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THE CONSCIOUSNESS OF AN AMERICAN EXPATRIATE
Over the years, many people have asked me why I expatriated. Critics of course will sarcastically ask, “Were you a failure in your previous country, and that is why you left?” Or, similarly, critics may pass the comment that an expatriate is some sort of malcontent or a selfish tax-dodger. Regardless if you are intrigued or just a bit curious as to why someone may elect to relocate to another country, there are some commonalities among most people that do decide to leave and expatriate.
To start off, it should be made clear that we are talking about middle class and professional people that have decided to migrate someplace else. Included in this group also are what I like to call the self-made man or woman – education alone is not the common thread. But they do have something in common in terms of income levels AND the fact that they are independent spirited or entrepreneurial minded. In addition, it is a case of discussing people, like myself, that were living in a so-called wealthy and modern democracy and for some reason, felt like something was going wrong, or shall we say, headed in the wrong direction. So, to be more precise, the conversation surrounds individual citizens from the U.S., Canada, Europe, Australia, and so on that WERE (and maybe some still are) living in these respective places – who are a group of people that now want OUT. The question is not why are the poor people still trying to chase the so-called dream of living in a modern and wealthy country, but rather why are the citizens of the modern and wealthy country skipping town? Are these people crazy? Are they selfish? Are they simply concerned about the future?
I started to work in the financial services industry, on Wall Street in New York City to be exact, when I was a fairly young man. I was a Barry Goldwater Republican, living in the comfortable ranks of the middle class, at least so I was told in terms of where I was classified by my income, according to the U.S. government tax authorities. To be sure, many people had it better than me, but then again, I had it better than a large number of other people also – so why complain? I have discovered that expatriates are not born but rather they are created over time. …Link here.
DEFENDING THE BAHAMIAN NATION
While we do not know whether a majority of the Bahamian people have had their fill of promises and proposed reviews and surveys, we suspect that the day is not far off when they will say “enough”. Take for example, the situation where the government itself admits its gross neglect of the Royal Bahamas Defense Force and the new promises about what will be done in the “near future”.
Governments the world over recognize that they have a duty to protect their citizenry from hurt and harm. On the one hand, there is the duty to protect the citizenry from external threat, regardless the source. And on the other, governments have a duty to maintain social harmony and to provide the enabling environment in which business, commerce and family life can thrive. When governments fail in these two areas, state sovereignty is undermined. In this regard, it is interesting to note that this is happening throughout the Caribbean, as one government after the other is obliged to confess that domestic and international crime is in the saddle.
In a very real sense, the evidence is high and mounting to support the strong claim that this nation’s integrity and coherence has already been undermined. The word is that those undocumented migrants who have taken and continue to take advantage of this nation’s openness have left this nation’s integrity in shreds. Into the breach enters the USA with a so-called Third Border Initiative. This help from the great neighbor to the north brings with it a price tag marked “lost of sovereignty”. The defense of The Bahamas has – to an alarming degree – been left up to the good mercies and self-interest of the U.S. This is just not good enough. The Bahamian people deserve better and should by whatever means necessary, receive better as regards the defense of the Bahamian Nation.Link here.
Embassy warns American residents in Bahamas.
In light of the recent crimes that have occurred during the past month, the American embassy is issuing a cautionary warning to its citizens living in The Bahamas. According to Michael Taylor, Public Affairs Officer at the American Embassy, a “warden’s message” was sent in the form of an e-mail to the American community. “We have sent out what is called a warden’s message this morning,” said Mr Taylor. “It’s just a reminder to take the precautions that are listed in the message but it just goes out to American citizens here in The Bahamas, who wanted to be a part of our regular mailing list.” He added that this type of message is “very different” from a travel advisory because it is only issued to the American community living there.
The message claimed that during the last month, there has been an increase in the number of robberies involving the use of weapons. “These robberies occurred at restaurants, gas stations, hotels, supermarkets, private residences and in the airport parking lot,” it warned. “All of the above information underscores the need to be personally aware of any threat. Persons should always be vigilant about their surroundings and avoid predictability.”
The e-mail then went on to list a number of precautionary tips that Americans should consider. These warnings included paying close attention to any unusual activity that may have occurred since leaving home, looking for parking spots that are lighted and observable by shops, and avoiding unlit areas where persons could hide and ambush. According to Mr. Taylor, the cautioning is just a repeat of previous warnings given by local law enforcement.Link here.
BAHAMAS OFF FATF MONITORED LIST
The Bahamas must strengthen the regime it has in place for regulation of its vital financial services sector and not become complacent now that the Financial Action Task Force (FATF) has discontinued its monitoring of the country, according to Attorney General and Minister of Education Alfred Sears. Minister Sears reported that after 5 years of monitoring The Bahamas, the FATF announced at its plenary meeting in Paris, France earlier in the day that it would remove The Bahamas from the list of countries which it would continue to monitor. In June of 2000, the FATF listed The Bahamas among 14 other offshore financial centers which it identified as Non-Cooperative Countries and Territories. The country subsequently implemented a series of legislative and institutional measures to improve the regulatory regime and was removed from that list in 2001, however, the FATF continued to monitor the jurisdiction until this month.
Describing the FATF’s decision to discontinue monitoring of The Bahamas as “extremely important”, Minister Maynard-Gibson said the development is expected to produce significant benefits for the country in general and the financial services sector in particular. She also expressed approval of the way in which the present administration dealt with the blacklisting experience.
Minister Mitchell, meanwhile, commended the efforts of local authorities and Bahamian diplomats posted overseas for the work they did in helping to secure The Bahamas’ removal from the list of monitored countries. He was critical, however, of the process by which The Bahamas initially came to be blacklisted, stating, “As Foreign Minister I have spoken to the United Nations about three or four times about these un-elected bodies that have been imposing these un-funded mandates on The Bahamas and I think it has been most unfair, but that’s life.” Echoing Minister Mitchell’s sentiments, Minister Sears also supported the call for a more representative body, which would operate under the auspices of the UN to deal with issues related to money laundering.Link here.
FATF removes Nauru from money laundering blacklist, keeps Myanmar and Nigeria.
The intergovernmental FATF against money laundering said it has removed Nauru from its blacklist as it shut down an offshore financial center that was causing concern. However, it has kept Myanmar and Nigeria on the list as their financial system reforms to date have not gone far enough.Link here.
GIBRALTAR IS A NATION UNDER COLONIAL RULE, SAYS BOSSANO
UN address by the leader of the opposition, Joe Bossano
Some weeks ago Spain’s Foreign Affairs Minister, Sr. Moratinos, told the General Assembly he wanted to see Gibraltar’s decolonization, finally resolved.
That, coming from Spain, is a bit rich.
Gibraltar is a nation under colonial rule primarily because, for 40 years Spain has done everything in its power here, at other international forums and bilaterally with UK, to impede and frustrate our progress towards decolonization. …Link here.
Concessions to Spain may be needed, says Gibraltar’s Chief Minister.
Britain, Spain and Gibraltar are very close to reaching an agreement over the airport at Gibraltar and concessions will have to be given to Spain, “but nothing will impact on exclusive British sovereignty, jurisdiction or control over the airport,” said Gibraltar’s Chief Minister Peter Caruana last week. Tripartite talks on a series of issues are being held by the three sides.Link here.
Uproar in Gibraltar against “possible concessions to Spain”.
Out of the blue, the chief minister Peter Caruana has said, “There has got to be concessions to Spain.” It was the first time he had spoken of making concessions to Spain. The House of Assembly, Gibraltar’s parliament, had been meeting the same day. He chose not to give the details there, to the elected representatives of the people, and instead chose to be interviewed on GBC. His thinking is that the concessions will not impact on exclusive British sovereignty, Jurisdiction or control of the airport. Who is the judge of what impacts on exclusive British sovereignty, jurisdiction or control of the airport?
At the time of the 1987 airport deal between Britain and Spain, the Foreign Office defended the line that the deal did not impinge on British sovereignty. All successive Gibraltar governments, including Mr. Caruana’s, have disputed the UK assertion and have claimed that sovereignty was affected. The deal was rejected by Gibraltar. What kind of concessions is Mr Caruana prepared to make to Spain? If Spanish interests are given what Mr. Caruana sees fit, then there would be joint administration and running of the airport. This is one example of the concessions he means. Are there other concessions he is prepared to make to Spain? If so, what are they?
The airport is not like any other commercial operation. It is a vital and essential asset for Gibraltar. Mr. Caruana says he is “hugely enthusiastic” about the deal. But is the rest of Gibraltar? The only way to find out is for the deal to be made public, and for a referendum to decide what the people want. It is the only way.Link here.
PANAMA REJECTS JUNGLE HIGHWAY DUE TO ECOLOGICAL, CULTURE CONCERNS
Panamanian officials are resisting pressure to build a road through a pristine wilderness straddling North and South America. Indigenous leaders and environmentalists are pleased, saying a road through the Darién Gap, so named because of the gap it represents in the Pan-American Highway, would threaten biodiversity in the region and open it up to increased violence and drug trafficking. But they stress that Panama’s rejection is only guaranteed through 2009, the end of the current Panamanian president’s 5-year term.
During a recent meeting in Panama of the Association of Caribbean States (ACS), Colombian President Alvaro Uribe publicly called for construction of a road to connect his nation with Panamanian and North American markets. “Sooner or later the road must be built,” Uribe said. “We want it built in this generation so that we can travel the road and not have to see it from heaven.” Uribe says a road would mitigate the economic ravages of a decades-long conflict in his country by allowing Colombian goods to move north at less cost. “I am hoping public opinion in Panama can be changed,” Uribe said, referring to polls that show Panamanians are solidly against the idea.Link here.
LET THE FREE MARKET BE FREE
The Internet has revolutionized the marketplace by, among other things, eliminating middlemen. Internet car-buying services let you shop for prices and options without leaving home. “For sale by owner” websites show you houses for sale. Uh oh. Can’t have that, can we? In a truly free market, businesses cannot kill competition, because they cannot use force. Unfortunately, in our “mixed economy”, they can get their friends in politics to use force to stifle competition.
Adam Smith saw it all the way back in 1776. In The Wealth of Nations, he wrote, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” He advised that any legislation such a group proposed “ought always to be listened to with great precaution.” Detroit and its dealers wield enough influence in state capitals to make direct sales of cars on the Internet illegal everywhere but Alaska. Every year the automotive industry spends millions of dollars fighting government regulation, but when it can use government for its own ends, it does.
When I confronted David Hyatt, spokesman for the National Automobile Dealers’ Association, about that, he said, “If the manufacturer sells directly over the Internet, it leaves the dealer in an unfair competitive situation.”
“So what?” I asked. “The Internet put lots of middlemen out of business. Consumers like it. I don’t want to buy from the dealership!” Hyatt answered, “There is a very healthy system in place.” Healthy for his car dealers, anyway. Less healthy for consumers.Link here.
RUSSIAN OLIGARCHS FLOCK TO BRITAIN WITH BILLIONS TO SPEND AND A TASTE FOR LUXURY
They think nothing of spending £40 million on a house or £250,000 on a mini-break – and Britain is the place they want to do it. Russia has an estimated 33 dollar billionaires and 88,000 millionaires, many of whom now call London – or Moscow2 as it is known among their select group – home. Lured by 3-hour flights, relatively lax tax rules and Bond Street shops, oligarchs and their families are following in the footsteps of the Chelsea football club owner, Roman Abramovich, in setting up home in London. Forbes magazine recently nicknamed the capital “Londongrad” because of its burgeoning Russian population.
There are an estimated 300,000 Russians living in Britain, and while they may not all have the £7 billion spending power of Mr. Abramovich, a substantial proportion still have a lot of cash to flash. Such is the influence of the oligarchs that this week the jewelry designer Theo Fennell attributed a rise in profits to its burgeoning Russian client base. Sales have risen by 4.5% in the past six months, at a time when high-street stores are experiencing tough trading conditions. Customers are keen to snap up the iconic outsize crosses, heart pendants and silverware which range in price, according to a spokeswoman, “from £1,000 to as many noughts as you want to add.” The faltering housing market is also being buoyed by sales to Russians for whom money is no object. Mr. Abramovich bought a five-story Georgian townhouse in Belgravia for £11 million in June, while fellow oligarch Leonard Blavatnik snapped up a house in Kensington Palace Gardens for £41 million. Estate agents estimate that Russians make up a third of the buyers at the multimillion-pound top end of the London housing scene.
A reason for Russia’s new-found love affair with Britain is that it can prove to be a rather effective tax haven. While other European countries demand that residents pay tax on their worldwide income and capital gains, there is a UK loophole which allows people to set up offshore accounts in a way that avoids this duty. It means that oligarchs can sell their valuable stocks in Russia’s industry and use the proceeds to buy a house without paying tax on the gain. Between 1998 and 2004, more than $100 billion (£57 billion) flowed out of Russia, according to Forbes magazine. A substantial chunk of that is now being spent in the boutiques and estate agents of Britain.Link here.
CORRUPTION STILL RAMPANT IN 70 COUNTRIES, SAYS CORRUPTION PERCEPTIONS INDEX 2005
More than two-thirds of the 159 nations surveyed in Transparency International’s 2005 Corruption Perceptions Index (CPI) scored less than 5 out of a clean score of 10, indicating serious levels of corruption in a majority of the countries surveyed. The 2005 Index bears witness to the double burden of poverty and corruption borne by the world’s least developed countries. “Corruption is a major cause of poverty as well as a barrier to overcoming it,” said TI Chairman Peter Eigen. “The two scourges feed off each other, locking their populations in a cycle of misery. Corruption must be vigorously addressed if aid is to make a real difference in freeing people from poverty.”
Despite progress on many fronts, including the imminent entry into force of the UN Convention against Corruption, 70 countries – nearly half of those included in the Index - scored less than 3 on the CPI, indicating a severe corruption problem. Among the countries included in the Index, corruption is perceived as most rampant in Chad, Bangladesh, Turkmenistan, Myanmar and Haiti – also among the poorest countries in the world.
Extensive research shows that foreign investment is lower in countries perceived to be corrupt, which further thwarts their chance to prosper. When countries improve governance and reduce corruption, they reap a “development dividend” that, according to the World Bank Institute, can include improved child mortality rates, higher per capita income and greater literacy. 19 of the world’s poorest countries have been granted debt service relief under the Heavily Indebted Poor Countries initiative, testifying to their economic reform achievements. Not one of these countries, however, scored above 4 on the CPI, indicating serious to severe levels of corruption. These countries still face the grave risk that money freed from debt payments now entering national budgets will be forfeited to greed, waste or mismanagement.Link here.
CRIME WAVE IN CAYMANS RAISES CONCERNS
So far in the Island Cayman, our new Government has budgeted an unprecedented amount of money to fight crime. I recently read about the feeling the NYPD had regarding the Feds – that they let them down on 9/11. Cayman too has recently felt let down not only by other countries but by the mother country herself, Britain. However, Caymanians have a strong history of resiliency and that is shining through. This hasn’t been the first time we have felt alone. The next was the wider casting of the recruitment net the New York police took and with specialist backgrounds. They looked for persons with “military, intelligence and diplomatic backgrounds, with deep knowledge of international terrorist organizations.” They have worked for example with cyber-intelligence specialists to help its people learn how to navigate jihadist chat rooms.
Do our police know how the criminal element that is currently terrorizing our Island gets their information on us? How do they communicate with each other? What do we know? Have they been trained to understand the backgrounds of these perps? What units of measurement do we have in place to know how we are accomplishing the task? While we await a new Commissioner ourselves, more violent crimes continue. The sudden attack on a Sunday afternoon into a family home is evident. The attempted attack on a local Government official that ended up terrorizing women and children again in a private home. Who are these criminals and why are they committing these heinous acts in broad daylight?
The kids seem to be learning. Recent police reports state 14 and 16 year old perps. It does not take long for this spiral down to become a toilet flushing of our country. We need the “A” team and we need them now. Even though the people fighting crime now have to be dedicated to work under some of the conditions we have heard about it is obviously not enough. While visas are a start as they relate to high-risk countries, I doubt a visa program is much comfort to the recent victims of violent crimes.Link here.
SOUTH AFRICA SAYS PLANS GRADUAL END TO FOREX CONTROLS
South Africa’s National Treasury said it would stick to its policy of gradually lifting the country’s remaining exchange controls, but in some years it would act more aggressively than in others. “It is very important that on exchange controls you stay the course, we have said that we will continue with a process of gradual liberalization,” said Treasury director-general Lesetja Kganyago. South Africa has gradually relaxed exchange controls since the country’s first all-race election in 1994, but has been reluctant to move too quickly in the past due to volatility in the rand currency. It has repeatedly stressed that the end goal is to scrap all controls and to replace them with prudential limits. Kganyago said it was crucial that South Africa demonstrated to the markets that it fully implemented its policy decisions.
The Treasury announced significant forex control relaxation in its Medium Term Budget Policy Statement last year, allowing companies to invest fully abroad and to keep dividends offshore. Previously corporations could only invest 1 billion rand offshore and 2 billion rand in Africa. It also gave permission to individuals wanting to invest in foreign firms listed on the local bourses. Kganyago dismissed calls for exchange controls to be abolished quickly to help weaken a rand that gained sharply against the dollar over a three year bull run.Link here.
U.S., PANAMA HAVE VERY DIFFERENT CANAL EXPANSION PRICETAGS
The most vocal skeptics about a Panama Canal expansion project are most certainly the Western Watershed farmers who think that they may be forced off the land by such a work, and these families have the support of part of the Catholic Church, leftist organizations and environmentalist groups. But the critics that at the end of the day pose the most danger for those who would have such a project approved by the voters in a referendum come from business and the professions, the most prominent individual in this camp being former deputy canal administrator Fernando Manfredo. The latter group argues that the construction of a third set of locks and the supporting infrastructure they would need would be extremely expensive, that it is not possible to predict the world shipping industry over the next 50 years, and that there is a limit to how far the canal can increase its tolls, factors which combine to make it very likely that any canal expansion would not be able to be amortized via ship tolls and thus would have to be subsidized by the Panamanian people.
Defenders of a canal expansion respond to critics in the business and professional fields by making three main points: 1.) The project would not be as expensive as the skeptics suggest; 2.) The injection of a huge amount of money into the Panamanian economy for a public work of this size would ripple right through the national economy, prompting new development in fields that may be only very remotely connected to the canal; and 3.) If Panama does not expand the canal and the waterway becomes obsolete then much of the rest of the nation’s economy that exists because of the canal with wither away.
At a recent hearing before the U.S. Senate Foreign Relations Committee, Undersecretary of Defense for the Western Hemisphere Roger Pardo-Maurer buttressed the skeptics’ arguments by setting the price range of the work at between $16 and $25 billion. The Panama Canal Authority (ACP), which has been waging a prolonged and sometimes ferocious publicity campaign in favor of an expansion plan whose details it will not reveal, has through its spokespeople and defenders before various business audiences put the price of canal expansion at between $6 and $8 billion. Manfredo has been basing his arguments on a presumed $10 billion pricetag.
Part of the debate in the Foreign Relations Committee touched upon a favorite topic of the American far right, the allegation that the Peoples Republic of China runs the Panama Canal – a lie that has been disseminated by cult leader Reverend Sun Myung Moon through the communications media he owns (most notably the Washington Times), anti-feminist leader Phyllis Schalfly and her Eagle Forum, the John Birch Society and such GOP members of Congress as Senator Trent Lott and Representative Dana Rohrabacher, to the extent that many Americans believe it. Without spinning wild conspiracy theories or stating any clear falsehoods about China’s role in Panama, Pardo-Maurer raised the possibility of Chinese financing for the canal expansion work.Link here.
Helping the hidden refugees in Panama.
For almost a decade, Matilde had lived on the run – first within her own country, moving from one Colombian city to the next – then across the border in Panama. In all that time, she had never thought of herself as a refugee, only as a woman who was trying to survive and save her children’s lives. A former city councillor in northern Colombia, she had refused to make deals with the illegal armed groups operating in the region. This was enough to make her a target.
By July 2003, Matilde had had enough. With the help of friends, she bought a ticket for Panama. Despite being a victim of years of persecution, Matilde did not think of asking for the protection to which refugees are entitled. Like many Colombian refugees in neighboring countries, she saw herself as an illegal migrant and had no idea of her rights. Life took a turn for the better when, through a chance meeting in a restaurant where she worked, Matilde was put in touch with the UN refugee agency’s office in Panama City, where staff helped her navigate the lengthy and complex procedure that led to her recognition as a refugee.
Matilde is no longer in hiding. Now that she has her refugee ID card and work permit, she has obtained a micro-credit loan of $450 from UNHCR and started a catering service for small businesses. She is doing well – so well that at long last her number one dream has come true. Last month, after two years of waiting, she was reunited with her 8-year old daughter. At Panama City airport, there were tears of joy when mother and daughter were finally able to embrace each other again.Link here.
HONG KONG’S DEMOCRACY PLAN DRAWS CRITICISM FROM DEMOCRATS
The Hong Kong government released its plan to pursue somewhat greater democracy, but the plan was quickly assailed by democrats, who called it inadequate and vowed to block it in the legislature. The strong and immediate criticism by democrats, who announced that they would organize a protest march in early December, represented a shift from the cautious welcome that some pro-democracy politicians had given portions of the plan that leaked early. Their rebuff to the government reflected the difficulty that democracy advocates face in supporting anything less than immediate general elections with full participation by all voters.
“The proposal is an insult to all people who want to have democracy as early as possible,” said Martin Lee, the founding chairman of the Democratic Party. “If we support the government, it would be a complete betrayal to our voters.” Ma Lik, the chairman of the pro-Beijing Democratic Alliance for the Betterment and Progress of Hong Kong, better known as the D.A.B., said that his party would support the legislation despite having reservations about it. But he questioned whether it would ever become law. “I’m afraid it will not pass if there is no compromise between the government and the democrats,” he said.Link here.
China’s economy defies fears of slowdown.
Investment and net exports helped China’s economy grow at an annualised rate of 9.4% from July to September, the ninth successive quarter in which output has risen by more than 9%, according to Chinese government figures. The sustained growth means expectations of a slowdown in the Chinese economy are evaporating, with the 3rd-quarter GDP figure matching recent independent assessments of strengthening domestic demand, the prime driver of growth in recent years.
Fixed asset investment increased by 26.1% in the first three quarters, down slightly from the 27.7% recorded in the same period in 2004, in spite of a campaign to squeeze lending to sectors including real estate and steel. In spite of official rhetoric about the need to damp property investment, Zheng Jingping, from the bureau of statistics, said curbs were aimed only at speculation “in some cities”. The data show a slight drop in property investment but any slack in domestic demand continues to be picked up by spending in “bottleneck” sectors such as coal, rail and power.Link here. China’s tax revenues record growth in excess of 20% for first 3 quarters – link.
HEDGE FUNDS CONTINUE TO FLOCK TO ASIA
The number of new hedge funds in Asia increased four-fold this year as U.S.-based firms such as Citadel Management Inc. and Tremont Capital Management Inc. took a larger share of the region’s $85 billion market, the fastest growing in the world. Data compiled by the Singapore-based research firm Eurekahedge has shown that 60 new hedge funds were started in the region in the first nine months of 2005 – most of these in Hong Kong – compared to just 15 new funds throughout the whole of 2004.
“The economies are the most robust and the need for capital is great,” observed Donald Sussman, founder of Paloma Partners Management Co, a $3.5 billion fund based in Connecticut which has a team of traders in Hong Kong. Research published in the July edition of AsiaHedge revealed that a record $3.5 billion was raised by start-up hedge funds in Asia during the first half of the year. In the corresponding period of 2004, new hedge funds raised some $1.7 billion in assets. According to AsiaHedge, the bulk of assets raised by new hedge funds in Asia traditionally occur in the second half of the year, meaning that 2005 as a whole is likely to be another record year for growth in the region’s hedge fund industry.Link here.
CANADIAN AMBASSADOR MCKENNA PUSHES U.S. TO DROP PASSPORT PLAN
Ambassador Frank McKenna says a U.S. plan to require passports of Canadians who cross the border is unaffordable for many and could create a false sense of security. McKenna, who is ratcheting up the pressure on U.S. officials to drop the idea, said the issue will figure prominently when Secretary of State Condoleezza Rice visits Ottawa next week.
In a roundtable with American journalists, mostly from border states, McKenna said there are serious questions about whether passports will actually help anti-terrorism efforts. “And if we don’t get this right, it will be a real inhibitor to the free flow of travel,” said McKenna, who predicts it will cost Canada nearly $2 billion, mostly in lost tourism revenue. Traveling Americans would also need passports and it is unlikely either country could even provide the necessary documents by the deadline on Dec. 31, 2007, he said. Only about 20% of Americans currently have a passport. About twice as many Canadians have one.
“We would have grave questions as to whether you could or not,” said McKenna, who has been Canada’s ambassador to the United States since January. “We have no evidence yet that either side of the border is prepared for that challenge.” Canadian officials, who have opposed the idea since a new U.S. rule was announced in April, were heartened when President George W. Bush publicly questioned whether it was necessary.Link here.
STEVE FORBES’S CURE FOR THE FEDERAL TAX CODE: SLAY IT AND START OVER
Anyone unfamiliar with Steve Forbes’s prescription for reforming the IRS – replace it with a postcard – might want to start the initiation process with his latest book. In Flat Tax Revolution, the two-time Republican presidential candidate and CEO of Forbes Inc., lays out in concise, readable language how different life would be with a single, low tax rate on all income.
For corporations, the flat tax would mean hundreds of millions of dollars saved each year on tax compliance. Individuals, meanwhile, would get an across-the-board tax cut, increasing their incentives to work and form businesses. And for the government – yes, even the federal government benefits – there would be additional tax revenue from stronger economic growth and reduced incentives for tax avoidance.
So how come everyone is not on board? Because the tax code is Washington’s way of rewarding a few, favored constituencies at the expense of the many and retaining its hold on power. And that is why, short of a huge grass-roots swell of support, the flat-tax reform that is sweeping Eastern Europe is probably still a pipe dream in the U.S.
Forbes’s plan is simple. All income would be taxed once, and only once, as close to the source as possible. Forbes uses a 17% rate. Under a flat-tax regime, decisions would be made for economic reasons. There would be no tax shelters whose sole function is tax avoidance. (Before Enron crossed the line, it was just trying to take advantage of what the system offered.) A flat tax would be “too transparent, too simple, to hide tax liabilities,” Forbes says.Link here.
Bush’s tax panel opposes replacing income taxes with a national sales tax.
President Bush’s tax commission has rejected the idea of a national sales tax and has voiced strong misgivings over European-style consumption taxes, drawing complaints of timidity from critics who wanted the panel to scrap the income tax. “Apparently they have dismissed out of hand the prospect of fundamental reform,” said Leo Linbeck, chairman and chief executive officer of Americans for Fair Taxation, a group advocating a federal retail sales tax. “That’s disappointing to me, as you might expect.” The President’s Advisory Panel on Federal Tax Reform will start wrapping up its work this week on recommendations for making the federal tax system fairer, simpler and better for economic growth. Its final report is due November 1.
Last week, the panel’s nine members opposed replacing income taxes with a national retail sales tax, voicing concerns about high tax rates and rampant tax evasion. When it meets again, the members will revisit the possibility of recommending a value added tax – a levy used widely in Europe that imposes a tax on increased value of a product at each stage of production and passed on to consumers. But the tax advisers last week brought up numerous problems and complications with the idea, from the possibility of creating a government “money machine” with quickly increasing tax rates to administrative difficulties for the IRS.Link here.
Who opposes simpler, lower taxes?
The president’s advisory panel on tax reform held a public meeting last week to discuss possible changes to our tax code, which most Americans view as a disgrace. Unfortunately, the reform panel consists almost entirely of Washington beltway insiders who have absolutely nothing in common with ordinary American taxpayers. The members are former Congressmen and Senators, DC think tank scholars, university professors, and - unbelievably – a former commissioner of the IRS! It is hard to imagine someone more opposed to taxpayer interests than the head of the IRS, the very agency that millions of Americans want abolished.
It is doubtful that former politicians and tax bureaucrats will propose meaningful tax reform. After all, we have heard this song before. Remember the big tax reform bills of 1986, 1997, and 2001? We were promised a simpler tax code each time, but it never happened. Some slight progress has been made in terms of very modest rate reductions and a slow phaseout of the estate tax, but even those changes may be reversed by revenue-hungry future congresses.
The reform panel should have two simple goals: make taxes lower, and make taxes simpler. Anything else quite frankly is insulting to the American public. But during several hours of discussion last week, the various panelists talked about everything but those two objectives. Instead they embraced the practice of using the tax code as a tool for social engineering, debating what exemptions, credits, and deductions should be tinkered with to steer taxpayers toward or away from certain activities. The panelists also misused the term “tax subsidy” over and over. A true subsidy is very simple: certain individuals or businesses receive taxpayer money from the government. But the panel members clearly have accepted the thoroughly leftist idea that all income belongs to the state, and therefore the state “subsidizes” you by letting you keep some of the money you earned. What kind of tax reform proposals can we expect from people who cannot understand the fundamental difference between a subsidy and a tax cut?
When it comes to actual tax reform legislation in Congress, do not underestimate the lobbying influence of accountants, tax attorneys, tax preparers, IRS employees, and mortgage companies, just to name a few. Many, many groups and industries benefit from our Byzantine tax system in one way or another. They will not accept major changes to the tax code without a fight.Link here.
Center for Freedom and Prosperity to co-host Tax Competition Roundtable in Australia.
The CF&P announced a Tax Competition Conference to be held in Melbourne, Australia on Monday, November 14th. Co-hosted by Australia’s Centre for Independent Studies and the Washington-based Heritage Foundation, the conference will focus on the virtues of tax competition and explore the adverse consequences of tax harmonization. The Conference deliberately precedes the OECD’s Global Forum on International Tax Policy that starts the next day. The Conference is designed to promote discussion and understanding about tax competition issues – particularly the OECD’s persecution of low-tax jurisdictions and the negative impact of tax harmonization on the global economy. The event will also give non-OECD policy makers useful information as they prepare to meet with the OECD.
The Conference is bringing together leading international tax experts from the U.S. and Australia to discuss how best to preserve tax competition, financial privacy, and fiscal sovereignty. An OECD representative has been invited to participate in the event. The OECD will convene their Global Forum in Melbourne (November 15 & 16) in part to convince targeted non-OECD jurisdictions that there is a “level playing field” between them and the 30 OECD countries, notwithstanding the fact that numerous OECD member nations do not share information with foreign tax authorities.Link here.
OHIO POLICE ARREST WOMAN FOR $1 IN UNPAID TAXES
An Ohio woman was arrested after she did not pay just more than $1 that she owed in income taxes. Deborah Combs owed the city of Loveland $1.16 last year, but she also had not filed her city income tax forms in five years, the television station said. She said officers pulled her over and acted as though she were a violent criminal. Combs said she thinks the arrest and charges are over-the-top for the amount she owed. She could also end up paying hundreds of dollars in fines for the unfiled tax forms, the television station reported.
Loveland City Manager Fred Enderle said the amount Combs owes is not the real issue. “Whether it’s $1 they owe us or $1,000, it’s not fair to the rest of the public to not pursue that person,” he said. “There is some expense involved, but it goes back to the principle. We have laws. The laws have to be complied with. At what cost do you stop enforcing the law?”Link here.
REPORT SAYS HIGH TAX STIFLING AUSTRALIAN GROWTH
Australia’s economic growth is under threat because uncompetitive levels of corporation tax are stifling the country’s businesses, according to a report published this week. The Business Council of Australia, a lobby group for the nation’s leading 100 companies, published an analysis showing Australian businesses face the 3rd highest effective tax burden in the developed world, after Norway and Luxembourg.
Australia’s headline corporation tax rate is 30%, in line with the OECD average. However, as a percentage of GDP, the corporate tax burden in Australia is 5.3%, compared with the OECD average of 3.4% and 8% in Norway and Luxembourg. The council said Australia’s high overall tax level was largely due to the government levying a broader range of taxes on Australian companies, with fewer concessions than are offered in other countries. The BCA said a sharp drop in foreign equity investment in recent years was partly due to Australia's business taxation regime becoming less competitive. Foreign equity investment in Australia grew 37% between 1993 and 1999 but by just 10% between 1999 and 2004.
Hugh Morgan, the council president, said the report showed it was time for the federal government to reduce business tax. Australian businesses last year paid a record A$46 billion in corporate taxes, double that of five years ago, and corporation tax is the fastest growing source of government revenue. Meanwhile, a leading economic forecaster on Monday warned the Australian economy was vulnerable to a downturn because it was benefiting from a resources boom while struggling with a flat property market.Link here. Australia’s treasurer under pressure for tax reform – link.
TAX SYSTEM DAMAGING UK AS A BUSINESS LOCATION
Increasing levels of tax and the growing complexity of the taxation system is damaging the UK as a competitive location for manufacturing, employers have warned. The EEF, which represents over 6,000 manufacturing, engineering and technology-based businesses, says that tax is increasing the cost of doing business in the UK and making it difficult for companies to reap the full benefit of strong and stable economic growth. A competitive and low-cost tax system is an important part of how government can help manufacturing address the challenges it faces.
“Whilst government is actively promoting innovation and improved skill levels, the rising cost and complexity of business tax is preventing companies from taking full advantage of this to improve their performance,” said EEF Director General, Martin Temple. “Our long-held competitive advantage on tax is starting to erode. The UK’s tax burden has been rising while falling in many other countries, who are actively designing their tax systems to attract high value manufacturing.” The warning is contained in report by the EERF which suggests alternative approaches to those aspects of the current tax system most damaging to manufacturing competitiveness.Link here.
MOST MULTINATIONALS DISSATISFIED WITH RUSSIAN TAX SYSTEM
A survey by accounting firm Ernst & Young has found that the majority of multinational companies operating in Russia are dissatisfied with the conduct of Russia’s tax authorities. Respondents to E&Y’s survey, 57% of which were domestic firms and 43% foreign multinationals, all from a variety of industries, continued to complain about inconsistent application of tax law and the high number of tax audits and disputes with the authorities. These firms are also increasingly concerned at the readiness of the tax service to file criminal charges against management and their employees in tax cases.
The survey found that 80% of respondents had been involved in a dispute with the tax authorities in the last three years, 92% of which ended up in court. However, 90% of these court hearings eventually found in favor of the taxpayer, leading E&Y to conclude that a significant number of tax issues of “limited merit” are being raised and litigated by the tax authorities. The statistics also suggest that the frustrations with Russia’s tax system are centred on the administrative arm, rather than on the legislation itself or the court system, which tended to be viewed favorably by investors. In fact, the respondents ranked the court system above the tax authorities on their knowledge of tax legislation and issues.
According to Petr Medvedev, Ernst & Young partner and Head of Tax in the CIS, the competence shown by the court system in tax disputes is one of the most “substantial achievements” of Russian tax reform.Link here.
PROTECT YOUR WEALTH OFFSHORE
Safe and Legal Havens for Assets Overseas
A swiss bank account was once synonymous with wealth, mystery, and individual sovereignty. Offering investors complete anonymity, this fabled financail fortress seemed unassailable. It placed assets far beyond the reach of creditors, tax collectors, ex-spouses and plaintiffs. Today, this and similar strongholds such as Panama, Lichtenstein and the Cayman Islands are under siege. With broad powers born out of policy wars against drugs, terrorism, and money laudering, the U.S. can unearth and examine the most private financial matters of its citizens almost anywhere in the world. Yet, despite its best efforts, the government has failed or chosen not to eliminate some of these safe harbors.
In the article, we examine the current state of offshore asset protection. We scrutinize the various legal options investors can still use to safeguard their wealth in foreign countries. And we recount the stories of individuals who, for a variety of reasons, chose to relinquish their U.S. citizenship.Link here (PDF file).
DEMYSTIFYING CURRENCY DEVALUATIONS
Recently, the international insurance industry associations and others have expressed interest in understanding how changes in the local economy might bring about changes in the valuation of the local currency. What does depreciation or devaluation of a currency mean? Let us examine the concept of devaluation by starting with just the opposite. How do you value anything?Link here.
UNCERTAINTY OVER EU TAX LAW IN CAYMANS
It has been over 3 months since the bilateral agreement to comply with the European Savings Directive came into effect on 1 July and some industry experts believe that it will have virtually no effect on the financial sector here in the Cayman Islands, because the EU Savings Directive and the mirror Cayman bilateral agreement only applies to interest income on savings accounts for individuals, not companies. Moreover most individuals will, according to financial experts here, get around the legislation by setting up a company, trust or other legal entity, where the individual is the beneficial owner.
And for the most part, that is what wealthy individuals have been doing for years even without the EU Savings Directive. Consequently, there appears to be a significant effort and expense from the private and Government sector to comply with the new EU Savings Directive, but with no real impact. As the bilateral agreement is unlikely to have any significant impact, questions have been asked, why is the EU and consequently the Cayman Islands Government going through this charade? Especially, if this legislation was implemented to collect taxes that are leaking from EU member states, when it appears to be so easy for wealthy individuals to get around the directive.
However, the Director of the recently established Tax Information Authority, Duncan Nicol said in reality no one can actually know for certain how the law will affect individual investors here until reports come in from the private sector.
The EU Savings Directive does not apply to the Cayman Islands per se. But the Cayman Islands as well as other overseas territories and other tax neutral jurisdictions implemented bilateral agreements in cooperation for the EU Savings Directive including the Dutch dependencies, San Marino, Switzerland, Liechtenstein, Andorra and Monaco. The Cayman Islands bilateral agreement states that information on savings income will be provided rather than a withholding tax.Link here.
WHICH OFFSHORE BANK IS RIGHT FOR YOU?
If you are not sure why you need an offshore bank account, consider the scandal that is rocking British banks right now. Many big English banks outsource their back office work to India – and a reporter who went to Bangalore was able to purchase top-secret information on thousands of personal accounts. He bought it from low-paid call center employees who had nothing to lose and no misgivings about selling account holders’ addresses, secret passwords, credit card details, drivers’ licenses – even passport numbers! Plenty of American and European banks use back office services in India as well. If you value your banking privacy and security, consider an offshore account in Panama, Austria, Switzerland, Liechtenstein, or Denmark. Each has its own unique features. Let us look at them one by one…Link here.
LEAK SHOWS U.K. ID CARDS MARK “A SECRET REVOLUTION”
On the eve of what could be a final Commons vote on the Identity Cards Bill, leaked Government strategy documents show that it intends to use ID cards as the basis of a transformation of the relationship between individuals and institutions with central government, with personal data farmed out for official use. Phil Booth, NO2ID’s national coordinator, said, “We told you so. This shows the extent of ambition in the deceptively-named ‘Identity Cards’ scheme. Whitehall wants to abolish privacy – not only to observe and control every individual’s relationship with any public sector organization, but every personal and commercial relationship too. With no public awareness or backing, and with no safeguards it is a recipe for totalitarian levels of control – cyber-Stalinism.”
The proposals say, “The opportunity from information sharing will be clarified and rolled out, balancing the potential value to the customer or taxpayer with privacy concerns.” Campaigners say this is code for abolition of personal privacy as we know it. NO2ID is calling for consultation to start again from the beginning, with all civil society and business groups given a fair hearing. Matthew Taylor MP, Parliamentary spokesman for NO2ID, said, “This potential invasion into personal and commercial privacy has just not been discussed. We’ve had the public and MPs fed endless spin about immigration, crime and terrorism, only for a much bigger agenda to emerge at the last minute. … It is the most astonishing power-grab since Henry VIII.”Link here.
Expensive, pointless, dangerous. Who needs these mistaken identity cards?
On October 18 the ID cards Bill returns to Parliament for its report stage. It is surprising that this profoundly ill-conceived measure has got this far, so unanimous has been the opposition to it from every qualified organization in the country, apart from the police and the biometric data companies who stand to make billions of pounds if it becomes law –— anything from £5 billion (the Government’s estimate) to £18 billion (The Financial Times’s estimate), all to be borne by the public.
The evidence given to MPs during the Home Affairs Committee’s consideration of the proposals overwhelmingly demonstrated that ID cards would be ineffective, costly and a gross violation of civil liberties, yet the Home Secretary insists on pressing ahead. It is startling to read the transcript of that evidence and to see how completely its careful and serious objections have been disregarded by Charles Clarke.
Arguments against the scheme relate both to practical matter, and to principle. Consider the practicalities first. At various times since David Blunkett first introduced the idea, different reasons for ID cards have been suggested: chiefly, that they will help to catch illegal immigrants, that they will reduce identity fraud, and that in some unspecified way they will reduce crime and prevent terrorism. This last claim has since been dropped by the Government, which acknowledges that ID cards would not have stopped either the 9/11 or 7/7 atrocities.
Rather than reducing crime, the scheme will generate a new criminal industry devoted to stealing and forging ID cards, rather as Prohibition created a huge criminal bootlegging fraternity. For criminals are entrepreneurs and as soon as something is turned into a marketable commodity – in this case, identities – they will seek to profit from it. Forged cards might not fool forensic experts, but in most cases they will not be recognized by bank clerks and shop assistants, so their effect on fraud will be minor.
In light of the ineffectiveness of ID cards for any of the purposes that the Government has variously mooted for them, as shown by the expert testimony to the Home Affairs Committee, this will mean that some of our most fundamental civil liberties, won slowly and painfully over centuries, will be lost in the interests of an expensive white elephant.Link here.
Identity card bill scrapes through despite efforts of 25 government rebels.
The government’s controversial ID Card Bill was voted through for its third and final Commons reading Wednesday night, but with a majority of just 25. The margin is the smallest in any government vote since the May election, after 25 “rebel” Labour MPs voted against the Bill along with opposition members. An amendment by Labour MP Neil Gerrard to make it possible for people to apply for a biometric passport without having to submit details for the ID cards database was rejected.
Home Secretary Charles Clarke announced that personal details contained on the cards will not go beyond those held on passports, and that it would be possible for individuals to access their entry and see which organizations had been verifying their information Clarke promised last week to cap the fee that will be charged for “standalone” ID cards at £30 each. The cap, though, will apply to people who do not renew their passports, mainly the elderly and those on low incomes.
George Platt, general manager of Intervoice, a provider of voice authentication systems, highlighted what he believes is a gaping hole in the current plans. “With all the controversy that has surrounded the ID Card Bill, it is surprising that it has been accepted by the House of Commons,” he said. “MPs need to realize that ultimately a solution will be needed to secure all the avenues that criminals currently use to glean identity details, such as call centers, which the current proposals do not address.” Microsoft attacked the plans, maintaining that a system based on a central database could lead to “massive fraud” and that the government needs to consider a more decentralized system.Link here.
U.S. GRIP ON THE INTERNET CHALLENGED
A high-stakes battle is raging over who should control the Internet. Not the Americans, is the message from the rest of the world. Last week, high-level talks in Geneva failed to resolve the dispute as the EU broke ranks with the U.S. government and joined Brazil, China and Iran in demanding an end to America’s supervision of the Internet. While many countries demand nothing less than “regime change”, others say the U.S. should practice what it preaches and instill some democracy in the abstruse governance of the Internet.
If another round of meetings fails to break the deadlock, the World Summit on the Information Society in Tunis next month will be dead on arrival. The summit was to pronounce on the future of the Internet, but the row is likely to overshadow other crucial issues such as bringing more people online and fighting spam emails. In the absence of a peaceful compromise, the biggest losers will be an estimated 1 billion people who use the Internet.
In the worst case scenario, dubbed by cyber pundits as the “nuclear option”, the Internet could fracture into multiple networks that may be incompatible with each other. It would be nothing less than Balkanization of the virtual world – a web meltdown where two computers might find different websites at the same numerical address. Brazil, Iran, Cuba and China want the creation of a new international body to govern the Internet, either through the UN or an independent organization. The Americans, deeply allergic to even the smell of the UN, vehemently oppose handing over this powerful tool to a bunch of bickering bureaucrats, many of whom will surely rise from countries on Washington’s blacklist. Both the executive and legislative branches of the government are united in their aim to keep the reins firmly in Washington’s hands.Links here and here.
ELECTRONIC FRONTIER FOUNDATION REVEALS CODES IN XEROX PRINTERS
Just because a document from a color laser printer does not carry your name does not mean no one can trace it back to you, privacy advocates warn. The EFF says it has cracked the tracking codes embedded in Xerox’s DocuColor color laser printers. Such codes are just one way that manufacturers employ technology to help governments fight currency counterfeiting. “Underground democracy movements … will always need the anonymity of simple paper documents, but this technology makes it easier for governments to find dissenters,” said Lee Tien, EFF senior staff attorney. “Even worse, it shows how the government and private industry make backroom deals to weaken our privacy by compromising everyday equipment like printers.”
Researchers found patterns of yellow dots arranged in 15 by 8 grids and printed repeatedly over every color page, said Seth Schoen, a staff technologist at the San Francisco-based civil-liberties group. The dots are visible only with a magnifying glass or under blue light, which causes the yellow dots to appear black. By analyzing test pages printed out by supporters worldwide and by staffers at various FedEx Kinko’s locations, researchers found that some of the dots correspond to the printers’ serial numbers. Other dots refer to the date and time of the printing.
The EFF is now studying other printers from well-known manufacturers with similar tracking codes, but whose keys remain secret. The Xerox DocuColor printers are high-end machines more likely to be found in offices and copy centers than in homes.Link here.
WI-FI IN THE CITY CONCERNS RAISED OVER LOSS OF PRIVACY
San Francisco’s plan to offer affordable wireless Internet connections may make it easier for computer hackers to spy on users and steal personal information. That is the consensus of computer security experts, who say that the city’s ambitious effort to get all residents online – potentially for free – could be more risky for users than traditional Web access. The problem with wireless Internet connections – called Wi-Fi – is that the onus is largely on consumers to protect themselves, they said. But many Wi-Fi users fail to take precautions out of laziness or ignorance, putting themselves in danger of their personal information being stolen.
“The FBI views wireless networks as very insecure,” said LaRae Quy, a spokeswoman for the FBI’s Northern California office. “Software allows you to set up security, but most people leave it open. It only takes a few extra steps to make it secure. But even it you take the extra steps, a skilled hacker can get into the system.”
In the next few weeks, Mayor Gavin Newsom is expected to decide how to proceed with his Wi-Fi initiative, which is aimed at making the city more economically competitive and bridging the digital divide. Chris Vien, who heads San Francisco’s technology department, said that protecting Wi-Fi users is important, and that commissioners are reading carefully what companies say about privacy and security.Link here.
GOOGLE OFFERS GLIMPSE AT DATA COLLECTION
The new policy states that Google may use personal information to display customized content and advertising, develop new services and ensure that its network continues to function. The practices are not new but were not explicit before. And while the old policy says Google restricts access of such information to employees on a need-to-know basis, the new policy stresses that those individuals may be fired or criminally prosecuted for violations. Google also reorganized its disclosures, bringing to the top details on information collected for e-mail, personalized search and other newer services that require registration. The fact that information may be shared among services is also moved to the section describing the types of information collected.
Chris Hoofnagle, senior counsel with the Electronic Privacy Information Center, said the changes do nothing to diminish his worries that Google is amassing “quite a trove of transactional and personal data” through its various services, which include e-mail, driving directions, photo-sharing, instant messaging and Web journals. Because storage is cheap, data from these services can be retained practically forever. Wong said Google could not set a general time limit on data retention because needs vary by service. Danny Sullivan, editor of the industry newsletter Search Engine Watch, said that although Google can do more on disclosing how long it retains data, its rivals are also guilty of saying too little.Link here.
GPS LAW STIRS CIVIL RIGHTS CONCERNS
California probation officials have gained broad authority to latch global positioning system devices onto their charges under a new law that critics call unprecedented for government surveillance. But for now, cost, not civil rights concerns, will probably limit the use of GPS bracelets or anklets. The bill will add county probation chiefs to the list of officials who can strap GPS tracking devices to offenders’ ankles without court orders. The change will bring about greater use of tracking devices – not just for high-risk, repeat sexual felons who are paroled, but also for people convicted of lesser crimes and given probation.
“In an ideal world, we would have one on every offender,” said Jeff Fagot, regional parole administrator for the state Department of Corrections, who is overseeing a pilot program for the devices in San Diego. Such talk disturbs civil libertarians, who believe the devices threaten privacy. Ignacio Hernandez, legislative advocate for California Attorneys for Criminal Justice, said the new law is too broad and gives probation officials spying powers well beyond what they need to do their jobs. “There are no checks or balances for this, and no way to know what it is going to be used for,” he said.
Hernandez says his group does not object to use of the devices for violent repeat sexual offenders on parole. But he finds them inappropriate for probationers convicted of lesser crimes. The latter should be able to go to the doctor or visit their mothers without their probation officers’ knowledge, he said. Representatives of the American Civil Liberties Union also opposed the law, saying it was too vague. GPS monitoring devices are more advanced than electronic bracelets, which enforce home confinement of offenders from a base station attached to a phone line. Electronic bracelets can tell authorities only that offenders are not home, not where they have gone. GPS shows offenders’ locations on a map, 24 hours a day, in real time.Link here.
RFID MOVES INTO NEW ARENAS, STILL RAISES PRIVACY ISSUES
On Boeing’s 787, the next-generation jet the company is developing, thousands of parts will contain tiny tags that store and communicate their maintenance history. As the plane sits on the tarmac between flights, Boeing envisions a worker with a handheld scanner walking down the aisle quickly assessing the number of life preservers on board, for example, or the expiration dates of oxygen bottles. The data on the tags, stored on a microchip, is beamed wirelessly through radio signals.
The same radio-frequency identification, or RFID technology, is being added to millions of credit cards this year. Chase Bank’s MasterCard and Visa cardholders can pay for prescriptions, hamburgers and movies by simply holding their cards within 2 inches of a payment terminal. With no signature or password required, the “contactles”q cards cut down on wait times. The bank says its new “blink” system is faster than paying by cash. As RFID comes of age, the technology is transforming large tasks to small ones.
Promising as it is, however, the technology is relatively untested. Its ability to track individual items, or people, wherever they go has raised privacy and security issues. Critics say the response by governments and the RFID industry to privacy concerns has been sluggish. “The industry really does care about looking good on the privacy issue, but it doesn’t want to seriously deal with privacy issues in a meaningful way if dealing with those issues means putting deployment on hold,” said Simson Garfinkel, a computer-security expert who has written extensively on RFID. Garfinkel and others back a voluntary moratorium on using RFID tags on individual consumer items until a full assessment of the technology can be done.Link here.
FUROR GROWS OVER INTERNET BUGGING
A recent government order mandating that voice over internet protocol services must include the same government-approved wiretapping capabilities as traditional phone companies threatens to cripple peer-to-peer telephone innovation, according to new warnings from civil liberties groups and an internet telephony pioneer. The new rules from the FCC were published last month and take effect November 14, though companies have 18 months to comply. The order expands a controversial 1994 law known as the Communications Assistance for Law Enforcement Act (CALEA), which required phone companies to buy or retrofit switching equipment to meet stringent, government-approved wiretap standards that permit law enforcement to more easily wiretap digital phone calls, and to capture information such as voicemail PINs typed on a phone after a call is completed.
Under the new order, VOIP services that can both dial into, and be called from, the traditional phone network also have to comply with the costly requirements, pulling services like AT&T CallVantage and Vonage into the wiretap regime. Critics say the rules make it harder for new U.S. internet telephony companies to get off the ground. “What the FBI has asked for, and what the FCC has to date given them, would require any new developer of a voice-based technology to submit their application for the FBI’s approval before even one single person on the internet can try it,” said John Morris of the Center for Democracy and Technology. “If the FCC continues to give the FBI every power it asks for, we will see a tremendous diminution of innovation in the United States and innovation will move overseas to places that are more supportive of small innovators.”
The ruling could be particularly troublesome for companies using a peer-to-peer architecture that does not route calls through a central server, and which may not technically be able to comply. The FCC order says that all calls on such a system – not just the ones to and from the traditional network – have to be wiretappable using CALEA standards. The end result, according to Jeff Pulver, who co-founded Vonage and runs a free P2P internet telephony service called FWD, is that the rules “take away our freedom to innovate and take away inspiration for people to be entrepreneurial in this space. This comes at a time when it’s most susceptible to being screwed up. … The technology is still in its adolescence. This is a transformational current – we are talking about the communications and computing industry transforming into something that has never existed before. This is not your parents’ telecom service.”
The ruling appears to pull in the best-known P2P telephone service, Skype, which eBay recently purchased for $2.6 billion. Skype offers optional pay services called SkypeIn and SkypeOut that permit customers to receive calls from, and make calls to, the traditional phone system. That means it will have to re-engineer its system to make its customers wiretappable, even during free peer-to-peer calls between Skype users – something that might not be possible.Link here.
OUR POLITICAL FEDERAL COURTS
The nomination of White House lawyer Harriet Miers to the Supreme Court has raised questions about her qualifications and political ideology. Conservatives and liberals alike fear that Ms. Miers will not represent their views, and will rule on issues in ways that harm our nation. But clearly we are not asking the right questions about Supreme Court nominees. The issue is not how candidates intend to wield judicial power, but rather whether they understand that the Constitution imposes limits on that power in the first place. We are guilty of permitting our federal courts to become politicized, when the proper role of those courts is to protect us from the very abuses that arise from politics.
Instead of viewing federal judicial nominees as liberals or conservatives, we ought to be viewing them as activists or originalists. Judicial activism is a popular and often misused term in politics today, but if we define it properly we can better understand the problem with our courts. Judicial activism is the practice of judges legislating from the bench, by interpreting law in a manner that creates an outcome to fit their political views. But judicial activism is more than this. Activist federal judges not only craft laws, they also ignore the laws in place – particularly the enumerated powers listed in Article I of the Constitution and underscored by the 9th and 10th amendments. By ignoring the strict constitutional limits placed on the federal government and bulldozing states’ rights, federal judges opened the door to the growth of wildly extra-constitutional government in the 20th century. Activist courts enable activist government.Link here.
AUSTRALIA TERROR LAWS COULD FORCE FIRMS TO HAND OVER RECORDS
Civil libertarians warn proposed new anti-terror laws could give police back door access to highly personal financial information and be a recipe for corruption. Businesses could be forced to hand over records to police under the federal government’s controversial new anti-terror laws. As Prime Minister John Howard dug in his heels against calls to alter the laws, the NSW Council for Civil Liberties attacked the proposed changes for going too far.
Under the draft laws, banks, airlines, phone and power companies could have to provide information about customers suspected of terrorist offences to police and spy agencies. The Australian Federal Police (AFP) and ASIO would be able to force businesses to hand over their records without having to get a search warrant. They would only need reasonable grounds to issue special notices to businesses such as ship and aircraft operators for details on their cargo, crew, passengers, stores and voyage. The AFP also could apply to magistrates for notices requiring banks, travel and transport companies, power, gas and water companies and telecommunications carriers to provide details on a suspect’s accounts, transactions and activities. The government argues the “notice to produce” would make it easier to investigate terrorism and not negatively brand a business as having been served with a warrant.
NSW Council for Civil Liberties spokesman Cameron Murphy said the laws go too far. “This might just be a back door for police to get highly personal information about people’s finances and it’s likely to just be done using the guise of terrorist investigations,” he said. “The problem is that these laws provide police extraordinary new power while at the same time reducing accountability - they are a recipe for misuse and corruption.” The Uniting Church also attacked the new laws, saying they would erode trust within the community.Link here.
PINOCHET’S SECRET FORTUNE OFFICIALLY TIED TO CHILE’S ARMS SALES
Chilean government prosecutors officially linked former dictator Gen. Augusto Pinochet’s secret fortune to illegal commissions and bribes he received from military weapons sales that took place while he was the commander in chief of Chile’s army. In a presentation before the Supreme Court last week, María Teresa Muñoz, prosecutor for the Metropolitan Region of the State Defense Council (CDE), presented evidence linking Pinochet’s secret bank accounts to Chilean weapons sales occurring in the 1990s.
The move comes after more than a year of investigations into a complex scheme first brought to light by a U.S. Senate money laundering report accusing the Washington, D.C.-based Riggs Bank of helping the former dictator launder between $4 and $8 million. Since the report was made public, Chilean prosecutors have discovered totals of over $26 million more in various secret bank accounts, offshore holdings companies located in the Cayman and Virgin Islands, and multiple Swiss bank accounts.
In a separate but related military investigation into the 1992 murder of Colonel Gerardo Huber, former Chief of Acquisitions for the Army, Judge Claudio Pavez, the lead investigator in the military case, requested information from Judge Muñoz regarding bank accounts opened in the name of Gerardo Huber and his widow, Adriana Polloni, in the New York branch of the Banco de Chile. Officials hope to learn more about the perpetrators of Col. Huber’s murder by studying records gleaned from investigations into the Riggs Bank case. Chile’s Supreme Court is due to decide whether or not to strip Gen. Pinochet of his immunity from prosecution in the Riggs Bank case this week, which may help shed light on the other crimes surrounding the weapons sales.Link here.
SPAIN ORDERS AMERICAN G.I. ARRESTS IN CIVILIAN’S DEATH IN BAGHDAD
A Spanish judge issued an international arrest order for three American soldiers in connection with the killing of a Spanish journalist in Baghdad during the American invasion of Iraq in 2003. The judge, Santiago Pedraz Gómez, of the National Court in Madrid, said the three might have committed murder and a “crime against the international community” on April 8, 2003, in Baghdad when an American tank fired a shell at the Palestine Hotel, where more than 100 journalists were staying. José Manuel Couso Permuy, a cameraman with the Spanish television station Telecinco, and Taras Protsyuk, a Ukrainian-born cameraman with Reuters, were fatally wounded in the blast. A Pentagon inquiry in 2003 concluded that the soldiers had been justified in firing as they had cause to believe the building was an enemy position, and had not known it was a hotel where journalists were staying.
Many Spanish judges and investigators say countries should be free to pursue suspects beyond their borders. The United States has said that could lead to politically motivated show trials in countries that lack the legal safeguards of the U.S. The judge wrote that the Bush administration had ignored two Spanish requests in 18 months for information on Mr. Couso’s death. The documents do not make clear if the judge plans to indict the soldiers, Shawn Gibson, Philip Wolford, and Philip de Camp, all of the Army.Link here.
Unsign that treaty.
President Clinton’s last-minute decision to authorize U.S. signing of the treaty creating an International Criminal Court (ICC) is as injurious as it is disingenuous. The president himself says that he will not submit the Rome Statute to the Senate for ratification because of flaws that have existed since the treaty was adopted in Rome in 1998. Instead, he argues that our signature will allow the U.S. to continue to affect the development of the court as it comes into existence. Signing the Rome Statute is wrong in several respects.
First, the Clinton administration has never understood that the ICC’s problems are inherent in its concept, not minor details to be worked out over time. These flaws result from deep misunderstandings of the appropriate role of force, diplomacy and multilateral institutions in international affairs. Not a shred of evidence – not one – indicates that the ICC will deter the truly hard men of history from committing war crimes or crimes against humanity. Second, the ICC’s supporters have an unstated agenda, resting, at bottom, on the desire to assert the primacy of international institutions over nation-states. Third, the administration’s approach is a thinly disguised effort to block passage of the American Servicemembers’ Protection Act, introduced last year  in Congress.Link here.
PADILLA RULING AN AFFRONT TO CIVIL LIBERTIES
When lawlessness broke out in New Orleans in the aftermath of Hurricane Katrina, martial law was declared, military troops were called in to restore order and the news media were on top of the story. Unfortunately, when more dramatic legal developments occur and when such episodes are of much greater legal consequence, the media sometimes fail to give them the attention they deserve. The Sept. 9 court ruling concerning Jose Padilla, an American citizen locked up in a military prison in South Carolina for three years, is a case in point. The ruling should send shockwaves through the American public since the decision seriously undermines constitutional rights.
A federal appellate court ruled that constitutional rules that apply to the police do not apply to military personnel. That is a sensible proposition when the military is conducting operations in a war zone like Iraq, or in a disaster zone like New Orleans, but it is an alarming idea when the U.S. military is given carte blanche. But that is the upshot of the Padilla ruling. The federal government has been given a green light to deprive Americans of their rights to due process. No arrest warrants. No trial. No access to the civilian court system. You may not be able to see it on television, but this court decision is the equivalent of a legal hurricane – and it is no exaggeration to say that this is a level 5 storm with respect to its potential havoc for civil liberties.
Federal agents arrested Padilla at O’Hare International Airport in Chicago just after he arrived on a flight from Pakistan. The feds claim that Padilla fought against U.S. troops in Afghanistan, escaped to Pakistan and returned to the U.S. to perpetrate acts of terrorism for al-Queda. Instead of prosecuting Padilla for treason and other crimes, President Bush declared Padilla an “enemy combatant” and ordered that he be held incommunicado and interrogated by military and intelligence personnel. Padilla has not yet had an opportunity to tell his side of the story. For two years the government would not even permit Padilla to meet with his court-appointed attorney, Donna Newman. Newman has nevertheless defended Padilla’s rights, arguing that the president does not have the power to imprison Americans without trials.
Bush has not made any dramatic televised address to the country to explain his administration’s attempt to suspend habeas corpus and the Bill of Rights, but his lawyers have been quietly pushing a sweeping theory of executive branch power in legal briefs before our courts. The president’s lawyers stress that America is at war and that the “laws of wa”q are now in effect. By “laws of war”, they mean that the president has assumed broad powers as commander-in-chief so that he can “protect the country”. The constitutional rights of the citizenry, in this view, are no longer the law of the land. A federal appellate court has now validated this ominous paradigm of military law.
Does this mean that black helicopters will be coming to the suburbs to take our friends away for questioning? Of course not. Still, even a subtle and selective use of the military to imprison American citizens on American soil ought to concern people regardless of political affiliation.Link here.
PORTUGUESE MONEY LAUNDERING, TAX EVASION PROBE RELATES TO “MANY MILLION EUROS”
The Public Ministry said the investigation it has ordered into suspected money laundering and tax evasion by various Portuguese financial institutions relates to the possible shortfall of “many million” euros in Treasury revenues over the past three years, Jornal de Negocios reported. The public prosecutor’s office confirmed that in recent days, at the instigation of the ministry, it has organized searches at financial institutions across Portugal, according to the report.
As many as 100 raids on homes and offices of bank executives and lawyers are planned as part of the operation, Jornal de Negocios said in its edition this morning, adding that it is Portugal’s biggest ever action of its type. Banco Comercial Portugues, Portugal’s biggest bank, said it will cooperate fully after being named as one of the targets of the investigation. Banco Espirito Santo said its board will take urgent steps to verify that all actions have been carried out properly. Also in a statement to CMVM, BES said it will approach the task calmy, as it always makes an effort to comply with the law and ethical principles.Link here.
THE CONSTITUTION WILL NOT SAVE YOU FROM DEATH OR TAXES
I have a message for every liberty lover out there who knows that the federal income tax is a moral outrage, nothing more than legalized theft, and something many of our country’s founders would have found unconscionable: “Pay it anyway.” No, I did not sell out to the feds during my recently completed clerkship with the U.S. Court of Appeals. But that experience did hit me with a dose of reality that made me more certain than ever that you cannot beat the federal government at its own game, on its own turf, so you must be careful to choose your battles wisely and well.
The tax protesters may have some interesting legal, historical, or philosophical points. But if you do not pay your taxes, you will be forced to pay them, and then you will go to jail. And what if you resist, physically? Then, if they deem it necessary, the feds will kill you. It is just that simple. No judge is going to listen to your stories about the 16th Amendment, sovereignty, or constructive trusts for one minute. Why? First and foremost, because when the federal government takes anyone to court, it is a rigged game, because agents of the federal government are both prosecutor and judge. We have “separation of powers” on paper, but the reality is that no judge is going to declare the taxes that support his paycheck unconstitutional. Another point to keep in mind is that the courts have heard it all before, more than once, and have summarily rejected these arguments. The IRS has helpfully cataloged some of these cases for you here. Every who has tried one of the arguments thought the law was somehow on their side when they stopped paying taxes, and every one of them was wrong.
I do not enjoy saying any of that. Taxation is slavery, and slavery is wrong, no exceptions. And that is what makes the tax protester situation so sad. Here we have people who have figured out something of which most of the mindless masses remain ignorant their entire lives, that taxation is theft and slavery, and that an individual is under no moral obligation to pay it. What a tremendous breakthrough, to realize that! And what a waste when they go to jail, because they naïvely believed the U.S. Constitution would protect their rights.
So are we doomed to simply be ever more enslaved to our federal masters, and give them as much as they demand for the rest of our lives? Of course not. But becoming freer is not easy. You may need to find another country, where the government will not burden you with high taxes. And if you do not feel like going that far, there are, at least for now, other legal ways to lower your tax burden and strike a blow for liberty. One of them is making a tax-deductible contribution to an organization that advances the freedom philosophy, such as LewRockwell.com, or the Ludwig von Mises Institute. Even more important than that is learning all you can about the economics and morality of liberty, and how to effectively communicate libertarian ideas. Someday, when the state collapses, the world will need a Remnant to rebuild civilization, and you cannot do your part to prepare for that day very effectively from a prison cell. So skip the bogus tax schemes, forget about fictional constitutional rights, and focus on doing something useful for yourself and for liberty instead.Link here.
RON PAUL SLAMS BUSH ON MILITARIZED POLICE STATE PREPARATION
Congressman Ron Paul has accused the Bush administration of attempting to set in motion a militarized police state in America by enacting gun confiscation martial law provisions in the event of an avian flu pandemic. Paul also slammed as delusional and dangerous plans to invade Iran, Syria, North Korea and China. Ron Paul represents the 14th Congressional district of Texas. He also serves on the House of Representatives Financial Services Committee, and the International Relations committee.
Paul appeared on the Alex Jones show and raised some interesting points about the possibility of imminent indictments of top Bush administration figures. “I think there’s a lot more excitement coming and it’s not going to be good for the Republicans,” stated Paul. “The things that I hear have to do with Karl Rove and Abramoff and that’s much much worse than anybody would believe and it involves DeLay as well.”
On the subject of the police state, Paul stated, “If we don’t change our ways we will go the way of Rome and I see that as rather sad. … the worst things happen when you get the so-called Republican conservatives in charge from Nixon on down, big government flourishes under Republicans. It’s really hard to believe it’s happening right in front of us. Whether it’s the torture or the process of denying habeas corpus to an American citizen. I think the arrogance of power that they have where they themselves are like Communists … in the sense that they decide what is right. The Communist Party said that they decided what was right or wrong, it wasn’t a higher source.”
Paul responded to President Bush’s announcement last week that he would order the use of military assets to police America in the event of an avian flu outbreak. “To me it’s so strange that the President can make these proposals and it’s even plausible. When he talks about martial law dealing with some epidemic that might come later on and having forced quarantines, doing away with Posse Comitatus in order to deal with natural disasters, and hardly anybody says anything. People must be scared to death.” Paul, himself a medical doctor, agreed that the bird flu threat was empty fearmongering.Link here.
A nation of sheeple.
President Bush informed the nation, during a press conference, that he might seek to use the U.S. military to quarantine parts of the nation should there be a serious outbreak of the deadly avian flu that has killed millions of chickens and 60-some people in Southeast Asia. That is the second time Bush has expressed a desire to use the military for local policing. The first was in the wake of Hurricane Katrina. The Posse Comitatus Act (18 U.S.C. 1385) generally prohibits federal military personnel and units of the U.S. National Guard under federal authority from acting in a law enforcement capacity within the U.S., except where expressly authorized by the U.S. Constitution or Congress.
Enacted during Reconstruction, the purpose of the Posse Comitatus Act was to severely limit the powers of the federal government to use the military for local law enforcement. Would Americans tolerate such a gigantic leap in the federalization of law enforcement? I am guessing the answer is yes. In the name of safety, we have undergone decades of softening up to accept just about any government edict that our predecessors would have found offensive. Let’s look at some of it.
The anti-smoking movement might be the beginning of the softening up process. They started out calling for reasonable actions like no-smoking sections on airplanes. Then it progressed to no smoking on airplanes altogether, then private establishments such as restaurants and businesses. Emboldened by the timidity of smokers, in some jurisdictions there are ordinances banning smoking in outdoor places such as beaches and parks. Then there are seatbelt and helmet laws that have sometimes been zealously enforced through the use of night vision goggles. On top of this, Americans accept government edicts on where your child may ride in your car. Americans sheepishly accepted all sorts of Transportation Security Administration nonsense. In the name of security, we have allowed fingernail clippers, eyeglass screwdrivers and toy soldiers to be taken from us prior to boarding a plane.
We have accepted federal intrusion in our financial privacy through the Bank Secrecy Act. Rep. Ron Paul, R-Texas, says, “More than 99.999 percent of those [who] had their privacy invaded were law-abiding citizens going about their own personal financial business.” Most recently there is the U.S. Supreme Court Kelo decision, where the court held that local governments can take a private person’s house and turn it over to another private person. Politicians have learned and become comfortable with the fact that today’s Americans will docilely accept just about any legalized restraint on their behavior.
You say, “Hey, Williams, but it’s the law!” In the late-1700s, the British Parliament enacted the Sugar Act, the Stamp Act and the Townshend Acts, and imposed other grievances that are enumerated in our Declaration of Independence. I am happy that we did not have today’s Americans around at the time to bow before King George III and say, “It’s the law.”Link here.
FACE IT, AMERICA. YOU’VE BEEN PUNK’D
It is now quite clear that the outing of Valerie Plame was part of a broader White House effort to mislead and manipulate U.S. public opinion as part of an orchestrated effort to take us to war. The unraveling of the Valerie Plame affair has exposed their scam – and it extends well beyond compromising the identity of a CIA officer. In short, the Bush administration organized and executed a classic “covert action” program against the citizens of the U.S.
Covert action refers to behind-the-scenes efforts by U.S. intelligence agencies to plant stories, manipulate information and shape public opinion. In other words, you write stories that reporters will publish as their own, you create media events that tout a particular theme, and you demonize your opponent. Traditionally, this activity was directed against foreign governments. For example, the U.S. used covert action extensively in Greece in the 1960s to help fend off communists. Covert action also played a major role in rallying world support for the Afghanistan mujahideen following the Soviet invasion in 1979.
We learned last May that in the summer of 2002, the Bush administration told our British allies that they would “fix the facts” around the intelligence. In other words, the U.S. sought to manufacture a case that Iraq was trying to build a nuclear capability. Note, not only did bogus intelligence reports and fabricated documents surface, but senior administration officials – Condoleezza Rice and Vice President Cheney – went to great lengths to try to convince Americans that the U.S. would soon face the wrath of Iraqi attacks. Remember the smoking mushroom cloud?
Americans have died because of the Bush deceit. The unmasking of Valerie Plame was not an odd occurrence. It was part of a pattern of deliberate manipulation and disinformation. At the end of the day, American men and women have died because of this lie. It is up to the American people to hold the Bush administration accountable for these actions.Link here.
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