Wealth International, Limited (trustprofessionals.com) : Where There’s W.I.L., There’s A Way

W.I.L. Offshore News Digest for Week of March 17, 2008

This Week’s Entries : This week’s W.I.L. Finance Digest is here.


The U.S. Federal Reserve is an institution richly deserving of all the condemnation it gets for its misuse of the monetary and credit control instruments at its disposal. If the Fed had never been born, in our opinion, we would all be better off in incalculable ways. But with the sin of its birth a done deal, to deny that the Fed could have a role in helping clean up certain messes it helped create is to deny reality. In particular, financial writer John Mauldin argues, to have allowed the swift collapse of Bear Stearns last week -- covered in more detail over on last week's and this week's W.I.L. Finance Digest -- to turn into a worldwide financial rout would have been insane. Hard to argue with his reasoning.

Reams of articles and comments have appeared over the past few days on the Bear Stearns debacle. A particularly interesting viewpoint has just been penned by my business partner John Mauldin in his Outside The Box newsletter. I realize that a large number of my readers also subscribe to John's newsletters, but I nevertheless thought it appropriate to republish his article for the sake of those not receiving his newsletters directly:

I already have a slew of e-mails from people upset about what they see as a bailout of a big bank, decrying the lack of "moral hazard". And I can understand the sentiment, as it appears that tax-payer money may have been used to bail out a big Wall Street bank that acted recklessly in the subprime mortgage markets.

But that is not what has happened. This is not a bailout. The shareholders at Bear have been essentially wiped out. Note that a third of the shares of Bear were owned by Bear employees. Many of them have seen a lifetime of work and savings wiped out, and their jobs may be at risk, even if they had no connection with the actual events which caused the crisis at Bear. Don't tell them there was no moral hazard.

For all intents and purposes, Bear would have been bankrupt this morning [Monday]. The $2 a share offer is simply to keep Bear from having to declare bankruptcy which would mean a long, drawn out process and would have precipitated a crisis of unimaginable proportions. Cue the lawyers.

As I understand this morning, JP Morgan will take a $6 billion write down, which is essentially what they are paying for Bear. The Fed is taking $30 billion dollars in a variety of assets. They may ultimately take a loss of a few billion dollars over time, although they may actually make a profit. When you look at the assets, much of it is in paper that will likely get close to par over time, and the good paper will pay premiums mitigating the potential loss. The problem is no one is prepared to take that risk today.

If it was 2005, Bear would have been allowed to collapse, as the system back then could deal with it, as it did with REFCO. But it is not 2005. We are in a credit crisis, a perfect storm, which is of unprecedented proportions. If Bear had not been put into sounds hands and provided solvency and liquidity, the credit markets would simply have frozen this morning. As in ground to a halt. Hit the wall. The end of the world, impossible to fathom how to get out of it type of event.

The stock market would have crashed by 20% or more, maybe a lot more. It would have made Black Monday in 1987 look like a picnic. We would have seen tens of trillions of dollars wiped out in equity holdings all over the world.

As I have been writing, the Fed gets it. Their action today is actually reassuring. I have been writing for a long time that they would do whatever it takes to keep the system intact. It should be pointed out that this was the NY Fed stepping in, not the FOMC. The NY Fed is responsible for market integrity, not monetary policy, and they did their job. And you can count on other actions. They are going to change the rules on how assets can be kept on the books of banks. Mortgage bail-outs? Possibly. The list will grow.

Yes, tax-payers may eventually have to cover a few billion here or there on the Bear action. But the time to worry about moral hazard was two years ago when the various authorities allowed institutions to make subprime loans to people with no jobs and no income and no means to repay and then sold them to institutions all over the world as AAA assets. And we can worry in the near future when we will need to do a complete rewrite of the rules to prevent this from happening again.

But for now, we need to bail the water out the boat and see if we can plug the leaks. Allowing the boat to sink is not an option. And get this. You are in the boat, whether you realize it or not. You and your friends and neighbors and families. Whether you are in Europe or in Asia, you would have been hurt by a failure to act by the Fed. Everything is connected in a globalized world. Without the actions taken by the Fed, the soft depression that many have thought would be the eventual outcome of the huge build-up of debt would in fact become a reality. And more quickly than you could imagine.

As I have repeatedly said, recessions are part of the business cycle. There is nothing we can do to prevent them. But depressions are caused by massive policy mistakes on the part of central banks and governments. And it would have been a massive failure indeed to let Bear collapse. ...

The Fed risking a few billion here and there to keep the boat afloat is the best trade possible today. Their action saved trillions in losses for investors all over the world. It is a relatively small price. If you want to be outraged, think about the multiple billions in subsidies for ethanol and the hundreds of billions of so-called earmarks over the past few years to build bridges to nowhere. And think of the billions in lost tax revenue that would result from the ensuing crisis. I repeat, this was a good trade from almost any perspective, unless you are from the hair-shirt, cut-your-nose-off-to-spite-your-face camp of economics.

The Fed is to be applauded for taking the actions they did. And they may have to do it again, as there are rumors that another major investment bank is on the ropes. I hope that is not the case, and will not add to the rumors in print, but I am glad the Fed is there if we need them.

It is precisely because the Fed is willing to take such actions that I am modestly optimistic that we will "only" go through a rather longish recession and slow recovery and not the soft depression that would happen otherwise. ...

Bailing out the big guys? No, the Fed does not care about the big guys, and only mildly pays attention to the stock market, despite what conspiracy theorists think. In the last few years, I have had the privilege of meeting at length with a number of Fed economists and those who have their ear. They are far more focused on the economy, their mandates for stable inflation and keeping unemployment as possible.

No one who owned Bear stock was protected. This was to protect the small guys who don't even realize they were at risk. To decry this deal means you just don't get how dire a mess we were almost in. It is all well and good to be rich or a theoretical purist and talk about how the Fed should let the system collapse so that we can have a "cathartic" pricing event. Or that the Fed should just leave well enough alone. But the pain to the little guy in the streets who did nothing wrong would simply be too much. The Fed and other regulatory authorities leaving well enough alone is part of the reason we are where we are. First, get the water out of the boat and fix the leaks, and then make sure we never get here again. ...

I believe earnings are going to continue to disappoint in a broad swath of companies, which will ultimately translate into lower stock market prices. Be careful out there. There are good trades and deals available, just not in traditional stock market index funds, in my opinion, which I should point out could be quite wrong.


This action seems overdue, although there are undoubtedly reasons for the delay. This article includes a useful quick summing up of the affair to date, for those who have been blissfully unaware of it until now.

Police in the Principality of Liechtenstein have issued an arrest warrant for the man they believe stole confidential bank data and sold it to tax authorities in Germany and elsewhere. The police issued a statement on [March 13]] announcing that that they are looking for Heinrich Kieber, a 42-year-old Liechtenstein citizen and former employee of LGT Bank.

"Mr Kieber is subject to an international arrest warrant. The Liechtenstein law enforcement agencies demand his immediate extradition," the statement announced.

Kieber, who worked for LGT Treuhand, a subsidiary of Liechtenstein's LGT bank which set up and managed foundations for clients, was understood to have received a sum of about €4.5 million from the German intelligence services for information about wealthy German clients contained on a computer disc, stolen by him in 2002. It is believed that the disc contained the names of 1,400 of the bank's clients, about 600 of whom were German, and prosecutors there have claimed that their investigation has led to 163 arrests and the recovery of more than €27 million in tax revenue.

However, the affair has had widespread international significance, and sparked perhaps the largest global tax evasion investigation of modern times, as well as a new debate on bank secrecy laws in places such as Liechtenstein and Switzerland.

It has been reported that the UK tax authority paid Keiber £100,000 ($203,000) for access to information about Britons who may have undeclared assets with the bank, while revenue authorities from a growing list of other countries have also launched investigations into their citizens' involvement with Liechtenstein banks, including Austria, Australia, Canada, France, Greece, Italy, New Zealand, Spain, Sweden and the United States.

For its part, Liechtenstein has strongly condemned the actions of the German and other governments, accusing them of violating its sovereignty. It has also pledged to tighten privacy rules, rather than loosen them as is being demanded by governments across the world, in response to the affair.

Everyone should be backing Liechtenstein here. Hopefully they successfully hold out.

The precise whereabouts of Keiber are currently unknown, although some newspapers claim to have tracked him down to the northern Australian city of Cairns. According to the German weekly Focus, he is still communicating with the German intelligence service and, apparently fearing for his life, has implored them to better protect his identity and help him establish a new life in South America.

One might well expect that some of the exposed tax evaders, once they have licked their monetary wounds, might decide to take matters into their own hands with regard to Mr. Keiber. We shall see just how well the governments actually do with regard to protecting him. Hopefully better than how well they perform in most places, for Mr. Keiber's sake.


The dispute over online gambling laws between the U.S. and the tiny Caribbean nation of Antigua (background here) is once more in the news. So far the World Trade Organization has sided with Antigua in theory, but in practice -- as one might expect, given the respective sizes of the two countries -- the U.S. has managed to stonewall, bribe its way around, or just plain ignore the rules that have gone against it.

As of the latest WTO ruling, in December, Antigua is allowed to "ignore" U.S. copyrights unless the U.S. backs off on its online gambling prohibition. So far Antigua has blustered but not followed through, understandably.

The government of Antigua is likely to abrogate intellectual property treaties with the U.S. by the end of March and authorize wholesale copying of American movies, music and other "soft targets" if the Bush administration fails to respond to proposals for settling a trade dispute between the two counties, according to the lawyer representing the Caribbean island nation.

The Motion Picture Association of America has been closely following the case with tremendous concern, an org official said, fearing that the copying could be extensively damaging and that -- worse -- a dangerous precedent could be set for other small countries angry at U.S. trade policy. "It is not our preferred option to punish the MPAA or others for the U.S. government's intransigence, but the U.S. has refused to negotiate fairly," said Mark E. Mendel, who represents Antigua.

Goods and materials that would be copied include "virtually everything from pharmaceuticals to music, anything with IP protection that can be duplicated, though we will go for softer targets first," Mendel said.

Antigua has previously suggested it might retaliate as such -- with approval from the World Trade Organization -- but has never stipulated when. So far, the U.S. Trade Representative has dismissed that threat simply as a negotiating ploy. "Antigua would be breaking the law if it did that," said USTR spokesman Sean Spicer. The WTO ruled last year that Antigua was entitled to $21 million in damages because of a dispute with the U.S. over Internet gambling. But Antigua has not received WTO approval to procure its damages via reproducing and selling domestically U.S.-copyrighted goods and materials, Spicer added.

"They continually engage in disinformation," Mendel responded. "The reality is, yes, we have to go before WTO and request their authorization for IP sanctions against the U.S., but we can do that at any time and the WTO will agree. That is 100% guaranteed."

Mendel acknowledged his client would like such entities as the MPAA, the recording industry and Microsoft -- organizations that depend on IP protection -- to pressure the Bush administration into negotiating a "preferred" settlement, which would allow Internet gambling between Antigua and the U.S. But he insisted the threat was neither idle nor empty. "Perhaps the U.S. doesn't think we're serious," Mendel said. "We are."

The case dates back to 2003, when Antigua claimed that the U.S. unlawfully prevented Antigua's online gambling operators from accessing American markets although the U.S. allowed domestic online bets for horse racing. Antigua claimed $3.4 billion in losses and took its grievance to the WTO, which agreed, but awarded only $21 million in damages.

Mendel said his client has been trying ever since to work out an agreement that would allow online gambling between the two countries, but instead the U.S. has responded by "using every possible appeal, counterattack and side attack it could think of. We've been through five separate full-blown WTO proceedings on this and have won every step of the way."

The most recent victory was in December, when the WTO ruled that Antigua could exact damages by ignoring IP agreements with the U.S. should a negotiated settlement fail. Mendel said the U.S. promised then to respond to proposals for settling the dispute. "We have been waiting for three months already and there's been nothing," he said. "If the U.S. doesn't come in with something by the end of March, my suggestion to the Antiguan government will be to forge ahead and impose IP sanctions."

In a letter to the USTR about the potential effects of Antigua's retaliation, sent prior to December's ruling granting $21 million in damages, the MPAA wrote: "The proposed retaliation would be impossible to manage. The real and resulting economic harm would vastly exceed any amount the (WTO) might approve, even the grossly exaggerated amount ($3.4 billion) for which Antigua seeks approval, plus the economic harm would extend to other WTO members.

"MPAA believes it would be very difficult to insulate other WTO members from the effects of Antigua's proposed retaliation," the letter continued. "The unfortunate reality is that the failure to offer or enforce adequate protection of intellectual property rights in Antigua could foster abuses in other countries."

You would think the MPAA might pressure Congress to back off on the online gambling laws in order to avoid jeapardizing their members' IP. But no, rules are for the other guys -- they do not apply to them or their fellow supplicants for protection from Uncle Sam. The WTO was designed to protect various and sundry then-existing interests, so it is amusing to observe a conflict occurring between some of these interests occurs due to the existence of that very organization.


Over at Techdirt, they make the very good point that the damages recovery granted by the WTO to Antigua so far is only $21 million -- a small fraction of the economic setback sustained by Antigua due to changes in U.S. gambling laws.

Officials in Antigua are now trying to draw a line in the sand, claiming that if the U.S. does not finally agree to allow some forms of online gambling by the end of this month, it will go ahead with its threats to ignore U.S. copyrights with the approval of the WTO. As you may recall, back in December, the WTO granted Antigua that right, after a loooooooong series of battles with the U.S. over whether or not the U.S. was violating free trade agreements by banning online gambling. Of course, every time the WTO sided with Antigua, the U.S. would stall, claim the WTO sided with the U.S. (when it clearly did not) and (my personal favorite) claim that even if it had broken trade agreements, it did not matter any more because the U.S. was unilaterally changing its trade agreements so that it was no longer violating them.

Of course, when Antigua won the final decision in December, allowing the country to ignore U.S. intellectual property rights, the U.S. government and the entertainment industry quickly warned Antigua not to follow through on those plans -- but the U.S. government still will not shift in its position on the matter. Thus, Antigua is agitating to get this show on the road. While it first needs to get one last permission slip from the WTO, once that is in place, it can start ignoring the copyright on American movies and music. Of course, while some are suggesting that it may make sense for The Pirate Bay to move to Antigua, that is not accurate. After all, the WTO has said that Antigua can only violate $21 million worth of intellectual property, and with the way the entertainment industry counts damages, that is like half an album or so.

In fact, that seems to be exactly the angle that the entertainment industry is taking in this fight. An MPAA letter warning: "The proposed retaliation would be impossible to manage. The real and resulting economic harm would vastly exceed any amount the (WTO) might approve, even the grossly exaggerated amount ($3.4 billion) for which Antigua seeks approval, plus the economic harm would extend to other WTO members."

The MPAA is apparently taking a Merchant of Venice, "You can take your pound of flesh, but not a drop of blood," strategy now. One might well ask what accounting mechanism the WTO had in mind in tallying up the damages incurred by the MPAA members due to any action that Antigua takes, but we suspect the MPAA is more concerned with the principle than damages per se.

One reader of the Techdirt posting commented, should Antigua make good on its threat: "How do we fit a 51st star on the flag? In other good news, we won't need a U.S. Passport to visit." This is not so all farfetched. It would be another example of life immitating art, akin to the Peter Finch character, Howard Beale, in the all-time classic satire Network -- ** spoiler alert ** -- being assassinated because his ratings were too low.


Negotiations between India and Mauritius are back in the news ... again. India is concerned that domestic firms will set up offshore holding companies in Mauritius, invest (accountingwise) back in India, and thereby reduce their Indian taxes depite nothing of economic substance having altered. Mauritius, of course, has no beef with anyone doing this. Mauritius claims that such "roundtripping" has been eliminated. India thinks otherwise. And so it goes.

According to reports in the regional media, attempts by the Indian authorities to renegotiate the country's tax treaty with Mauritius, in order to reduce revenue lost to "round-tripping" by investors have stalled once again.

Rediff News reported recently that talks between the two sides last month over a change proposed by the Indian government to toughen the residence requirements necessary for Mauritius-based firms to benefit from the tax treaty between the countries, were unsuccessful, despite an offer of financial compensation which was made to the Mauritian authorities. "An attempt was made, but nothing came of it. India even offered to compensate Mauritius for potential loss of revenue on account of a change to the treaty. Now, there is very little chance of the DTAA being amended for at least a year or so," an unnamed official told the news service.

One must guess that the compensation was not adequate, in Mauritius's eyes.

The Mauritian government, meanwhile, feels that it has already made several concessions to the Indian authorities on this matter, including tightening up rules on the issuance of Tax Residence Certificates, and issuing them for only one year at a time. In October 2006, Mauritian Minister of Finance, Rama Sithanen Mauritius announced of measures put in place that year that:

"Let me state very clearly that we will collaborate to prevent any alleged misuse of the treaty. But keeping in view historical, cultural, political and diplomatic ties between the two countries we need a global solution that will not penalize Mauritius. ... The problem of roundtripping has been eliminated completely."


Offshore tax evasion also makes the "Dirty Dozen" list (of course).

The IRS has released its annual "Dirty Dozen" list of what it considers the most egregious tax schemes and scams. Email phishing is back again, and probably will be for some time to come. The perennial attempting to hide income offshore is also in the top 5.

The IRS issued its 2008 list of the 12 most egregious tax schemes and scams [last] Friday, highlighting in particular internet phishing scams and several frivolous tax arguments. Topping this year's list of scams is phishing, which encompasses numerous internet-based ploys to steal financial information from taxpayers. New to the "Dirty Dozen" this year is a scheme, which IRS auditors discovered, that relates to unreasonable and/or excessive fuel tax credit claims. ...

Tax schemes can lead to problems for both scam artists and taxpayers. Tax return preparers and promoters also risk significant penalties, interest and possible criminal prosecution. The top five schemes that the IRS is urging taxpayers to avoid include:
  1. Phishing. Phishing is a tactic used by Internet-based thieves to trick unsuspecting victims into revealing personal information they can then use to access the victims' financial accounts. These criminals use the information obtained to empty the victims' bank accounts, run up credit card charges and apply for loans or credit in the victims' names.

    Phishing scams often take the form of an email that appears to come from a legitimate source. Some scam emails falsely claim to come from the IRS. To date, taxpayers have forwarded more than 33,000 of these scam emails, reflecting more than 1,500 different schemes, to the IRS.
  2. Scams Related to the Economic Stimulus Payment. Some scam artists are trying to trick individuals into revealing personal financial information that can be used to access their financial accounts by making promises relating to the economic stimulus payment, often called a "rebate". To obtain the payment, eligible individuals in most cases will not have to do anything more than file a 2007 federal tax return.

    But the tax authority revealed that some criminals posing as IRS representatives are trying to trick taxpayers into revealing their personal financial information by falsely telling them they must provide information to get a payment -- the IRS will not contact taxpayers by phone or email about their stimulus payment.
  3. Frivolous Arguments. Promoters of frivolous schemes encourage people to make unreasonable and unfounded claims to avoid paying the taxes they owe. Most recently, the IRS expanded its list of frivolous legal positions that taxpayers should stay away from. Taxpayers who file a tax return or make a submission based on one of these positions on the list are subject to a $5,000 penalty.
  4. Fuel Tax Credit Scams. The IRS is receiving claims for the fuel tax credit that are unreasonable. Some taxpayers, such as farmers who use fuel for off-highway business purposes, may be eligible for the fuel tax credit. But some individuals are claiming the tax credit for nontaxable uses of fuel when their occupation or income level makes the claim unreasonable. Fraud involving the fuel tax credit was recently added to the list of frivolous tax claims, potentially subjecting those who improperly claim the credit to a $5,000 penalty.
  5. Hiding Income Offshore. Individuals continue to try to avoid paying U.S. taxes by illegally hiding income in offshore bank and brokerage accounts or using offshore debit cards, credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities or life insurance plans. The IRS and the tax agencies of U.S. states and possessions continue to aggressively pursue taxpayers and promoters involved in such abusive transactions.
While the IRS has seen a decline in the occurrence of some of these scams, other problems, such as abuse of the American Indian Employment Credit and misuse of structured entity credits, continue to be areas of concern.

To repeat yet again: Evading taxes by trying to hide evidence of taxable income in offshore financial accounts is stupid. The chance of being discovered and the resulting penalties are both too high to bother with this. If you have enough money to bother to think about trying to hide it offshore, then you have enough to be materially fulfilled without attempting anything questionable.


Few truly believe that the "blusting" (as the article puts it) states who have made a show of resisting the imposition of the Real ID act would somehow hold back the tide. In an entirely unsurprising evolution of events, states have been almost completely bribed, cajoled, and beaten into compliance -- although "compliance" so far just means "promising" to fulling implement Read ID down the line, so we shall see how this all plays out where the rubber meets the road.

All but a handful of states have made preparations to comply with a May 1 deadline for compliance with the federal Real ID law that mandates secure driver's licenses be issued only to legal residents of the United States, according to specialists inside and outside the federal government. The states' quiet steps to fall in line with the law appear to contradict state officials' blustering claims that they will resist the new requirements.

Meanwhile, states are grappling with the technical issues of setting up systems that will ensure that applicants for driver's licenses are vetted for proof of identity and legal presence in the country. The Homeland Security Department acknowledged early in the process of framing regulations for the law that new connections among state motor vehicle department databases and federal visa records would have to be established to allow the state agencies to verify driver's bona fides.

Complying with the May 1 deadline is not that hard, experts in the law and regulations contend. The state governments essentially have two choices. First, they can show DHS that their driver's licenses meet the initial requirements of adopting the security and proof-of-legal presence requirements of the law. ... Second, they can apply for a waiver to extend the date for their compliance with the law for as long as 18 months, which will likely be well into the term of the next administration.

Congress and the Bush administration adopted the Real ID law mainly as a result of findings by 9/11 Commission investigators that the militants who hijacked commercial aircraft in those attacks carried many driver's licenses issued by various state-level motor vehicle departments (DMVs).

Since the passage of the Real ID law, DHS has blinked winsomely on the statute's technical compliance details. For example, the department has exempted elderly residents who were born inside this country before all states issued birth certificates to infants born at home. Real ID compliance is being phased in to reduce the financial burden on state governments, and those governments have received some grant funds to help pay for the credentials.

DHS now counts only four states as having failed to either obtain waivers or comply with the requirement to launch a legal-presence program. The program itself would not have to be complete by that date, but DMVs would have to announce their intent to comply.

About a third of all state governments have adopted resolutions in opposition to Real ID requirements. But almost all those states have received deadline waivers -- some of them without having actually asked for the temporary exemptions. Opponents of the law raise the specter of a nationwide database of personal information. Real ID proponents note that the "pointer system" envisioned as a means of providing communications among state DMVs does not shift any state's data to a central registry.

Many of the states that have "resisted" the law have argued against the costs of implementing the act rather than on principle. Needless to say, a little money will overcome those objections.

Advocates of Real ID cite several other advantages of the law besides hindering the creation of false credentials for criminals and foreign militants. For example, they cite the laws' contribution to the "entity resolution" problems that face state prison systems, where convicts frequently seek to change their identities to foil prosecution for crimes committed under other names.

The FBI faces a similar problem in the development of its Next Generation Identification project to improve the accuracy of its biometric databases of individual identities. Bureau officials have cited problems with resolving the identities of persons in the federal and state prison systems as one of the major technical goals of their project. The entity resolution problem also arises in the creation of police information networks such as National Data Exchange system (N-Dex) project the FBI recently rolled out as well as that project's commercial counterparts, such as the widely adopted Coplink system.

The advocates also cite the importance of enforcing legal presence in the country as a prerequisite to any attempt to resolve the status of more than 10 million people who reside here illegally.

The most adamant state that rejects the Real ID law, Oklahoma, has passed a law stating that it will not comply with the federal Real ID requirements. However, specialists in the field including Brian Zimmer, president of the Coalition for a Secure Driver's License, note that Oklahoma has received a waiver that will delay the state's effective compliance date.

States that fail to meet their extended compliance dates could, in theory, expose their citizens to increased likelihood of stricter inspections when entering federal buildings or boarding aircraft.

Some observers contend that once the necessary technical work is done and state DMVs have worked out the kinks of providing secure driver's licenses, resistance to the law may fade and compliance benefits become clearer.

Some Real ID advocates contend that if and when the law helps expose criminals who have evaded punishment for decades by using fake documents, that positive publicity could help break down opposition to the requirements, and the recalcitrant state governments will fall into line.

If the most obdurate states, like Oklahoma, continue to refuse to comply, their driver's licenses could, in effect, become red flags, according to some observers. If Oklahoma becomes a "sanctuary state" for people who refuse to provide proof of identity or legal presence in the country, police outside the state likely will view the state's driver's licenses warily.

People from Oklahoma could obtain a passport as an alternative fed-compliant form of ID, but most people do not seem to think along that line.

State lawmakers' statements that the Real ID law imposes a new requirement that private citizens properly identify themselves to the police contradict decades of U.S. Supreme Court decisions to the contrary, according to legal specialists.


Many dubious laws and monitoring initiatives are instigated "for the sake of the children." It has become a cliche, if not a bad joke. So just what are the dangers to children lurking on the internet that would justify widespread monitoring? They mostly reside in the realm of urban legend, it turns out. Like so many risks in life there is a lack of perspective -- witness the hype over the real but negligibly probable prospect of suffering harm due to terrorism, vs. the non-negligible risks incurred when routinely traveling around by automobile.

Both this article, which appeared in the New York Times, and a PBS Frontline documentary -- neither institution of which can be considered a bastion of anti-state thinking -- reached similar conclusions after careful research that the internet's dangers were vastly overstated. And most kids are way too savvy to fall for the come-ons of would-be predators. As with most dangers in life, it seems the best course parents should take is to educate their kids in a matter-of-fact manner and leave it at that. It does appear, however, that "cyber-bullying" is a greater threat than is commonly conceived.

A few years ago, a parenting magazine asked me to write an article about the dangers that children face when they go online. As it turns out, I was the wrong author for the article they had in mind. The editor was deeply disappointed by my initial draft. Its chief message was this: "Sure, there are dangers. But they are hugely overhyped by the media. The tales of pedophiles luring children out of their homes are like plane crashes: They happen extremely rarely, but when they do, they make headlines everywhere. The Internet is just another facet of socialization for the new generation; as always, common sense and a level head are the best safeguards."

My editor, however, was looking for something more sensational. He asked, for example, if I could dig up an opening anecdote about, say, an 8-year-old getting killed by a chat-room stalker. But after days of research -- and yes, I actually looked at the Google results past the first page -- I could not find a single example of a preteen getting abducted and murdered by an Internet predator.

So the editor sent me the contact information for several parents of young children with Internet horror stories, and suggested that I interview them. One woman, for example, told me that she became hysterical when her 8-year-old stumbled onto a pornographic photo. She told me that she literally dove for the computer, crashing over a chair, yanking out the power cord and then rushing her daughter outside. You know what? I think that far more damage was done to that child by her mother's reaction than by the dirty picture.

See, almost the same thing happened at our house. When my son was 7 years old, he was Googling "The Incredibles" on the computer that we keep in the kitchen. At some point, he pulled up a doctored picture of the Incredibles family, showing them naked. "What ... on ... earth?" he said in surprise.

I walked over, saw what was going on, and closed the window. "Yeah, I know," I told him. "Some people like pictures of naked people. The Internet is full of all kinds of things." And life went on. My thinking was this: a 7-year-old is so far from puberty, naked pictures do not yet have any of the baggage that we adults associate with them. Sex has no meaning yet; the concept produces no emotional charge one way or another. Today, not only is my son utterly unscarred by the event, I am quite sure he has no memory of it whatsoever.

Now, I realize that not everybody shares my nonchalance. And again, it is not hard to find scattered anecdotes about terrible things that happen online. But if you live in terror of what the Internet will do to your children, I encourage you to watch this excellent hour-long PBS Frontline documentary. ... It is free, and it is online in its entirety. The show surveys the current kids-online situation—thoroughly, open-mindedly and frankly. Turns out I had it relatively easy writing about the dangers to children under age 12. This documentary focuses on teenagers, 90% of whom are online every single day. They are absolutely immersed in chat, Facebook, MySpace and the rest of the Web. It is part of their ordinary social fabric to an extent that previous generations cannot even imagine.

The show carefully examines each danger of the Net. And as presented by the show, the sexual-predator thing is way, way overblown, just as I had suspected. Several interesting interview transcripts accompany the show online. The one with producer Rachel Dretzin goes like this:
"One of the biggest surprises in making this film was the discovery that the threat of online predators is misunderstood and overblown. The data shows that giving out personal information over the Internet makes absolutely no difference when it comes to a child's vulnerability to predation." (That one blew my mind, because every single Internet-safety Web site and pamphlet hammers repeatedly on this point: never, ever give out your personal information online.)

"Also, the vast majority of kids who do end up having contact with a stranger they meet over the Internet are seeking out that contact," Ms. Dretzin goes on. "Most importantly, all the kids we met, without exception, told us the same thing: They would never dream of meeting someone in person they had met online."
Several teenagers interviewed in the story make it clear that only an idiot would be lured unwittingly into a relationship with an online sicko: "If someone asks me where I live, I'll delete the 'friend'. I mean, why do you want to know where I live at?" says one girl.

Fearmongers often cite the statistic, from a 2005 study by the Crimes Against Children Research Center, that 1 in 7 children have received sexual propositions while online. But David Finkelhor, author of that report, notes that many of these propositions do not come from Internet predators at all. "Considerable numbers of them are undoubtedly coming from other kids, or just people who are acting weird online," he says.

"Most of the sexual solicitations, they're not that big a deal," says another interview subject, Danah Boyd of Harvard's Berkman Center for Internet and Society. "Most of it is the 19-year-old saying to the 17-year old, 'Hey, baby.' Is that really the image that we come to when we think about sexual solicitations? No. We have found kids who engage in risky behavior online. The fact is, they've engaged in a lot more risky behavior offline."

As my own children approach middle school, my own fears align with the documentary's findings in another way: that cyber-bullying is a far more realistic threat. Kids online experiment with different personas, and can be a lot nastier in the anonymous atmosphere of the Internet than they would ever be in person (just like grown-ups). And their mockery can be far more painful when it is public, permanent and written than if they were just muttered in passing in the hallway.

In any case, watch the show. You will learn that some fears are overplayed, others are underplayed, and above all, that the Internet plays a huge part in adolescence now. Pining for simpler times is a waste of time. Like it or not, this particular genie is out of the bottle.

FBI Admits to Internet Spying

Agency repeatedly broke its own rules, says Mueller.

For those who were still (or ever) in doubt ...

"You cannot just have an FBI agent who decides he'd like to obtain Americans' records." ~~ Patrick Leahy, Senate Judiciary chairman

The FBI has admitted that it repeatedly broke its own rules in spying on internet communications. FBI director Robert Mueller said that for the 4th straight year his agency collected information on people's emails and web activity which was beyond its legal remit. However, Mueller claimed that this was partly the fault of telecoms companies which had provided the FBI with "too much information."

"We are committed to ensuring that we not only get this right, but maintain the vital trust of the American people," he said.

The problems stemmed from the FBI's use of information request letters which was made much simpler after the passage of the Patriot Act.

"Everybody wants to stop terrorists. But Americans believe in our privacy rights and we want those protected," said Senate Judiciary chairman Patrick Leahy. "There has to be a better chain of command for this. You cannot just have an FBI agent who decides he'd like to obtain Americans' records, bank records or anything else and do it just because they want to."

Leahy added that the FBI had now reformed its practices since March 2007 and would stay within the law.

All those who believe that, raise their hands. Looking ... looking ...


Americans used to be the world’s most skillful entrepreneurs and managers. Now they are laughingstocks. What happened?

While pride may goeth before the fall, respect certainly seems to tumble with the fall.

The dollar plunged to new lows against foreign currencies [last] week. There are plenty of reasons for its plunge, but at the most basic level, the dollar's weakness reflects the world's collective, two-thumbs-down verdict about the ability of the United States -- businesses, individuals, the government, the Federal Reserve -- to manage the global financial system and the world's largest economy. Countries that outsourced their monetary policy by pegging domestic currencies to the dollar are having second thoughts. Kuwait last year detached the dinar from the dollar, and Qatar government officials last week said they were considering doing the same with their currency. International financiers are unnerved by the toxic combination of "misplaced assumptions about housing, a lack of necessary regulation and irresponsible use of debt with sophisticated financial instruments," said Ashraf Laidi, currency strategist at CMC Markets.

Dissing American financial management is an affront to national pride tantamount to standing in Rome and asking, loudly, if Italians are able to make pasta. The U.S. invented the concept and practice of running large, complex systems. Along with baseball and deep-frying, management is one of our great national pastimes. The world's first MBAs were awarded by pioneering yuppie factories such as the Wharton School at the University of Pennsylvania. ... Henry Ford's revolutionary assembly line was the gold standard in global manufacturing for decades. Contemporary American institutions stand for excellence in managing everything from supply chains (Wal-Mart) to delivery services (Federal Express and UPS).

Americans' ability to manage complex systems has been the ultimate competitive advantage. It has allowed the U.S. to enjoy high growth and low inflation -- a record we have not hesitated to lord over our foreign friends. The shelves in the business section of a bookstore in a mall in Johannesburg, South Africa, are stocked with the same volumes you will find in a Barnes & Noble in Pittsburgh, Pennsylvania: memoirs by cornfed paragons of capitalism like Jack Welch, wealth-building advice from American money managers, large tomes on how Andrew Carnegie and John D. Rockefeller built global businesses from scratch.

But now, thanks to widespread incompetence, American management is on its way to becoming an international laughingstock. Faith in American financial sobriety has been widely undermined by the subprime mess. The very mention of the strong-dollar policy now elicits raucous bouts of knee-slapping in even the most sober Swiss banks. (How do you say schadenfreude in German?) Earlier this month, as oil hovered near $100 a barrel, President Bush complained to OPEC about high oil prices. OPEC President Chakib Khelil responded acidly that crude's remarkable run had nothing to do with the reluctance of Persian Gulf nations to pump oil, and everything to do with the "mismanagement of the U.S. economy." Since Bush's plea, oil has gushed to $110 per barrel. (How do you say schadenfreude in Arabic?)

Americans abroad are constantly taunted by perceived failings of American management. America's aviation system is now the butt of jokes because 9-year-olds have become accustomed to removing their Heelys before boarding a plane. As my family and I passed through the snaking security line in Cancun, Mexico's airport last month, we were harangued by a security guard who encouraged tourists to sing along with him: "Please. Do not. Remove. Your shoes."

The concern extends beyond airlines to America's industrial complex. Doubtful of the ability of provincial American executives, with their limited language skills, to negotiate today's global business environment, the boards of massive U.S. firms like Coca-Cola, Pepsi-Cola, Alcoa, and insurer AIG have hired foreign-born CEOs. Carl Icahn, the 1980s corporate raider, has reinvented himself as a borscht-belt comedian/activist investor, who delights conferences and reporters with jokes at CEOs' expense. On a recent 60 Minutes, Icahn complained to Lesley Stahl about the incompetence of American management. "I see our country going off a cliff, and I feel bad about it."

Icahn is moping all the way to the bank. The market's recognition of management failures gives him the opportunities to acquire companies on the cheap. But those of us who are not billionaire corporate raiders ... must manage through this management crisis on our own.


In the lead entry above we opine that the Federal Reserve should have been strangled in its crib, but having survived to adulthood it has some role in and responsibility for sorting out the messes it created -- such as last/this week's Bear Stearns debacle. In the entry immediately above it is noted that America's growing reputation for incompentence is coincident with -- causally related, we would say -- to its mismanagement of the dollar as a reserve currency.

This mismanagement would be Example A of a mess in which the Fed played a foundational role. Yes, if the federal government had consistently conducted itself in a fiscally prudent manner, the Fed would not have had to destroy the currency to keep the books nominally balanced. But without the Fed, there would have been limits to Congress's fiscal profligacy -- as there was in the old quasi/sometime-gold standard days.

What is the biggest government boondoggle of all? War. War involves directing vast amounts of resources and labor into destructive ends, very seldom justified in some cost/benefit calculus (e.g., the amount spent on the war saved a greater amount of destruction). Without government-directed manipulation of money and credit, the ability to finance and therefore conduct war is greatly stunted by comparison. This piece from The Foundation for Economic Education (FEE) -- a free-market advocy organization founded in 1946 -- examines this linkage in great detail.

When I teach money and banking, I begin the section on the history of the American monetary system by asking my students what the following dates in U.S. history have in common: 1812-1816, 1863, 1913, and 1971. The obvious answer is, "times of war or close to it." (If you count the Great Depression as a metaphorical war in the eyes of politicians, you could add 1934-35 to the list.)

The answer I am looking for, however, is, "times of increased federal government involvement in the monetary system." That both answers are correct is no coincidence. For hundreds of years governments have intervened in monetary institutions in order to use them to raise revenue through the manipulation of money and credit, and most often that revenue has been used to make war.

War finance has long been the overt and covert rationale for an expansion of government's role in the banking system. For classical liberals, exploring this historical relationship sheds light on the sources of both government control over money and the duplicity with which the state often heads to war. The connection illustrates that government intervention in money has no justification in the failures of free-market monetary systems, but rather grew out of the need for revenue. However, it also illustrates the ways in which government can mislead with respect to war by subverting the democratic process and using less-than-transparent means to finance wars, especially unpopular ones.

That classical liberals believe both that government should get out of the money-regulation business and stick to defending the territory of the United States from attack, rather than intervening in the domestic affairs of other nations, often strikes proponents of the "conventional wisdom" as odd. This sort of reaction has greeted Ron Paul's presidential candidacy, which has argued for an immediate withdrawal from Iraq and for the gold standard. Most conservatives, of course, deride the former position, while the left (and some on the right) do the same to the latter.

What few if any seem to realize is that these two positions have a deep and important historical connection: If you want to make it harder for the U.S. government to act like an imperial power, you need to find ways to reduce the resources available for it to do so. Preventing the state from creating money would eliminate its ability to manipulate the monetary system to raise funds surreptitiously for foreign adventurism.

Fighting wars requires resources. Governments have only four ways to raise revenue: sell off assets, borrow, tax, or inflate/manipulate the currency. If we assume that states interested in making war are also ones interested in accruing power, selling off assets is unlikely, at least as anything but a last resort.

Both borrowing and taxing have their limits. The most common strategy for financing wars is to sell war bonds. If governments go in this direction, they better have buyers, which assumes that the populace is in general agreement with the conduct of that war. War bonds are a hard sell for unpopular wars. For example, World War II bonds sold well as the public was convinced it was proper to respond to the direct attack by the Japanese and to attempt to stop the Nazis. However, you will look in vain for any Vietnam War bonds, nor have any Iraq War bonds been available since the 2003 invasion. When governments wish to conduct unpopular and often unjustifiable wars, engaging in borrowing tied directly to that purpose is unlikely to succeed.

Great points!

Raising taxes to fight a war also requires at least some public agreement with the policy because tax-raising politicians may well be voted out if the war is unpopular. For politicians the downside of raising taxes (like the downside of using conscription to obtain soldiers rather than paying them market wages) is that it is an obvious and painful grab for resources by the state. Taxes make the costs of war very visible and spread them across the whole population. (Conscription is very visible, but more concentrated on the draftees.) From the standpoint of political actors, it would be preferable to raise the necessary resources in a way that is much less obvious and therefore has less potential for political conflict. Whenever politicians can disguise and/or delay the true costs of their programs, they will do so. This is where the monetary system enters the picture.

Governments that can either create money directly or use regulation to force banks to provide the resources will be able to conduct war more often and with less political resistance than those that cannot.

So this is the fundamental point. The author goes on to cite the role of U.S. central banks, or proto-central banks, in helping finance the War of 1812, the Civil War, and the "war" against the Great Depression. ...

Like many wartime activities, it is plausible to argue that the New Deal programs benefited business constituencies more than the public at large. (Halliburton's role in the Iraq War provides a contemporary example of this sort of damaging corporate capitalism.) The administration's outlawing of private gold holdings in 1934 and the Banking Act of 1935, which created a variety of new federal interventions -- the most notable giving the Federal Reserve new powers to create money through bond purchases -- were both examples of using the monetary system to provide resources for a growing state. These powers were certainly useful when the government took the country into World War II a few years later.

The Vietnam era provides an example of a direct connection between inflation of the money supply and war finance. The Johnson administration made a conscious decision to finance the Vietnam War through inflation rather than higher taxes. The increase in money was accomplished by buying up government bonds from financial institutions. As payment, the government simply credited the institutions' accounts. This saved interest payments on those bonds and therefore also allowed the government to issue additional Treasury securities at the same total interest cost they had before the new money was created. The bottom line was that the Fed created additional money and allowed Congress to run more debt at no greater cost in the process.

At the time Federal Reserve Notes held by foreign central banks were still redeemable in gold at the Fed. As a result of the inflation (depreciating dollar) of the late 1960s, the Fed saw a massive flow back of Federal Reserve Notes from foreign governments, which began to reduce U.S. gold holdings. This drain of gold reserves led President Nixon to close the "gold window" in 1971, breaking the last remaining link between the dollar and gold. With excess supplies of money no longer generating any direct negative economic consequences for the Fed, the even-greater inflation and macroeconomic disorder that characterized the rest of the 1970s and 1980s were no surprise.

Thus the need to finance the Vietnam War led to increased government control over money, which led to macroeconomic disorder (much as we saw in the late nineteenth-century banking panics), which in turn led to calls for more government intervention. Aside from the direct problems of financing the warfare state, increased control of money by the state often sets off what Ludwig von Mises called the "interventionist dynamic," in which one state intervention has negative unintended consequences that create the perceived need for more intervention. The business cycle is one example of this process.

One can tell similar histories about the creation of central banks and other forms of government monetary intervention in other countries across the globe. The need to fund war and empire has been behind the creation of many a central bank. It is easier to pay for bombs and bullets if you have the equivalent of a printing press at your fingertips.

Because inflation's costs are normally dispersed, subtle, and longer term, politicians find it a politically more palatable way to raise revenues, especially for unpopular causes. This point is even more important because politicians play up the very short-term benefits of inflation as if they were a panacea for a stalled economy. Persuading the public to accept those ephemeral and small short-term gains without an understanding of the long-term costs is part of the general deception often used to promote empire-building wars.


This article seems like good advice for those who find that dealing with "urgent" tasks gets in the way of true accomplishment over the longer haul.

I have to admit, I am as lazy as the next guy. I have my moments of productivity, where I am cranking out the tasks and checking things off my to-do list like my life depended on it. But for the most part, I just want to do a few things each day, and then take a nap.

And as it turns out, that is all that is needed. Doing just a few things each day has worked wonders for my productivity -- I do less, but those few things I do have a higher impact. With this method, I have created a couple of successful blogs, and achieved a few other things along the way. Not trying to brag, but only showing that laziness can actually work if you put it to work for you.

How can laziness work? Well, if you only want to do three things, just do three things. But here is the key: make those three things count. Here are my suggestions for making laziness work for you:
  1. Choose only three things to do today. If you set a limit, you will be forced to choose just the important things. If you do not set a limit, you will try to do everything ... which means you will be busy, but you will be doing a lot of unimportant things as well. Just choose three, but choose carefully.
  2. Choose for impact, not urgency. There are always things that seem urgent today, and those things tend to push the important stuff back. But here is the thing: the urgent stuff is only urgent in our minds. In a week, they will not matter. But if you choose something that has long-term impact on your work and your life, it will matter in a week. It is those high-impact tasks that really make a difference. If you choose high-impact tasks -- things that will really make a difference over time, that will get you recognition and success and create new opportunities -- you can let the urgent stuff melt away.
  3. Choose them the night before. Plan your three tasks the night before, so you are prepped for the day when you wake up. Then there is no "urgent" stuff on the list, because you chose them when you were calm. It helps give you a jump-start on your day.
  4. Start on them immediately. First thing you do when you start working: start on the first of your three important tasks. Do not do little things. Just start.
  5. Do not check email until the first one is done. There is always the urge to dive into email (or whatever your normal productive distraction is at work), but resist. Let it be your reward for completing the first task on your list. Let your urge to be lazy motivate you to finish that task!
  6. Choose a fourth, more important task to procrastinate on. Here is where procrastination can really help you. Trick yourself by putting a big task you have been dreading at the top of your list. So you actually have four tasks. You will try to procrastinate on that big task by working on the three tasks below it. In that way, you will still get three very important tasks done while procrastinating on the fourth. How will you get that fourth one done? When something bigger comes along that you dread even more, put that at the top of your list.
  7. Take breaks in between. When you finish one of your three tasks, give yourself a short break. 10 minutes works well for me, but you may need 15 or 20. That is OK. We are not in a sweatshop here. You are only doing three things today. Take a walk. Get a glass of water. Shoot the breeze with someone. Check whatever you like to check online. Then get back to work on the next task.
  8. When you are done, celebrate with a nap. After you do your three important tasks, take a nap. You have earned it. You have done three important things today, which is more than most people, to be honest. They might do 7 smaller things, but you have been more productive by doing less.
  9. Batch process smaller tasks. It is inevitable that you will have smaller things you will need to take care of. Put those off until the afternoon or end of your day, and do them all at once in batches. So do all your phone calls, then all your emails, then all your little paperwork or whatever. Just do not allow these smaller, routine tasks to push back your big ones.
  10. What if you need to do more? You probably will not actually complete them all anyway. Just choose three and put the rest off until tomorrow. I promise, the world will not end and life will go on. And you will be much less stressed.


Whatever your religious beliefs vis-a-vis the supernatural elements of Jesus's life story, the real-world elements of his teachings that survive -- however accurately translated -- are always worth pondering, we find. The Christian Easter holiday -- which apparently will not again happen this early in the year for a couple of centuries -- is as a good time as any to deepen one's contemplation of them. This essay from frequent Stike the Root contributor Glen Allport, started in 2005 and published last year, nicely threshes out certain key points from the teachings of Jesus.

Jesus was tried and executed by the Roman government, then ruling over Judea. That government is no different in essence from any other coercive government that rules by force and threat. Jesus's treatment at the hands of government is every bit as much a lesson for us as his words. It is a stinging indictment of the very idea of coercive government itself.

“By this shall all men know that ye are my disciples, if ye have love one to another.” ~~ Jesus of Nazareth , as quoted in The Gospel According to Saint John, 13:34

This column was begun (and then set aside, unfinished) two years ago in response to Henry Lawton's "The Obedient Son Sacrificed: Mel Gibson's The Passion of the Christ" in the Spring 2005 edition of The Journal of Psychohistory. Lawton discusses a number of possible underlying themes and backstories for the film, including speculation about Gibson's motives for producing the film. In general, Lawton's article does not paint a flattering portrait of either Mr. Gibson or the story of Jesus.

I see these topics very differently. Indeed, I believe the most powerful, important, and universal elements of Gibson's The Passion -- and of the story of Jesus generally -- have been largely overlooked. These elements are non-supernatural in character. Some cannot be well-conveyed in abstract language, for they are of lower levels of consciousness, of feeling rather than reason. Nonetheless, they are the essence of every true religion, and are critical for the emotional health of both societies and individuals.

I begin with a discussion of Jesus's story and its implications, and then briefly outline ways in which Gibson's film accurately dramatizes this material. Stripped to its basics, and considering only the real-world, non-supernatural elements, Jesus's story is this:

A man begins a ministry in the Middle East, 20 centuries ago. Cruelty is common in the culture, both to children and to adults; for example, even petty thieves may be executed and in a spectacularly cruel fashion: by crucifixion. That is to say, criminals are not merely executed but slowly tortured to death -- and in public, where both adults and children can be terrorized by the event. The Roman occupation is brutally repressive in other ways as well, quick to imprison citizens or torture them or put them to death for even minor resistance to the regime. Slavery is commonplace, poverty is the norm, and modern comforts and protections are centuries in the future.

Completely at odds with this harsh reality, Jesus preaches love. He does so in a manner that seems deeply felt and sincere, at least from what we can know, given the materials available to us. Preaching love is not a marketing tactic for Jesus. We can easily believe, reading the New Testament, that Jesus means every word. Jesus goes so far as to assert that those who love others are his followers. ... Jesus extends his love to children (and insists his followers do the same), and makes an astonishing claim: that the kingdom of God consists of children and of adults who have retained the essence of childhood. ... This, in a society which -- like most others, past and present -- practices neglect and cruelty to children as a matter of course.

These and other passages from the New Testament -- about love and about children -- amount to an open war on neurosis. They suggest that one way to see the kingdom of heaven is as an emotionally healthy world, here on Earth. Jesus makes this point very directly in a well known passage in Luke:

17:21: Neither shall they say, Lo here! or, lo there! for, behold, the kingdom of God is within you.

The emotional impact of this short sentence on Jesus's listeners must have been profound. Note that Jesus not only says clearly where the kingdom is, but in doing so he defines the kingdom of God (that is, heaven) as an inner state ("heaven" and the "kingdom of God" generally have the same meaning in the Bible). Furthermore, in Luke 17:21, Jesus admonishes his followers to look nowhere else for the kingdom: "Neither shall they say, Lo here! or, lo there!"

If this seems at odds with much of the symbolic and supernaturally-oriented material in Jesus's teachings, it is nonetheless clear and direct. Compared with much of what the New Testament reports of Jesus's comments and parables, the passages above, and other passages about love and about children, seem less symbolic and more real. Jesus often speaks in parables and with great care and cleverness -- apparently, in some cases, to avoid or postpone his prosecution for blasphemy, treason, or any of the other pseudo-crimes he knows he could be charged with for teaching that compassion is more important than political or religious law. When he speaks of love, however, Jesus seems to speak without artifice, guile, or defense. When Jesus talks of love and compassion, he speaks directly and from the heart.

Given our innate, universal hunger for love and compassion, it is no surprise that Jesus gains a large and growing following. Likewise, given the threat to individual defenses (against pain) and to political, social, and economic power that Jesus's teachings and his following represent, it is no surprise that local religious leaders, wealthy merchants, and others begin searching for a way to neutralize Jesus. Nor is it surprising that many ordinary people join the mob as it becomes clear that a blood spectacle could soon be played out, with Jesus as victim.

The weapon used to arrest, torture, and murder Jesus is the coercive state -- murder being its most characteristic activity, and coercive power in general being the essence of coercive government itself. Given that the wealthy and influential outside of government have so often bent government power to their own ends, it is hardly surprising that government's power to kill without legal consequence is sought and granted in this case.

For the crime of advocating love and compassion (and of course for developing a large following based on those teachings), Jesus is arrested by agents of the Roman empire -- at the behest of local merchants, religious leaders, and others, including, ultimately, a growing mob. He is accused of blasphemy, but had he not been preaching love and compassion, and gaining a huge following as a result, he would never have come to the attention of the authorities in the first place. In any case, Pilate washes his hands of the matter and simply gives Jesus over to the mob rather than pronouncing him guilty of any crime -- indeed, Pilate defends Jesus's innocence: "And the governor said, why, what evil hath he done? But they cried out the more, saying, Let him be crucified." (Matthew 27:23) -- which Pilate then does.

Roman soldiers lead Jesus away, mock him and torture him (ripping flesh from his back with a scourge), and finally nail him to a wooden cross, leaving him to die slowly, in agony, between two common criminals who are also being crucified. All this, in plain view of the locals, including children. ...

Our real, deeply-feeling selves are murdered, or at least bludgeoned into some level of unconsciousness, by the traumatic infliction of pain from many sources. Jesus was murdered for championing that real and healthy self within each of us. Among the most important details of the Christ story, then, is this: Ultimately, Jesus was murdered for preaching love, and for clearly identifying and defending the real self.

Not a random killing, this one. Not a mugging by some petty criminal. Not the act of a violent drunk in a tavern. No: despite the famous "washing of hands" by Pontius Pilate, this horrifying, gruesome murder was at least semi-official policy, like so many millions of other murders by empires and democracies and tin-pot dictatorships throughout history. Jesus was murdered by Roman soldiers, and in such a way as to drive the point home to all who saw it, or who even heard rumors about it:

We can do this to anyone we want, anytime we choose, and talking about love is as good a reason to kill you as any -- especially if others start taking you seriously. We are in charge of your life, and the penalty for forgetting that is death. Fear us and obey, or die.

Another important detail (and lesson) of Jesus's story, then, is that coercive government is fundamentally at odds with love. It is anti-life.

There is a spiritual saying of sorts to the effect that "Your ego doesn't give a sh*t about you." You would do well to consider that the same applies to the institution of government. From the indifference of bureaucracies all the way to the horrifying mass slaughters of people for the alleged good of cause XYZ, it is impossible to ignore that the institution of coercive government's ultimate priority is its own perpetuation and aggrandizement and not the good of those it rules (or "represents") -- all pronouncements of caring on the part of government agents notwithstanding. Anyone who tries to wake people up to this fundamental nature of government invites retribution.

That should be no surprise, because coercion is a crime, no matter who is doing it or what the excuse. Coercion is all it takes to turn sex into rape, or a bank withdrawal into armed robbery. Coercion is among the central components of child abuse. Coercion replaces voluntary cooperation with violence and threats of violence. Gandhi, for one, put this clearly: "One who uses coercion is guilty of deliberate violence. Coercion is inhuman."

The society-wide use of coercion that defines "government" is a major element in the ongoing cycle of emotional damage to children, who grow into emotionally damaged adults, who in turn inflict emotional damage on others, including upon the next generation of children, and so on. ...

War is the most obvious example of damaging government behavior -- what other institution kills by the millions, on purpose, repeatedly? What other institution orphans as many children, maims and cripples as many children and adults, destroys the homes and livelihoods of so many families, and otherwise ruins as many lives -- as does government in war?

The surprise, for most people, is that governments actually kill even more people by simply murdering their own citizens than they do in war. From Genghis Khan to Idi Amin, from Stalin to Castro, the "leaders" of coercive governments have seldom failed to torture, starve and murder "their" citizens whenever it suited their fancy. Governments continue this even today in genocides, in gulags and work camps, by firing squads and hangings, by torturing victims to death, by creating needless famine, and in a hundred other ways.

Allow me to expand on that with a quote from Death by Government by R. J. Rummel, professor at the University of Hawaii and probably the world's foremost expert on government murder (Transaction Publishers, 1994):

"In total, during the first eighty-eight years of this [20th] century, almost 170 million men, women, and children have been shot, beaten, tortured, knifed, burned, starved, frozen, crushed, or worked to death; buried alive, drowned, hung, bombed, or killed in any other of the myriad ways governments have inflicted death on unarmed, helpless citizens and foreigners. The dead could conceivably be nearly 360 million people. It is as though our species has been devastated by a modern Black Plague. And indeed it has, but a plague of Power, not germs." (Page 9)

All that, in addition to millions of war dead in the 20th Century. Rummel has recently updated his estimate for total government murder during the 20th Century to 262 million. That averages to roughly 7,178 murders per day, every day, for one hundred years. And for every murder, a stunned and grief-stricken family; a shattered life for sons or daughters; a traumatized group of friends and neighbors. For every murder, many more who were "only" maimed or crippled or imprisoned or tortured or gang-raped (by guards or soldiers or inmates) or otherwise harmed, but not actually killed. If 262 million were murdered, and many tens of millions more killed in war, how many more were "only" assaulted in some way or other? A billion? Two billion? How much emotional damage, to those victims and to others who knew and cared about them, was done in just the past century?

Rummel is not the only researcher to have published such material. The Marxist authors of The Black Book of Communism: Crimes, Terror, Repression (Harvard University Press, 1999) estimate that Communist governments alone murdered roughly 80 million to 100 million people in the 20th Century. The book's Foreword is titled "The Uses of Atrocity" and the photographs alone are enough to create nightmares.

The secular story of Jesus is, among other things, a reminder of the essentially violent, cruel, and deeply unhealthy nature of coercive power. It is the story of Power's hatred and mortal fear of the real and the healthy. The story of Jesus tells, in clear language, of Power's willingness to inflict any atrocity, to murder any number of innocents, to tolerate or instill any corruption, and to do whatever else is necessary to retain control and privilege.

Power is threatened by love, by compassion, and by open, healthy access to feeling -- characteristics of young children and of healthy adults -- and it will not tolerate them. Power's most devastating and subtle deception has been to corrupt the story of Jesus and to incorporate it, along with the human desire for a compassionate world generally, into Power's own justifications and machinery.

The brings to mind Wendell Berry: "War is the outer darkness beyond the reach of love, where people who do not know one another kill one another and there is weeping and gnashing of teeth, where nothing is allowed to be real enough to be spared." Power's modus operandi is dehumanization. Failing that, people would not treat each other as they do and Power would run out of willing robots to perform its handiwork.

In The Passion of the Christ, Mel Gibson focuses on the cruelty and violence directed at Jesus by those in power. Gibson was predictably attacked for doing so. "All that violence; how distasteful! How disgusting that a film director would sell a movie about Christ with blood and torture and murder!" ...

In fact, the violence, torture, and murder are essential elements of the Christ story. Without these elements, there IS no story. Without these elements, there would have been no need for Jesus to champion love and compassion at the cost of his own life. Without these elements, Jesus would have simply lived a healthy, compassionate life among his family and friends, dying in bed at a ripe old age, and 2,000 years later we might never have heard of him.

The emotional damage of Jesus's contemporaries, and their cruelty -- especially as empowered by coercive government -- formed the milieu that Jesus lived in, and this milieu was the reason for his ministry in the first place. The New Testament details some of the unhealthy, violent, coercive, and corrupt aspects of life that Jesus was working to change. Jesus was willing to die on the cross -- he knew that he would, in all likelihood, be murdered in that exact fashion -- because he felt and believed that every person needed and desired, with all their heart, a compassionate and healthy world, instead of the corrupt, violent, hate-drenched world of coercion and pain that every new child of his time was born into. That reality was clearly so painful to Jesus that even the threat of his own death could not keep him from starting a ministry aimed at changing the world for the better. ...

This linking of love and freedom is another powerful insight on Gibson's part. Love and freedom truly are linked; indeed, like Yin and Yang, love and freedom are two sides of a central duality in human life. To champion Love is to oppose coercive Power, which is to side with Freedom. Love and freedom must be kept in a reasonable balance, and at high levels, for a healthy society.

By spending $30 million of his own money on a film about Jesus that nearly everyone thought would fail, and which (to no one's surprise) brought Gibson much criticism and even insults, Gibson showed hints of the same willingness to risk himself for what is right that made his protagonists interesting and positive figures. ... Furthermore, despite complaints to the contrary, I do not believe that The Passion of the Christ shortchanges Jesus's message. The brief scene in which the doomed Jesus tells his followers to love one another would be enough, by itself, to convey the essence of Jesus's teachings. ... Jesus's message of love was hugely appealing to the masses, and this message, combined with the large following it attracted, was, as I have already said, also the reason for Jesus's perceived threat to the power elite of his time

As someone with no interest in the supernatural elements of any religion, I am focused on what I see as the cornerstone of every true religion: the importance of love and freedom in human life. ... Cruelty and tyranny are not what we want out of life, and they make for harmful, unhealthy environments. The mark of any true religion is the attempt to minimize cruelty and tyranny by maximizing love and freedom. Supernatural elements are optional, in my view: an afterlife, a deity, reincarnation, or an eternal soul, for examples. I have no quarrel with those who believe in such elements. To each his own. But the core importance of love is, in my opinion, far more basic, more in the present, more real, and more important.

It is no surprise that the most positive and healthy religions oppose both cruelty and coercive power generally (if often obliquely in regards to government coercion, given that direct opposition is quickly stamped out by those in power) while focusing on the importance of love.

Jesus's teachings about the importance of love will live on, long after the common desire for an afterlife has disappeared -- as I believe it eventually will. Those same teachings about love will be widely comprehended if and when the world begins living up to Jesus's teachings about children ...

The fundamental importance of love; the understanding that a loving world requires better treatment of children, and the flat assertion that "the kingdom of God is within you" are what I see as the most real and powerful of Jesus's teachings -- or of anyone's teachings. These three teachings are the best short summary of human wisdom I have ever seen.

Jesus knowingly added a fourth teaching -- of Power's hatred for all that is loving, decent, and real -- by arranging for and allowing Roman soldiers to arrest, torture, and murder him. By the most vivid and courageous example possible, Jesus thus taught that the coercive State is an evil almost beyond imagining.

While reflecting upon Jesus's teachings, life, and sacrifice, please do not overlook the Earthly, here-and-now lessons that Jesus gave his life to burn into human memory. Please do "Love one another" -- and follow that most central of Jesus's teachings wherever it leads for you.