeping surveillance society will just be accepted as a “cost of doing business” or as a necessary loss in the cause of “national security”. In either case, with our privacy goes our freedom, and I do not accept the validity of either justification.

There is all kinds of pressure to have RFID (an identification system with biometric data). The vehicles for utilizing such a personalized identity come in many forms and from many quarters. There are suggestions for a national ID card, attached to passports, integrated into state driver’s licenses and identification cards, as well as implantable RFID in hospital patients. The possibilities seem to be endless. It is coming, and whoever’s interests are being served by this have clout. The “war appropriations” bill had the Real ID Act tagged onto it.

It is no surprise that the Bush administration supports Real ID, data collection, and massive public surveillance. From the day they entered the White House they have done everything they can to obscure what is happening in government, and make transparent the lives of the population. This is just the reverse of what was intended by the framers of the Constitution. They knew full well that you cannot have a democracy if the people could not see what the government was doing - and hold that government to account. And what do we pay for creating a system that tracks everyone? Does it make us safer? Somehow I doubt it, but it does make our daily lives much more transparent – and open to whatever “threat assessment” software which will be run over the massively growing databases.

Knowledge is power, and those who control the knowledge control the power. That is a truism and is operating at multiple levels in our current environment. In the case of data collection, there is (even under the most trusting of circumstances) concerns about intimidation. Do you ever consider how what you are doing might be interpreted? The possibilities for interpretation of our daily lives are endless. It concerns me that there is not more outcry and concern, but I think most are being lulled into acceptance.

NATIONAL INSECURITY CARDS

As a security technologist, I regularly encounter people who say the U.S. should adopt a national ID card. How could such a program not make us more secure, they ask? The suggestion, when it is made by a thoughtful civic-minded person like Nicholas Kristof in The New York Times, often takes on a tone that is regretful and ambivalent: Yes, indeed, the card would be a minor invasion of our privacy, and undoubtedly it would add to the growing list of interruptions and delays we encounter every day – but we live in dangerous times, we live in a new world … . It all sounds so reasonable, but there is a lot to disagree with in such an attitude.

The potential privacy encroachments of an ID card system are far from minor. And the interruptions and delays caused by incessant ID checks could easily proliferate into a persistent traffic jam in office lobbies and airports and hospital waiting rooms and shopping malls. But my primary objection is not the totalitarian potential of national IDs, nor the likelihood that they will create a whole immense new class of social and economic dislocations. Nor is it the opportunities they will create for colossal boondoggles by government contractors. My objection to the national ID card, at least for the purposes of this essay, is much simpler. It will not work. It will not make us more secure. In fact, everything I have learned about security over the last 20 years tells me that once it is put in place, a national ID card program will actually make us less secure.

My argument may not be obvious, but it is not hard to follow, either. It centers around the notion that security must be evaluated not based on how it works, but on how it fails. It does not really matter how well an ID card works when used by the hundreds of millions of honest people that would carry it. What matters is how the system might fail when used by someone intent on subverting that system: how it fails naturally, how it can be made to fail, and how failures might be exploited. The first problem is the card itself. No matter how unforgeable we make it, it will be forged. And even worse, people will get legitimate cards in fraudulent names.

But the main problem with any ID system is that it requires the existence of a database. In this case it would have to be an immense database of private and sensitive information on every American – one widely and instantaneously accessible from airline check-in stations, police cars, schools, and so on. The security risks are enormous. Such a database would be a kludge of existing databases; databases that are incompatible, full of erroneous data, and unreliable. As computer scientists, we do not know how to keep a database of this magnitude secure, whether from outside hackers or the thousands of insiders authorized to access it. And when the inevitable worms, viruses, or random failures happen and the database goes down, what then? Is America supposed to shut down until it is restored?

WILL THE COURT GRANT US FREEDOM?

On the face of it, who can object to the Supreme Court’s decision that permits wine consumers to buy directly from out-of-state wineries? This is just the free market at work. The state laws that prohibited the practice were nothing but a legal leftover from prohibition days and a mercantilist privilege granted to politically powerful distributors who thought only of their monopoly. The commerce clause of the Constitution is good for nothing if not to prevent this kind of state-to-state protectionism. Right? Well, that is the impression you get from those who are toasting and celebrating and proclaiming a glorious day for wine lovers. To these enthusiasts, it is enough that consumers are now permitted to do something they were previously prohibited from doing, and that is all there is to it. Yes, it was an act of power by the Supreme Court, but power used for good ends. Or so they say.

It has been a very long time since liberty lovers have been able to celebrate anything, so I can understand the impulse. But let the libertarian conscience speak here. What precisely are you celebrating? The Supreme Court, which has been, with very few exceptions, a major force for statism for as far back as one can look, has employed its power not against the federal government but against a lower order of government. If we celebrate this, are we developing a habit of mind that pleads with the powerful to somehow impose freedom on others? And what would be wrong with this?

Well, there is the not-small matter of federalism. Under this idea, higher orders of government should not interfere with the juridical powers of lower orders. In the American setting, this means states should manage their own affairs, however badly, rather than be managed by the central government. Why? The positive case is that, over time, laws are least bad and oppressive when they are closest to the people. In these conditions, we are more likely to experience government by the people. If that is not the case, smaller units of government permit people to move from one jurisdiction to another, and the competition between units drives the whole system towards greater liberalization. Capital and labor flow to areas that permit more liberty, even as despotic jurisdictions drive away new wealth and talent.

There is also the negative case for federalism. The higher order of government is not an impartial arbiter. Its interest in the liberty of lower orders is dubious at best. It is very likely invoking that liberty as an excuse to expand its jurisdiction – its empire. Once that power is acquired, it is likely to be abused. The supposed concern for liberty that higher level of government uses to trample on lower orders is never applied against the higher order itself. American history demonstrates this well. Part of the propaganda for the ratification of the Constitution included the claim that it would liberate Americans from state-to-state protectionism. In fact, as Scott Trask has shown, the real motive force behind the Constitution was not to abolish tariffs, which were either minimal or non-existent, but rather to prevent some states from establishing free trade relations with foreign countries at the expense of mercantilist interest groups in the U.S. In other words, the Constitution was not backed in order to bring about free trade but to prevent free trade from becoming the full reality it might have been under the Articles of Confederation.

The early history of American political debates divided very clearly along Jeffersonian and Hamiltonian lines. The Jeffersonian position favored free trade, decentralized government, and the libertarian position generally. The Hamiltonian view favored centralized government, protectionism, and a regulated national life. When the Supreme Court claims to be achieving Jeffersonian goals with Hamiltonian means, there is a solid reason to be suspicious. As Murray Rothbard emphasized, the principled libertarian position is: universal rights, locally enforced. Do you think the Supreme Court is giving you liberty? Ask yourself why the court pounced on state regulations instead of addressing the regulations by the pound enforced by the federal government that constitute far more of an imposition on consumers and retailers. When the Court starts striking these down, I will celebrate, but until then I will continue to observe the federal government doing what governments do, namely amassing power unto itself.

FEAR: THE FOUNDATION OF EVERY GOVERNMENT’S POWER

“[S]ince love and fear can hardly exist together, if we must choose between them, it is far safer to be feared than loved.” – Niccolò Machiavelli, The Prince, 1513

All animals experience fear – human beings, perhaps, most of all. Any animal incapable of fear would have been hard pressed to survive, regardless of its size, speed, or other attributes. Fear alerts us to dangers that threaten our well-being and sometimes our very lives. Sensing fear, we respond by running away, by hiding, or by preparing to ward off the danger. To disregard fear is to place ourselves in possibly mortal jeopardy. Even the man who acts heroically on the battlefield, if he is honest, admits that he is scared. To tell people not to be afraid is to give them advice that they cannot take. Our evolved physiological makeup disposes us to fear all sorts of actual and potential threats, even those that exist only in our imagination.

The people who have the effrontery to rule us, who call themselves our government, understand this basic fact of human nature. They exploit it, and they cultivate it. Whether they compose a warfare state or a welfare state, they depend on it to secure popular submission, compliance with official dictates, and, on some occasions, affirmative cooperation with the state’s enterprises and adventures. Without popular fear, no government could endure more than 24 hours. David Hume taught that all government rests on public opinion, but that opinion, I maintain, is not the bedrock of government. Public opinion itself rests on something deeper – fear.

Were we ever to stop being afraid of the government itself and to cast off the phoney fears it has fostered, the government would shrivel and die, and the host would disappear for the tens of millions of parasites in the United States – not to speak of the vast number of others in the rest of the world – who now feed directly and indirectly off the public’s wealth and energies. On that glorious day, everyone who had been living at public expense would have to get an honest job, and the rest of us, recognizing government as the false god it has always been, could set about assuaging our remaining fears in more productive and morally defensible ways.

THREE STEPS TO DISAPPEARING

Being a leading skip tracer who is hired to find people, I have also helped individuals disappear. I have dealt with corporate whistle blowers, wives stalked by ex-husband’s and others just looking for a new start. I receive emails from individuals who seek new identities. Questions range from, how to get a new passport, a birth certificate and a driver’s license. I express repeatedly new identities do not work. If you have ever been finger printed or perhaps left some hint of DNA behind you cannot escape it.

I recently was on a radio show and the host asked if it is possible to buy someone’s identity? My answer was simple: you never know whose identity you are buying. Does that person have a warrant or a tax lien you do not know about? What skeletons dwell in their closet? What about if you take this unknown person’s identity and you tell your new friends you are from Dubuque, Iowa. Now, you are sitting at the beach sipping Mai Tai’s and a couple of tourist show up in your age range and start talking about a place you know little about. Then, imagine if the tourist sipping on his or her Mai Tai knows the person whose identity you are assuming.

I call it the fluke factor, if you have no control over something then the fluke factor comes into play. The reality of life is you have zero control over the people you meet or the situations you walk into. I am on the road a lot, have met childhood friends in the remotest of places as well as friends of friends in places like Paris and Dublin. Americans overseas tend to gravitate towards each other like teenagers in a mall on Friday night. It is difficult to avoid other Americans when you are in a foreign country. New identities to me are always a nefarious situation … it is a red light shinning, blaring trouble. There are many ways to disappear or be more private in this world, even in the world of DNA, fingerprints and big brother. New identities usually have the word felony standing behind them. My advice is to get a good lawyer if you feel the need for a new identity.

If you are looking to disappear, leave life behind, or just start over and not have people from your past find you, there is hope with a little misinformation, disinformation and reformation it can be done. Some people believe that they can just pick up and go, the problem with that is if someone is looking for you, they have your whole past and present to search. They have your family and friends to contact, store memberships, airlines, car rentals, banks, credit card statements, subscriptions, library records, phone records, emails, IP addresses, the list is as long as the person’s imagination and budget. A little homework before you go, see my three steps to disappearing.

THOUGHTS ON OFF-SHORE INVESTING

Have you ever watched the so-called investment experts on CNBC? They remind me of TV sports analysts who seem to think they always know who is going to win and never admit when they were wrong. Almost everyone jumps on the bandwagon, dishing out the exact same advice from their collective ivory tower. Few have the courage to question, to think differently – they praise investor confidence and brag about huge profits during a bull market run-up, then they chastise irrational exuberance after the market crashes, as if they did not have any part in it. Just once I would love to see one of them on national television accepting responsibility for their mistakes and oversights. But I digress…

The mind-numbing mantra of “stocks, bonds, mutual funds” pervades American investment canon. Any other deviation from the norm is immediately labeled as high-risk, fraudulent, or illegal. People seem to rule out global investment from the realm of possibilities, and yet, quite literally, there is a whole world of opportunity out there. In my business, I travel overseas seeking profitable, low-risk investment prospects … yes, they exist. And they are everywhere.

So what do we mean by “off-shore” investing? At its simplest, “off-shore” means “international”. Over the last 20 years, the government, movies, and media have portrayed off-shore investing as a dirty, illicit trade undertaken by drug dealers and terrorists. Nothing could be further from the truth. Tax evasion is illegal. Investing your money overseas is not. For example, maybe you think the new Honda hybrid car so fantastic that you want to buy stock in the company. You could purchase shares of Honda on the New York Stock Exchange in U.S. Dollars, or you could purchase shares of Honda on the Tokyo exchange in Yen. Or you could purchase shares of Honda on several other markets across Europe and Latin America. Each of these shares represents ownership in the same company – Honda is Honda, regardless of which country’s exchange facilitates the transaction. If you buy from one of the international exchanges, you would be investing off-shore. If you buy shares into an international or emerging markets mutual fund, technically you are investing off-shore. …

BURN YOUR LICENSE

During the Vietnam War, people protested the draft and U.S. policy in Vietnam by burning draft cards. It was a symbolic gesture – a way of refusing to be counted as a citizen willing to fight a morally dubious battle, a way to avoid becoming a statistic in the graveyards of the cold war. As of last week, we have a new card to burn. I am talking about the new driver’s licenses and ID cards ushered into existence by the passage of Rep. James Sensenbrenner’s Real ID Act, which zoomed through the House and Senate without debate by piggybacking on an appropriations bill. It mandates that all licenses include a digital photo, as well as “machine-readable technology with defined minimum data elements”. In other words, your license will include some kind of tech – probably a magnetic stripe or radio frequency identification (RFID) chip – containing all your personal information.

Because there will be national standards for how this information can be stored, it appears anyone will be able to acquire readers for them. You can expect machines to start reading your cards in bars, buildings, state parks, taxicabs, and stores. Say your local bar owner decides to install a mag stripe reader so the bouncers do not have to look at IDs. When you slide your card through the reader, a lot more than your age will be revealed. Although the Department of Homeland Security has yet to decide what the “minimum data elements” will be, it seems likely they will include at least the information currently visible on your card, i.e., name, age, address, biometrics. Possibly more. If that local bar owner chooses, he can store your information and sell it to a large data company looking to sell marketers a list of people who drink alcohol in urban areas.

Why is this creepy, aside from the idea that going to a bar may mean you get spam about drinking Guinness? Well, suddenly a lot more businesses and other entities will be collecting your personal information in not-very-secure databases. That leaves you much more vulnerable to identity theft and fraud. But the databasing does not stop with your local bar. The DHS wants to use these cards to create a massive electronic warehouse with everybody’s name and information – a warehouse whose contents they will disclose to Canada and Mexico too. Basically, it will become a citizen-tracking machine if they can ever get it together to make state and federal databases talk to each other. Part of the law does require state DMVs to open their databases to the DHS if they want to continue receiving federal funding, thus potentially creating a vast repository of everybody’s photographs, associated with their name, location, and driving records.

This is just the latest step in the strange metamorphosis our driver’s licenses have undergone over the past several decades. Originally issued as a simple license demonstrating the holder’s ability behind the wheel, the driver’s license has gradually become a de facto identity-authentication card.

IRAQ FALLS APART … AND IN WASHINGTON, THE CENTER CANNOT HOLD

There was panic in the streets of Washington, the Capitol emptied, and Congress scattered in fear – all because a small plane had entered the airspace over the Imperial City. “Run, run, run!” It was, of course, nothing to laugh or gloat about. All of us remember that day in September: the shadow of it hangs over us, darkening our present with presentiments of disasters to come. Yet the reaction of the authorities and our leaders assembled in the mighty city of Washington was telling. Here was the capital city of the greatest, most powerful empire the world has ever seen, prostrate before the threat of a two-seat Cessna 152, which is smaller than most cars. How quickly the illusion of safety – and strength – dissipates.

After spending hundreds of billions of dollars in a “war on terrorism” in which no expense has been spared and no risk – including the risk of alienating the rest of the world – is considered too great. After sacrificing liberty to “security”, after following our war-maddened president into Iraq and, perhaps, beyond, what have we got to show for it? Only the fear in the eyes of our government officials as they fled out into the street. Before the all-clear sounded, these lines from Yeats came to mind:

“Things fall apart; the center cannot hold;
Mere anarchy is loosed upon the world…”

The War Party screeches for “military victory”, as one “libertarian” butt-boy of the neocons put it – no matter what the cost, to the Iraqis or to the U.S. Fresh from his U.S.-government-sponsored trip to Iraq – where he lectured the Iraqis on the virtues of “limited” government, even as his “students” began to erect a theocracy – this longtime top official of the Washington-based Cato Institute – supposedly a “libertarian” thinktank – has enlisted in an army of banshees bent on blood. He and his ilk are part of what Pope Benedict XVI describes as a satanic force “still at work in the world unleashing ‘evil energy’.” I hope he enjoyed his taxpayer-funded $35,000 cab ride from central Baghdad to the airport – because, come the (libertarian) Revolution, we are going to make him pay back every penny of it, with interest.

We who have fought the War Party long and hard, and are now – at long last! – winning the hearts and minds of the American people, know that such hubris cannot but be repaid with divine fury – and the sooner the better. The neocons’ comeuppance is imminent, or so we hope. How many investigations are even now tracing their treason? The battering of Bolton is just a warm-up for the main event. As the new Pope put it in an address on the meaning of the Book of Revelation in the Bible:

“‘History, in fact, is not in the hands of dark forces, left to chance or just human choices,’ he told thousands of people in St. Peter’s Square. ‘Above the unleashing of evil energy, above the vehement interruptions of Satan, above the so many scourges of evil, rises the Lord, supreme arbiter of history.’”

Against the everyday horrors unfolding in Iraq – and on the floor of the U.S. Congress – we have some hope that the power of evil is limited. Lately, we can bring ourselves to imagine that it can be pushed back and eventually defeated – even as we remember that evil isn't the norm, and that before Sept. 11, 2001, it was in retreat. We cannot return to that halcyon era. However, what we can do is begin to understand that signal event, not only its meaning but the specific circumstances surrounding it. As we peel back the layers of the mystery, we get closer to the truth of how to forge a rational response.

The Bush administration’s response to 9/11 has been anything but rational. That is why the threat of terrorism is greater today than ever. As members of Congress and other government officials ran from the U.S. Capitol, squealing with terror, surely an approximation of this thought must have crossed their minds. For the first time since 9/11, the city of Washington, D.C., went into Code Red – the highest state of emergency. It is about time. Because ever since the neocon coup d’état that Bob Woodward wrote about in Plan of Attack, American patriots have been trying to alert the country that it is Code Red as far as the future of America is concerned. The danger, not only to our liberty but to our physical safety and our survival as a free people, has never been greater.

YOU HAVE BEEN DRAFTED: UNCLE SAM WANTS YOU FOR THE WAR ON DRUGS

Congressman Sensenbrenner’s draconian mandatory minimum sentencing bill is now garnering national attention. This bill would have serious consequences for our democracy, requiring you to spy on all your neighbors, including going undercover and wearing a wire if needed. Refusing to become a spy for the government would be punishable by a mandatory prison sentence of at least two years. We are especially concerned about a section of the bill that turns every American into an agent of the state. Here is how it works: If you “witness” certain drug offenses taking place or “learn” that they took place you would have to report the offense to law enforcement within 24 hours and provide “full assistance” in the investigation, apprehension, and prosecution of the people involved. Failure to do so would be a crime punishable by a mandatory two year prison sentence.

In addition to turning family member against family member, the legislation could also put many Americans into dangerous situations by forcing them to go undercover to gain evidence against strangers. This is what we are up against in Congress, and it is not going to be easy. Sensenbrenner, the chair of the powerful Judiciary Committee, usually gets what he wants. Lots of people are afraid to challenge him. But we have a duty to our children to stop our country from turning into a police state. I am sure you feel this duty, as well.

MONEY LAUNDERING IN A CHANGED WORLD

If you shop with a major bank, chances are that all the transactions in your account are scrutinized by AML (Anti-Money Laundering) software. Billions of dollars are being invested in these applications. They are supposed to track suspicious transfers, deposits, and withdrawals based on overall statistical patterns. Bank directors, exposed, under the Patriot Act, to personal liability for money laundering in their establishments, swear by it as a legal shield and the holy grail of the on-going war against financial crime and the finances of terrorism. Quoted in Wired.com, Neil Katkov of Celent Communications, pegs future investments in compliance-related activities and products by American banks alone at close to $15 billion in the next 3 years (2005-2008). The U.S. Treasury Department’s Financial Crimes Enforcement Network (finCEN) received aproximately 15 million reports in each of the years 2003 and 2004. But this is a drop in the seething ocean of illicit financial transactions, sometimes egged on and abetted even by the very Western governments ostensibly dead set against them.

Israel has always turned a blind eye to the origin of funds deposited by Jews from South Africa to Russia. In Britain it is perfectly legal to hide the true ownership of a company. Underpaid Asian bank clerks on immigrant work permits in the Gulf states rarely require identity documents from the mysterious and well-connected owners of multi-million dollar deposits. Hawaladars continue plying their paperless and trust-based trade – the transfer of billions of U.S. dollars around the world. American and Swiss banks collaborate with dubious correspondent banks in offshore centers. Multinationals shift money through tax free territories in what is euphemistically known as “tax planning”. Internet gambling outfits and casinos serve as fronts for narco-dollars. British Bureaux de Change launder up to £2.6 billion annually. The €500 note makes it much easier to smuggle cash out of Europe. Intelligence services cover the tracks of covert operations by opening accounts in obscure tax havens, from Cyprus to Nauru. Money laundering, its venues and techniques, are an integral part of the economic fabric of the world. Business as usual?

Crime is resilient and fast adapting to new realities. Organized crime is in the process of establishing an alternative banking system, only tangentially connected to the West’s, in the fringes, and by proxy. This is done by purchasing defunct banks or banking licences in territories with lax regulation, cash economies, corrupt politicians, no tax collection, but reasonable infrastructure. The countries of Eastern Europe – Yugoslavia (Montenegro and Serbia), Macedonia, Ukraine, Moldova, Belarus, Albania, to mention a few – are natural targets. In some cases, organized crime is so all-pervasive and local politicians so corrupt that the distinction between criminal and politician is spurious. Gradually, money laundering rings move their operations to these new, accommodating territories. The laundered funds are used to purchase assets in intentionally botched privatizations, real estate, existing businesses, and to finance trading operations. The wasteland that is Eastern Europe craves private capital and no questions are asked by investor and recipient alike.

The next frontier is cyberspace. Internet banking, Internet gambling, day trading, foreign exchange cyber transactions, e-cash, e-commerce, fictitious invoicing of the launderer’s genuine credit cards – hold the promise of the future. Impossible to track and monitor, ex-territorial, totally digital, amenable to identity theft and fake identities – this is the ideal vehicle for money launderers. This nascent platform is way too small to accommodate the enormous amounts of cash laundered daily – but in 10 years time, it may. The problem is likely to be exacerbated by the introduction of smart cards, electronic purses, and payment-enabled mobile phones.

Trust-based, globe-spanning, money transfer systems based on authentication codes and generations of commercial relationships cemented in honour and blood - are another wave of the future. The Hawala and Chinese networks in Asia, the Black Market Peso Exchange (BMPE) in Latin America, other evolving courier systems in Eastern Europe (mainly in Russia, Ukraine, and Albania) and in Western Europe (mainly in France and Spain). In conjunction with encrypted e-mail and web anonymizers, these networks are virtually impenetrable. As emigration increases, diasporas established, and transport and telecommunications become ubiquitous, “ethnic banking” along the tradition of the Lombards and the Jews in medieval Europe may become the the preferred venue of money laundering.

FEDERAL EXPRESS HANDS OVER CUSTOMER DATA TO FEDS AT THE DROP OF A HAT

Before Sept. 11, 2001, when federal law-enforcement officials asked FedEx Corp. for help, the company had its limits. It would not provide access to its databases. It often refused to lend uniforms or delivery trucks to agents for undercover operations, citing fears of retribution against employees as well as concerns about customer privacy. Then came the attacks on New York and Washington and pleas from the government for private-sector help in fighting terrorism. Suddenly, the king of overnight delivery became one of homeland security’s best friends.

FedEx has opened the international portion of its databases, including credit-card details, to government officials. It has created a police force recognized by the state of Tennessee that works alongside the FBI. The company has rolled out radiation detectors at overseas facilities to detect dirty bombs and donated an airplane to federal researchers looking for a defense against shoulder-fired missiles. Moreover, the company is encouraging its 250,000 employees to be spotters of would-be terrorists. It is setting up a system designed to send reports of suspicious activities directly to the Department of Homeland Security via a special computer link.

FedEx’s newfound enthusiasm for a frontline role in the war on terror shows how the relationship between business and government has changed in the past few years. In some cases, these changes are blurring the division between private commerce and public law enforcement. After Sept. 11, the U.S. government altered the definition of a good corporate citizen to include help running down al Qaeda operatives, often asking companies to act as the eyes and ears of federal law enforcement. The Bush administration and Senate Republican leaders are currently pushing an updated version of the Patriot Act that would expand the ability of law-enforcement agencies to demand business records without a warrant. Already, some companies are voluntarily increasing their level of cooperation with the government, say law-enforcement officials.

Federal agents privately praise Western Union for sharing information with Treasury and Homeland Security investigators about overseas money transfers. Time Warner’s America Online has set up a dedicated hotline to help police officers seeking AOL subscriber information and also proffers advice about wording subpoenas. Wal-Mart Stores, which has a sophisticated supply-chain security system, has been helping U.S. Customs and Border Protection agents figure out how to better track international shipping, say Homeland Security officials.

Spokespeople for Western Union, AOL and Wal-Mart all say their companies take consumers’ privacy seriously and that they cooperate with legal investigations. They would not provide details about their cooperation with the government. Cooperation between businesses and federal law-enforcement agencies generally is not advertised and customers are seldom aware of it. In some cases, people waive their right to privacy when they use a particular company’s service. With FedEx, customers consent to having shipments inspected as soon as they hand over their packages and sign the shipping forms.

READY FOR YOUR OWN ALL-NEW, SINISTER ID CARD?

Well, now we have done it. Congress just passed it and Dubya has promised to sign it and the Homeland Security Department is giddier than Mel Gibson in a nail factory over it and marketers nationwide are salivating at the groin at the prospect of it, and the next big step toward America becoming an even more delightfully paranoid and draconian Big Brother wonderland has now officially been taken.

It is called Real ID. It is, in short, a new and genetically mutated type of driver’s license for all Americans, replacing your current license and replacing your Social Security card and replacing your sense of well being and privacy and humanity and part of a new, uniform, deeply sinister, national uniform card system whereby every person living and breathing in these paranoid and tense times shall henceforth be much more traceable and watchable given how we will all soon be required by law to carry this super-deluxe computerized ID card with us at all times, packed as it will be with more personal, digitized info about you than even your mother knows.

The new law will require everyone to hand over not one, not two, but fully four types of documentation to renew their driver’s license, such as a photo ID, a birth certificate, proof that their Social Security number is legit and something that validates their home address, like a phone bill. DMV employees will then have to verify the documents against giant teeming federal databases and store the documents and a digital photo of you in a database. Doesn’t that sound gratifying? What is more, the card’s design plan includes multiple openings for the Homeland Security Department to add on whatever features they deem necessary, with or without your knowledge, consent or who the hell cares what you think because we do what we want now please shut the hell up and quit asking questions.

Make no mistake. Real ID, in short, takes us one happy step closer to a total surveillance state, where everyone is stamped and everyone is watchable and everyone is traceable and unless you live way, way off the grid out in the increasingly nonexistent hinterlands, you cannot escape the spazzy and twitchy and paranoid eye of Homeland Security. This is the funny thing. This is the sad thing. This is the terrifying thing. We have suffered one major debilitating act of terrorism in this nation and we have recoiled so violently, so rabidly, so desperately that we are still more than willing to give up whatever freedoms necessary in a vain and silly attempt to control chaos and plug every hole, when of course the nation is basically one giant hole to begin with.

AND TO MY DOG, I LEAVE A $10,000 TRUST FUND …

If you are like many pet owners, you want the best for your dog or cat. You give it premium food, good veterinary care and bring it with you on vacation. But what happens to your pet if you die or become incapacitated? Unless specific provisions have been made, your pet could wind up in a shelter and be put to death. If you plan ahead, though, your pet can be well cared for. In addition to arrangements with friends and family, there is, increasingly, a formal option. Laws in 27 states – including Arizona, Colorado, Florida, New Jersey and New York – now allow owners to establish trusts for pets. These arrangements set aside money for the care of one or more animals in the event of an owner’s disability or death.

Leaving money to a pet became legally possible in 1990, when a section validating trusts for domestic animals was added to the Uniform Probate Code. More states may soon allow it. Pet trust legislation is pending in Connecticut, Hawaii, Massachusetts, Oregon, Pennsylvania, Rhode Island and Texas. Setting up a trust for your pet is, in many ways, similar to creating one for a child. A trustee and caregiver are named. The trustee is in charge of the money and pays the caregiver a set amount each month for expenses, like food, grooming and veterinary care. At any point, if the caregiver is not doing a good job, the trustee can find a replacement. These new statutes “allow people without lots of money, without detailed consultations with lawyers, to create a simple provision to take care of their pet,” said Gerry W. Beyer, a law professor at St. Mary’s University in San Antonio.

Creating a trust can cost as little as $100 if you draw up a will for yourself at the same time or up to a few thousand dollars. Most people, though, do not make formal arrangements, assuming they will outlive their pet, or that friends and family will take care of it. Consequently, more than 500,000 pets are killed in shelters and veterinary offices each year after their owners die, according to 2nd Chance 4 Pets, a nonprofit organization in Los Gatos, California, that raises awareness of this problem.

While volunteering at Tri-Valley Animal Rescue in Pleasanton, California, Amy Shever frequently saw dogs and cats whose owners had died. She noticed many of the pets never adjusted to living in a shelter and became fearful or defensive. Consequently, nobody wanted to adopt them. “I personally witnessed a lot of these animals getting euthanized,” said Ms. Shever, who is the director of 2nd Chance 4 Pets. Last year, she started PetGuardian, a company in Los Gatos that creates pet trusts for birds, horses, dogs and cats. For $500, her company enrolls its customers in a program that includes a comprehensive pet trust document, a cost analysis to determine how much money to set aside for the pet’s care and emergency identification cards for owners to post at home and carry in their wallets.

As part of the program, she said, the Best Friends Animal Society, a large no-kill shelter in Utah, finds homes for pets, no matter where they reside, if the caregivers named in the trust are no longer available. A detailed instructional sheet is also created so animals continue to receive care in the manner they are accustomed to. So far, 500 clients have either started or completed the program, she said, and owners typically leave between $8,000 and $15,000. The largest sum a client left was $200,000 for the care of two African birds that can live 90 years or more. If clients have a hard time setting aside money for the trust, Ms. Shever recommends they talk to their insurance agent. “One really great way to fund these trusts is to have the beneficiary of your life insurance policy use the money to cover the pet trust,” she said.

Estate planners warn, though, not to put excessively large amounts of cash or property in the trust because it may encourage heirs to contest the arrangement. Courts have the power to reduce the amount if deemed unreasonable. Another concern is that a dishonest caregiver could fraudulently extend the life of the trust by replacing an animal when it dies with a look-alike in order to continue receiving the funds. The best way to prevent fraud, trust experts say, is to get a DNA sample from the animal. Then, if the trustee becomes suspicious, a comparison can be made. Instead of a trust, owners can include a provision for pet care in their will. But William A. Reppy Jr., a professor at Duke Law School in Durham, N.C., said there were some drawbacks to that approach. A will takes effect only upon your death, not if you become ill or incapacitated. And it must go through probate, which can temporarily freeze funds for your pet's care and delay determining the rightful new owner.

THE GOP’S POLICE STATE

It has always been an article of faith on the “loony” right that the black helicopters of the Jewish-United Nations fascist government would arrive to take over America and turn it into a hellish police state through the machinations of the liberal Democrats. Who would have thought that it would be the conservative Republicans who would be waving the landing lights to guide the troop planes in? But there it is. In four short years, following the 9/11 attacks, we have moved a long way down a very dark and dead-end alley.

First we had the Patriot Act, the handiwork of John Ashcroft (now out to pasture nursing his wet dreams of a restoration of slavery and the Confederacy) and his able assistant Michael Chertoff, now Sith overlord of the Department of Homeland Security. This obscene 362-page pile of totalitarian legislation has dangerously undermined the First and Fourth Amendments of the Bill of Rights. Then we had the assertion of a Justice Department and Presidential right to revoke one’s citizenship (as witness the cases of Mssrs. Hamdi and Padilla, the latter of whom, a native-born American citizen, remains in jail in a military lock-up now for two years, with no access to family or even an attorney, with no charge against him and no right to challenge his arrest).

Couple that with the Bush/Cheney-sanctioned policies of rendition, where people are kidnapped by government agents and whisked away on unmarked planes to other nations like Syria and Egypt where torture and extra-judicial killings are routine, and torture (see Guantanamo, Abu Ghraib, Bagram, etc.), and you have the very real threat of American citizens being disappeared, just they way they did it for years (under American instruction and direction) in Guatemala, El Salvador, Honduras, Argentina and Chile).

Sadly, while they are leading the parade, the Republicans are not alone in this march to fascism and a 21st Century police-state tyranny. They have been doing it with the willing connivance of a number of conservative Democrats, including the likes of Joe Lieberman, Hillary Clinton and Diane Feinstein (this is hardly a complete list). And the way was paved, of course, by anti-Democratic police-state measures introduced earlier by the Clinton administration. They have also had the help of a somnolent corporate media and a blissfully ignorant public caught up in American Idol and the Michael Jackson trial or whatever the latest entertainment diversion might be.

I used to think that right-wing warnings about jackbooted agents of the federal government landing in black Cobra gunships and storming our homes in dead of night were the fevered ravings of lunatics, but no more. With the push to stack the courts, create a computerized national ID card, equate protest with support for terrorism, and make citizenship a revocable privilege, comes official government promotion of an intolerant, medieval Christian fundamentalism which provides the whole thing with an ideological gloss that makes any outrage not just permissible, but “God’s will”. Still, it is surprising to see the right turning off the lights of liberty, after all those years of warnings about liberal Democrats and the “nanny” state.

TAX EVADERS KEEP STEP AHEAD OF EU

After more than a decade of haggling, the EU is now just one month away from starting its biggest, coordinated assault on tax evasion: a new law aimed at uncovering – and taxing – interest earned on the hundreds of billions in savings stashed by EU citizens outside their home countries. Yet the windfall of new revenue that some cash-strapped countries, led by Germany and France, had been hoping for is unlikely to materialize, according to bankers in Switzerland and other tax havens. Not only are historic low interest rates keeping the potential pot to be taxed low, but many investors are restructuring their deposits to legally avoid paying anything, bankers say. Others have already moved their money even farther afield – to places like Singapore – where it can remain hidden from tax collectors at home.

Most European nations have been trying for years to recoup some of the lost revenue – estimated at millions or billions of euros over the years – on interest earned by their citizens in tax havens like Switzerland and Luxembourg. Tax amnesties offered in recent years have brought some deposits back, with Italy showing better results than Germany. Places like Switzerland are now finding it harder to accept money without asking questions because of stricter money-laundering rules adopted since Sept. 11, 2001. But huge amounts of potentially taxable funds remain out of reach of EU tax collectors. In Switzerland, about SF1.2 trillion, or $975 billion, was held by foreign private investors and some three-quarters of that was not declared to tax authorities, Deutsche Bank estimated in a report last year.

The new EU law, which takes effect July 1, allows governments to track at least some of that hoard. Negotiations, which started in 1989, bogged down for years over divisions between nations that lost out on taxes, like France and Germany, and financial centers like Luxembourg and Britain that profited from the investment business. The law was eventually whittled down to aim at only interest income from savings and bonds. It covers only individuals, not companies and trusts, and earnings from other assets, like stocks and derivatives, are exempt. Finance ministers gave their final endorsement to the pact a year ago, but implementation was delayed to allow time for countries to pass the necessary legislation. In 2007, the EU will review the directive with a view to possibly broadening its scope.

BY 2013 EVERY U.K. CITIZEN OVER 16 WILL HAVE TO OWN ID CARD

The identity cards bill will give the government the legal powers to set up the scheme and charge the fees it needs to recover the costs of enrollment, issuing and maintaining the cards and providing verification services. ID cards are to be introduced on a staged basis. First it will become compulsory for foreign nationals to register under the scheme, then it will be voluntary for UK nationals to register when they renew their passports.

About 80% of the adult population have a passport and new applicants from next year will be given a biometric passport. From 2008 the 3-4 million who renew their passport each year will get a combined ID card/passport valid for 10 years.

It is expected that the scheme will become compulsory in 2013 when about 80% of those who have passports will have registered under the scheme. It is expected that only about 13% of the UK resident population will not have a passport by then and they will be issued with a standalone ID card. Foreign nationals, including those from inside the EU, will also have to register. Parliament will then vote before it becomes compulsory to have an ID card but not to carry it at all times. It may then become compulsory to have the card to access various public services.

FOREIGN POLICY THREATENS OUR FREEDOM

There are four important pending U.S. terrorism legal cases, which separately and together present ominous and dangerous threats to the freedom of the American people. These four cases provide good examples of how the U.S. government’s pro-empire and pro-interventionist foreign policy that holds our nation in its grip ultimately redounds to the detriment of the American people. That foreign policy policy is not only threatening the lives of the American people with the possibility of terrorist “blowback”, – and not only threatening the lives of U.S. military personnel and the people of Iraq – and not only gradually corrupting the inner spirit of the American people– and not only threatening the economic well-being of our country with out-of-control federal spending – it is also threatening the freedom of the American people through major federal assaults on civil liberties, as the Jose Padilla, Ali Saleh Kahlah al-Marri, Ahmed Omar Abu Ali, and Zacarias Moussaoui cases demonstrate.

I DON’T PLEDGE ALLEGIANCE

I wish to propose a salubrious anarchy, a deliberate renunciation of fealty to country, society, and government, an assertion of independence from folly and moral decay. Permit me to offer a taxing political idea: When a society ceases to be worthy of support, it is reasonable to withdraw support. The time, I submit, has come.

Here I do not mean to urge crime or counsel treason, but to suggest quiet renunciation of the national disaster. Ask yourself how much of American life pleases you. The schools are run by fools to manufacture fools, government grows more intrusive by the day, and culture is determined by the triple sewers of New York, Hollywood, and Washington. Freedom withers, not only in the ominous encroachment of police powers, but in the loss of control over schools, church, hiring, daily life. We are no longer our own. The United States is not the country we are told it is, and not the country it was.

How to escape? The beginning, and the most difficult, is a moral distancing. Those who care must disentangle themselves from the cobweb loyalties and factitious duties with which we have been unconsciously encumbered. From childhood we learn patriotism, that one must vote, that if our way is not perfect it is at least best, that we must support anything however bad because we were were born in a particular place. Let me suggest that one owes loyalty to one’s family and friends, to common decency, and to nothing else. Render under Caesar what you must, keep what you can, and swear allegiance to nothing. Here I do not mean just the government, but the zeitgeist, the miasmic stench of trashy culture, the desperate consumerism, the entire psychic odor of a society in decomposition.

Begin with things so fundamental as seldom to be reflected upon. For example, do not imagine that you are under an obligation to marry, or to have children, or to raise them as the government requires. Procreate if you choose, but only if you genuinely want to procreate. It is not your job to perpetuate a civilization that is daily less deserving of perpetuation. But, never let the government have your children. Once they are had, your responsibility is to them. Teach them at home. Better yet, go abroad. Other countries do not force you to pay for an academically retrograde moral cesspool and then to drown your children in it. You might be astonished to know Argentina, for example.

Do not tie yourself to … anything. The price of freedom is poverty: freedom grows as your needs diminish. Less apothegmatically, if you believe that you need a vast house in a prestigious suburb, then you will need a lucrative job to pay for it. Having tied your psychic contentment to such an abode you will also believe that you need impressive cars and will therefore be tied to a retirement system and, bingo, the door of the trap falls. This, we are told, is the American Dream. I fear it has become so.

Finally, work the system. The government, if you let it, will take roughly half of your income, give much of it to useless bureaucrats, much to various forms of welfare, use much to bomb countries you may have no desire to bomb, and much to force upon you services, such as horrible schools, that you do not want. The central question regarding government is whether you can take more from it than it takes from you. It is much better to receive than to give. Live cheap, work only as much as you like, enjoy life, and keep your taxes down.

You will still read of the rot and running sores of a declining culture, but it will bother you less. These things are your problem only to the extent that you feel yourself to be part of the society that produces them. Do not fight the government, as it will win. Do not try to reform society, because you cannot. Laugh at it. Live well. Read much.

FREEDOM TO CHOOSE FLAT TAX COULD OVERCOME POLITICAL OPPOSITION

All over the world, from Estonia, to Albania, to Russia to Hong Kong, flat taxes are in vogue. The flat tax is being instituted to enhance economic growth, increase tax revenues and make tax codes fairer. Why not in the U.S. After all, is the world not topsy-turvy when Moscow, the onetime center of socialism, has a 13% top income tax rate compared to 35% in America, the land of the free? Former Sens. Connie Mack of Florida and John Breaux of Louisiana are trying to grapple with the issue of how to make tax reform politically palatable, as they enter their final stage of deliberations as chairmen of President Bush’s federal tax reform panel. I would suggest one politically viable way to overcome the special interest opposition to tax reform is adoption of a Freedom to Choose Flat Tax.

The potential economic gains are gigantic for American workers and firms if the tax panel adopts this approach. For example, if the $200 billion a year compliance costs attributable to the tax code could be cut in half, the financial windfall to the nation would be larger than the value of all goods and services produced by every worker and business in the states of Maine, Vermont and New Hampshire combined. On top of that, Harvard University economist Dale Jorgenson estimated several years ago that if replacing the U.S. tax code with some kind of flat and simple consumption tax would increase economic growth by about 10%.

The idea behind the Freedom to Choose Flat tax is an optional postcard flat tax, offered to tax filers as an alternative to, rather than a replacement of, the current tax code. What I propose is an Alternative Maximum Tax of 20%. The current tax laws require millions of Americans to fill out their tax forms then compute the Alternative Minimum Tax and pay the greater of the two. Under this Freedom to Choose Flat Tax, the filer would be allowed to pay the lesser of the two tax liabilities. In fact, this idea simultaneously solves the middle-class AMT problem by simply lowering the tax rate to 20% on all income and letting Americans opt into that system if they so wish.

Wage and business income would be taxed at a maximum 20 percent. The corporate tax rate would fall to 20%, but all tax credits would end. Business capital purchases would be expensed, thus eliminating complicated depreciation schedules. Capital income – from capital gains, dividends, and estates -- would also be taxed at 20%. This plan would accomplish each major goal of tax reform.

DESTROYING COMPANIES AND COUNTRIES

The U.S. government gave the slave trade a boost by offering money for Al Qaida and Taliban fighters. Afghan and Pakistani war lords simply rounded up people who looked Arab or foreign and sold them to the Americans as captured fighters. The “fighters” apparently included relief workers, refugees, and Arab businessmen. The tribunals looking into the classification of Guantánamo prisoners as “enemy combatants” have uncovered numerous examples of hapless victims of a naïve U.S. government too flush with money.

The Bush administration, of course, denies that it bought its detainees, as it denies everything. However, on May 31, 2005, Michelle Faul of the Associated Press reported that in March, 2002, leaflets and broadcasts from helicopters in Afghanistan enticed Afghans to “Hand over the Arabs and feed your families for a lifetime.” One leaflet said, “You can receive millions of dollars. This is enough to take care of your family, your village, your tribe for the rest of your life, pay for livestock and doctors and school books and housing for all your people.”

Najeeb al-Nauimi, a former Qatar justice minister leads a group of lawyers representing 100 detainees who were sold to the naïve Americans. He says a consortium of wealthy Arabs are buying back fellow citizens kidnapped by Pakistani gangs before they can be sold to the Americans. More is going on here than merely unintended consequences of a hairbrained policy. The Bush administration has proven itself to be utterly irresponsible in the use of power. And it keeps demanding more power, including the suspension of our civil liberties in order to better fight “terrorism”.

Aside from September 11, an event of several years ago, the only terrorism the U.S. has experienced is the terrorism Bush created by invading Iraq. Why are we worried about Osama bin Laden when the moronic Bush administration is so adept at creating terrorism? Notice the pattern. Bush creates terrorism and then suspends our civil liberties in the name of his war on terror. The real terror Americans experience comes from their own government. Indeed, consider the terror the accounting firm, Arthur Anderson, and its 85,000 worldwide employees experienced as a result of the gestapo tactics of federal prosecutors …

BASKING IN NIRVANA: THE ASSET MANIA

I am in my final year of a forty-year banking career. I have worked in large regional banks and small community banks. I have witnessed economic and financial markets ebb and flow over the four decades of my active life in banking. During all of this time I have been an interested student of the workings of markets and economies. My experience has taught me to understand that a major determinant of economic and market trends is the human herding impulse. The herding impulse is largely an emotional response to act and behave like everyone else. It is an unconscious default decision to be part of the herd. We human animals take many actions which are not derived from our rational sides. To understand the irrational in human behavior, notice how mobs of people participate in actions which most people would not undertake individually. Most participants in economies and markets have limited financial knowledge and so defer to the decisions of the group. The impulse to imitate the group becomes increasingly insistent the longer a trend continues.

The herding tendency strengthened in the stock markets in the later 1990s as stock prices, especially of tech stocks, began their steep ascents. Some market participants offered increasingly bizarre justifications for prices which were well beyond norms when measured against earnings or, for that matter, against sales. In time, many market players became overextended by committing a large portion of their total assets to the market. Eventually, small changes in market supply/demand relationships, such as a diminution of buying resulting from the existing heavy commitments, tipped the impulse in the other direction. The herding instinct then unraveled the previous price increases in a hurry.

Following the devastation of stock values during 2000 to 2002, the mania was transferred by our Federal Reserve and willing market participants to the property markets. The Fed’s exceedingly low interest rates had the effects of making it unwise to save while providing an incentive to borrow. And borrow we did! I have seen these historically extreme market activities manifested among community banks. It is accepted and commonplace for community banks to make loans of 95% to 100%, and sometimes more, of market value. The Federal Reserve’s extremely easy money policy following the stock market decline has fostered these market activities and mitigated their effects. An appraiser in the market where our bank is located recently told me she has been asked several times to appraise a property at a specific value in order to be adequate to cover the loan request. A “market value” derived under such duress then confirms a spurious sale price which, in turn, becomes a “comparable” for the next appraisal. Credit practices, which would have astonished prudent lenders fifteen years ago, have become commonplace in small town America.

Today people are certain real estate will continue to appreciate. That is why they foresee little risk in property loans at 100% of cost. I believe they are mistaken, terribly mistaken. The possible washout from this herd inspired mania in properties will reverberate for many years. The U.S. economy will be exposed for what it is, a debt driven illusion of strength. Unfortunately, consumers will be financially damaged. Maybe I will be retiring in time to avoid the carnage in the consumer debt market, which seems likely to result from history’s latest rendition of an asset mania.

FIRST THE USSR, THEN THE EU, THEN THE U.S.

Students of American history know that had the French not arrived in time to support the colonials in their struggle to secede from the British Empire, modern investors might now be concerned with how the American pound was faring against the euro. While the French were motivated primarily by the opportunity to have another whack at the British, it is nonetheless true that Americans owed the outcome of the so-called “Revolutionary War” to France’s intervention.

There is a more recent indebtedness to France that most Americans lack the decency to acknowledge: the refusal of Chirac’s regime to join forces with George W. Bush’s unprovoked aggression against Iraq, the first step in a neocon-inspired effort to get the world to prostrate itself at the feet of American emperors. By refusing to join with such lap dogs as Tony Blair – eager to roll over in exchange for any morsel of recognition from the grand imperator – the French became a symbol to other nations of the importance of pursuing a course of principled integrity in dealing with others.

Americans are not the only people indebted to a French obstinacy at being stampeded into a destructive herd frenzy. In voting to reject the constitution of the EU, France may have dealt a crushing blow to the efforts of the political establishment to create another monolithic state system, a result that will doubtless benefit the people of Europe. Dutch opponents of the EU, perhaps taking heart from the French, amassed a nearly 62% “nee” vote. The German parliament – not the voters – had earlier ratified the EU constitution, a reflection, perhaps, of a continuing desire for centralized power that has characterized that nation since at least 1870.

I have long been of the opinion that vertically-structured power systems – such as that implicit in the nation-state – are bound to collapse, taking with them the civilized societies upon which they feed. I have been amazed, however, at how rapidly this disintegrative process has progressed. The demise of the Soviet Union was the first major victim of the arrogance of centrally-directed authority. I also believe – as the subtitle to this continuing E-book suggests – that the United States will likewise succumb to the fatal virus of coercive bigness. I have had the same confidence that the European Union would be unable to sustain itself, but I did not suspect it would be delivered stillborn.

The French and the Dutch people – though not their political leaders – may well have saved European societies from having fastened around their necks the kind of vertically-structured, repressive, and violent super-state system now in retreat before the quiet forces of chaos and complexity. A Europe of independent but cooperative Luxembourgs, Liechtensteins, Switzerlands, and Hollands will be far more productive and peaceful than would be a Europe organized on the models of hegemony that tyrannized and rampaged that continent in the past. Europeans, like the rest of the world, will learn to organize themselves along horizontal lines of networked relationships, wherein “tops” and “bottoms” no longer have meaning. The vertical power structures will continue to waste away, the shrill voices of their occupants becoming more and more distant from the lives of ordinary people.