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THE RISKS OF BUYING INVESTMENT PROPERTY IN MEXICO
With its stunning beauty, warm climate, friendly people, and low prices, it is very tempting to buy real estate in Mexico. We know it is risky, but it is hard to know exactly what the risks are and how to avoid them. I have bought five condos now in Mexico and have learned something new on each deal. Americans are accustomed to a high level of legal protection for transfer of title but this does not exist to such an extent in Mexico. There are number of common risks areas to look out for and the following list is my no means exhaustive.
The agents are not licensed or bonded. Many agents, though members of the local MLS, do not know the market very well. Some do not know or even care if properties they are selling have title problems. If you send a down payment to an agent, the agent could disappear with your money. This has happened before. Even if it is a U.S. name franchise, if there is a problem, they will likely claim it is a different entity in Mexico. Escrow agents are not bonded. It has been known for Escrow agents to empty out their escrow account and flee. You are well advised to use a U.S. escrow.
A large percentage of the properties have title problems. You need to get title insurance. Even if you ask for title insurance and pay for it, you might not ever receive a policy. The closing process is complicated and expensive. Foreigners buying near the coast or border have to obtain a foreign investment permit, and are required to hold title through a bank trust. There is an annual fee for the services of the trustee, about $300-500 per year. The amount of the annual fee is set in your trust documents so make sure your closing agent shops around. There is a big transfer tax. Expect to pay at least $7,000 in closing fees which is nonrecoverable when you sell. If you have any title problems it can take years to get it cleared. Make sure you hire an attorney to help you get clean title.
Do not underreport transfer values. People used to underreport values so the seller could pay less capital gains tax, and buyer could pay less transfer tax. But the government has caught on. If you do this, or allow the seller to do this, you will find yourself liable for the seller’s capital gains. There is a rich history of re-socializing property. Watch out for Ejidos (communal farming land). In case of any dispute, the agrarian judge always rules in favor of the Ejido. The court system is slow, inefficient, and sometimes corrupt. If you get in a dispute do not expect any recourse in the courts without paying and waiting. Be aware that if anyone steals money from you the prosecutors will not do anything unless you pay them to investigate.
It is risky to use developer financing or any Mexican financing. Typical contracts state that the developer keeps title until you pay everything off. If they go bankrupt in the meantime, you can lose everything. With bank financing, it can take years to get liens removed after you have made your last payment. Hire an attorney in advance. Just make sure they are competent. Make sure you have a good escrow agent who verifies that condo association fees are current, utility bills are current, and property taxes are current.
Some people put title in corporations to avoid the bank fee and because they feel more secure. You cannot live in a house that is owned by your Mexican corporation. There is ambiguity in the law as to whether you can own residential rental real estate in a Mexican corporation if you do not live in it. Many people in Mexico view income tax as optional, and nobody likes to give receipts. If you rent your property, you need official receipts “Facturas” if you are going to take itemized deductions (which you have to do if you use a Mexican company to hold title to your property). If you pay tax as an individual, there is a blind deduction option to paying income tax, which is easier. You need to get a Mexican tax ID or the renter is supposed to withhold the tax for you and submit it to the government.
If you stay 183 days, you are a Mexican resident for tax purposes and subject to Mexican income tax on your worldwide income. If you do have income in Mexico, you are supposed to pay estimated taxes every month. You do not get the deductions you get in the U.S. – tax is based on gross rent. Mexican tax laws change all the time. Capital gains taxes are huge. Your capital gains taxes go down the longer you own a place.
Now that you have a foreign trust, you have to file special documents with the IRS that no accountant knows about, forms 3520 and 3520A. If you do not do it in time (and it is not the normal tax deadline), the penalties can be drastic. It is hard to get money out of Mexico. One way I have figured out to do it is via an ATM card. Bank drafts are too expensive. Their mail system is too slow and not trustworthy. But there is no problem getting money from the U.S. to Mexico using Western Union. To open a Mexican bank account, you first need an FM3 (365 day) visa and a Mexican light bill. You have to renew your visa in the exact same town year after year. There is a lot of corruption in the Immigration department. The easiest way to renew a visa is to hire a lawyer and pay them a fee to help you renew the visa.Link here.
REAL ESTATE BUSINESS OPPORTUNITIES IN CHILE
Our last article concerned Chile’s interest in attracting “Smart Capital”. Since that article hit cyber-space, we were again over-run with requests for more detailed how-to information such as finding employment or business investment opportunities here in Chile. Also, in addition to these requests, many readers asked about visa requirements and how to obtain permanent residency in Chile. Unexpectedly, many of the people who contacted us were from within Chile. These were people who actually have business or job opportunities available! We had already known of a few, but WOW! If anyone out there is interested, we just might have THE connection for whatever type of business or occupation you may be seeking or perhaps, at the very least, we might be able to point you in the right direction.
With this in mind, we talked it over and decided to expand on the “Opportunities in Chile” theme a bit in order to more fully support our readers, including the people we had no idea about, those who are already living and working IN Chile. We are also continuing to work on our website, to keep it up-to-date. We have also included several links to employment search tools in Chile. We wish you “Buena Suerte” in your search for your new life.
First we would like to mention a few points regarding the acquisition of visas in Chile. We always get a bit of a reality check when we read about other countries and their respective visa requirements. Panama has their Pensioner’s program which sounds like a great visa except that it can never lead to Panamanian citizenship and from the knowledge we have acquired, one is not permitted to work with this type of visa either. Other visa-types require large investments in special programs that stimulate the economy in pre-determined ways. There are also “time deposit” based visas, requiring a rather large chunk of cash to be deposited into your new country’s bank for up to two years. Also, as you may or may not know, certain countries have what is known as “point-based systems” – points go away the older you are, so unless you have a nice chunk of cash to deposit into your favorite country’s bank, our suggestion is to forget it. Educate yourself a bit beforehand. There are also countries where points are increased for trained professionals. So, if one is 50+, not a doctor and has less than a million dollars OR is not equipped with the appropriate college degree, the person will likely not be appropriate, either.
Happily, Chile has a very simple, welcoming and straight ahead, if not logical visa program which, unless you are a criminal, deadbeat or an outright bum, you should be able to comply with their requirements. If you happen to land a job in Chile, you will need a work contract (this is necessary for all employees in Chile) which has been signed and notarized by the local notary. If you purchase real estate or a business, you are usually guaranteed a visa. If you have a retirement pension, receive Social Security checks or happen to have a significant nest-egg saved up, you can obtain a residency visa. The basic requirement for any type of visa is, can you support yourself here? It is a much simpler process to apply and obtain your visa from within Chile than to apply through the Chilean Consulate in your home country.
The various business opportunities we are aware of range from a salmon farming operation with land and water rights and with a hydro-electric side-line operation, a 7-bedroom Patagonia fishing lodge, a lovely European-style hotel near the lake in one of the Lakes District tourist towns, a charming and cozy local restaurant plus six rooms for rent upstairs, a group of eight rental cabanas, an established bed and breakfast located in a major tourist town, and – last but certainly NOT least – a Seaman’s Port of Call Center with a bar, restaurant, Internet phones and Internet access for the crews of merchant vessels and cruise ships. In Chile, once people know you have an interest in something it is incredible how many people find out and come from out of practically nowhere to tell you what they know or what is available. The purchase process is about the same as one would experience in the USA, Canada, England or any other developed country. We highly advise that you engage the services of a Chilean attorney and preferably one who has been recommended by another expatriate or two.Link here.
DUBAI RENTS ARE “UNVIABLE” SAY LOCALS
The majority of Dubai residents believe that the high cost of home rentals relative to other parts of the world such as the UK and the U.S. makes living in the city “unviable” in the long-term, according to a recent survey. An overwhelming 92% of the 412 individuals who took part in the survey said rents take up a larger proportion of Dubai residents’ income than in other cities. Almost three-quarters (72%) of the respondents said that they spent half or more of their annual income on home rentals, while 67% stated that the current situation made living in Dubai “unviable” in the medium- to long-term.
The survey was commissioned by DSL Exhibitions, organizers of the upcoming Resale and Rental Property Show, which is to be held on the 8th and 9th of September 2006 at Dubai’s Crowne Plaza Hotel. Reflecting Dubai’s diverse population, 60% of the sample were nationals from the Indian sub-continent, 20% were UAE nationals, 15% were expatriates from Arab nations while 5% were nationals of other countries. All respondents had lived in Dubai for three years or more.
Interestingly, while less than half (45%) of the respondents felt that the sale prices of properties were too high in Dubai, almost 87% said that rentals are unsustainable at current levels. In other findings, about two-thirds (62%) of the respondents considered Dubai’s mortgage market to be immature compared with other parts of the world, with few schemes such as “rent-to-buy” on the market. 82% felt that mortgage was also “too expensive” when compared with developed markets. Nonetheless, 21% felt that products were growing to meet the needs of property buyers.Link here.
MALTA’S POOR INFRASTRUCURE MAY DETER INVESTORS DESPITE PROPERTY BOOM
Despite the island’s booming property market, spoiled beaches, poor roads and a bad infrastructure could be costing Malta’s economy millions in lost revenue, according to a travel guide for the island. “The lack of investment in Malta tourism and the island’s infrastructure is turning investors and tourists away to other destinations,” claims the guide. “At a time when many Mediterranean islands are seeing an increase in visitor numbers, Malta has seen a drop of over 2% in the first six months of 2006 compared to 2005, and unless there’s a sharp turnaround in Malta’s fortunes as a holiday destination the overall figures for the year as a whole could be even worse.”
Property prices in Malta have risen sharply in recent years, partly spurred on by Malta joining the EU in 2004, while recent government figures showed a 16% rise in the year to March 2006. One Malta property company reports that the demand for property in Malta remains buoyant from the U.K., U.S., Australian and European mainland markets, and predicts a further 10% rise in the coming year.
The Malta government is expected to allow developers to utilize more land for building, but some property companies see this as a negative rather than a positive move. “Malta is an island with a finite amount of land, and while the Malta government view releasing more land for building, and more properties as the answer to increasing property prices, we believe this is the wrong approach,” said a spokesman for Tribune Property, “and in the end more developments could have an adverse impact on Malta’s economy. Tourism is an important industry for Malta, and tourists aren’t impressed by cranes and construction work while they’re trying to relax or go to see Malta’s historical sights, and if it’s a first visit to the island there’s an increased chance that it will be their last, losing the Malta holidays industry repeat business.”Link here.
TRADE COMMON CURRENCY IN MERCOSUR’S AGENDA
Mercosur and associate member countries Finance ministers are scheduled to meet in Rio do Janeiro to address, among other issues, the possibility of issuing a common trade currency, which would eventually replace the U.S. dollar. The Brazilian Finance Ministry which is hosting the meeting said a trade common currency would help promote cooperation and trade in the region. Participating at the gathering will be ministers from the five Mercosur full members, Argentina, Brazil, Paraguay, Uruguay and Venezuela, as well the five associated members, Bolivia, Colombia, Chile, Ecuador and Peru.
The use of local currencies in regional trade was discussed originally at the 30th Mercosur advisory council meeting of Finance ministers and Central Bank presidents last July in Cordoba, Argentina. According to the Buenos Aires financial press discussions on the issue have advanced between Brazil and Argentina, the two largest members of Mercosur which have a bilateral trade that reached $16 billion in 2005. “The Argentine exporter, for example, has to convert pesos into dollars and dollars into reais. We would like to conduct direct operations with our currencies,” Brazilian Finance Minister Guido Mantega said at the July meeting. Mantega argues that replacing the U.S. dollar in business transactions would help reduce costs, diminish pressure on exchange rates and strengthen local currencies.
The meeting in Rio will aim to “strengthen even more regional integration of Mercosur and unite efforts to seek common denominators in the political, economic and financial areas,” reads the official release. However analysts point out that a better coordination of macroeconomic policies between member countries will be needed before reaching the stage of a common currency.Link here.
RUSSIAN RUBLE SUCCESS HIGHLIGHTS DEMISE OF U.S. DOLLAR
The Russian Financial Ministry announced last week that they had successfully repaid $3.6 billion of debt in the first half of 2006. Compared to the U.S., which accrues, on average, well over a billion dollars of debt per day, Russia’s dedication to repay debt is as impressive as it is telling. The Russian ruble, which utterly collapsed less than a decade ago, is beginning to challenge the once reliable dollar as the next foreign reserve currency.
“The ruble’s rise is a serious gut-check confirmation,” said Justice Litle, an expert on international currency trade. Litle believes that the ruble’s recent growth signals the weakening of global democracies and the inevitable rise of national oil companies controlled by authoritarian states. “Russia’s finances have become so strong, thanks to its position as a top energy exporter,” said Litle, “that there is talk of the (now fully convertible) ruble cutting into the dollar’s turf as a regional reserve currency.”
The ruble is also backed by a booming economy. Barron’s recently reported that the Russia Trading System Index registered gains of 96% over the past 12 months, vs. the Dow Jones Industrial Averages’ 5.4% year-to-date growth. “This is a remarkable sea change,” said Litle. “The Russian economy, along with the ruble, was completely down and out, and now it has managed to start competing with the dollar. This shift highlights an economic and geopolitical reality that Americans are having a hard time facing: the dollar is in trouble.”Link here.
MAURITIUS AIMS HIGH WITH LOW TAX AGENDA
Two new pieces of legislation will make Mauritius one of the most competitive jurisdictions in the world in terms of tax and regulation, according to Deputy Prime Minister and Minister of Finance and Economic Development, Rama Sithanen. Speaking at a workshop, Sithanen said the government wants to make Mauritius a globally competitive nation capable of reaching greater heights without trade preferences. The new legislation, he added, was one of the most comprehensive sets of reforms the country has witnessed in many years. “Our new tax policy is a prominent example of how both macroeconomic and microeconomic concerns of businesses are addressed in the reform programme. Mauritius is becoming one of the lowest tax jurisdictions in the world, with a 15% flat rate which will give our enterprises an important competitive edge,” stated the Deputy Prime Minister.
Sithanen explained that the Business Facilitation Act complements the Finance Act to ensure that reforms at the macro level, including fiscal consolidation, and at the micro level reinforce each other so as to give maximum impact on investment, trade and job creation. The Business Facilitation Act also aims to further open up the economy to business by sweeping away irrelevant laws and reducing bureacracy.Link here.
IRS ISSUES GUIDANCE ON PRIVATE DEBT COLLECTION INITIATIVE
The IRS has released legal guidance outlining the protections in place for the controversial new private debt collection program. According to the IRS, the guidance describes the “limited” role which private collection agencies (PCAs) may play in collecting back taxes and the legal restrictions and procedures in place to safeguard taxpayer privacy and taxpayer rights. The IRS will assign delinquent federal tax accounts to three PCAs beginning September 7. An initial 12,500 taxpayers who owe back taxes will be in this group, with the number reaching approximately 40,000 by year’s end.
To assist the IRS in its collection of back taxes, the 2004 American Jobs Creation Act authorizes the IRS to hire private firms to collect federal tax debts. The IRS says that the provisions were “carefully crafted” by Congress, but the scheme has attracted strong criticism from mainly Democratic lawmakers, who fear that taxpayer privacy could be compromised. However, the IRS says that the legislation includes several limitations to ensure the private firms will be subject to the same stringent taxpayer protection and privacy rules that IRS employees work under. In addition, private firms cannot subcontract the work.
Private firms are not authorized to take enforcement actions such as filing liens, or making levies or property seizures. In addition, private firms are not authorized to work on technical issues such as offers in compromise, bankruptcies, hardship issues or litigation. The IRS will assign to the private firms cases in which the taxpayer has not disputed the liability. “Redirecting relatively simple cases to private firms will permit the IRS to continue to focus its existing collection and enforcement personnel on more complex tax issues,” Everson argued.Link here.
H&R BLOCK AGREES TO SETTLE OVER TAX REFUND LOANS
U.S. tax preparation firm H&R Block has said that it is “pleased” to be able to settle a long-running class action lawsuit related to its sale of controversial refund anticipation loans, or RALs, for $39 million plus interest. The settlement covers 1.72 million H&R Block customers who bought the loans, arranged through Beneficial National Bank – a unit of British bank HSBC Holdings – between April 1994 and December 1996. RALs are short term advances that tax preparers can extend to their customers, who then sign over their official tax refund checks when they are issued. Interest rates on such loans are high, and can equate to as much as 100% on an annualized basis.
The plaintiffs claim that the company did not make it clear that the cash advances they received were actually packaged as loans, an argument that H&R Block rejects. Nonetheless, the company was keen to settle a lawsuit which has dragged on since 1998. An initial $25 million settlement was thrown out by the federal appeals panel in 2003, while a second settlement was rejected by District Judge Elaine Bucklo as inadequate. In a judgment dated August 28, Bucklo concluded that the third settlement was “fair and reasonable.” According to Bucklo, it would have been doubtful that the plaintiffs would have succeeded at trial. Ronald Futterman, the Chicago attorney who represented the plaintiffs, said that eligible class members would be paid about $78 for each of their loans, provided no more claims were submitted before a deadline at the end of October.Link here.
IRS TO APPEAL TAX COURT DECISION REGARDING FIRM’S TRANSACTIONS WITH IRISH SUBSIDIARY
IRS pursuing several firms on transfer pricing arrangements with Irish subsidiaries.
The IRS is to appeal against a decision by the U.S. Tax Court regarding the allocation of costs between Xilinx Inc., a U.S. semiconductor manufacturer, and its Irish subsidiary. In a judgment published on August 30, 2005, the Tax Court found that Xilinx’s cost sharing agreement did not, as the IRS had argued, include any sharing of cost for stock option expenses and met the arm’s-length standard of the IRS Tax Regulations. The Tax Court concluded that the company was not liable for any tax, penalties or interest associated with the IRS assertions. On August 25, the IRS filed a Notice of Appeal against the decision with the U.S. Court of Appeal. In a filing with the SEC, Xilinx announced that it intends to oppose the appeal because it believes that “the Tax Court decided the case correctly.”
Xilinx is one of a number of U.S. technology companies being pursued by the IRS for outstanding taxes related to transfer pricing arrangements with Irish subsidiaries. Last month Cadence Design Systems, a designer of software and hardware tools for the semi-conductor industry, filed a notice with the SEC revealing that it has been locked in a dispute with the IRS since 2003 concerning an alleged $143 million in unpaid tax relating to the three tax years between 1997 and 1999. Symantec, the maker of Norton, the popular anti-virus software, recently settled a $100 million transfer-pricing tax claim by agreeing to pay the IRS $36 million, but is also fighting a separate IRS claim totaling $900 million.Link here.
CZECH PRIME MINISTER PROMISES TAX EVOLUTION, NOT REVOLUTION
Incoming conservative Czech Prime Minister Mirek Topolanek has said that he will set aside his party’s goal of introducing a flat rate of income tax, and has pledged instead to simplify the tax system. In a recent interview, Topolanek revealed that he wants to emulate much of the tax policy of Robert Fico, the Prime Minister of neighboring Slovakia, who is seeking to dismantle the country’s own 19% flat tax by introducing a two-tiered VAT system and extra income tax on high income earners.
Corporate tax in the Czech Republic was reduced to 24% this year, and personal income tax rates are levied at progressive rates between 15% and 32%. The standard rate of VAT is 19% for most goods and services, with a 5% discounted rate for certain specified goods. Originally, the center-right Civic Democratic Party (CDP) had planned to follow the example of many governments in Central and Eastern Europe by introducing a 15% flat tax. Topolanek was appointed as interim prime minister by President Vaclav Klaus as a first step toward forming a minority government following inclusive elections held in mid-June. However, the CDP will need the support of the left-of-center Social Democrats, or CSSD, to pass a confidence vote scheduled for next month. The CSSD are opposed to the CDP’s tax plans.Link here.
FINLAND CRACKING DOWN ON TAX EVASION BY ASSOCIATIONS AND FOUNDATIONS
The National Board of Taxation started a 3-year crackdown starting the beginning of 2006 on suspected tax violations committed by associations and foundations. Nearly all of Finland’s nearly 130,000 associations and foundations enjoy tax-free status as not-for-profit organizations. Poor scrutiny of the finances of the associations has attracted shady figures who operate actual businesses activities without paying taxes, under the guise of working for the common good.
“The purpose of the project is to find out how much money is moving in this field, and if the sum is so big that it is worth spending ammunition on it,” says Tuomo Karvonen of the National Board of Taxation. Dozens of inspections have been conducted, and up to 30 are still incomplete. The investigation has revealed that some associations operate on a tax-free basis, while engaging in business that should be taxed. “Nothing dramatic has come out yet,” Karvonen says.
The Uusimaa Employment and Economic Development Center is currently investigating the use of employment subsidies paid to several associations. Markku Uusitalo, head of the center, says that in many cases, associations have failed to pay employer contributions and taxes. A few cases have come under police investigation. He adds that in many cases, the violations occur out of ignorance.
“Enforcement has long been scattered and weak. This is a broad area, which is difficult to get a grip on. Associations and foundations nevertheless pay great amounts of wages and receive public subsidies,” says Markku Hirvonen, head of a development project aimed at developing cooperation among officials. Hirvonen says that it is possible to engage in shady business for years under the guise of an association before tax authorities get wind of what is going on. “Associations do not have the same kinds of obligations to report on their dealings as companies do.”
Inspections have revealed cases where funds raised for what is supposed to be a charity drive are actually pocketed by the organizer. The founders of an association themselves define whether or not is that of a non-profit organization. Submitting tax declarations is at the discretion of the association itself. Tax authorities usually do not take issue with the activities until fund raising activities have taken on characteristics similar to that of a business.Link here.
SOUTH AFRICAN REVENUE SERVICE ISSUES URGENT TAX SCAM WARNING
SARS has issued an urgent warning to business and individual taxpayers about a scam which attempts to dupe victims into believing they have been mistakenly paid a tax refund by the tax department. The most common approach of the scam according to SARS is a fraudulent letter faxed to a taxpayer – mostly registered businesses – that informs them that a tax refund was mistakenly paid into their bank account. In some instances taxpayers are contacted by telephone or post. The letter urges the taxpayer to deduct bank charges and pay the balance into a bank account which supposedly belongs to SARS. The amounts range anything from R50,000 to R1 million ($7,000 to $140,000).
“SARS wants to caution taxpayers not to pay any money into such accounts after receiving letters. It is not part of SARS’ procedure to issue letters of this nature that claim that a refund was mistakenly been issued to a taxpayer,” the tax department stated in its alert. “It must be emphasized that, in the unlikely event that a refund is mistakenly issued by SARS, SARS has the procedures in place to withdraw the money without involving taxpayers or demanding from them to transfer money,” the alert explained. Guidelines have been issued by SARS to help those who have received letters from suspected fraudsters.Link here.
CARRYING LARGE SUMS OF MONEY? THE POLICE CAN CONFISCATE IT
A federal appeals court has ruled yesterday that if a motorist is carrying large sums of money, it is automatically subject to confiscation. In the case entitled, United States of America v. $124,700 in U.S. Currency, the U.S. Court of Appeals for the Eighth Circuit took that amount of cash away from Emiliano Gomez Gonzolez, a man with a “lack of significant criminal history” neither accused nor convicted of any crime.
On May 28, 2003, a Nebraska state trooper signaled Gonzolez to pull over his rented Ford Taurus on Interstate 80. The trooper intended to issue a speeding ticket, but noticed the Gonzolez’s name was not on the rental contract. The trooper then proceeded to question Gonzolez – who did not speak English well – and search the car. The trooper found a cooler containing $124,700 in cash, which he confiscated. A trained drug sniffing dog barked at the rental car and the cash. For the police, this was all the evidence needed to establish a drug crime that allows the force to keep the seized money. Associates of Gonzolez testified in court that they had pooled their life savings to purchase a refrigerated truck to start a produce business. Gonzolez flew on a one-way ticket to Chicago to buy a truck, but it had sold by the time he had arrived. Without a credit card of his own, he had a third-party rent one for him. Gonzolez hid the money in a cooler to keep it from being noticed and stolen. He was scared when the troopers began questioning him about it. There was no evidence disputing Gonzolez’s story.
The Eighth Circuit summarily dismissed Gonzolez’s story. It overturned a lower court ruling that had found no evidence of drug activity, stating, “We respectfully disagree and reach a different conclusion. … Possession of a large sum of cash is ‘strong evidence’ of a connection to drug activity.” Judge Donald Lay found the majority’s reasoning faulty and issued a strong dissent.Link here. Full text of ruling here (PDF file).
THE TOP 10 ADVANTAGES OF LOW-RENT LIVING
One of the biggest threats to happiness at work is having too many fixed expenses at home. When you are completely dependent on bringing home a pay check (or two!) every single month, you are vulnerable. If work turns out to be unbearable you cannot simply up and leave and take three months without income.
I have chosen low-rent living for myself. At first it was through accident rather than planning but now I would never live any other way. Some years ago, my wonderful girlfriend and I were hunting for a new place to live in Copenhagen. We were living in her small, 1-bedroom apartment and we really longed for more space, more rooms and a bigger kitchen. Homes are getting ludicrously expensive in all European capitals including Copenhagen. We actually submitted bids on two different (expensive) homes and narrowly lost out in each case to other bidders. Back then we were devastated – we really had our minds set on those two places. Today we are incredibly relieved that it never came through. We are still living in Patricia’s apartment which costs us next to nothing and looking back I can see how much of an advantage that has been for the both of us. Obviously this applies not only to your mortgage or rent but to all fixed expenses. Rent/mortgage just happens to be the largest fixed expense most of us have. Leaving lots of breathing room in my economy has brought me some huge advantages:
This is not about being unambitious at work or setting small business goals – my aspirations are as big as the next person’s. It is about realizing that economic flexibility frees you to do things and take chances that lead to more happiness and therefore to great results in your work life and your private life. I am also not knocking anybody else’s lifestyle and financial decisions. This is simply an observation of something that I discovered mostly by accident but which works incredibly well for me. Maybe you would be terribly miserable living in a small appartment instead of a huge house. But I know that many people feel trapped in jobs they do not like because their financial situation is precarious. If that is the case for you maybe you should consider trying the low-rent life and granting yourself some financial freedom. It is a huge step towards more happiness at work and in life.Link here.
Diving for dinner.
Bryan Meadows’s backpack lay open on the ground, bulging with bags of peanuts, a tub of chocolate-covered ginger and two loaves of bread. He tossed aside a few moldy pastries and was on his way back for more when he suddenly realized the jig was up. “Can I ask what you’re doing?” asked a Trader Joe’s employee. Meadows was caught dumpster diving, though he is neither homeless nor destitute. He considers himself a “freegan” – a melding of the words “free” and “vegan” – meaning he tries not to contribute to what he sees as the exploitation of land, resources and animals wrought by commercial production.
The Trader Joe’s employee was polite at first, but within 30 seconds the conversation turned antagonistic. Meadows insisted he had done nothing wrong, and the employee grew impatient with the 18-year-old college student’s refusal to cooperate. “Put all of it back in the trash and get off the property now,” the employee ordered. As Meadows saw it, that chocolate-covered ginger had a one-way ticket from the store to the landfill, so he was liberating it, not stealing it. The employee saw it differently. The garbage was on his company’s property, so the teenager had no claim to it. He also did not relish the idea of someone getting sick from something carrying the Trader Joe’s label.
The number of freegans in the D.C. region is anybody’s guess, but the ranks appear to be growing. Spokesmen from several groceries said the sight of people behind their stores has become more common, and stores are citing trespassing laws, food-safety concerns and the fear of being sued to discourage dumpster divers. A half-dozen longtime divers said such Web sites as Meetup.com, which connects people looking for activity partners, have seen a huge increase in the number of curious first-timers seeking fellow divers. And disillusionment with the Bush administration’s environmental policies has pushed some young people to everyday forms of protest.
The Environmental Protection Agency estimates that 96 billion pounds of food are thrown away each year, making up 12% of the trash produced in the U.S. Because of federal and state regulations for restaurants and grocery stores, expiration dates often come before the food actually spoils. Much of it ends up in bags separate from the rest of a store’s garbage, providing easy access for divers. “I’m trying to limit my participation in some of the corporate farming practices that are terrible for the environment and aren’t healthy,” said Columbia Heights resident Ryan Beiler, citing pesticides, animal cruelty and pollution. “I’m struck by the absurdity of how the American economy works.” Beiler, Web editor for Sojourners magazine, estimated that 95% of the food he eats comes from his every-other-week dumpster runs.
Like many dumpster divers, Beiler and Meadows have had multiple run-ins with police or store managers, leading in some instances to the shut-off of prime locations. The same day that Meadows was caught diving at the Trader Joe’s, employees began locking the dumpster. Because dumpster diving generally requires trespassing, divers are bound to accept stores’ refusal to allow them access to the trash. Even if food from dumpsters looks edible, food safety experts advise against eating it once it has been thrown away. But several experienced divers said they have never become sick from food found in a dumpster. Half the fun of dumpster diving is the anticipation of the unknown, they said. Beiler has come home empty-handed some nights. On other trips, he has netted pounds of smoked salmon, full containers of lobster, and several trays of sushi.
John Hoffman, an author who coined the term “dumpster diving” in a 1993 how-to guide, said stores are taking steps to discourage divers. “Compactors are Satan's little helper,” he said. “Unless [store employees] are evil, why do they care that you’re taking trash off their hands?” Grocery spokesmen shrugged off the accusations. “There’s a popular misperception that stores are throwing away a lot of food,” a spokesman for Whole Foods stores said. “If we feel it’s fit to be eaten, we sell it or donate it.”Link here.
AMERICANS’ NET WORTH FALLS, REPORT SAYS
The net worth of many U.S. households has fallen as Americans cope with rising debt, flattening real estate values and stagnant wages, according to a report today from the Economic Policy Institute. The study says the accumulation of stocks, bonds, bank savings or other assets aside from equity in their homes has eluded many Americans. In fact, about 30% of households have a net worth of less than $10,000. The institute’s report refutes the notion that most people have invested in the stock market through 401(k) retirement plans at work, mutual funds or other means. Less than half of households own stock in any form, and of those who own stock, just one-third have holdings in excess of $5,000. “Stock is sometimes described as the democratization of wealth, which turns out to not so much be the case,” Institute President Lawrence Mishel said.
The study by the Washington-based liberal think tank also noted a racial divide almost unchanged from 20 years ago. The median wealth of white households was $118,300 in 2004. Black families’ median wealth was one-tenth as much, $11,800. The wealth findings concern Americans’ net worth – the sum of a family’s assets in real estate, checking and savings accounts, stocks, retirement funds and other sources, minus all the family’s liabilities, including mortgages and credit card debt. The research uses data from the Federal Reserve Board’s Survey of Consumer Finances. It found economic promise in a “remarkable and unprecedented surge in home ownership rates” in the past decade. But Mishel warned that people have treated the equity in their homes “like ATM machines.” And the authors found persistent disparities in wealth, with a deepening concentration of assets among the very richest Americans.Link here.
RARE COIN PORTFOLIOS OUTPERFORMING EQUITIES
Rare U.S. coins can provide the perfect alternative investment to ride out periods of falling equity markets and inflation, according to industry experts. Rare U.S. coins tend to perform well during periods of high inflation. As such they may hedge interest rate sensitive investments such as bonds. Adding coins to an investment portfolio also tends to lower overall portfolio volatility. Over the past 35 years investment grade rare U.S. coins have enjoyed a 12.7% compounded annual rate of return.
“On a ten-year moving average basis, rare coins returns are negatively correlated with equities, thus providing a potential hedge against major down ticks in stock markets,” noted Gary Knaus, President of Numismatic Investments Corporation, whose firm specializes in selling research-based portfolios of prospectively undervalued rare U.S. coins to investors. Numismatic also said that investors should have no concerns over liquidity in the rare coin market. Coins that have been certified by the two major independent grading services are readily marketable and can be sold directly to dealers or via auction.
Coins also trade on a sight-unseen basis on the two independent electronic dealer networks, which at any one time typically have $800 million in open dealer bids. Furthermore, rare coins can qualify for tax advantages – coin investors can swap rare coins that have appreciated in value for rare coins that may be undervalued without realizing a taxable gain.Link here.
PAMPHLETS ALLEGEDLY SHOWED AUSTRALIANS HOW TO BEAT THE TAX SYSTEM USING OFFSHORE ENTITIES
Clients of the Swiss-based accounting firm at the center of the Wickenby tax fraud and money-laundering investigation had access to three pamphlets containing advice on offshore structures allegedly designed to avoid tax. The tightly held booklets produced by Strachans accountants are understood to be the subject of a major investigation by Australian authorities.
One of the pamphlets, titled “Tax Planning and Offshore Administration”, is understood to explain to clients how Strachans could help set up companies in regions where disclosure of the beneficial owners was not required. The British Virgin Islands was recommended as one attractive option, and it is understood this tax haven was a jurisdiction often used to avoid tax by some of Strachans’s hundreds of Australian clients. A second booklet titled “Trusts: A Simple Concept”, is understood to explain how clients can use trusts possibly to avoid paying tax and duties, and how to set them up to ensure the identity of the settlor (ultimately the client) of the trustee remains private. “In essence, by owning a share in a company via trusts it is possible to keep the identity of the true beneficial owner of the company a secret,” the booklet is understood to explain.
The third pamphlet is titled “Choosing the Right Jurisdiction”. The booklets are understood to have been seized in a raid authorized under the Operation Wickenby investigation being run by the Australian Crime Commission, Australian Taxation Office and the Australian Federal Police. The raid took place on February 14, 2004, at the Melbourne hotel room of Strachans principal Philip Egglishaw. It is understood Mr. Egglishaw was in Australia to gather instructions about financial arrangements from clients, who were the settlors of the trusts and beneficial owners of the thousands of offshore companies administered by the accountants.Link here.
BOXES ON A CAR
Most motorists probably do not know that they have been giving a free ride to a silent passenger who is secretly recording their driving habits. Or that lawyers, police and insurers might someday want that passenger to provide evidence. The nosy passenger is an event data recorder (EDR), a cigarette pack-size device similar to “black boxes” on airplanes. More than 70 million vehicles, including two-thirds of cars made since 2004, carry EDRs. They track speed, seat-belt use, steering, braking and other data in the seconds before and after a crash.
Last week, the National Highway Traffic Safety Administration (NHTSA) ordered automakers to standardize the data collected by EDRs and to disclose their presence in owner’s manuals. The new rule, however, will not take effect until the 2011 model year. NHTSA says the automakers need time to make the devices more uniform. Maybe so. But there is no good reason the notification requirement could not kick in now. Drivers have every right to know the recorders are in their cars.
They also have reason to know who has access to the data. Today, that depends on where they live. Ten states have passed laws requiring that automakers notify new car buyers that the boxes are present, and several states prohibit the download of data without the owner’s permission or a court order. Court rulings vary about whether police can tap EDRs or whether insurers can use them to raise premiums or deny claims. There are no national rules. NHTSA, which prodded manufacturers to install the boxes so it could research accident causes, says it lacks authority to impose privacy standards. But the agency’s practices offer a useful model that Congress could translate into law. NHTSA examines hundreds of EDRs a year, but only with the vehicle owner’s consent. That is the right approach.Link here.
U.S. AND E.U. AIM TO TAP DEEPER AIRLINE PASSENGER DATA
Homeland Security Secretary Michael Chertoff has proposed expanding the screening of international passengers to allow the U.S. government to not only look for known terrorists on watch lists, but also to broadly search through itinerary data to identify people who may be linked to terrorists, he said in a recent interview. European leaders are also considering seeking access to this same database, which contains not only names and addresses of travelers, but often their credit card information, email addresses, telephone numbers, and related hotel or car reservations.
The proposals, prompted by the recent British bomb plot allegations, have inspired a new round of protests from civil libertarians and privacy experts, who had objected to earlier efforts to plumb these repositories for clues. “This is a confirmation of our warnings that once you let the camel’s nose under the tent it takes 10 minutes for them to want to start expanding these programs in all different directions,” said Jay Stanley, a privacy expert at the American Civil Liberties Union.
The U.S. has rules in place, and European nations will have rules by this fall, allowing them to obtain basic passenger information commonly found in a passport, like name, nationality and date of birth. U.S. officials are pressing to get this information, from a database called the Advance Passenger Information System, transmitted to them even before a plane takes off for the U.S.
But a second, more comprehensive database known as the Passenger Name Record (PNR) is created by global travel reservation services like Sabre, Galileo and Amadeus, companies that handle reservations for most airlines as well as for Internet sites like Travelocity. Each time someone makes a reservation, a file is created, including the name of the person who reserved the flight and any others traveling in the party. The electronic file often also contains details on rental cars or hotels, credit card information relating to travel, contact information for the passenger and next of kin, and at times even personal preferences, like a request for a king-size bed in a hotel. uropean authorities have no system in place to routinely gain access to this PNR data. Franco Frattini, vice president of the EC and the commissioner responsible for justice and security, intends to propose that governments across Europe establish policies that allow them to tap into this data so they can quickly check the background of individuals boarding flights to Europe, his spokesman said.Link here.
GUIDELINES NEEDED TO PROTECT ANONYMITY
In early August, officials at America Online released information about searches being conducted by AOL members and users of the AOL search tool. This historical data was released onto the internet by several AOL officials to demonstrate how useful such data could be for tracking patterns, uses and interest of AOL members. The data was anonymized, with members being assigned random ID numbers instead of userid’s or names, and was only online for a few days. The New York Times demonstrated, however, how easy it was to take that anonymized data, and with a few keystrokes, determine the identity of the searcher, and their personal interests, likes and dislikes – indeed to create a profile of users from this anonymized data.
The persons responsible for the “data breach” at AOL were fired – more for a public relations problem than anything else. The case demonstrates how any database, once collected, can be misused, and the significant lack of legal protection for similar information. Privacy laws, both in the U.S. and abroad generally protect the collection, dissemination and use of “personally identifiable information” of various types and classes. This includes, for example things such as identifiable banking or financial information, personal health information, credit card or payment card information, and personal communications (for example, contents of emails).
Aggregated information on the other hand is not generally afforded the same level of protection. Thus, information about trends, overall internet use, health care utilization, overall buying patterns, and the like is generally treated as the property of the institution that creates, collects, stores or collates this information. If it is easy to convert the aggregate information into identifiable information, it may be afforded some level of protection, or may still be treated as identifiable information.
For many companies, there is a blurring of the lines between personal information (that is information about me) and aggregate information. So, for example, Google collects information about every single thing I look for – every search request, the contents of everything delivered, what I click on, where I go from there. It keeps both the aggregate information (how many people buy stuff off those ads on the side) and the personal information (tell me everything you have looked at this month). The aggregated information is analysed, processed, sold, and used by Google to increase advertizing revenue, do load balancing – all kinds of things.
The same is true of ISPs and ecommerce sites. They collect and analyse massive amounts of information about even the most intimate details about you – who you chat with, who you email, what you read, what you post, and potentially even the source, destination and length of your VoIP calls. Unless they have agreed not to in a Terms of Service agreement, there is virtually nothing preventing them from using this data, in an aggregated and “anonymous” fashion, and very little preventing them from using it otherwise.
Governments – particularly the U.S. government – have taken advantage of this fact to attempt to obtain massive amounts of information. When they got the cooperation of various telephone companies to turn over massive amounts of telephone calling records (non-content information) they apparently argued that such aggregated information (in that case not anonymized) was not entitled to legal protection. The problem is, as the NY Times learned, it is relatively easy to convert this anonymized information into pointers to learn its source. More destructively to privacy, once you know the source, you end up learning a tremendous amount of information about the source. Given enough material with which to cross reference the data, you can probably figure out who the source was. Massive databases make this job easier and therefore threaten privacy.
While laws such as the EU Data Privacy Directives and their equivalents in Asia generally give the data subject the right to access and correct personal information collected, this right may not extend to aggregated information – which ultimately is nothing more than lots of personal information. The laws need to be tightened. We need to redefine personal information as any information from which the identity of a person can reasonably (and sometimes unreasonably) be determined (this is actually the general standard for laws like the HIPAA, but is generally not well enforced). More importantly, we need to have some guidelines on what general information can be collected, collated, analyzed, and processed, both by governments and the private sector. Until then, it is generally a free for all.Link here.
eBay accused of privacy breach.
UK’s Information Commissioners Office (ICO) is to investigate eBay after Privacy International lodged an official complaint about the company’s data retention practices. PI alleges that the auction site is deliberately making it difficult for people to delete their accounts, with the aim of bolstering customer numbers. Under the 1998 Data Protection Act (DPA), firms are obliged to allow people to delete their registration information.
PI head Simon Davies explained, “There are two categories of offenders in cases like this. eBay is a category two offender, which means that it does provide an opt out option, but it is not easy to find. Category one offenders, such as Amazon or Friends Reunited, have no delete account function at all.” Davies said PI had chosen to target a lesser offender in the hopes of getting a clear ruling from the ICO on what best practice should be. “We could probably win if we challenged a category one offender, but what we want is a set of clear, enforceable guidelines requiring companies to prominently display an account delete function.”
eBay, meanwhile, says users can delete their registration information, and that it only shares user data with law enforcement agencies. Davies says although it is easy for eBay to say this, the level of difficulty involved in deleting account information means the auction site “effectively prevents all but the most diligent and persevering customers from deleting their personal information from the site.” eBay could face a hefty fine, or prosecution, if the ICO finds the company guilty of breaking the DPA rules.Link here.
THE MEN WHO DESTROYED THE U.S. CONSTITUTION
In his 1850 Disquisition on Government, John C. Calhoun argued that a written constitution would never be sufficient to contain the plundering proclivities of a central government. Some mechanisms for assuring consensus among the citizens of the states regarding “federal” laws would be necessary. Consequently, Calhoun proposed giving citizens of the states veto power over federal laws that they believed were unconstitutional (the “concurrent majority”). He also championed the Jeffersonian idea of nullification. To Calhoun (and Jefferson), states’ rights meant that the citizens of the states were sovereign over the central government that they created as their agent, and could only be so if such mechanisms – including the right of secession – existed. Without these political mechanisms the forces of nationalism, mercantilism, and political plunder would relentlessly reshape the Constitution with their rhetoric, and their efforts would eventually overwhelm the strict constructionists. At that point the Constitution would become a dead letter.
In his new book, The Constitution in Exile, Judge Andrew Napolitano explains in very clear language just how prescient Calhoun was. The biggest special-interest group of all – the federal government itself – has “seized power by rewriting the supreme law of the land,” as Judge Napolitano says in the subtitle to his book – just as Calhoun predicted. The purpose of the book, says the judge, is to tell “the unhappy story of liberty lost, federalism trampled, and Big Government run amok.” How did we get to the point, he asks, of where the “federal” (i.e., central) government defines for us the drinking age for alcohol, how much wheat farmers can grow, the ability of terminally ill cancer patients to medicate themselves with marijuana, the amount of sugar that can be used in ketchup, and even the size of toilets?
Unlike the neocons who surround Judge Napolitano in his appearances on the FOX News Channel, he understands that freedom comes “from God and is inherent to our humanity …” Judge Napolitano is one libertarian who is not intimidated by the forces of political correctness, a defining feature of so many “beltway libertarians”. Advocates of centralized governmental power have long falsely associated statements about states’ rights with racism and slavery, which has intimidated most beltway libertarians, but not Judge Napolitano.
After a lucid explanation of each section of the Constitution the judge discusses how the nationalist/mercantilist coalition, led by Alexander Hamilton and his accomplice Judge John Marshall, conspired to effectively rewrite (and undermine) the Constitution almost as soon as he ink was dry on the original copy. The “Federalists” (who would eventually morph into the Whigs, and then the Republicans) never accepted their defeat in the Constitutional convention (which created a federal, not a national government). Nor did they accept Jefferson’s election as president. Thus, two days before his term ended the Federalist President John Adams appointed dozens of “midnight federal judges” and appointed John Marshall to the Supreme Court on March 3, 1801, one day before he would leave office. Marshall “spent the remainder of his career finding clearly disingenuous, historically inaccurate, and highly questionable justifications for ruling that federal power is not limited,” writes Judge Napolitano.
In his most famous decision, Marbury vs. Madison, Marshall gave the federal judiciary the power to rule on the constitutionality of both statutory law and the behavior of the executive branch. “[T]his means that the Supreme Court granted itself the authority to declare the will of the people … null and void …” This of course has caused endless mischief and tyranny. This principle of a monopoly in reviewing constitutionality was not widely accepted, however, until after Lincoln’s war of 1861–1865 destroyed state sovereignty once and for all.
Judge Napolitano recognized that it was Federalists like Joseph Story and John Marshall, and later Whig politicians like Daniel Webster and Abraham Lincoln, who would tell The Big Lie that the Constitution was ratified by “the whole people” and not as it actually was – by the citizens of the sovereign states, with their representatives assembled in state conventions. “That was both historically incorrect and intellectually dishonest,” says Judge Napolitano. According to this false view of the American founding the central government was always the master, not the servant, of the people. This, too, is a perfect recipe for tyranny that has been made by tyrants everywhere. In McCulloch vs. Maryland Marshall enshrined into law Hamilton’s dangerous (to liberty) notion that there were supposedly “implied powers” in the Constitution. He did this in order to justify a central bank, which is mentioned nowhere in the Constitution under actual powers. This created the situation where the powers of the central government were only to be limited by the imaginations of federal politicians.
By far the most brilliant chapter of The Constitution in Exile is chapter four, entitled “Dishonest Abe: The Lincoln You Didn’t Know”. Here the judge recounts how, “"In order to increase his federalist vision of centralized power, ‘Honest’ Abe misled the nation into an unnecessary war.” And, “with very little regard for honesty, Lincoln increased federal power and assaulted the Constitution. His actions were unconstitutional, and he knew it.” He goes on to present chapter and verse of the abuse of the constitution and the consolidation of political power in Washington that took place during and after the Lincoln regime. The judge also recognizes that all other countries in the world ended slavery peacefully, which could have happened in the U.S had the slaves not simply been used as political pawns by the Republican Party to achieve its main goal, the consolidation of political power in Washington and the destruction of citizen sovereignty.
Thanks to the final victory of the Federalist/Whig/Republican cabal continued to enhance governmental power and diminish liberty by perverting the Commerce Clause of the Constitution in the post-war years. By the late 19th century, the monopolistic federal judiciary began attacking capitalism in the name of regulation that supposedly served “the common good”. The judge is wise enough to understand that capitalism itself serves the common good, and that regulation more often than not is the result of special-interest politics. These attacks intensified during the New Deal, which “codified socialism, evaded the Constitution, disregarded the Natural Law, and put individualism on the path to extinction.”
And here is a shocker … “Between 1937 and 1995, not a single federal law was declared unconstitutional by the Supreme Court. Not one piece of legislation was seen as exceeding the scope of Congress’s commerce power.” So much for the phony argument that “judicial review” by the federal courts acts to protect liberty. Instead, it does the opposite. It expands the size and scope of government at the expense of liberty. This sad story is told over the course of several of the latter chapters of The Constitution in Exile.
So what can be done? Among Judge Napolitano’s common sense recommendations are abolition of the income tax (“the Sixteenth Amendment … should be abolished outright”). Same for the Seventeenth Amendment which called for the direct election of U.S. senators and a return to the system of appointing them by state legislatures. And the recognition that the federal government will never check its own power. “Thus, I would clarify the right of the states to secede from the Union,” writes the judge from New Jersey, “losing all the benefits that come from membership [in the union], but regaining all the freedom membership has taken away.”
The U.S. government is now characterized by dictatorial power, abuse of every kind of personal liberty, confiscatory taxation, economic fascism, dangerous militarism, and imperialism. Every American who is concerned about this Nazification of the American government needs to own a copy of The Constitution in Exile.Link here.
BUSH SEEKS RETROACTIVE LAWS TO PROTECT HIMSELF FROM WAR CRIMES PROSECUTION
When I was a kid John Wayne war movies gave us the message that America was the good guy, the white hat that fought the villain. Alas, today the U.S. and its last remaining non-coerced ally, Israel, are almost universally regarded as the bad guys over whom John Wayne would triumph. Today the U.S. and Israel are seen throughout the world as war criminal states.
On August 23 the BBC reported that Amnesty International has brought war crimes charges against Israel for deliberately targeting civilians and civilian infrastructure as an “integral part” of Israel’s strategy in its recent invasion of Lebanon. Israel claims that its aggression was “self-defense” to dislodge Hezbollah from southern Lebanon. Yet, Israel bombed residential communities all over Lebanon, even Christian communities in the north in which no Hezbollah could possibly have been present. UN spokesman Jean Fabre reported that Israel’s attack on civilian infrastructure annihilated Lebanon’s development: “Fifteen years of work have been wiped out in a month.” Israel maintains that this massive destruction was unintended “collateral damage”. President Bush maintains that Israel has “a right to protect itself” by destroying Lebanon. Bush blocked the attempt to stop Israel’s aggression and is, thereby, equally responsible for the war crimes. Indeed, a number of reports claim that Bush instigated the Israeli aggression against Lebanon.
Bush has other war crime problems. Benjamin Ferenccz, a chief prosecutor of Nazi war crimes at Nuremberg, recently said that President Bush should be tried as a war criminal side by side with Saddam Hussein for starting aggressive wars, Hussein for his 1990 invasion of Kuwait and Bush for his 2003 invasion of Iraq. Under the Nuremberg standard, Bush is definitely a war criminal. The U.S. Supreme Court also exposed Bush to war crime charges under both the U.S. War Crimes Act of 1996 and the Geneva Conventions when the Court ruled in Hamdan v. Rumsfeld against the Bush administration’s military tribunals and inhumane treatment of detainees.
President Bush and his Attorney General agree that under existing laws and treaties Bush is a war criminal together with many members of his government. To make his war crimes legal after the fact, Bush has instructed the Justice (sic) Department to draft changes to the War Crimes Act and to U.S. treaty obligations under the Geneva Conventions. One of Bush’s changes would deny protection of the Geneva Conventions to anyone in any American court. Bush’s other change would protect from prosecution any U.S. government official or military personnel guilty of violating Article 3 of the Geneva Conventions, which prohibits “at any time and in any place whatsoever outrages upon personal dignity, in particular, humiliating and degrading treatment.” Eugene Fidell, president of the National Institute of Military Justice says that Bush’s changes “immunize past crimes.”
Under the U.S. Constitution and U.S. legal tradition, retroactive law is impermissible. What do Americans think of their President’s attempts to immunize himself, his government, CIA operatives, military personnel and civilian contractors from war crimes? Apparently, the self-righteous morally superior American “Christian” public could care less. The Republican controlled House and Senate, which long ago traded integrity for power, are working to pass Bush’s changes prior to the mid-term elections in the event the Republicans fail to steal three elections in a row and Democrats win control of the House or Senate.Link here.
DEFEND THE THIRD AMENDMENT!
“No Soldier shall, in time of peace be quartered in any house, without the consent of the Owner, nor in time of war, but in a manner to be prescribed by law.” ~~ Third Amendment, United States Constitution (1791)
Well, why not? There are any number of organizations, both political and strictly educational, promoting the right to free speech (First Amendment), and the right to keep and bear arms (Second Amendment), so I figure it is high time someone started defending the Third Amendment. Why, you ask? Again, why not? Government has violated, and continues to violate ever more egregiously, the other nine amendments in the U.S. Bill of Rights, so why not head them off at the pass before they get started on this one?
It is that loophole at the end which gives me the greatest cause for concern: “… nor in time of war, but in a manner to be prescribed by law.” Well, there is no shortage of war these days, is there? Even if Congress never officially declared it in Afghanistan, or Iraq, which just goes to show what total absence of law government operates under when it means fulfilling its sole ostensible purpose, to defend and maintain the peoples’ liberty. We need look no further than what the recent Kelo ruling did to the eminent domain clause in Amendment 5. Why should Amendment 3 receive any different treatment from such a perverse body as the U.S. Supreme Court, or any of the lower courts?
We could start with a website – say, www.thirdamendment.com, or something to that effect. We could begin educating the masses about the very real and credible danger of Green Berets or marine platoons knocking on the door late some evening, brandishing machine guns and demanding to be put up for the night. We could begin flooding Congress and the White House with phone calls, faxes, and e-mails – demanding that no military personnel be permitted to stay in our homes without our express permission. When these Pols balk, shake their heads and laugh, and ensure us that there is no danger, that no such plans exist and are not even in the works we could simply press that much harder. Then, perhaps with enough of us shouting our heads off, the Pols, in an effort to quiet us down, will introduce something like The Third Amendment Protection Act of 2008 (an election year would be a good bet for such a bill to get handed down). From there, things will get interesting. …Link here.
STUPID SECURITY MEASURES NOMINEES SOUGHT
Human rights watchdog Privacy International has relaunched its hunt for the World’s most stupid security measures. The “Stupid Security” awards aims to highlight the absurdities of so-called security procedures that make little contribution to real security improvements … to unearth the world’s most pointless, intrusive, stupid and self-serving security measures. PI’s director, Simon Davies, said the organization had taken the initiative because of “innumerable” security initiatives around the world that had “absolutely no genuine security benefit.” This will be the second competition in the series, following inaugural awards in 2003 which attracted 5,000 entries.
Privacy International, the outfit behind the Big Brother awards, says that the time has never been better to cast a critical eye on security in its widest sense. “Even before the recent ‘liquid bomb’ scare a whole army of bumbling amateurs has taken it upon themselves to figure out pointless, annoying, intrusive, illusory and just plain stupid measures to ‘protect’ our security,” it said.
Gongs will be awarded in five categories: (1) the Most Egregiously Stupid Award, (2) Most Inexplicably Stupid Award, (3) Most Annoyingly Stupid Award, (4) Most Flagrantly Intrusive Award and (5) Most Stupidly Counter Productive Award. PI cites a few choice examples of the sort of pointless measures it is seeking to hold up to ridicule – including an airport that this month emptied out a full plane because a passenger was drinking from a lemonade bottle, to the British schools that fingerprint their children to “stop” the theft of library books, to the airline company that refused to allow passengers to bring books or magazines onto the plane.
There are real concerns about security, of course. PI argues that unworkable security practices and illusory security measures do nothing to address issues of real public concern. They only hinder the public, intrude unnecessarily into our private lives and often reduce us to the status of cattle. “The situation has become ridiculous” said Davies. “Security has become the smokescreen for incompetent and robotic managers the world over.” Although the airline industry has become the most prominent offender in introducing pointless security measures it is far from alone in its folly. The security desk of a U.S. office building complained because paramedics rushing to attend a heart-attack victim had failed to sign-in. Nominations can be sent to email@example.com.Link here.
PayPal freezes out British user in “terror” list snafu.
PayPal has frozen Brit Mohammed Hassan’s account and banned him from using the service if he refuses to fax the company a raft of personal information. The online payments service told him his name is “similar to or a match to” a name on the U.S. government’s anti-terror assets freezing list. The Office of Foreign Assets Control Specially Designated Nationals List (SDN) is operated by the U.S. Treasury and designed to prevent money laundering and funding of illegal organizations. The SDN list is here (PDF file). It contains hundreds of names, including Osama Bin Laden and a Tunisian named Mohamed Hassan.
Mohammed received an email saying that, “Access to your PayPal account has been denied because your name is similar to or a match to an entry on the Office of Foreign Assets Control Specially Designated Nationals (SDN) list. We are required to further verify your identity. In order to regain access to your account, please provide the following documentation: 1.) A copy of government-issued photograph identification (i.e., passport, driver’s license). 2.) A copy of a utility bill verifying your address. 3.) A copy of a document verifying your date and place of birth. … Please provide the requested information within the next 30 days. If this information is not received within the next 30 days, your PayPal account will be closed.”
PayPal confirmed that in Mohammed Hassan’s case, his account will be closed unless he faxes his passport to them – action he told us he is not willing to take on priniciple. Unlike banks, PayPal does not require identity verification to set up an account. PayPal refused to provide any details of how many customers the bans are affecting, or whether the policy had led to any genuine terrorist assets being seized. Mohammed works for the UK government, in a job which requires security clearance. “I am not a terrorist or a criminal,” he said. “How the hell can PayPal link me to that name on the SDN list, is it because my name is Arabic? Or is it because PayPal are just plain stupid?”Link here.
U.K. CHARITY ACCOUNT FROZEN AMID TERRORISM INQUIRY
Britain’s charity watchdog said it has frozen the bank accounts of the aid group Crescent Relief as part of a probe into whether money was diverted to an alleged plot to blow up U.S.-bound planes. The Charity Commission said it opened a formal inquiry following media reports potentially linking suspects in the plot to Crescent Relief, which raised funds for earthquake relief in Pakistan. “The inquiry will focus on whether or not the charity’s funds, or funds raised on its behalf, were used unlawfully. It will also consider the financial policies and practices of the charity,” the commission said in a statement. “As a temporary and protective measure, the commission has frozen the bank accounts of the charity,” adding that the charity would have to obtain its permission to use any funds.
The Charity Commission said it was evaluating media reports of links between the charity and the alleged airline conspiracy which British police said they foiled on August 10. Crescent Relief, which mobilized for the October 8 earthquake in Pakistan, was founded in 2000 by Abdul Rauf, the father of Rashid Rauf, who is being held in Pakistan over the plot. Pakistan’s foreign ministry has said that Rashid Rauf was unconnected with any charities involved with the earthquake, while denying a separate report that a Pakistani charity had diverted quake relief to the plot.
Rashid’s brother Tayib Rauf was arrested in the central U.K. city of Birmingham in an August 10 dragnet in Britain when police arrested a total of 24 suspects in London and Birmingham. Tayib Rauf was not among 11 people charged in London this week, but he remains among nine others still being held by police for questioning. Pakistani officials said last week that they had also detained Abdul Rauf, 52, at Islamabad airport, though it was unclear whether he was arrested for questioning in the case or whether he himself was a suspect.Link here.
WELLS FARGO GOT OFF TOO EASILY FOR WEAK MONEY-LAUNDERING SAFEGUARDS, REPORT SAYS
Wells Fargo & Co.’s safeguards for detecting illicit banking activities by terrorists, drug smugglers and other criminals were so weak that federal regulators should have publicly reprimanded the San Francisco-based bank, according to a Treasury Department report. Instead, senior banking regulators met with Wells Fargo CEO Richard Kovacevich, then overruled their own staff by letting Wells off with an informal enforcement action – sparing Wells the scrutiny and embarrassment suffered by other banks that have been forced to disclose that regulators faulted their oversight systems.
The Bank Secrecy Act requires financial institutions to tip off authorities to any suspicious activity, such as large cash deposits. Aggressive enforcement of the act has been a high priority for the Bush administration since the 9-11 terrorist attacks. Responding to the report, Wells Fargo said in a statement that it had “always taken Bank Secrecy Act regulations, policies and compliance very seriously. We recently improved our suspicious activity detection and reporting systems.”
The report from the Treasury’s inspector general criticized not only Wells Fargo’s failure to comply with requirements of the act but also the decision by the Treasury’s Office of the Comptroller of the Currency to keep its criticisms and demands for change private. The report said bank examiners found “numerous and recurring deficiencies” in Wells’s Bank Secrecy Act compliance program from 1999 through 2004. Although details were largely deleted from the version released publicly, the report identified problem areas including weak internal controls, inadequate independent testing of business lines, lack of Bank Secrecy Act oversight and failure to file suspicious-activity reports as required.
According to the report, the comptroller’s staff recommended February 4, 2005, that a formal cease-and-desist order be issued to Wells Fargo. Such a public reprimand and demand for changes would have sent a powerful enforcement message to the nation’s banks, since Wells is generally regarded as one of the best-run banks in the U.S. The subsequent about-face came to light in June 2005 after a whistle-blower leaked internal OCC documents to Congress. Critics have long charged that federal banking regulators are too cozy with the banks they oversee. Kevin Mukri, a spokesman for the OCC, said the decision to override the staff recommendation for a public rebuke was not unusual. Other banks, however, have endured public reprimands.
American Banker first reported in June 2005 on the whistle-blower’s allegations, including that Wells Fargo failed to monitor accounts for suspicious activity and to adequately investigate money-services business customers. The trade journal cited such embarrassing violations as Wells opening an account for a customer who deposited 2,000 $100 bills without asking about the source of the funds or filing a suspicious-activity report.Link here.
CANADIANS SUPPORT LEVIES ON BLANK CDS, MP3 PLAYERS TO COMPENSATE MUSIC CREATORS
According to the Canadian Private Copying Collective (CPCC) - the copyright collective charged with collecting and distributing private copying royalties - a recent nationwide survey found that 60% of Canadians aged 18 and older believe in the principle that music creators should be compensated for private copying of pre-recorded music. An even larger majority of respondents, from 74% to 80%, thought that a levy of 20, 30 or even 40 cents included in the price of a blank CD is fair to pay music creators for copied songs. The current levy on a blank CD is 21 cents. Although currently there is no levy on MP3 players, 75% of those surveyed responded positively to the idea of a levy of up to $40 on a 30GB MP3 player.Link here.
IS THERE A TERRORIST THREAT OR NOT?
For the past five years, Americans have been regularly regaled with dire predictions of another major al Qaeda attack in the U.S. In 2003, a group of 200 senior government officials and business executives, many of them specialists in security and terrorism, pronounced it likely that a terrorist strike more devastating than 9-11–- possibly involving weapons of mass destruction – would occur before the end of 2004. In May 2004, Attorney General John Ashcroft warned that al Qaeda could “hit hard” in the next few months and said that 90% of the arrangements for an attack on U.S. soil were complete. That fall, Newsweek reported that it was “practically an article of faith among counterterrorism officials” that al Qaeda would strike in the run-up to the November 2004 election. When that “October surprise” failed to materialize, the focus shifted. A taped encyclical from Osama bin Laden, it was said, demonstrated that he was too weak to attack before the election but was marshaling his resources to do so months after it.
On the first page of its founding manifesto, the massively funded Department of Homeland Security intones, “Today’s terrorists can strike at any place, at any time, and with virtually any weapon.” But if it is so easy to pull off an attack and if terrorists are so demonically competent, why have they not done it? Why have they not been sniping at people in shopping centers, collapsing tunnels, poisoning the food supply, cutting electrical lines, derailing trains, blowing up oil pipelines, causing massive traffic jams, or exploiting the countless other vulnerabilities that, according to security experts, could so easily be exploited? One reasonable explanation is that almost no terrorists exist in the U.S. and few have the means or the inclination to strike from abroad. But this explanation is rarely offered.
Instead, Americans are told – often by the same people who had once predicted imminent attacks – that the absence of international terrorist strikes in the U.S. is owed to the protective measures so hastily and expensively put in place after 9-11. But there is a problem with this argument. True, there have been no terrorist incidents in the U.S. in the last five years. But nor were there any in the five years before the 9-11 attacks, at a time when the U.S. was doing much less to protect itself. It would take only one or two guys with a gun or an explosive to terrorize vast numbers of people, as the sniper attacks around Washington, D.C., demonstrated in 2002. Accordingly, the government’s protective measures would have to be nearly perfect to thwart all such plans. Given the monumental imperfection of the government’s response to Hurricane Katrina, and the debacle of FBI and NSA programs to upgrade their computers to better coordinate intelligence information, that explanation seems far-fetched. Moreover, Israel still experiences terrorism even with a far more extensive security apparatus.
It may well have become more difficult for terrorists to get into the country, but, as thousands demonstrate each day, it is far from impossible. There are over 300 million legal entries by foreigners each year, and illegal crossings number between 1,000 and 4,000 a day – to say nothing of the generous quantities of forbidden substances that the government has been unable to intercept or even detect despite decades of a strenuous and well-funded “war on drugs”. Every year, a number of people from Muslim countries – perhaps hundreds – are apprehended among the illegal flow from Mexico, and many more probably make it through. Terrorism does not require a large force. And the 9-11 planners, assuming Middle Eastern males would have problems entering the U.S. legally after the attack, put into motion plans to rely thereafter on non-Arabs with passports from Europe and Southeast Asia.
If al Qaeda operatives are as determined and inventive as assumed, they should be here by now. If they are not yet here, they must not be trying very hard or must be far less dedicated, diabolical, and competent than the common image would suggest.Link here.
CAN ANYTHING BE DONE?
Many readers have praised me for my courage in broaching taboo subjects and stating obvious truths. Others denounce me for “being unpatriotic and distrusting our government.” One reader wrote to me that I was obviously in the pay of Islamic Jihadists and that she had reported me to the FBI. Despite the lack of evidence to support their belief, a number of readers remain confident that Saddam Hussein had weapons of mass destruction and that America narrowly missed being annihilated. These readers know for a fact that Hussein had WMD, because “the President would know, and he wouldn’t lie.” In other words, whatever Bush says is true, and all who doubt him are unpatriotic. “You are with us or against us.” The facts be damned. There are a large number of such people in the body politic.
A group of scientists, engineers, and university professors is trying to start a debate about the collapse of the three World Trade Center buildings. I reported one of their findings, that there is an inconsistency between the speed with which the buildings collapsed and the “pancaking theory” used to explain the collapse. For reporting a scientific finding, I was called a “conspiracy theorist”. Only in America is scientific analysis seen as conspiracy theory and government lies as truth. Applications of the laws of physics and scientific calculations can be reviewed and checked by other scientists. Scientists, like the rest of us, can make mistakes. However, questions raised about the collapse of the WTC buildings are not engaged but ignored.
The 9/11 scholars findings seem to be in sync with public opinion. Polls show that more than one-third and as much as one-half of the American public does not believe the government’s 9/11 story. The public does not believe the John F. Kennedy assassination story either. Nevertheless, experts who point out problems in the official story are still called “conspiracy theorists” even though a large percentage of the people share their doubts. I think the reason so many Americans do not believe the Kennedy story told by the Warren Commission and the 9/11 story told by the 9/11 Commission is not because Americans are knowledgeable about ballistics or physics, but because the stories contain too many unusual happenings, too many oddities.
In the Kennedy case doubts are raised by such things as an improbable bullet trajectory, the against-all-procedures absence of Secret Service agents from the rear and sides of Kennedy’s limo, the inexplicable access of an unauthorized armed civilian, Jack Ruby, who was able to assassinate Oswald inside the jail before Oswald could be questioned. Courts no longer accept as evidence and the FBI no longer uses the analysis that was used to close the Oswald case. Any one of these things would be an oddity. The combination of oddities becomes inexplicable, a statistical impossibility.
The same with the explanation of 9/11. Powerfully constructed buildings collapse when there is no source of the required energy to do the job. A large 757 hits the Pentagon but leaves a small hole, and there is no sign of wings, engines, tail or fuselage. Every air control and military procedure fails, and hijacked airliners are not intercepted by jet fighters. The alleged hijackers’ names apparently are not on the passenger lists, and some of the alleged hijackers have been found alive and well in Saudi Arabia. A copy of the autopsy list of American Airlines flight 77 has no Arabic names on the list.
If deception is sensed, there is a receptive audience when experts or film makers speak. Denouncing inconvenient facts as “conspiracy theories” is a way of suppressing debate and investigation. This itself is telling. If the official explanations are safe, their proponents should welcome the opportunity to show again and again that the explanations can stand all challenges. Instead, the second a challenge shows its head, it is branded a “conspiracy theory.” That tells me that the official explanations can stand no challenge. Do not ask me who killed Kennedy and why, or who was behind the 9/11 attack, or what brought the three WTC buildings down. My position is a simple one. The official accounts are too improbable to be believable.
Readers ask me what can we do? We can do very little as we have lost control over our government. Elections, even if not stolen, change very little. Government got free of our control when we forgot the teaching of our Founding Fathers that government is always the greatest threat to our liberty.Link here.
TEN RECURRING ECONOMIC FALLACIES, 1774–DATE
As an American historian who knows something of economic law, having learned from the Austrians, I became intrigued with how the U.S. had remained prosperous, its economy still so dynamic and productive, given the serious and recurring economic fallacies to which our top leaders (political, corporate, academic) have subscribed and from which they cannot seem to free themselves – and alas, keep passing down to the younger generation. Let us consider ten.
When William Graham Sumner was writing his masterful History of American Currency, he grappled with the question of how North America had withstood levels of inflation and indebtedness that would have ruined any European country. His answer? “The future which we discount so freely honors our drafts on it. Six months [of] restraint avails to set us right, and our credit creations, as anticipations of future product of labor, become solidified.” In other words, the country was so productive that the losses engendered by these excesses were quickly made up. He went on, “We often boast of the resources of our country, but we did not make the country. What ground is there for boasting here? The question for us is: What have we made of it? No one can justly appreciate the natural resources of this country until, by studying the deleterious effects of bad currency and bad taxation, he has formed some conception of how much, since the first settlers came here, has been wasted and lost.”
Let us begin with geography and resources, to which Sumner alludes. The lower 48 states are entirely in the temperate zone. Apart from the desert states of the southwest, all receive ample rainfall. Most of the land is fertile, and it is abundant. The country teems with natural resources. Until very recently, the U.S. enjoyed a low density of population, which meant high wages and low land prices. And for centuries, the population has been one of the hardest working in the world, creating an infrastructure to build on. Largely because of the influence of Christianity, the debilitating sin of envy has no social standing here, unlike the Third World where it is perhaps the chief impediment to wealth-creation and development. Also, for the same reason, there is little bribery, which also impedes growth. Finally, there is the tradition of law, respect for private property, tradition of profit, and contractual freedom. These institutions – and not the fallacious ideas, corrupt institutions, and bad policies named above – form the core of American prosperity.Link here.
DEATH BY HANDOUT
There are over 50 million Americans currently receiving handouts from the government. Today we take an odyssey into just one aspect of the handout “rabbit hole” and the destruction it wreaks upon recipients, not to mention those footing the bill. Below are true stories. I have not intentionally chosen the worst-case scenarios. These are just the three relatively young people I happen to know who live off taxpayers via Social Security. I have tried to present the facts as free from judgment as possible. You can conclude for yourself how they have fared through the government’s largesse and what the odds are of the countless others on the dole faring any better.
First I should clarify terminology. The word “welfare” has made an interesting transformation in our culture, thanks to the spin doctors in Washington, D.C. What was once an innocuous word in the preamble to the Constitution meaning “well being”, it originally referred to the restraints on government’s attempts to stop us from exercising the freedom of each of us to pursue our own. After decades of inappropriate fondling by big government, it has been magically morphed into a loaded, unlimited carte-blanche vehicle for the power-mad. As usual, Welfare, with a capital “W” is disguised as a benefit. Actually, it robs us and destroys poor and sick people’s chances of securing “the blessings of liberty,” all the while feathering the nests of layer upon layer of bureaucrats. Only a politician with unlimited funding and power could conceive of something so self-serving, destructive and dastardly as the public assistance umbrella that we have come to understand “Welfare” to be today.
There are myriad problems with safety nets. First, they are not free, not for the recipient and not for the taxpayer. As with all government programs, recipients become psychologically, if not physically, dependent on the dole, exacerbating their problems. Handouts are not limited to poor or sick people. Quite the contrary! They permeate every aspect of American life, from farm subsidies to small business loans, home mortgages, banking, automobiles, airlines, education, health, empire building, etc. Lobbyists make a living obtaining taxpayer funds for private use. There is no aspect of American life unmolested by government. We are a sick nation because of it – a nation addicted to the use of force and every man, woman and child in the U.S. is on the hook to the tune of half a million dollars each in government debt for it, give or take a hundred thousand or so. There is no reason to assume that this number will be heading down any time soon. There are excellent reasons to assume it will rise.
I have come to believe that we create a lot of our own problems. I also believe that if someone is willing to step in and prevent us from experiencing the consequences of poor choices, we will never learn from them. This is the situation with government handouts. I am not suggesting no one needs help at times, I am saying what government is doing is not only wrong, but unless the goal is dependency, it is not working. Repeatedly, time has shown that private charity, coupled with accountability on the part of the recipient, is the only effective strategy in making long-term improvements in quality of life, provided that change is what the recipient is indeed looking for. As the old joke goes: How many psychologists does it take to change a light bulb? The answer is only one, but the light bulb has to want to change.
Part of me would like to grab the people described by the throat and shake them until their eyes rattle. Unfortunately, there are just too many of them. Are we not all caught with our foot in a trap? We are all trying to build a life for ourselves with government stacked against us, too big to overcome, too well armed to fight and too rabid to even risk being bitten by. Government is like a vampire sucking the life out of the unsuspecting, and each bite creates one more whoring zombie after another.Link here.
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