Wealth International, Limited

Offshore News Digest for Week of December 31, 2007

Note:  This week’s Finance Digest may be found here.

Note: This is the last W.I.L. Offshore News Digest that uses the structure and format that has been consistently followed since its inception on January 1, 2001: summaries of articles of the editor’s choosing, with the choice of articles and summaries extracted therefrom ideally speaking for themselves. Starting with the first Offshore News Digest in 2008, the format will be explicitly that of a blog, with editor comments and quotes from the article(s) under consideration freely interspersed.


Future historians will look back on the current decade as a turning point comparable with that of the ‘70s. No, not the 1970s. This is not going to be another piece pointing out the coincidence of an unpopular Republican president, soaring oil prices, a sagging dollar and an unwinnable faraway war. I am talking about the 1870s.

At first sight, the resemblances across 130 years may not seem obvious. The 1870s were a time when conservative leaders such as Benjamin Disraeli, British prime minister, were powerful and popular. It was a time of falling commodity prices, after the financial crash of 1873 and the opening up of the American plains to agriculture. And it was an era of currency stability, as one country after another followed the British lead by pegging to gold.

Yet, on closer inspection, we are indeed living through a global shift in the balance of power very similar to that which occurred in the 1870s. This is the story of how an over-extended empire sought to cope with an external debt crisis by selling off revenue streams to foreign investors. The empire that suffered these setbacks in the 1870s was the Ottoman empire. Today it is the U.S.

In the aftermath of the Crimean war, both the sultan in Constantinople and his Egyptian vassal, the khedive, had begun to accumulate huge domestic and foreign debts. Between 1855 and 1875, the Ottoman debt increased by a factor of 28. As a percentage of expenditure, interest payments and amortization rose from 15% in 1860 to 50% in 1875. The Egyptian case was similar: between 1862 and 1876, the total public debt rose from E£3.3 million to E£76 million. The 1876 budget showed debt charges accounting for more than half of all expenditure.

The loans had been made for both military and economic reasons – to support the Ottoman military position during and after the Crimean war and to finance railway and canal construction, including the building of the Suez canal, which had opened in 1869. But a dangerously high proportion of the proceeds had been squandered on conspicuous consumption, symbolized by Sultan Abdul Mejid’s luxurious Dolmabahçe palace and the spectacular world premiere of Aïda at the Cairo Opera House in 1871. In the wake of the financial crisis that struck the European and American stock markets in 1873, a Middle Eastern debt crisis was inevitable. In October 1875 the Ottoman government declared bankruptcy.

The crisis had two distinct financial consequences. (1) The sale of the khedive’s shares in the Suez canal to the British government (for £4 million, famously advanced to Disraeli by the Rothschilds). (2) The hypothecation of certain Ottoman tax revenues for debt service under the auspices of an international Administration of the Ottoman Public Debt, on which European bondholders were represented. The critical point is that the debt crisis necessitated the sale or transfer of Middle Eastern revenue streams to Europeans.

The U.S. debt crisis has taken a different form, to be sure. External liabilities have been run up by a combination of government and household dis-saving. It is not the public sector that is defaulting but subprime mortgage borrowers. As in the 1870s, though, the upshot of this debt crisis is the sale of assets and revenue streams to foreign creditors. This time, however, creditors are buying bank shares, not canal shares. And the resulting shift of power is from west to east.

Since September, Middle Eastern and east Asian sovereign wealth funds have made a succession of investments in four U.S. banks: Bear Stearns, Citigroup, Morgan Stanley and Merrill Lynch. Most commentators have been inclined to welcome this global bail-out. Better to bring in foreign capital than to shrink balance sheets by reducing lending. Yet we need to recognize that these “capital injections” represent a transfer of the revenues from the U.S. financial services industry into the hands of foreign governments. This is happening at a time when the gap between eastern and western incomes is narrowing at an unprecedented pace.

In other words, as in the 1870s the balance of financial power is shifting. Then, the move was from the ancient oriental empires (Persian and Chinese as well as Ottoman) to western Europe. Today the shift is from the U.S. – and other western financial centers – to the autocracies of the Middle East and east Asia.

In Disraeli’s day, the debt crisis turned out to have political as well as financial implications, presaging a reduction not just in income but also in sovereignty. In the case of Egypt, what began with asset sales continued with the creation of a foreign commission to manage the public debt, the installation of an “international” government and finally, in 1882, to British military intervention and the country’s transformation into a de facto colony. In the case of Turkey, the debt crisis was followed by the sultan’s abdication and Russian military intervention, which dealt a lethal blow to the Ottoman position in the Balkans.

It remains to be seen how quickly today’s financial shift will be followed by a comparable geopolitical shift in favor of the new export and energy empires of the east. Suffice to say that the historical analogy does not bode well for America’s quasi-imperial network of bases and allies across the Middle East and Asia. Debtor empires sooner or later have to do more than just sell shares to satisfy their creditors.

(The writer is a professor at Harvard University and Harvard Business School and a senior fellow of the Hoover Institution, Stanford.)

Link here.
The failing empire – link.


Why economics – and imagination – matter.

Even now, people think nothing of professing their attachment to socialist ideology at cocktail parties, at restaurants serving abundant foods, and lounging in the fanciest apartments and homes that mankind has ever enjoyed. Yes, it is still fashionable to be a socialist, and – in some circles within the arts and academia – socially required. No one will recoil. Someone will openly congratulate you for your idealism. In the same way, you can always count on eliciting agreement by decrying the evils of Wal-Mart and Microsoft.

Is it not remarkable? Socialism (the real-life version) collapsed nearly 20 years ago – vicious regimes founded on the principles of Marxism, overthrown by the will of the people. Following that event we have seen these once decrepit societies come back to life and become a major source for the world’s prosperity. Trade has expanded. The technological revolution is achieving miracles by the day right under our noses. Millions have been made far better off, in ever-widening circles. The credit is wholly due to the free market, which possesses a creative power that has been underestimated by even its most passionate proponents.

What is more, it should not have required the collapse of socialism to demonstrate this. Socialism has been failing since the ancient world. And since Mises’s book Socialism (1922) we have understood that the precise reason is due to the economic impossibility of the emergence of social order in absence of private property in the means of production. No one has ever refuted him.

And yet, even now, after all this, professors stand in front of their students and decry the evil of capitalism. Best-selling books make anti-capitalism the theme. Politicians parade around telling us about the glorious things that the government will accomplish when they are in charge. And every evil of the day, even those directly caused by the government (airline delays, the housing crisis, the never-ending crisis in public schooling, the lack of health care for everyone) are blamed on the market economy.

As an example, the Bush administration nationalized airline security after 9-11, and hardly anyone – except Ron Paul, of course – even questioned that this was necessary. The result was an amazing mess that is visible to every traveler, as delays pile on delays and humiliations became part of the rubric of travel by flight. And yet who gets the blame? Read the letters to the editor. Read the mountains of copy written by journalists covering this issue. The blame is heaped on the private airlines. The solution? More regulation, more nationalization.

How can we account for this appalling display? There are two primary factors. The first is the failure of people to understand economics and its elucidation of cause and effect in society. The second is the absence of imagination that such ignorance reinforces. If you do not know what causes what in society, it is impossible to intellectually grasp the proper solutions or imagine how the world would work in the absence of the state.

The educational gap can be overcome. To think in economic terms is to realize that wealth is not a given or an accident of history. It is not bestowed on us like rain from above. It is the product of human creativity in an environment of freedom. The freedom to own, to make contracts, to save, to invest, to associate, and to trade – these are the key to prosperity. Without them, where would we be? In a state of nature, which means a dramatically shrunken population hiding in caves and living off what we can hunt and gather. This is the world we can slip back into should any government ever manage to take away freedom and private property rights completely.

This seems like a simple point but it is one that evades vast swaths of even the educated public. The problem comes down to a failure to understand that scarcity is a pervasive feature of the world and the need for a system that rationally allocates scarce resources to socially optimal ends. There is only one system for doing so, and it is not central planning but the free-market price system.

Government distorts the price system in myriad ways. Subsidies short-circuit market judgments. Product bans cause the ascendance of less desirable goods and services over more desirable ones. Other regulations slow down the wheels of commerce, thwart the dreams of entrepreneurs, and foil the plans of consumers and investors. Then there is the most deceptive form of price manipulation – monetary management by a central bank.

The larger the government, the more our living standards are reduced. We are fortunate as a civilization that the progress of free enterprise generally outpaces the regress of government growth, for, if that were not the case, we would be poorer each year not just in relative terms but absolutely poorer too. The market is smart and the government is dumb, and to these attributes do we owe the whole of our economic well-being.

The second part of our educational task – imagining how a market-run world would function – is much more difficult. Murray Rothbard once remarked that if the government were the only producer of shoes, most people would be unable to imagine how the market could possibly do it. How can the market accommodate all sizes? Is it not wasteful to produce styles for every taste? What about fraudulent shoes and poor quality producers? And shoes are arguably a good too important to turn over to the vicissitudes of market anarchy.

Well, so it is with many issues today, such as welfare. Among the first objections to the idea of a market society is that the poor will suffer and have no one to care for them. One response is that private charity can handle it, and yet we look around and see private charities handling comparatively small tasks. The sector just is not big enough to pick up where government leaves off.

This is where imagination is required. The problem is that government services have crowded out private ones and reduced private-sector services below which they would be in a free market. Before the age of the welfare state, charities in the 19th century were a vast operation comparable in size to the largest industries. They expanded according to need. They were mostly provided by the churches through donations, and the ethic was there. Everyone gave a portion of the family budget to the charitable sector. A nun like Mother Cabrini ran a charitable empire.

But then in the progressive era, ideology changed. Charity should be considered a public good and it should be professionalized. The state began to encroach on territory once reserved to the private sector. And as the welfare state grew throughout the 20th century, the comparative size of the private sector shrank. As bad off as we are in the U.S., it is nothing compared with Europe, the continent that gave birth to charitable services. Today, few Europeans donate a dime to charity, because everyone is of the belief that this is a government service, and, moreover, after taxes and high prices, there is not much left over to donate.

It is the same in every area the government has monopolized. Until Federal Express and UPS came along to exploit a loophole in the letter law, people could not imagine how the private sector could deliver mail. There are many similar blind spots today in the area of justice provision, security, schooling, medical care, monetary policy, and coinage services. People are aghast at the suggestion that the market should provide all these, but only because it requires mental experiments and a bit of imagination to see how it is possible.

Once you understand economics, the reality that everyone sees takes on a new significance. Wal-Mart is not a pariah but a glorious achievement of civilization, an institution that has finally put to rest that great fear that has pervaded all of human history – the fear that the food will run out. In fact, even the smallest products dazzle the mind once you understand the incredible complexity of the production process and how the market manages to coordinate it all toward the end of human betterment. The achievements of the market suddenly appear in sharp relief all around you.

And then you begin to see the unseen ... how much more secure we would be with private security, how much more just society would be if justice were privatized, how much more compassionate we would be if the human heart were trained by private experience rather than government bureaucracies.

And what makes the difference? The socialist and the advocate of free markets observe the same facts. But the person with economic knowledge understands their significance and implications. For example, only Ron Paul, of all American public officials, really understands economics. This is why we must never underestimate the central role of teaching about economics. Facts will always be with us. Wisdom, however, must be taught. Achieving a culture-wide understanding of liberty and its implications has never been more important.

Link here.


Jim Rogers’s book provides a roadmap for investing there.

Imagine the irony. While my girl was attempting to become Shanghai Tang’s customer of the month, I noticed a Newslink bookstore in the SkyMart portion of the Hong Kong International Airport. The SkyMart could pass for any high-end mall in the U.S. – Cartier, Channel, Dior, Fendi, Gucci, Prada – you name it. Not the dreary trinket shops provided in U.S. airports. The first book I spotted had a picture of the adventure capitalist himself, Jim Rogers, on the cover of A Bull In China: Investing Profitably In The World’s Greatest Market.

Rogers has been a bull on China since 1984 when he motorcycled cross the huge country. But the China of today is vastly different than the backward country that Rogers pushed, dragged and rode his motorcycle through 23 years ago. High-rise cranes are everywhere, and millions of peasants are flocking to the major cities in search of employment and a better life.

This hyper-capitalism all started in 1978 when China’s supreme leader, Deng Xiaoping “restarted traditions of commerce suppressed for decades by wars, civil strife, and Communist dogma,” explains Rogers. With 1.3 billion people who save and invest at a rate of 35% of their incomes, China is poised “to become the most important country in mankind’s future.”

That is a bold statement. And the vast majority of Americans, who do not own a passport, might laugh. But as Americans save nothing and go into hock, while their government lives off inflated dollars to fight wars around the world and fund the nanny state, the Chinese are producing goods at an astounding rate. And all one has to do is spend some time there to see the commerce and capital investment.

In A Bull In China, Rogers provides investors with a simple primer on how to financially take advantage of China’s growth. Of course most investors would rather have someone fish for them, rather than learning to fish. But while Rogers does not give away any hints as to what his personal holdings are in the region, each chapter offers investment ideas – “Jim’s Sino Files” that provide company names, industries, what exchanges the stocks are traded on, and a quick glimpse at recent financial highlights. But the book is not all company summaries. In between Rogers provides a fast-paced history of a country that is just over 4,000 years old.

China is still (officially) a communist country so buying shares is complicated. But Rogers breaks down the alphabet soup of China’s “split-share” system that ensures “that the common people of the People’s Republic get first crack at the country’s corporate future.” But, if buying foreign shares makes you queasy, or your discount broker cannot snag you some shares in Shanghai, many of the companies Rogers mentions have ADRs traded on U.S. exchanges or on the NASDAQ Bulletin Board.

Other than the eye-stinging pollution, the first thing you notice in Shanghai or Beijing is the incredible amount of traffic. There may not be many opportunities to invest in your local expressway here at home but there are more than 20 toll-road construction and management companies listed on Chinese and Hong Kong Exchanges. For those who want to invest in air travel, Rogers provides the names of four airlines and three airports as possible investment ideas. Rogers makes a point that China’s major airports are not the dingy crowded variety like New York’s Kennedy and LaGuardia. In addition to high end shopping and dining, China’s airports are clean, expansive, well lighted and have in-house hotels and healing centers.

The Chinese are passionate about eating and drinking. But don’t expect to see many fat people if you make the trip. And with over a billion hungry people, investing in food and drink would seem to be a Yao Ming slam-dunk. Rogers provides a number of investment angles in this area, from First Tractor Co., Ltd. to Dynasty Fine Wines Group Ltd.

Housing and all types of real estate development are also in great demand, and Rogers has ideas to take advantage, but warns “today’s property-development industry is probably the sector of the Chinese economy most rife with fraud and scandal.”

A Bull In China provides a complete buffet of Chinese investment concepts. However, Rogers stresses that none of the companies mentioned are recommendations, and he is also mindful of a potential bubble forming in these burgeoning stock markets. Investing in China’s growth is not a strategy to make a quick buck (or Yuan). “If the twentieth century was the American century,” writes Rogers, “then the twenty-first century belongs to China.”

I am convinced it is time to start building a portfolio in the Far East, and A Bull In China is the roadmap. As Jim Rogers says, “China won’t wait.”

Link here.


“This guy must be out of his mind,” Bill declared, walking into my office with one of those glossy international property magazines opened to a “Case Study” page. “Look at this,” he continued, handing me the magazine. “This upholsterer from South Wales has bought a house on the island of St. Vincent ... and two others in the Dominican Republic. He says these investments ‘give him great peace of mind.’

“But he has never been to the Caribbean ... never stepped foot on these islands. And he is buying retail in developed markets! Certain, that, nevertheless, the values of the properties he is investing in will go up ... because, I guess, well, real estate values always go up, don’t they? He has no idea what he is doing. It’s nuts.”

Sure enough, when I looked at the article Bill pointed to, Paul from Caerphilly has just invested $700,000 in a 2-bedroom house on St. Vincent and The Grenadines. As he explains, “I am not even looking to visit the development but rather to sit back and watch my investment work for me.” If only it were that easy. But you and I know better.

Bill walked out of my office shaking his head. “This is just what we have been warning readers of International Living not to do all these years.” Indeed. And I will take this opportunity to remind you again of a few fundamentals:

(1) Never buy in a market where you have never been. Lief and I broke this rule once three years ago, and we are regretting it. Without question, if you are buying with any thought to personal use, you want to spend time in a place before committing to a real estate purchase. But even if you are buying only for investment, you should pound the local pavements (or beaches) with your own two feet. No amount of research can substitute.

(2) Buy only what you see. The developer or real estate agent may promise a marina, a clubhouse, paved roads, and a helicopter landing pad ... but if those things do not exist the day you sign your contract ... they do not exist. And you are not buying them. Maybe, someday, they will be built. But do not figure them into your purchase price.

(3) If you are buying for personal use, rent first, for at least six months. You may have visited the country several times. You may feel you know it well. But you know it as an outsider. You need to give yourself a chance to get to know it as a local. If possible, arrange your trying-the-place-on-for-size visit during the least appealing season.

(4) If you are buying for investment, do not buy at the top. Talk about stating the obvious, I know, but you would be surprised what people can be persuaded to do. Reasonable investments are found ahead of the infrastructure, as Lief Simon, our resident global real estate investing guru, reminds his readers regularly. You want to buy before the roads go in, and you want to pay pre-road prices.

(5) Finally, recognize that real estate values do not always go up. Look at Buenos Aires in 2001 (following devaluation of the peso), Ecuador in 2000 (following dollarization), London in 1989. Property markets go up (sometimes exuberantly and beyond reason), and they go down (sometimes crashingly). As an investor, you are as interested in the downturns as in the years of appreciation, for the falls often afford you buying opportunities.

Lief has been reporting lately, for example, on the current and ongoing decline of the Spanish property market. Leigh Fergus, Euro-editor in Paris, recently commented on the most recent interest rate hike in the UK. Further rate rises in the UK and Ireland could (and we believe will) contribute to the decline (finally) of these frothy markets. All opportunities to watch.

But do not pursue any of them, dear reader, from your armchair. And do not buy because you are certain an overseas property investment will make you rich.

Link here.


Beware the hype and misrepresentations of various promoters.

Gringos tend to have an unrealistic idea of what Mexico is all about. I am not an expert. I will be the first to admit that much that I have encountered living in the country, specifically in the Mexican highlands, has taken me by surprise. The existing expatriate books on the market and at least one Web magazine tend to create the impression that moving to Mexico is like walking right into the loving arms of a Fantasy Island welcoming party. It is like living in paradise, these sources would tell you.

To stave off hate mail, let me say that I love Mexico. I really do. My wife and I chose this country and love learning how diverse it is in all of its wonderfully varied regions. What this sort of delusion-building hype does is create the idea that all of Mexico, all of its culture, is going to be the same in each region you check out for possible expatriation. You see this in the forums on Yahoo and other sources a heck of a lot. You do not have to read very many forum posts before seeing some posts along the lines of: “The Mexicans love us here.” ... “The Mexicans will be patient with you and go out of their way to help you.” ... “Mexicans are honest people.”

The truth is that not all of the Mexican people will love you. Not all will be patient with you. Not all will go out of their way to help you. And not all will be honest. Just as in the States, Canada, and anywhere else you might go, there will be some very good people of sound character. There will also be some who are terrible scoundrels. To paint a vast picture that all Mexicans are ______ (fill in the blank) is to create a delusion in the minds of the Gringos who are ill informed about this culture.

Here is another delusion perpetrated by certain interests who have as their motive to sell you some very expensive real estate in Mexico. They will seek to paint a picture that the same culture courses its way seamlessly throughout this country. They fail to tell you that just like in the States, the culture will vary according to the location you choose.

This is a no-brainer. I am from America’s Midwest. I know scores of midwestern folks who would never in a million years be able to adapt to living in New York City. New York is America. However, because of the vast local or regional cultural differences, I know many who could never adapt. I have had friends from the laid-back life in California who could never adjust to living in Kansas City. I know some who have done it. I have a niece who is an actress in New York City and loves it there. However, she was able to adapt by assimilating into the local population with its unique regional culture.

When you talk to some here in Guanajuato who are from different regions in Mexico, they have some very firm convictions about the differences between the local culture and the culture of their home regions. Recently, we talked with a lady from Zacatecas who works in a local business. She confirmed – adamantly – what we have been told over and over again about the difference between the people of Guanajuato and those from Zacatecas.

This is not a bad thing. It means that to lump all of Mexico into the same cultural pot is as erroneous as lumping all the regions of America together and claiming there are no regional differences. There is the underlying Mexican culture that unifies its people but there are going to be regional differences that can be startling. There is a cultural sameness that unites Mexicans and there are cultural differences that divide them.

I have an American friend who has lived in Guanajuato as long as my wife and I have been here. Because of her age and health issues, she is moving to a city in Mexico that is a Prime Living Location to which many Gringos flock. This town has a super-developed Gringo infrastructure. The existence of this Gringo Infrastructure has changed what was once a unique Mexican town into something different. English is widely spoken and she will have a better chance at having her serious medical needs met in that town. At this point in her life, this is what she needs. But, if you want a genuine Mexican experience in your expatriation experiment, the town to which my friend is moving might not be for you. In towns with greatly developed and intricately evolved Gringo Infrastructures, the Gringo will be treated differently than in towns that have not been accustomed to having large populations of Gringo residents.

Unfortunately, most of the research you find on expat issues is material based on the Prime Living Locations. These books, websites, and magazines address something unique and different. They will tell you of what life is like in a Mexican town that has been transformed into vast real estate investment empires for Gringos. What this has done to the local Mexican culture can most certainly be debated. Agree or disagree about whether the attraction of foreign investors is a good thing for these towns, but know this with a certainty: It would be a mistake to assume that settling in every part of Mexico is going to be as easy as settling into any of these Prime Living Locations.

Just because you thrive in one of these Prime Living Locations in which American-style housing developments, American-style strip malls, medical personnel who speak English, American-style country clubs, spas, and restaurants exist does not mean you will do well in the rest of Mexico. If you move to a place that has all the comforts of American life in Mexico, it is like moving to a state in the USA where there is a large Mexican population. It is not like moving to another country.

To swallow the hype that some of these Real Estate Investment businesses give you – “All of Mexico is bilingual.” – is a mistake. Not all parts of the country will cater to your monolingualism.

Do you want an easy transition moving to Mexico for your retirement? If so, move to one of the Prime Living Locations. Do you want a challenge that will sometimes try the very core of your being but perhaps strengthen your soul and make you a much better person for having had the experience? Then move to a region of Mexico not used to your Gringo face. It can very easily change your life forever!

Link here.


Moving is exciting for some and dreadful for others. The chore of packing all your personal belongings, making new friends and confronting the unknown can be daunting. However, a change of scenery, great job opportunity or better lifestyle can be extremely motivating factors. Regardless of whether you are looking forward to the big day or looking for anything to do but think about it, relocation is sure to bring a host of different experiences, ranging from complete excitement to an absolute nightmare, especially when moving overseas.

The packing process can be tricky, including the crucial decision when only one box is left: Is placing cleaning products and dry foods in the same box a bad idea? An enquiry that today remains unanswered. However, there are even more issues to solve when this move is being made to another country, including import taxes and “Where they heck do I pick up my stuff anyway?!”

So, after packing up your life as you know it, managing to get it to another country and into your new home, the fun part begins. Living abroad.

The expatriate is sure to ride the emotional rollercoaster after arriving in the host country, and a great majority of these ups and downs has to do with cultural differences. If you arrive in a new country with your ethnocentric thinking cap on, then all you are going to get is a lot of migraines.

However, despite how open we are to new things, cultural differences can make transitioning to a new country difficult. So, it is the responsibility of the expatriate to learn more about the host country’s customs and norms and be prepared for the bumpy ride ahead.

With regards to educating oneself about a country’s cultural nuances, I recommend the crash course lesson, which is showing up at the local watering hole and getting knackered with the natives. However, a more civilized approach would be to surf the internet, checking out a variety of online resources, such as blogs, forums and travel sites. Forums are excellent because one can post a question and get an assortment of answers from different individuals. Good expatriate websites with great forums are expatexchange.com and expatforums.org. Also, Escape Artist provides an array of articles about living, working, investing and traveling overseas – including international real estate.

In addition to learning more about the country to which one will immigrate, expatriates can also develop a better understanding about the emotions they will undergo after relocation. According to Professor Steve Barnett of the University of Louisville, most expatriates experience a common series of emotions upon arrival in a foreign country.

Before the move, you usually feel nervous, excited, scared, and/or all of the above. Upon arrival, you are on cloud nine. After all, life is exciting! Walking around the block is guaranteed to be barrels of fun, all the while ruminating as to why you did not make the move sooner. After a couple of months, the honeymoon is over. Walking around the block would be possible if they fixed that darn sidewalk or implemented some form of traffic control! The language barrier is finally getting to you and practicing has become more of a chore than a novelty. The expected, but dreaded, culture shock has arrived. But, you cannot go back now! After all, you just got here. So, you get on with your life. Then, one day, you realize that you have been doing just that. Wow! You have been living in a foreign country and actually learned how to grocery shop (200-grams of meat, none of that pound nonsense!) and pay your electricity bill. You find yourself becoming more competent and more familiar with the insider knowledge. Hooray!

For expatriates returning to their native country after a work assignment, they are expected to experience a reverse culture shock upon arrival, which will eventually subside. For individuals that plan to relocate abroad permanently, whether for retirement, a better life or to be with a spouse, then I hope this finds them well. If you are in the stages of culture shock, then let this serve as a sort of pick-me-up. If you have already fought the good fight and can laugh at the fact that “nothing works,” then I hope this brings a smile to your face.

Link here.


On Havana’s malecón, the seawall that parallels the shore, the waves roll in and hit the sudden obstacle, sending towering explosions of bright white spray far into the air, occasionally soaking the unwary pedestrian. Across the highway that follows the malecón is a cheap open-air restaurant, the DiMar. A steady breeze from the sea pours across the tables. A tolerable shrimp cocktail, topped with mayonnaise, costs a few bucks. On a couple of evenings I drank a beer there, watching Cuba go by. It was not what I had expected.

Unlike many gringo tourists, I was legal, having gotten a license from the Treasury Department. Without a license travel to Cuba is illegal under the Trading with the Enemy Act of 1917. Why Cuba was my enemy was not clear to me. Nor was it to the Cubans.

I had inadvertently neglected to tell the authorities that I was a journalist – I hate it when that happens – so I was not in a position to ask probing questions of officials. But then I did not want official twaddle. I wanted to wander, take cabs down the coast, just look at things.

I was pleased to find the old part of Havana both charming and reasonably well preserved, especially around the convent of San Francisco. The latter is of course a museum now, as God knows we must not be religions, but it is in good shape and breathes a moody solemnity. I tried to imagine the stillness in times before the motorcycle. The narrow lanes around it were closed to cars, making it pleasant to walk among the shops.

The country is poor and run down, and itself almost a museum. Sitting in the DiMar is like visiting the 1950s. The American embargo makes it hard to get new cars, so many Cubans still drive cars from 1959, the year of the revolution, and before. Some sport jazzy paint jobs. It was remarkable to watch the rides of my adolescence go by, charting them mentally as one did in 1964 – ‘54 Merc, ‘57 Caddy, ‘56 Chevy, on and on. Around me the other customers, down-scale Cubans in all shades of nonwhite, laughed and chatted.

They are an accommodating people. On my arrival they spoke a truncated Spanish hard to understand – “Cómo etáh uteh? Ma o menoh.” – but they made an intense national effort to improve their clarity and by my fourth day they were comprehensible.

Cuba does not fit its sordid image. It is most assuredly a dictatorship, yet the police presence is much less than that of Washington, and such cops as I saw had no interest in me. It is not regimented. Havana does not feel – well, oppressed – as Moscow did during the days of the Soviet Union. Mao’s China it is not.

The island certainly is not dangerous to anyone. Somebody said that the only communists remaining in the world were in Cuba, North Korea, and the Harvard faculty lounge. I do not know whether Harvard’s professoriate thirsts for godless world hegemony, though the idea is not implausible, but it is absurd to put North Korea and Cuba in one category. Pyong Yang has, or wants, nuclear arms, and has both a huge army aimed at South Korea, and a habit of testing ballistic missiles of long range. Cuba has little military and no one to use it against. From an American point of view, the Cuban armed forces are about as terrifying as George Will with a water pistol. It has no nuclear arms and no signs of wanting any. It is not a rogue state. It is a bedraggled island of pleasant people who need more money.

Cuba is expensive. Figuring the prices of things is difficult – deliberately so, one might suspect – because of a peculiar game that the government plays with currencies. Cuba has two, the national currency, which a visitor almost never sees, and the CUC (pronounced “kook”) which appears to exist to impoverish tourists. A visitor has to convert his money to CUCs. If you change dollars, the government skims 20% off the top, and then changes the rest at $1.08 per CUC. If you change Mexican pesos, which I did, the rate is 13.3 pesos per CUC when the dollar was trading at about 11 pesos. Visitors have to buy things for CUCs, which the seller then has to exchange for national currency at a rate of ... You see. Nobody seems sure what anything really costs. Still, it’s a rip.

The island could use some investment. While I found neighborhoods with nice-looking modern houses, said by taxi drivers to belong to governmental officials and employees of foreign firms, the rest of the city needs paint, repairs, and new sidewalks. Countless once-elegant houses with pillared porches and tall windows are now discolored and crumbling.

Why communists imagine themselves to be revolutionary is a mystery. Whenever they gain power in a country, it comes to a dead stop and sits there as other countries pass it by. I do not think that communism generates poverty – rather it finds it and preserves it. It has certainly done so here. Cuba seems firmly mired in 1959. How much of this comes from the embargo – “el bloqueo” as the Cubans call it – and how much from communism, I don’t know. Nobody does. This is convenient for Castro, as he can blame everything on the U.S. And does.

Curiously, Fidel’s irreplaceable supporter is Washington. Alongside of highways, along Havana’s malecón, in little Mediterranean-looking villages down the coast one sees signs of the type, “Forty-three hours of the blockade would pay for a new school house.” Or for so many locomotives, or complete the national highway, or this or that. How the figures are arrived at, I do not know, but that does not matter. To an extent the signs are not propaganda but simply call attention to a fact: The embargo does hurt people, who want jobs, dollars from tourists, and consumer goods. They are perfectly aware why they do not have them. The American embargo. This may or may not always be quite true, but it has a convincing verisimilitude. It makes Fidel look good. He is standing up to the bastards who are strangling us.

How resolutely communist are the Cuban people? This is just an impression, but I would say, “Not at all, if that much.” Abstractions ending in “-ism” are hobbies for people who have time for them. Everyone I talked to wanted more money – a better job, better food, better clothes, a chance to take the wife out to dinner. After these, more freedom.

As an example of Castro’s use of the embargo to maintain himself in power, consider the internet. People I talked to had heard of it of course, but had little idea what it was and no access to it. It can be found in hotels and apparently in tourist areas, though I did not see a single cybercafe of the sort that are found every 20 feet in all Third World countries I know. Why no internet? Cubans universally said that the U.S. embargo prevented Cuba from having access. This struck me as improbable. It was.

ZDNet quotes Bill Woodcock, a network engineer and research director of Packet Clearing House, as follows: “Zero percent of Cubans are connected to the Internet. The Cuban government operates an incumbent phone company, which maintains a Web cache. Cubans who wish to use the Internet browse the government Web cache. They do not have unrestricted access to the Internet.” And if they did, the government would find itself with a lot of explaining to do.

Also from ZDNet: “A report published last month by the Reporters Without Borders advocacy group says, ‘it is forbidden to buy any computer equipment without express permission from the authorities,’ and spyware ‘installed in all Internet cafes automatically detects banned content.’ U.S. law exempts telecommunications equipment and service from the trade embargo.” The Cuban government is lying – Who would have thought it? – but can blame lack of access on the embargo. Washington in effect aids Castro in maintaining censorship.

Cuba has what are called “cocotaxis”. These are yellow spherical plastic things like part of a coconut husk attached to a motorcycle, providing transportation for two. Having hired a cocotaxi for a day, I got to know the driver reasonably well, to the point of being invited to his house for snacks. His wife had just had a new daughter and he was proud of both. His take on the economy was that things were bad, had been worse but were slowly getting better. Still, he said, taxes were high and he had to buy gasoline in CUCs, which made it more expensive. Things like computers were out of reach, and he and his wife could not afford restaurants. Did he have many gringo fares, I asked. No, not many. He wished more would come. He was tired of being poor. I am not sure why it is in the national interest of the U.S. to make a cab driver and his family live on rice and fish. I did not feel notably safer on hearing about it.

An embargo makes sense when it makes sense, but does not when it does not. Cuba is no longer the spearhead of the Soviet Union. We seem to proceed from pure vengefulness against Castro. Fidel, a freelance reprehensible dictator, beat Batista, our reprehensible dictator. We want to get even. But Castro is not Cuba. The CIA Fact Book says that Cuba has 11,394,043 citizens. One of them is Castro, and 11,394,042 are not. Many Americans say that Castro is evil and so we need to embargo him. One person the embargo assuredly does not hurt is Castro. Does anyone think he eats less well because of it?

Ah, but there are the Cuban émigrés in Miami. So much of American foreign policy seems determined by domestic politics, by a certain infantile truculence, and by ignorance of how people work. The embargo has accomplished nothing of any use for 50 years. Clearly the thing to do is keep at it for another 50. The “Cubans” in Miami demand it.

We are subject to considerable disinformation regarding the island. The Cuban émigrés in south Florida paint Cuba as a hellhole. It is not. I have seen hellholes. Even before coming to Cuba, I had developed a dim view of the pseudo-Cubans of Miami. Further, by supporting the embargo they are knowingly inflicting grave hardship on 11 million of their supposed fellows because they are mad at Fidel. This is contemptible. They want the U.S. to get back for them holdings that Castro confiscated on coming to power. Given the corruption and criminality rampant under Batista, it would be interesting to ask just how they came by their property. To try to get it back they are perfectly willing to condemn the island’s population to another 50 years of living on fish and rice. What patriots.

I say “pseudo-Cubans” and “supposed fellow Cubans”. It is worth noting that 1959 was 48 years ago. The great majority of these alleged Cubans were born here, have never been to Cuba, and would not live there if they could. They are gringos, Americans. They are also an important voting bloc in a presidentially crucial state. As so often in foreign policy, domestic politics trumps national interest and coherent thought.

Living as I do in Mexico, perhaps I have a better angle of view on matters Latin-American than do ideological isolates in Washington. To the world below Laredo, Cuba is a heroic little country being bullied by the U.S. but not giving in. I am not sure this is not the opinion of the whole world except for America. Remember that much of Latindom believes that South America’s economic doldrums spring from American exploitation. They do not. Considerable faith is required to believe that Bolivia would turn into Japan if only the U.S. stopped oppressing it. But beliefs, not facts, determine behavior.

American arguments against the island do not carry much weight in a region that sees things through Latin-American eyes. For example, by regional standards Cuba is not terribly poor. It did not suffer the butchery of Guatemala and El Salvador. For 50 years it has been politically stable. Given the experience of Latin-Americans with dictatorship, corruption, and violence, Cuba’s government does not look bad.

Americans, perhaps because of the Cold War, tend to think that communism is communism, all poured from the same bucket. Not so. At the high end of horribleness you have Stalin, Pol Pot, and Mao – genuine madmen of genocidal enthusiasms. North Korea’s dynasty runs a close second.

Castro is neither mad nor genocidal. A dictator, yes. A tiresome windbag, yes. Repressive of dissent, yes – but willingness to repress dissent does not mean that there is a great deal of dissent to repress. As far as Cubans are concerned (I mean real Cubans, the kind who live in Cuba, not the make-believe variety in Miami), the problem is not Castro. It is the hostility of Washington. Castro could end the embargo by surrendering, sure. Washington could end it by ending it, and probably end Castro at the same time.

While I was on the island the UN voted 184 to 4 to recommend that the U.S. end the embargo. In this vote America had the support of the following great powers: Israel, Palau, the Marshall Islands, and itself. Several Cubans spontaneously told me of the vote, smiling triumphantly. Intrigued, I made a point of bringing the vote up with people I ran into. They all knew of it – the governmental television made very sure of it – and grinned broadly over what they saw as a victory for Cuba over Bush. If this island is unstable, yearning for Fidel to die so that it can revolt and become an appendage of the U.S., then I am Sophia of Anhalt-Zerbst.

I spent several hours walking through Havana’s slums. These are extensive and ugly. Like so much of the city, they seem to have been built 50 years ago and never maintained. Commercial streets have the usual pillars, often in pastel colors now covered with soot, the plaster falling off in patches. In side streets potholes gape. Sometimes water, probably sewage, runs across the pavement. I saw nothing suggesting hunger, no pot-bellied malnutrition, but these people clearly have little. Time and again I glanced into doorways and saw cruddy worn steps rising into darkness. Tired people gazed from windows.

Similar places exist in downtown Detroit and in Washington D.C., where abandoned buildings are common, where whole housing projects have their windows bricked up to keep them from becoming shooting galleries for needle people. In America slums are racial in demarcation. In Cuba they are not. I encountered no hostility. In four hours I did not get so much as a hard look. In Detroit I would have lasted five minutes. But these people are going nowhere, living, breeding, and dying with nothing to show for it. It is a rotten thing to do to them without very good reason. And there is no reason. It does not get rid of Fidel.

The trappings of bumper-sticker socialism are everywhere in Cuba. Signs on walls say “Venceremos!” (“We will conquer!”) and “Patria o Muerte!” (Fatherland or death) and other exciting things. Adolescence dies hard everywhere.

The press is assuredly controlled. The political section of a bookstore I saw consisted of maybe a dozen books about (sigh) Che, the rest being not much better. Confusingly, there were a couple of textbooks on business management. Television is heavy on affirmation of socialist patriotism. In particular there are channels from China, which Cuba seems to regard as communist (when did you last hear of a communist economy growing at 10%, or at all?) and from Venezuela. Hugo Chavez clearly is thought to be a great man.

Toward the end of the adventure I went back to the DiMar to commune with the wind and the exploding waves and ponder what I had seen. Cubans make good beer (Bucanero). I have to give them that, and while mayonnaise on shrimp may not seem advisable, it worked.

I wanted to sort out what I knew about Cuba from what I suspected, so as to avoid the trap of instant-expertism. Some things I did know. A hellhole? No. Threat to anyone? No. Danger to international stability? No. In need of embargoing? No. Dictatorship? Yes. Adherent of the Bill of Rights? No.

How bad was Fidel? I really did not know. Admirers and detractors are wildly ideological. Compared to Thomas Jefferson he does not look good (though I do not think Castro owns slaves). Compared to other dictators the U.S. has installed or supported – Somoza, Trujillo, the Shah, Pinochet, Saddam Hussein, and so on – about par.

But however repugnant Castro may be, the practical question is whether the embargo is in America’s interest. If the U.S. is still strong enough that it does not have to care what the world thinks, then the embargo, though unnecessary, does not matter (except in moral terms, which do not matter). But as the country wages war on the Moslem world, tries to contain China (that’s going to work), pushes Russia into China’s arms, and tries to intimidate South America, all of these at once, maybe it would be better to improve America’s relations with this hemisphere. An effective way to spread communism is to make heroes of communists. The entire world – well, except Israel, the Marshall Islands, and Palau – is against the U.S. on this one. Is it so important to keep Miami happy?

Link here.


A lot of commotion ... about probably not very much except hypocrisy.

S.E.C. documents and financial disclosure forms filed by Hillary Clinton show that Bill Clinton, 61, has a financial stake in three investment entities registered in the Cayman Islands by California billionaire Ron Burkle’s Yucaipa Cos. LLC. Former President Bill Clinton’s decision to reconsider a business relationship with Burkle reflects concern those financial dealings may embarrass his wife’s presidential candidacy.

In 2004, Hillary Clinton, a New York senator, said she wanted to close the “loopholes” for “people who create a mailbox, or a drop, or send one person to sit on the beach in some island paradise and claim that it is their offshore headquarters.”

The former president’s possible decision to move away from Burkle “is all tied up with the laws of appearance and the politics of perception,” said Linda Fowler, professor of government at Dartmouth College in Hanover, New Hampshire. “The world being what it is, people are attracted to the spouse of somebody with political power. The level of potential conflict is just that much higher with a former president and a senator who would be president.” Moreover, added Fowler, “with this particular couple, somehow, the whole story doesn’t come out except in dribs and drabs.”

Bloomberg News last month submitted a list of questions to the Clinton campaign regarding the former president’s involvement in the three Cayman-based funds. The campaign did not respond to the queries until December 13, after the New York Times reported that Clinton plans to dissolve his 5-year partnership with Burkle, a longtime friend and important fund-raiser for both Clintons. Jay Carson, a Clinton spokesman, said that while the former president has not “severed ties” with Yucaipa, he “is taking steps to ensure” that “there will be an appropriate transition for those relationships” if his wife receives the 2008 Democratic presidential nomination.

Carson, in an e-mail, said the funds are designed for foreign investors. “All three of these entities (which are related) are organized in the Cayman Islands so that each investor or partner pays the taxes they would owe in their home country,” he said. “For U.S. citizens like Bill Clinton, that means he pays U.S. taxes on his income from this fund, which he does.”

The disclosures that Hillary Clinton, 60, is required to make as a lawmaker and candidate show that her husband has holdings in three Burkle-controlled funds, all listed at Yucaipa’s Los Angeles address. An October filing with the S.E.C. by Burkle, Yucaipa’s lead partner, names one fund as a Cayman Islands corporation and the other two as Cayman Islands partnerships.

The amounts disclosed by Hillary Clinton are minimal, though a person familiar with the matter confirmed a report last year in the Times that Bill Clinton stands to make tens of millions of dollars with little risk if the Yucaipa funds he is involved in profit beyond a certain level.

Paul Roth, an attorney with Schulte Roth & Zabel LLP in New York, said companies that organize outside the U.S. often do so because “it’s more attractive” to foreign investors, who can “make sure they are not subject to U.S. taxation.” Foreign registration may also make it easier for U.S. tax-exempt entities such as pension funds to invest “in certain strategies,” he said. These tax benefits – which are legal and common practice for many investment firms, particularly hedge funds – have drawn attention from lawmakers and candidates.

In a December 13 debate, Hillary Clinton’s chief rival for the Democratic nomination, Senator Barack Obama of Illinois, said that as president he would crack down on corporate loopholes and tax savings, particularly those involving offshore transactions. “There is a building in the Cayman Islands that houses, supposedly, 12,000 U.S.-based corporations,” Obama said. “That’s either the biggest building in the world or the biggest tax scam in the world. And I think we know which one it is.”

Roth said U.S. law makes it difficult for Americans to avoid taxes on payments from offshore, though some hedge-fund managers use such entities to defer U.S. taxes on their compensation. A measure passed this month by the House would ban this practice. Obama, 46, was a Senate co-sponsor of the provision when it was introduced in February. Carson said Bill Clinton’s payments from Yucaipa are not deferred and the former president pays tax on that income in the year in which it is earned.

Steven Howard, a partner at Thacher Proffitt & Wood LLP in New York who advises investment firms, said private-equity firms such as Yucaipa often compensate advisers with a stake in the company rather than salary. “In Clinton’s case, he may be allocated equity instead of significant cash for services rendered,” Howard said.

Carson did not respond to questions about whether Bill Clinton receives this form of compensation. Howard said equity allocations are taxed at the 15% capital-gains rate instead of as ordinary income, which is taxed at rates as high as 35%. He said the same benefit applies to so-called carried interest, a profit-sharing arrangement used by fund managers that Hillary Clinton and other Democrats have criticized and vow to curb.

The realized value of Clinton’s holdings in Yucaipa has not been disclosed and such stakes are typically difficult to assess until they are disbursed. Funds such as Yucaipa are privately held and are not normally required to disclose details to regulators. Bloomberg’s questions to the campaign involved the nature and amounts of his compensation from Yucaipa, why the holdings were listed as Los Angeles-based rather than Cayman Islands entities, and when Hillary Clinton became aware that the funds were offshore. Carson did not address those questions. Yucaipa spokesman Frank Quintero referred all questions about the former president’s role to the Clintons’ spokespeople.

Bill Clinton’s ties to Yucaipa have sparked controversy over the past year, including a September report in the Wall Street Journal that detailed how one of the former president’s aides had helped arrange a partnership with Burkle that dissolved amid litigation over allegations of misused funds.

The former president is not the only person in the campaign with links to funds in the Cayman Islands. Former North Carolina Senator John Edwards, who is also seeking the Democratic nomination, was a senior adviser to Fortress Investment Group Inc., a New York-based private-equity and hedge-fund manager, and reported at least one asset, the Investments Fund III (Fund D) LP, that was incorporated in the Cayman Islands in 2004. Edwards, who was the first candidate to criticize tax preferences for the private-equity industry, also pays taxes as if the money was earned in the U.S., spokesman Eric Schultz told the Washington Post in May. Schultz said Edwards, 54, “believes offshore tax shelters are wrong” and “will end them” if elected.

Separately, the Los Angeles Times reported that former Massachusetts Governor Mitt Romney, a Republican candidate, used shell companies in at least two offshore havens while running Bain Capital LLC, the Boston-based private-equity firm. Romney spokesman Kevin Madden told the Times there was nothing improper about the registration of funds in Bermuda and the Cayman Islands and that Romney did not defer or avoid paying U.S. taxes.

When he left the White House in 2000, Bill Clinton reported assets of more than $1 million and legal fees of more than $2.4 million. In his wife’s most recent disclosure, Hillary Clinton reported that the couple now has a net worth estimated at between $17.4 million and $53.7 million. Both now claim to be uneasy about their place among the richest Americans. This “new experience,” Hillary Clinton said during a debate October 30, is not “one that makes us very comfortable.”

Link here.


How he came to that position is a lesson for everyone.

Although he was only schooled to the eighth grade, 78-year-old Millville, New Jersey resident Paul Navone has had a lifelong love affair with numbers. It was that passion for math – or “figures”, as he likes to call it – that saved him from getting bored with his longtime factory job as a quality control technician at a local manufacturing plant.

Aside from keeping the drudgery at bay, it also proved to be a considerably lucrative relationship. Although he never made more than $11 per hour in the 62 years he worked, Navone – who has neither a phone nor a television at his home – is a multimillionaire. He gave away $1 million of his wealth earlier in December to Cumberland County College. And only weeks later, on January 9, another school in the region is slated to announce that Navone has made yet another equally large gift.

Navone expressed surprised delight at the interest people have taken in him. With eyes twinkling, he wondered why anyone would think it exceptional that a wage earner with an unglamorous job would be able to amass such a fortune without it coming from a source like inheritance. “Mine came from hard work,” he said.

According to his broker, Navone earned his wealth through frugal living coupled with what Navone described as “making the money work for (him).” He invested in stocks and bonds and always reinvested his returns, rarely taking any out of the market.

Learning more about Navone, however, his life story becomes increasingly intriguing. Navone never married and has always lived alone – he described himself as a “loner, almost to the extent of being a recluse.” He has never taken advantage of his wealth in the way most people might – large houses, fancy cars, lavish vacations. He drives an old-model SUV and lives in a small house in Center City Millville.

He has never traveled outside the region other than to two places: the only leisure vacation he ever took was to New Orleans by bus. His other adventure included a trip to Florida for a union convention on behalf of the union to which he belonged, the Glass Bottle Blowers Association. He cannot remember the last time he owned a television. The last thing he remembers watching on TV, Navone said, was the NASA moon landing in 1969. Navone’s broker said the septuagenarian has never received a windfall.

The middle of five children born to immigrants from Italy, Navone grew up modestly in Depression-era Vineland. His family was by no means wealthy – “poor as church mice,” he said – and his father worked as a laborer laying railroad ties while his mother was a homemaker. While his father was away at work, he said, Navone and his siblings cultivated half of the 5-acre parcel in south Vineland they shared with another family, growing vegetables like sweet potatoes for sustenance.

His applied for his first job – at Wheaton Glass – upon becoming eligible to work on his 16th birthday. He said he was amazed at his first hourly wage - 75 cents – and thought it was a mistake. He said nothing and waited the two weeks to his first paycheck, and when he saw that the hourly wage was no mistake, he was elated. “I was in seventh heaven,” he said. “I had always wanted a coat, a full-length coat. And I got it.”

He continued working at Wheaton Glass before moving on to the Millville Manufacturing Company, where he worked his way up to weaver before being drafted into the U.S. Army in 1951. After serving two years in Germany, he returned to his job in Millville. He moved to Armstrong Cork, the factory at which he would work for more than 41 years as the plant itself changed ownership – and the products it manufactured – four times. He retired from his job as a quality control tester 12 years ago at the age of 66.

In the interim, he regularly worked 60-hour weeks. He made enough money to buy several rental properties throughout his life, either in Millville or Atlantic City, although he never owned more than three properties at any given time. The rental income, he said, was what enabled him to save his paychecks for a rainy day. “Very seldom did I have to dip into my weekly wages,” he said.

As his wealth increased, he continued living frugally. He also never aspired to rise through the professional ranks, preferring to remain a wage earner. “Time and time again, it was proven that salaried people made less than hourly workers,” he said. “I never wanted a title. What good is a title?”

He still frequents flea markets and rarely buys anything at full price. His wardrobe is almost entirely second-hand, he said, except for “maybe the socks.”

“I don’t know when I buckled down and got serious about making money,” Navone said. “It just grew into my lifestyle. With age, it got more serious. I never denied myself anything, but I certainly never spent on something outstandingly lavish.”

He also confessed that he did – just once – splurge somewhat on one shiny bauble: a three-diamond platinum ring, which he bought years ago for $800 at pawnshop in Philadelphia. He has since sold it.

Despite his wealth, Navone said he has never let the money, or the ability give it away, get to his head. His current philanthropy, he insisted, is not due to illness. “It still hasn’t registered in my mind, the significance of (the million-dollar gifts),” he said. “I think I’m the same now as I’ve always been.”

Link here.


The tiny Caribbean island of Antigua failed in its bid to impose $3.44 billion in fines on the U.S. in an Internet gambling dispute. The World Trade Organization, to which the country took its complaint, instead ruled that Antigua could fine the U.S. just $21 million because Washington had not complied with a ruling to open its borders to online gambling.

Antigua, with a population of about 70,000, is a center for offshore Internet gaming operations and attracts large numbers of U.S. residents to its online casino-style games and betting services. The U.S. bans online gambling, but large numbers of American gamblers use websites that are largely located in offshore centres like Antigua and Gibraltar.

Earlier this month, a European online gaming trade association lodged a complaint with the European Commission over the U.S. ban. The Remote Gambling Association accused the US Department of Justice of discriminating against its members, by enforcing the ban against foreign online gambling companies while allowing U.S. rivals to do business. The U.S. has agreed it would widen access to some of its services to compensate the EU, Japan and Canada in order to settle a WTO dispute over the U.S. ban on online gambling. But the association said that the deal “does not address discriminatory and protectionist U.S. practices against European and other foreign online operators in the form of selective prosecution.”

Link here.


The three agree to cooperate further in “unearthing other criminal activity.”

Three of the largest internet companies have agreed to pay millions in fines, cooperate with investigators and stop accepting ads for online gambling, the U.S. attorney’s office in St. Louis announced. Microsoft, Google and Yahoo neither admitted nor denied federal prosecutors’ claims that as much as a decade of their advertising aided and abetted the crime of online gambling. But as part of the $31.5 million settlement, they have agreed to stop running online gambling ads and also agreed not to publicly contradict the allegations.

Microsoft agreed to forfeit $4.5 million, give $7.5 million to the International Center for Missing and Exploited Children and at least $9 million to fund a 3-year public service ad campaign aimed at educating users that online gambling is illegal. Yahoo agreed to forfeit $3 million and run its own $4.5 million, 3-year ad campaign. Google agreed to forfeit $3 million.

U.S. Attorney Catherine Hanaway said the settlement would have “a major impact,” not only because three the largest online organizations agreed not to accept any more gambling ads, but also because they agreed to “assist in unearthing other criminal activity.” In the agreement, the companies agreed to cooperate with investigators, including the FBI and the criminal investigation division of the IRS. Federal prosecutors in St. Louis have developed a specialty in combating online gaming.

In all, prosecutors have reaped $70 million in settlements with companies associated with online gaming, including $7.2 million in 2006 from The Sporting News, $6 million for advertising associated with two gambling websites in 2004 and $10 million that eBay paid in 2003 to settle allegations that its subsidiary, PayPal, had transferred money to online gambling sites. PayPal and major credit card companies already had restricted the flow of gamblers’ money, but new ways of transferring funds have since sprung up.

Prosecutors scored perhaps their biggest victory with civil and criminal cases against BetOnSports, once one of the largest online gambling companies in the world but now effectively out of business after recently settling with Hanaway’s office. Hanway said there has been a “serious chilling effect” on the online gambling industry, especially with the BetOnSports case. She also said that large organizations “that understand what the laws are” now try to comply. The case against BetOnSports is on­going, and Hanaway estimated that it is still six months or a year away from going to trial.

Hanaway said the settlement with Microsoft et al ends years of often “tedious” investigative work reviewing online and print ads in trade publications to determine where and when ads ran and how much they were worth. Negotiations with the companies lasted 12 to 18 months, she said. “It’s a very profitable business that had a lot of money to spend on marketing,” she said. Hanaway declined to estimate how much the companies had received for ads, saying that both sides likely would disagree.

Microsoft stopped accepting online-gambling ads in 2004, shortly after receiving a subpoena and warning letter in 2003. Many other old and new media companies received the same subpoena and letter. “Once we became aware that the government viewed this as something that (it) saw as unlawful, we just stopped accepting the ads,” Microsoft lawyer Rich Wallis said.

Yahoo’s agreement says that the company will be released from civil or criminal liability associated with its role in advertising or facilitating online gambling. Yahoo spokeswoman Kelley Benander said the company stopped accepting banner ads in 2002, and ads linked to search terms in 2004, and has worked cooperatively with prosecutors.

In its e-mail response, a Google spokesman said, “While we did not admit any wrongdoing, the Department of Justice has advised that online gambling is illegal in the United States and ads to promote it are improper. Google voluntarily discontinued running such ads.” Google’s agreement says it will provide information relative to possible crimes involving online gambling.

Link here.


Nearly a decade ago, Sun Microsystems CEO Scott McNealy snapped out a warning to the worriers of the Internet Age: “You don’t have any privacy. Get over it.” McNealy’s words look more prescient every year. In 2006, AOL unwittingly divulged the personal lives of 650,000 customers by publishing their search histories as research data. Despite AOL’s attempts to anonymize the info, the New York Times quickly outed a 62-year-old lady in Georgia whose searches revealed her dog was wetting the upholstery. The Justice Department has subpoenaed Google, Yahoo!, MSN, and AOL for lists of search queries. More recently, Facebook employees were caught reading the customer logs.

With more people putting more of their personal lives online every day, there is a huge potential market for the Web’s privacy pushers. A couple of weeks ago, search engine Ask.com tried to poach customers from Google by launching a new service called AskEraser. Worried that Google keeps your search queries for ages? AskEraser allows you to force the company to delete your search history from the company’s servers. Great idea, but it is just a start. How can you use the Web, e-mail, and IM without seeing your Internet Explorer history in the New York Times?

Link here.


This past year was one of the most eventful years in desktop Linux’s short history. While Mac OS X remains the most successful of all the Unix/open-source-based operating systems, the Linux desktop made great strides forward in both the office and in homes.

This was not a year where I can point at some substantial advancement in the Linux desktop itself. There were significant desktop Linux releases. To name but a few, this year saw the arrival of such significant distributions as Fedora 8, OpenSUSE 10.3, SLED (SUSE Linux Enterprise Desktop) 10 Service Pack 1, MEPIS 6.5 and last, but never least, Ubuntu 7.10. However, while each was incrementally a better desktop than its predecessors, none of them were revolutionary. The Linux desktop has reached a point where its progress is evolutionary.

At the same time, Microsoft has trapped itself into trying and failing to create a revolutionary new system – Windows Vista. Today, no one aside from Microsoft and its fanboys claims that Vista is really a move forward from XP. It is increasingly seen as, at best, a step to the side. At worst, Vista is seen as potentially the greatest failure Microsoft has ever brought to market. Never before in operating system history have so many thousands of years of programmer hours and so much money been put into such a flop. Meanwhile, Linux kept inching along with an almost continual series of small steps forward.

Desktop Linux’s major leaps forward in 2007 happened in the hardware, software and business systems around it. So that is where I start my list, working my way from the least to the most important developments, beginning with the OLPC (One Laptop Per Child) project.

In the long run, the OLPC notebook, and its imitators like the Classmate, may prove to be the most important innovations of all. Through them, now thousands, but eventually millions, of users will have their first introduction to both computers and Linux. John Dvorak doubts the OLPC will change the world because it does not address the killing issues of absolute poverty – clean water and sufficient food. He is right. But the OLPC will give Third World children the tools and knowledge they need to move their nations out of poverty’s endless lock-step.

In the short run, though, the OLPC has led directly to another change: the sub-$500 Linux-capable PC. Before the OLPC, no one gave serious thought to really cheap PCs. Then, as the OLPC’s push to bring the price of a PC down as low as possible continued, OEMs realized that not only was an under-$500 computer with reasonable performance possible, but there was a real market for it.

The results were such Linux-powered PCs as the Xandros Asus Eee PC 4G, which costs $400, and the under-$200 Everex TC2502 gPC, which uses Ubuntu. Both early PCs have had remarkable sales. Asus is now predicting that it will sell 5 million Eee PCs in 2008 and Everex will be introducing its Cloudmark laptop in mid-January. Numerous other smaller PC vendors are rushing to bring inexpensive Linux systems to customers.

Everex has done more than just bring out a cheap Linux PC. The company has also brought together three previously existing sets of programs – Ubuntu 7.10, the Enlightenment desktop interface and Google Apps – to create a new Linux desktop experience: gOS. This is the first desktop operating system to marry SAAS (software as a service) with Linux to create a Linux for the Internet generation. While you can run gOS as a stand-alone desktop, that is not the idea. While gOS is not an official Google desktop, for all practical purposes that is exactly what it is. As such, gOS has come out of nowhere to become hotter than hot.

For ages people have talked about how SAAS, thin clients, network computers, ASPs (application service providers) and so on would be the future of computing. They have been wrong. Desktop computing applications that depended on a server always remained a niche market. Google, with its numerous and popular applications, has proven to be popular, though, and gOS was the first operating system to pick up on this transformation and run with it.

Another change is that 2007 was the year that, slowly and grudgingly, proprietary software and formats were integrated into mainstream Linux distributions. Freespire and Linspire led the way. Ubuntu-based Mint also wholeheartedly embraced proprietary software and drivers. Others, such as OpenSUSE 10.3 and Ubuntu 7.10, while steering clear of incorporating closed-source programs, drivers and codices, made it easier for users to access proprietary programs. Hardware vendors, like Dell with its recent release of PCs with pre-installed Ubuntu 7.10, also included a few proprietary elements, specifically the ability to play commercial DVDs on Linux.

Which leads me to my #1 advance in desktop Linux – top-tier PC vendors, like Dell and Lenovo, shipping pre-installed Linux desktops to users. Today, you no longer need to know even the basics of installing Linux, much less driver tweaking and the like, to run Linux. Instead, you can go online and order a Linux-powered PC from a brand-name vendor that will work out of the box.

It is this fundamental shift, more than anything else, which marked 2007 as a year for Linux desktop users to remember. As other PC OEMs follow Asus and Everex on the low end and Dell and Lenovo in the traditional laptop and desktop markets, 2008 promises to be the year when finding a pre-installed Linux system will be even easier than buying a Mac.

I have one extra reason why 2007 was a good year for desktop Linux. It was a horrid year for Vista. Microsoft will tell you it was a wonderful year. But if it was so great, why do customers keep insisting on XP? I am not speaking now as someone who has found Linux to be the better choice. I am speaking as someone who over the year has spoken to hundreds of IT staffers and ordinary PC users. Most of these people have been Windows users. I would say one in 10 of them like Vista. That is a lot of disgruntled users, and some of them are now looking to Linux and Mac OS X for a replacement.

So, I will end this year’s survey of the best of the Linux desktop with a salute to the worst of Microsoft’s desktop. If it were not for Vista, far fewer people would be giving Linux a chance. Thanks, Bill and Steve, we could not have done it without you!

Link here.
The gPC is true to the adage “you get what you pay for” ... not a compliment – link.


“The Great Emancipator” was a racist tyrant, statist orthodoxy notwithstanding.

“My paramount objective in this struggle is to save the Union, and is not either to save or destroy slavery.” ~~ Abraham Lincoln, August 22, 1862, letter to newspaper editor Horace Greeley

In recent news, the Press has begun to pillory Ron Paul over his unconventional views of the U.S. Civil War. It is unknown what they hope to accomplish by spotlighting a 147-year old historical event as a campaign issue. But the inference, since the discussions concern slavery, suggests a subtle attempt to smear Paul as a racist.

Before the socialist tyrant lovers in the mainstream media wax too orgasmic about using Paul’s position against him, it is worth pointing out that his position is the intelligent and informed position. It is long since past obvious that the MSM is uninterested in reaching an intelligent, informed audience – but I am not too sure this Lincoln debate is something they really want to dredge up into a national controversy. The odds are much too high that modern-day people may actually learn something new.

Most Americans who are products of the public school system are conditioned to love Lincoln. His image as a hero has been carefully cultivated and sugar-coated by academia and pundits. I admired Lincoln as a child, so much so that I drew portaits of him and sculpted a bust of his head once in clay. Such is the hero worship a child can have for the most lionized president in American history.

The truth is both ugly and unpleasant: Not only was the ghastly, bloody war that he supposedly fought to end slavery unnecessary, Lincoln was a tyrant and an abuser of civil liberties. The “tyrant” part is well-documented. He suspended habeas corpus. He deported a U.S. Congressman who disagreed with the war. He had federal police impound dissenting newspapers and smash their presses. He authorized Sherman’s March to the Sea – a war crime, by any civilized human standard.

But “Honest Abe” also was not racially enlightened, as many people think. This is obvious to those who dig beneath the sugar coating of the historical image, but those who have not should start with his own words on the topic of race, from the Lincoln-Douglas debates (source: www.nps.gov):

We have decided that the negro must not be a slave within our limits, but we have also decided that the negro shall not be a citizen within our limits; that he shall not vote, hold office, or exercise any political rights.” ~~ Abraham Lincoln, September 15, 1858

... I will to the very last stand by the law of this State, which forbids the marrying of white people with negroes.” ~~ Abraham Lincoln, September 18, 1858

I will say then that I am not, nor ever have been, in favor of bringing about in any way the social and political equality of the white and black races, that I am not nor ever have been in favor of making voters or jurors of negroes, nor of qualifying them to hold office, nor to intermarry with white people; and I will say in addition to this that there is a physical difference between the white and black races which I believe will forever forbid the two races living together on terms of social and political equality. And inasmuch as they cannot so live, while they do remain together there must be the position of superior and inferior, and I as much as any other man am in favor of having the superior position assigned to the white race.” ~~ Abraham Lincoln, September 18, 1858

It can only be concluded, based upon his own words, that Abraham Lincoln may well have been a slave abolitionist, but he was also clearly a racist who considered African-Americans to be inferior human beings – if indeed he considered them human beings at all. Imagine the firestorm that would ensue today if a famous politician running for public office uttered the above quotations in a public forum!

Historical apologists for Lincoln mewl that the above remarks were simple political expediency – that Lincoln was bowing to the racism of the times, and that he did not really mean it. Rubbish. Jefferson actually owned slaves, and never made such white separatist and piggish remarks. Ben Franklin considered the races to be equal ... but then, Franklin was a sincere abolitionist who lived before his time – not an opportunist.

By contrast – according to author Lerone Bennett, at least – Lincoln was a crude bigot who habitually used the “N” word, enjoyed watching black minstrel shows and delighted in demeaning “darkie” jokes.

Lincoln also supported the Fugitive Slave Act of 1850, which empowered “slave catchers” in free states to arrest escaped slaves and return them to bondage. Marshals were given cash rewards for runaway slaves they returned to slavery. Marshals who refused to enforce the law were fined. Those who assisted a runaway slave, as many people in underground railroads did, were brought to justice as well. Runaways were denied the right to testify on their own behalf, and were also denied trial by jury. Lincoln did not see the law as unconstitutional, nor did he feel it should go unenforced.

Most ludicrous and disturbing of all, Lincoln was well-documented as a proponent of a separatist movement dubbed “colonization” – and in the White House, Lincoln proposed to create colonies to send black people back to Africa in Liberia, to Haiti, or to work in coal mines in Panama. Most of his plans went awry, so the colonization was not implemented. However, just a few days before his assassination, he asked General Benjamin F. Butler to study the possibility of shipping the blacks to a new colony in another location on the map. Lincoln did not feel blacks and whites could live together. At no point, rhetorically, did the “Great Emancipator” ever deviate from that white separatist position. We have all been sold a bill of goods on “Honest Abe”.

Racism is a hallmark of collectivists and tyrants. Adolf Hitler was a collectivist tyrant and a socialist. That is probably why, at least early in the 1930s, the U.S. news media had a sneaking admiration for him. They admired “Uncle Joe” Stalin, too, before news of his reign of terror leaked out enough to make him unsupportable. Both Hitler and Stalin were graced with Time magazine’s Man of the Year award, which really tells us all we ever need to know about Time.

The media loves tyrants. “Honest Abe” was a racist tyrant. It is therefore especially ironic that the media is now subtly attempting to paint the courtly and decent Dr. Ron Paul as a racist, using his opposition to Mr. Lincoln’s war as a rhetorical foil.

Whether the smear sticks depends upon how gullible and misinformed the public is – but in the age of the Internet, the mainstream media, as usual, is probably underestimating the opposition. In truth, a thoughtful debate on Lincoln and the War Between the States has been long overdue, and it may not be wise for the gatekeepers of the fourth estate to have that debate now, in the age of political blogging and Youtube. Especially not considering the relative youthfulness and energy of Dr. Paul’s followers.

An unintended consequence of pushing this as a campaign issue is that the Press may wind up accidentally shattering “Saint” Lincoln’s feet of clay, and bringing his whole mythology crashing down.

As the ever-cerebral Decider says, “Bring it on.” Let’s hash this out. A lot more people on the Web need to read Lincoln’s phrase, “I as much as any other man am in favor of having the superior position assigned to the white race.” Let us see how that quote plays in Peoria in 2008. All Americans should learn the truth about Mr. Lincoln’s view of the “difference in the races”.

As for Dr. Paul, there is no racist avarice in him. He is a kind, gentlemanly soul – a rare breed in Washington. He is not politically correct, either, because he does not believe in Orwellianism. But he is less prejudiced than most big-government socialists from the mainstream of the two prevailing political parties, who see racial division as a matter of campaign strategy.

Libertarians are not racists. Racism has no traction in the libertarian movement, because libertarians believe in the Power of the Individual, inalienable human rights, personal responsibility, and civil liberties. Libertarians judge people on individual merits, based on their behavior and intellect. To a true libertarian, a black man is just another man – not some sort of inferior dependent upon White Man’s Burden, or human chattel to be exploited ... Belief systems that unfortunately eluded Lincoln, historical myth to the contrary.

Published originally at EtherZone.com.

Link here.


From SkinTheFox.com:

In 1996, Fox News began broadcasting extreme right propaganda labeled “fair and balanced” reporting.

Fox “News” today is little more than an advertising arm of the current White House administration. With a clear intent : disseminate false information to support a government administration that came to power under questionable circumstances; maintain a government administration that remains in power through more questionable circumstances; and disseminate false and misleading information to the American People to support that current [and questionable] government administration.

We, the American People, will no longer tolerate or support advertising or political propaganda in the guise of “news.” We will no longer tolerate or accept the brainwashing of America. We will no longer tolerate or support any sponsor who financially supports or contributes to Fox News’ continued and mislabeled “journalistic” practices.

Fox News Sponsors here.
“Boycott of the Week” here


Hunter S. Thompson’s spirit lives on, however hard the Ruling Class tries to suppress it, in the Ron Paul candidacy.

Author Hunter S. Thompson (HST), the original Gonzo journalist, died by his own hand in February of 2005. His most famous work was Fear and Loathing in Las Vegas: A Savage Journey to the Heart of the American Dream. It introduced the world to the concept of Gonzo Journalism. After watching the epic Meet the Press interview of Ron Paul last weekend Hunter has been much on my mind, reincarnate as the “filthy bearded raven croaking nevermore.”

The campaign kicks into high gear next week as we enter the New Year and it promises to be a real animal act, the kind that Hunter would revel in. The mainstream (straight) press has been voraciously devouring the campaign to date. Like malignant hyenas they are dieting on the bones and gristle of failed and failing policy nostrums from all the usual suspects.

The Democrats, as they have since JFK was assassinated, are dragging up career political hacks with the morals of hammerhead sharks. Edwards, Clinton and Obama are just the latest chapter in an ongoing saga of political devolution and the near suicide of the Democratic party. They offer nothing different than their long line of predecessors: Mondale, Biden, Bentsen, Ferraro, Kerry, Clinton I, Gore and the ubiquitous Hube. A steady dose of statist pablum – soak the rich, help the poor, free health care, lower taxes, higher spending. Roast ducks will fly into the open mouths of the proletariat if they just elect them! Habitual LewRockwell.com readers and Austrians know that this thin gruel of economy-busting inflationist fiscal policy, taxation, profligate spending, and increased regulation are the recipe for ongoing disaster. The Democrats are truly the party of no ideas. Every one of these “thought leaders” is proffering the eerie reincarnation of Hubert Humphrey, a massive dose of prevaricating atavistic swill.

The Dems at least are consistent, reusing, yet again, the same dog-eared and tired platform of the ghosts of elections past. This time they are fielding, in my humble opinion, the least electable candidates yet. The mainstream Republicans – Thompson, McCain, Huckabee, Romney and Giuliani – are leapfrogging one another in taking up the mantle of Bush the Lesser. Bush II’s presidency has been a cruel charade of Nixon/Kissinger diplomacy with lie and kill in center ring as the main event, second only to borrow, borrow, and borrow again. As if the $4 trillion in additional debt that the Neocon-Military-Congressional-Complex has yoked Americans with is not enough. These candidate golems are playing the foolish and desperate game of trying to one-up one another in offering acts III and IV of the same debacle. Numerous LRC contributors have beaten this platform into dust, so I will spare readers kicking up any more here. Which brings me around to the legacy of Hunter S. Thompson, aka Dr. Gonzo.

Fear and Loathing on the Campaign Trail was Thompson’s finest work. During the presidential campaign of 1972 Hunter diligently filed bi-weekly reports on what the candidates, the press corps, their entourages and fellow travelers were doing. The work had brilliant allegorical references to the deviant behavior that Hunter watched, and whole-heartedly participated in, as all concerned showed how low they could stoop on the road to becoming Potus Imperious. While Fear and Loathing in Las Vegas proved to be a self-indulgent and empty diatribe against Thompson’s perception of American Corporatism, it did awaken a journalist spirit to strike at the enemy (“I kicked Nixon ... every chance I could”) hard and often. Dr. Gonzo’s Nixon obituary is a classic bile-filled screed.

The current campaign trail goes from a footpath to a superhighway this January. This necessitates full Thompsonian disclosure to cut through the fog of the Straight (Linear) Press, as Thompson called the mainstream media. It is hard to tell if they (linear press) are drunk or just stupid as they witlessly perform the Ruling Party’s attempt at suppression of dissent and the promulgation of relevant ideas. Neocons, like Nixon, do not see dissent, they see criminals when they look beyond their many moat’s at the rebelling populace. Nixon may be dead, but his legacy of hate and malfeasance lives on in the mainstream Ruling Party in both of their malignant wings with Bush the Lesser as Nixon reincarnate.

Still Hunter Thompson was a pitiable soul. His multi-faceted addictions were a poor compensation to his awareness of the deconstruction of the American dream. As criticism it lacked the essential ingredient of offering an alternative. As a methodology his results were nil, even if the process became hilarious. The only real benefit was inculcating readers in the quest to seek the reality lurking beneath the increasingly crude facade. This quest is become a conflagration igniting countless blogs, web sites, and grassroot candidacy worldwide.

Hunter and his Gonzo methodology brought into the media spotlight an arena that had assiduously shunned it for almost a century. Yet Hunter never saw the bigger picture that was grounded in ironic perception, revisionist understanding of history and the Austrian economic policy that is the logical end result of the same. The spotlight turned from his writing to his behavior, and his message got lost for a time. His suicide was his last futile, poignant but nihilistic vanguard of Gonzo.

Hunter died unaware that the Internet was a reincarnation of his Gonzo method. The Internet is streaming uncensored information at light speed around the planet and is starting to drive the media and the campaign process. It is now continuously available to billions almost everywhere. Uncountable numbers of blogs are the vigorous implementing the HST vision of Gonzo. The Ruling Party with its opposing wings are cranking up the volume on their one-note song. The cacophony of their death throes will be deafening as the reigns of power slip from their claw-like grasp.

Power, like a championship fight, must be taken from the titleholder. The Ron Paul revolution has the ruling elite on their heels, back to the ropes, weakening with every blow. Last weekend bore witness to something previously never thought possible in the age of media-controlled candidacy and disinformation dissemination: A viable candidate at the national level discussing actual issues, with thought-provoking and cogent arguments based on both a moral and a historically accurate basis.

Dr. Ron Paul represents a limited government conservative, classically liberal. The only platform of consistent and ideological Republicanism. This is the American Dream that Hunter longed for. It is not dead. This is what HST wanted Gonzo to be, a viral force that changes the process yet does not get compromised from the participation. He wanted a free America, free of war, free of racism, free of corporatism, free of fear and devoid of loathing.

The viral Ron Paul revolution is gaining momentum everywhere but in the linear press (whose audience dwindles daily), which is still working overtime denying the viability of the candidacy. Dr. Paul is viral on Meet the Press (Part I, Part II, Part III, Part IV).

Ron Paul Presidency is a head-on assault to the Ruling Party, government bureaucrats and their many supplicants. It is where Hunter Thompson wanted to go.

Link here.
How To Detonate a Money Bomb – link.
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