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

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

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


Land of diverse regions and unique attractions.

This introduction to the geography and main population centers of Costa Rica is nothing if not comprehensive. Sixteen year resident and construction consultant Tom Rosenberger's written tour is a useful place to start for people planning a visit to the country, amazingly diverse and rich in natural wonders as it is, before moving on to more in-depth material. You will want a detailed map of Costa Rica while reading this. Here is one. Another source is a Google Images search for Costa Rica maps.

For over 16 years, I have been fortunate to live and work in this fabulous country of Costa Rica, and I have assembled the following information, highlights and facts about each major area as my own informal travel primer of Costa Rica, my paradise.


The heart and soul of Costa Rica is the Central Valley, where 70% of the population lives and works. Strikingly beautiful with a mild, spring-like climate year-round. Costa Rica's Central Valley lies at an elevation of 3,000 to 5,000 feet above sea level. The valley dominates a large portion of the interior of Costa Rica, with lush forests, fruitful farms and coffee plantations, for which the country is famous. In the Central Valley, you can find many small towns, well-known for their beauty and charm. Residents here enjoy going to the theater, concerts, art galleries, malls, boutiques, bars, restaurants, produce ferias and friendly village churches.

San José Province

Here you will find the communities of Escazu, Santa Ana, Desamparados, Moravia, Guadalupe, San Pedro, Curridabat, Tres Rios, and Cartago. Historically, Spanish colonists were attracted to the valley's fertile soil, from which crops flourished and plantations prospered, helping farmers achieve easy sustenance, a reality that was already well-known to the region's many indigenous inhabitants. Expats with second homes in the Central Valley enjoy going to art galleries, handicraft shops, boutiques, bars, restaurants, flower markets, and friendly village churches. San Jose City, Provincial Capital, also Capital of Costa Rica.

About San José

San Jose is by far the most populated province in the country. Within the boundaries of San Jose you can find portions of the Talamanca and Central Mountain Ranges. The major areas of development are the surrounding areas of the city of San Jose. San Jose has all the basic technology which you would find in any major metropolitan city, however it is all being upgraded at a much slower pace. Great tempered climate all year round!

Unique Attractions: Heredia Province

Here you will find the communities of Belen, San Joaquin de Flores, Santa Barbara, Barva, San Pablo, Santo Domingo, San Isidro, and Sarapiqui. Unique Attractions: Ojo de Agua in Belen; Braulio Carillo National Park; Heredia City, Provincial Capital -- Population 42,600 (2004). Altitude: 1,150 Mts. above sea level

About Heredia

Belen is one of the smaller provinces; however, is very rich in colonial tradition. This province is situated on the Central Mountain Range and extends north to the border of Nicaragua. Heredia is the heartland of Costa Rica's world famous coffee plantations. For the 4th year in a row, the cleanest and best managed city in Costa Rica, as determined by the Control Generals Office is Belen, Heredia.


The protected rainforest around Sarapiquí is an outstanding eco-tourism destination. This area lies along a river valley beneath the Cordillera Central mountain range. To the west is the rainforest of Braulio Carrillo National Park, and to the east are Tortuguero National Park and Barra del Colorado National Wildlife Refuge. Between these protected areas lie thousands of acres of banana, pineapple, and palm plantations interspersed with forest. The area is renowned for its conservation efforts, centered primarily at Tirimbina Biological Reserve and OTS (Organization for Tropical Studies) La Selva, a protected rainforest area and state-of-the-art international research facility.

Alajuela Province

Here you will find the communities of San Ramón, Grecia, San Mateo, Atenas, Naranjo, Palmares, Orotina, San Carlos, Sarchí, Upala, and Los Chiles.

Unique Attractions: Alajuela City, Provincial Capital -- Population 220,000. Altitude: 925 meters above sea level.

About Alajuela

Alajuela is one of the largest provinces in Costa Rica, and here you will find portions of the Central, Tilaran and Guanacaste Mountain Ranges. Altitudes vary from 900 to 90 meters above sea level, so you will also notice dramatic changes in flora and fauna throughout the province.

At Poas Volcano National Park, steam rises from vents in the earth, near crystal-blue sulfur pools. Lunch at La Paz Waterfall Gardens, a lush nature preserve famed for its butterflies and hummingbird gardens. Later, we learn about bats at Tirimbina Rainforest Center. On a night walk into the forest we find the mist nets that scientists have erected to trap bats. We can see them up close and even touch them before they are released.

Check out La Paz Waterfall Gardens.

Arenal Volcano

Few natural phenomena rival the rumblings, eruptions and lava flows of one of the world's most active volcanoes. At Arenal Volcano, that thrill is compounded by the proximity of our accommodations at Arenal Observatory Lodge, little over a mile from the cone's crater. From here we can see, hear, and even feel the ground shake as smoking cinders the size of houses are ejected from the crater and sent crashing down the mountain.

On clear nights, we may see brilliant red lava spewing from the top and flowing down the sides. The protected rainforest environs provide great hiking and wildlife viewing opportunities. Arenal Volcano, among the most active volcanoes in the world. Costa Rica lies on the edge of two tectonic plates, one of the most dynamic such junctures on earth. Molten rock, created by the friction of the plates, is forced up through fissures and emerges as fiery magma. Arenal regularly puts on a spectacular performance, hissing and rumbling and spewing ash and lava into the sky.

Check out Arenal Observatory Lodge.

Cartago Province

Here you will find the communities of Cartago, Paraíso, Tres Ríos, Turrialba, Pacayas, San Rafael, and Tejar.

Unique Attractions: Cartago City, Provincial Capital -- Population 141,524 (2003). Altitude: 1,150 meters above sea level.

About Cartago

This is one of the smallest provinces in Costa Rica however it is probably the richest in colonial tradition. Cartago was the capital city of Costa Rica until 1823 when the capital was changed to San Jose. The highest peak is Cerro de la Muerte at 3,600 meters above sea level and the lowest point of the province would have to be Turrialba which is 90 meters above sea level.


Spectacular ocean views, gorgeous beaches, world-class surfing, sport fishing, bird watching, scuba diving, snorkeling, kayaking, and horseback riding make the Pacific Coast a prime attraction for adventuresome tourists. It is also becoming a Mecca for property shoppers. And remarkably, there are still places along the Pacific Coast that are not overcrowded.

Puntarenas Province

Here you will find the communities of Caldera, Jaco, Esterillos, Quepos, Manuel Antonio, Dominical, Uvita, Ojochal, Coronado, and Palma Sur. This province is a narrow strip of coastal land stretching from just north of Jacó, southeast of the Golfo de Nicoya, down south to Marino Ballena National Park, just above of the Osa Peninsula. These magnificent beaches are flanked by spectacular deep green mountains (year-round), which highlight the awe-inspiring landscape. The Central Pacific region, a combination of lush tropical vegetation and ocean panorama, has scenery unlike any other.


Rising nearly 5,000 feet into the misty skies, Monteverde Cloud Forest Biological Reserve, is home to 400 species of birds, more than 100 species of mammals and an estimated 2,500 species of plants. Among the dense forest vegetation we find many wild relatives of familiar tropical houseplants including philodendrons, ficus trees, bromeliads and ferns, and orchids abound, with over 500 species.

Guided walks through the reserve offer an introduction to this tiny country's amazing biodiversity. Monteverde means "green mountain," though moisture comes not so much in the form of rain but in the constant mists that swath the mountaintops. More than 400 species of birds flourish here, including the rare resplendent quetzal. A hundred mammal species live in the cloud forest as well as an estimated 2,500 species of plants, including 300 different orchids.

Check out Fonda Vela.

Manuel Antonio, Quepos

Manuel Antonio National Park is one of the most famous in the country and is south of Quepos on the Pacific Coast, 132 km from San José. Perhaps It is so popular because of its expensive white sand beaches backed by an evergreen forest that grows right up to the high tide line. The principal habitants are primary forest, secondary forest, mangrove swamps, lagoons and beach vegetation. There is quite a varied fauna with 109 species of mammals and 184 of birds. The park includes 12 little isles just off the coast; these are a number of dolphins and, at times, migrating whales can be observed.

Punta Leona – Herradura

These beach communities are the closest to San José. When driving, it should take less than two hours. If you do not have a lot of time and want to chill out at the beach, this area is a convenient option.

Cocos Island

Located off the southeastern shore of the province of Puntarenas in Costa Rica, the island measures 24 square kilometers and is a protected national park, approximately 550 km (340 miles) from the Pacific shore of Costa Rica. Surrounded by deep waters with counter-currents, Cocos Island is admired by scuba divers for its populations of Hammerhead sharks, rays, dolphins and other large marine species.

The extremely wet climate and oceanic character give Cocos an ecological character that is not shared with any other islands. Puntarenas

Unique Attractions: Puntarenas City, Provincial Capital -- Population 100,000. Altitude: Sea level. About Puntarenas. This a typical port city with businesses catering to mariners.

Osa Peninsula

This is the largest stretch of prehistoric rainforest on the Pacific coast of Central America and is regarded as one of the most biologically diverse and beautiful locations on the planet. This region is quite different from the Costa Rican mainland. There are an extraordinary number of animal and plant species found nowhere else on Earth. Quite simply, it is one of the most pristine and awe-inspiring natural wonders you will ever visit. Imagine a "floating island" with a thousand shades of blue and green saturating its rolling hills.


There are still places along the Southern Pacific Coast that are not overcrowded. In fact, you can still find small fishing villages and stretches of beach that may remind you of a completely wild tropical island. This historic peninsula and its port of Golfito are unlike most places you will ever see. There are several government protected, national parks and wildlife preserves nearby that are home to dozens of exotic animals.

Pavones – Corcovado

Far removed from the larger population centers, this area encompasses some of the country's most stunning natural beauty. Situated in the southern Pacific part of Costa Rica, it boasts the largest remaining tracts of Pacific coastal rainforests in Central America. The forest here is particularly lush and dense, due to high rainfall throughout the year. If you are craving adventure and getting in touch with nature on the grandest scale, an overnight stay at this lodge, will provide you with access to secluded beaches and beautiful national parks.


The government has designated this region the as a preferential tourism development area. In order to facilitate access, the Liberia airport was upgraded and extended to become the second international airport in the country. Foreign pensioners and investors have chosen the area for retirement, in Flamingo Beach there are mainly USA citizens, in Tamarindo and Playa Grande mostly Europeans and in Potrero predominantly Canadians. Guanacaste, like the rest of Costa Rica, has interesting national parks, which boast of lush flora, fauna, birds and wildlife.

Guanacaste Province

Here you will find the communities of La Cruz, Liberia, Guardia, Sardinal, Coco, Santa Cruz, Tamarindo, Flamingo, Nicoya, Samara, and Nosara. Guanacaste is one of the largest and least populated of the seven provinces of Costa Rica. The province is known primarily for its cattle production, and it is often compared to the State of Texas for this reason. This comparison is not altogether erroneous as Guanacaste shares with Texas the long stretches of plains, which are ideal for cattle ranches.

The Pacific Ocean off Guanacaste offers anglers excellent fishing options. The main fishing season is April through December and during the months of January and February, the waters off Guanacaste produce some of the best bill fishing found anywhere in the world. Most of the fishing from December until April is out of Playa Carrillo, to escape the Papagayo winds that consistently blow from the north that time of year.

Unique Attractions: Liberia City, Provincial Capital -- Population 35,847. Altitude: 25 meters above sea level.


The center of activity and home to the largest marina in Guanacaste (presently being rebuilt). There are many charter boats operating in that area, ranging from 23 to 47 feet in length. Hotels in the area are luxurious and most have pools and spectacular views of the ocean.

Bat Islands

A long run from Flamingo, but faster boats can make the run in about an hour out of Playas del Coco. The volcanic underwater structure of the islands make for great haunts for a variety of species to prowl the fertile waters. Because of the little fishing pressure in this area, inshore species like Roosterfish, Snapper, Grouper, Amberjack, Wahoo and Dorado are readily available. Anglers have even been surprised with marlin and sailfish hook-ups fishing for other species.

Catalina Islands

A short run out of Flamingo and produce the same inshore species as the Bat Islands but not in the numbers as the islands to the north. At times, they have a great run of Wahoo that stop at the island to feed during their migratory runs.


An excellent spot to stay while fishing or surfing. More laid back than Flamingo, but still luxury hotels are available as well as less expensive lodging.

Santa Cruz

This city has been declared Costa Rica's National Folklore City. Santa Cruz is famous for its colorful fiestas, which feature delicious native foods and dances. Santa Cruz is a short 30-minute drive south from Liberia.


This small town hosts one of Costa Rica's best centers for native ceramic handicrafts. Guaitil is situated amid Costa Rican cattle country between the cities of Santa Cruz and Nicoya. The Guaitil Art Cooperative continues the long tradition of fine Chorotega Indian ceramic crafts. Descendants of this Indian tribe own and operate the center while generating their modem creations employing the techniques of their ancestors.


Protruding outward into the Pacific Ocean, the Nicoya Peninsula runs alongside Costa Rica's Central Pacific coastline, with the Gulf of Nicoya lying calmly in between. It is also home to the Reserva Natural Absoluta Cabo Blanco, Costa Rica's oldest protected piece of land -- and the Refugio Nacional de Vida Silvestre Curu, which includes a great variety of wildlife, such as deer, monkeys, and wildcats roaming through the forest here.

In this region you will find the communities of Paquera, Tambor, Montezuma, Santa Teresa, and Mal Pais. Long a secret in Costa Rica, these communities are home to a small but thriving community of artists, actors, singers, writers, celebrities, models, musicians, and other creative visionaries that have made this undiscovered paradise their new home away from home.


For decades, tourists have been attracted to the Caribbean Coast, where the commercial port of Limón is located and where you can enjoy superb surfing, sport fishing, and opportunities to get a close-up look at nature in an area where tropical rainforest's extend to the white-sand beaches. The Caribbean Coast is also home to several wildlife refuges and parks, including the Tortuguero National Park -- where turtles go to nest.

Limón Province

Here you will find the communities of Limón, Guápiles, Siquirres, Bratsi, Matina, and Guácimo. This Province runs 125 miles (200 km) north to south starting at the Nicaraguan boarder, near Punta Castilla, and finishing at the headwaters of the Sixaola River on the Panamanian border. With its monopoly on alluring Caribbean beaches, dense inland wet-rainforest, and unique Afro-Caribbean culture, Limón offers a side of Costa Rica not found outside the province. Rains spawned by trade winds off the Caribbean, fuel the dense forests that envelop the region, thus providing sanctuary for the region's biologically diverse flora and fauna. Here, humidity is more pronounced, the result of heavy moist air hovering over the Caribbean.

Puerto Viejo, Punta Uva, Manzanillo

I have lived in Costa Rica for over 16 years, 6 of those years right on a Pacific Ocean Beach in Guanacaste, and the only beach I go to for pleasure is Punta Uva. It is located on the Atlantic Ocean between Puerto Viejo and Manzanillo, which is the end of the road in southeast Costa Rica. It has a couple of small hotels and restaurants, and a small residential area. Punta Uva is well known for its excellent beaches and the Punta Uva butterfly garden, which has an amazing variety of tropical butterflies. The actual point of Punta Uva is a rocky promontory which extends out over the lovely Caribbean sea.

The rock is a great place to explore, covered with lush jungle, and a trail leading to up to a great lookout point at the top. To the north-west of the point there is a sheltered cove with great swimming. One of the most popular beaches in the area, especially among the locals, this beach even offers kayak rental during the tourist season, and is a great spot for water sports and just lying around in the sun. A short access road leads down to this beach right across the main road from the Punta Uva grocery store, and there is parking right next to the beach. To the south-east of the point, the town of Punta Uva comes right down to the beach, with several beach-front houses and a restaurant or two. This region also has excellent beaches, with white sand and no reef.

Check out my favorite place to stay in Punta Uva.


Tortuguero National Park is a sprawling maze of brackish canals through lowland tropical rainforest along the northern Caribbean coast. The park embraces eleven different habitats, supporting an amazing array of wildlife and a spectacular stretch of black sand beach. The park is named for the green turtles that nest on its protected beaches from July to September.

Park explorations include boat rides through the canals where we may see spider, howler, and white-faced capuchin monkeys, crocodiles, tree sloths, and more than 300 bird species, arguably the best wildlife viewing in Costa Rica. Travel through some of the richest rainforest on earth at Braulio Carillo National Park this morning on our way to Limón, where we board our boat for Tortuguero, considered by many to be the best place to view wildlife in Costa Rica.

A boat cruise along canals that wind through the dense jungle may reveal spider, howler and white-faced capuchin monkeys, tree sloths, caimans, and a spectrum of colorful birds. Here in the tropics, steady sunlight, constant rain and warm temperatures create an intense incubator for a profusion of species. After lunch, we may have time to visit the Caribbean Conservation Center before heading to our jungle lodge accommodations adjacent to the park.

Check out this hotel.


Tourist Attractions: Limon City, Provincial Capital -- Population 105,000. Altitude: Sea level.

About Limón

When Christopher Columbus discovered Costa Rica in 1502, it was the coastline of Limon that inspired him to name it the "Rich Coast" (Costa Rica).

The following regions are not as popular as those above, however they are equally as unique and beautiful.

Central Highlands -- A thin belt of dramatic peaks which give way to impressive views extend from the town of Tilarán, in the northwest, down to the southeast and the Turrialba Volcano, outlining the spectacular Central Highlands. The uppermost peaks make up a dazzling skyline as they provide views that get better and better as you wind your way up the coffee-shrouded hills. The scenery is so spectacular from areas like Atenas and San Ramon, that on many of the highest points it is possible to simultaneously view the Pacific Ocean and the Caribbean Sea.

The region is bordered by the Northern Lowlands to the north, the Central Valley to the south, the Caribbean to the east and Guanacaste to the west—encompassing an elliptical expanse full of dense green rolling hills which give rise to an explosion of jaw-dropping peaks and unparalleled biodiversity. Beautiful discoveries lie around every corner of the Central Highlands.

Northern Lowlands -- Positioned just north of San José and the Central Valley, east of Guanacaste and west of the Caribbean coast, the ideally situated Northern Lowlands of Costa Rica offer some of the country's most diverse scenery. With the exception of the Arenal Volcano (Volcán Arenal) -- home to dazzling light shows as the volcano spews molten rock and ash down its hillsides -- the region is mostly rolling flatlands that sweep across northern Costa Rica.

The wide variety of jungles, cloud and rain forests, and web of rivers are carefully placed along the two main flatlands, Llanuras de los Guatusos to the west towards Guanacaste and Llanura de San Carlos to the east. The region is supplied with spectacular attractions, not to mention the diverse flora and fauna Costa Rica is famous for.

South Central -- If remoteness and inaccessibility appeal to you, the wild South Central region may be just what you need. One of the most rugged and unexplored regions in the country, it is here that you will find natural wonders like Costa Rica's largest collection of virgin forest and the highest peak south of Guatemala, Cerro Chirripó. Winding trails through various ecosystems stroll through this scarcely populated landscape exposing various peaks over 9,800 feet (3,000 meters) along the Talamanca Mountain Range.

Where ever you visit or move to in Costa Rica you are bound to be thrilled with your decision! If you are considering moving to Costa Rica for business, you may find the info on this site useful.


Following four years of political stalling tactics and horse trading, Costa Rica's legislature has voted to join the Central American Free Trade Agreement. It will benefit the agricultural sector while exposing the domestic insurance and telecommunications industries to outside competition. We at WIL are personally looking forward to improvements in the telephone system.

Barack Obama actually opposes the agreement because of inadequate environmental and labor safeguards. Perhaps he is not aware that Costa Rica has a much lower per capital income level than the U.S. (for now at least).

Costa Rica is finally ready to join the Central American Free Trade Agreement. The country signed the accord in 2004 along with the rest of Central America, the United States and the Dominican Republic.

But its implementation has been stalled for four years by opposition lawmakers who did not want to open Costa Rica's powerful state-run telecommunications and insurance industries to competition. Others felt the required intellectual-property laws dictating jail time for violators were too strict.

Costa Ricans voted for the trade deal in a national referendum a year ago, moving it forward. But then it became stalled again as congress squabbled over the enabling legislation dealing with 13 different aspects of the deal.

On Tuesday (November 11), lawmakers overcame the final intellectual-property hurdle by allowing schools and universities to copy some materials and by reducing prison time for those guilty of selling pirated goods. President Oscar Arias said his office will quickly finalize the paperwork needed for CAFTA to take effect in Costa Rica on January 1.

"After more than four and a half years of debate, two extensions and one historic referendum in which the majority said they agreed with the free trade accord, we are finally closing this chapter," said the president's spokesman and brother, Rodrigo Arias.

Costa Rica's agriculture sector stands to benefit the most from the new agreement, particularly specialized fruits and vegetables such as pineapple and yucca. Costa Ricans are also hoping competition in the cellular phone industry will lower costs and offer more services. Under the state-run monopoly, it was difficult to even get a new line.

While several telecommunications companies have expressed interest in starting up businesses in Costa Rica after January 1, there has not been the same level of interest in the insurance industry, mostly because of the global financial crisis.

Chamber of Commerce President Manuel Rodriguez said the accord "opens a window of opportunities for small businesses."

The pending deal has mobilized large protests in Costa Rica in the past, but Tuesday's news came with no public opposition.

U.S. President-elect Barack Obama has opposed CAFTA, arguing it "did not contain the sorts of labor provisions and environmental provisions that should have been embedded and should have been enforceable in those agreements."


The ongoing financial meltdown has given the governments of the world an excellent opportunity to demonstrate their power-lust, incompetence, deficiency in imagination, and sheer lack of grace under pressure. They have seized the opportunity with both hands.

The power to create money and credit out of thin air has long been a -- perhaps the, along with their armies of goons -- power behind all the other government powers. Besides being a stealth technique for transferring wealth from the general populace to the political class it has the distinct virtue of being more covert than taxation or armed theft. In the interests of maintaining their viability, never mind credibility, central banks in ordinary times will push their advantage as hard as they can get away with, but generally no harder. Now the system is breaking down. Saving the system from disintegrating is top priority and there is no tomorrow.

On the other side of the crisis, which will eventually come despite governments' best efforts to extend it well beyond its natural life, will central banking still be around? If so, will it still have the monopoly on credit creation heretofore vested in the institution? Jacob Steelman asks why not. The reserve currency status of the U.S. dollar is clearly on life support. It has never lacked for enemies, but no one wanted to tempt fate with an alternative. Now there is little to lose, and even its friends are talking about funeral arrangements. As Steelman points out, there is an active niche market in alternative asset-backed currencies. With fiat currencies discredited it is time for asset-backed currencies to lose their niche status.

In the midst of the imploding U.S. and European financial systems and the resultant bankruptcies, nationalizations and bailouts the People's Daily, China's official newspaper, called for a new global currency to replace the U.S. dollar. Writing in the edition of 17 September 2008 Professor Shi Jianxun of Shanghai's Tongji University said that "The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States."

This was later followed by a Friday 26 September address by Prime Minister Gordon Brown before the United Nations in which he called for a new "global financial order." It is to be based on "transparency, not opacity, rewarding success not excess, responsibility, not impunity, and ... is [to be] global not national." Brown went on to say "We must clearly state that the age of irresponsibility must be [at an] end."

As the G20 nations prepare to meet in Washington this week (last week) Mr. Brown has again called for a new global financial order, a Bretton Woods II. Mr. Brown wants the Middle East oil producers and China to assist in contributing to the bailouts taking place in the U.S. and Europe. In calling for such contributions Mr. Brown is effectively admitting the U.S. and Europe are broke and have exhausted their government (and central bank) resources in an effort to cure this massive market correction (frequently called a recession, deep recession or even depression) which has been underway since August 2007. China has announced its own stimulus program but it is unclear whether included in the 4 trillion Yuan amount are new programs or existing ones or a combination of both ...

Professor Jianxun is right to express concern about the financial leadership of the U.S. and the U.S. dollar in light of the events taking place in Washington and in the capitals of Europe. Estimates by financial analysts of the various bailouts of U.S. financial institutions, the U.S. automobile industry and god knows who all are at $2.7 trillion dollars with more bailouts likely to come. In Australia in addition to bailing out the automotive industry the government is assisting in the rescue of childcare operator ABC Learning Centres with a A$22 million dollar injection to keep the company afloat until the end of the year. The administrator appointed to oversee the company has estimated that 40% of the company's childcare centers are unprofitable. Another example of the management of a company assuming inflation by central banks would continue forever without there being any correction.

Any sane person would have to wonder how the U.S. taxpayer (as well as the taxpayers of other countries) will pay for all of this while at the same time trying to recover and grow the U.S. economy and strengthen the U.S. dollar. The national debt of the U.S. is likely to go well above $11 trillion when totaling up all the financial risks proposing to be addressed by the U.S. Treasury and the Federal Reserve (we can be sure that $700 billion is not the final cost of the bill for the bailout; already AIG has been refinanced with $150 billion). For example the total derivative risk covered by CDSs (credit default swaps, private contractual financial instruments insuring against default of debt), which is what finally sunk Bear Stearns and AIG, is estimated to be $62 trillion and the exposure by U.S. banks and financial institutions for all derivative products is estimated to be $180 trillion. The U.S. House of Representatives recently agreed to bail out the U.S. automotive industry and is in the process of considering providing additional money for the industry. With this bailout the line outside the corporate soup kitchen is likely to become very long as the corporate jets start flying into Washington to get a free meal and a free ride at the expense of the American taxpayer.

In 1999 the U.S. debt was "only" $3.6 trillion; the government was running a surplus and projecting to pay off the debt by 2015. What a difference years of large government intervention have made -- expenditures for wars in Iraq and Afghanistan and other large government expenditures to be paid through inflation by the Federal Reserve with the resultant malinvestments. It is not surprising then that questions arise about U.S. financial management and the U.S. dollar. It is time to adopt a global currency for a global economy -- a private asset-based currency rather than a fiat currency which is subject to political whim, manipulation and wild swings in value resulting in massive malinvestments and destruction of savings. It is time to return to gold as the global private currency for our global economy. Eliminate fiat currency, eliminate fractional reserve banking, eliminate central banks and their government sponsored banking cartel which has brought about this massive destruction of wealth.

The technological and financial revolution which has resulted in a globalized economy and more open markets among nations has dramatically broken down trade and other national barriers among countries of the world. While far from perfectly efficient (due to the vast array of national protectionist laws and regulations) we have a global economy in spite of the attempts by governments to preserve the past with various national barriers. The least-developed nations can participate in the globalized economy as well as can their larger developed neighbors. So why do we still have over 150 national currencies in the world today rather than one global currency? Why is this nationalistic barrier to trade still standing? The currency and monetary system to be used in a modern globalized system of trade and development is simply too important to be left to the numerous central bank bureaucrats and power brokering politicians who have various agendas of a political nature rather than the facilitation of free trade, free markets, economic development and prosperity for the people of the world. A global currency should be in private hands and not under political control as it is presently.

The establishment of the developed countries must have sensed the train wreck and thus began to question whether or not a private system makes more sense then the current system particularly in light of the financial crisis which began in August 2007 and continues to worsen almost daily. In an article published in the Financial Post November 8, 2007 Benn Steil, Director of International Economics for the Council on Foreign Relations, says that private money is a real possibility if the United States does not "return to long-term fiscal discipline" (raise your hand if you think the U.S. government will return to long-term fiscal discipline).

"As for the United States, it needs to perpetuate the sound money policies of former Federal Reserve chairmen Paul Volcker and Alan Greenspan and return to long-term fiscal discipline. This is the only sure way to keep the United States' foreign creditors, with their massive and growing holdings of dollar debt, feeling wealthy and secure. It is the market that made the dollar into global money -- and what the market giveth, the market can taketh away. If ... the dollar fails, the market may privatize money on its own."

Mr. Steil goes to on to say:
"... private gold banks already exist, allowing account holders to make international payments in the form of shares in actual gold bars. Although clearly a niche business at present, gold banking has grown dramatically in recent years, in tandem with the U.S. dollar's decline. A new gold-based international monetary system surely sounds far-fetched. But so, in 1900, did a monetary system without gold. Modern technology makes a revival of gold money, through private gold banks, possible even without government support."
While it is arguable (among non-Austrian economists) whether or not the monetary policies of Messrs. Volcker and Greenspan were sound (many, if not most, point the finger of blame at Greenspan for today's financial problems), it is wishful thinking to believe for one second that governments and the government's financier, their central banks, will maintain long-term (or even short-term) discipline in spending and creating money. Their track record to date is not good and is becoming worse by the day. The events since August 2007 and particularly the response by central banks and governments to the meltdown which began during the week of 15 September 2008 and thereafter clearly indicates that the prospects for a "return to long-term fiscal discipline" is poor. The appetite of politicians, bureaucrats and governments for expansion of power and spending is too great to resist and the bureaucrats at central banks are all too eager to accommodate the demands of the government and the power broker politicians. It is the reason the world's economy has been on a course toward economic disaster since the flood gates of fiat currency (initially paper money and now electronically created money) were opened in 1913 with the passage of the Federal Reserve Act in the United States.

Gordon Brown's call for more global regulation and hence more government intervention is not the answer. The creation of money and management of the monetary system should be returned to a free (free from government intervention) private marketplace in the United States, Europe and other countries. As recent events clearly show our property, our wealth and our lives should not be entrusted to government bureaucrats and power-brokering politicians who bow and bend to special political interests rather than satisfy private consumers' demands as does the private marketplace. Let the private free market determine and provide what consumers want, what will be money and how the monetary system will function as the private market does with other products and services provided in the private marketplace. We would not think of the government providing our groceries (scarcity and long lines are the rule from such a system as we saw in the old Soviet Union and as we see in Zimbabwe today) so why do we allow the government to provide and manage something as important as our monetary system?

It is time for a new world financial order of private money and a private monetary system. Close down government-sponsored central banks in the United States and other countries and end the government monopoly of creating money and managing the monetary system which has brought the world financial system to near collapse. It is time to return to a private global gold standard for a global economy.


The War on Tax Evasion needs reinforcements.

The EU Savings Tax Directive came into force in 2005 after years of haggling but, as noted here, loopholes have emerged. The loopholes were actually obvious from the start, such as that the rules applied only to natural persons. Perhaps their widespread adoption has been quicker than the EU tax freaks reckoned on.

An example of how the EU would like to extend the rules is illustrated in this hypothetical situation: An EU bank pays interest to a trust based in Hong Kong, and is aware, due to "know your customer" rules, that the effective beneficial owner of the trust is a resident in the EU. The bank will have to apply EU rules at the time of payment as if this was directly made to the individual. So the EU would like to extend the rules to legal entities and non-European countries.

The proposals will need unanimous backing from all the EU's member countries, some of whom, like Austria and Luxembourg, share more economic interest in the matter with Switzerland and Liechtenstein than with the tax-grabbers. Then there is the small matter of getting Hong Kong and Singapore to go along with the gag. It will be a protracted battle.

European Union regulators have announced proposals that aim to close off loopholes in the EU's strict tax rules and crack down on tax evasion linked to cross-border investments. The idea is to prevent investors in an EU member country such as Germany from parking millions of euros in secretive banks in the tiny Alpine principality of Liechtenstein.

Non-EU countries like Liechtenstein and Switzerland signed up to the EU's savings tax rules when they were introduced in 2005. But at present, those rules only cover interest on bank accounts held outside a home state.

In a news conference, EU Tax Commissioner Laszlo Kovacs said the current scope of the EU savings tax directive needed to be extended, to help Europe in its battle to stamp out tax evasion. "At present, it is relatively easy for individuals to circumvent it (directive) ... it is beneficial to all parties to go further in extending the scope of measures," he said.

Ways of getting round the rules included using trusts or foundations where there was no income tax, he said, or rearranging financial portfolios so that income from interest fell outside the EU's formal definition of interest payments.

Existing EU rules ensure that banks and other institutions either report to authorities the interest income which they pay to savers resident in other EU countries, or levy a withholding tax on the interest income received.

The new proposal thus requires paying agents to apply the rules to payments of interest to structures outside the EU, and extends the rules to payments of interest to certain trusts and foundations. It further proposes extending the scope of the rules to cover certain life insurance contracts.

For example, if a bank established within the EU pays interest to a trust based in Switzerland or Hong Kong, and if it knows -- under anti-money-laundering provisions -- that the effective beneficial owner of the trust is an individual resident in the EU, the bank will have to apply EU rules at the time of payment as if this was directly made to the individual.

In March, Germany persuaded EU finance ministers to speed up a review of tax rules covering interest that EU savers receive on bank accounts or mutual funds in other member states or in non-EU countries applying the bloc's rules -- such as Liechtenstein, Switzerland or San Marino.

The rules came into force in 2005 after years of haggling but loopholes have emerged, such as arrangements for investment trusts in Liechtenstein which fall outside the rules' scope.

The European Commission had already opened talks with selected important financial centers -- Hong Kong, Singapore and Macao -- to extend the geographical scope of the savings tax directive, Kovacs said.

Formal negotiations will start soon with Norway, while other jurisdictions like Bermuda and Iceland have shown interest in participating in the EU savings taxation arrangements. The proposals will need unanimous backing from all the EU's 27 member countries to enter force, as in all EU tax matters.

Kovacs said EU finance ministers would hold an initial discussion of his proposal at their next meeting on December 2. If all EU countries agreed, as well as the European Parliament, it could receive full endorsement by the end of next year, he said.


The threat will not just pass as in times past, says major insurance company CEO.

XL Capital is a major insurance company domiciled in Bermuda. New XL chief executive officer Michael McGavick warns that all the anti-offshore laws emanating from the U.S. are a genuine threat to Bermuda's status as a world insurance center -- as distinct from times past when chest-puffing rhetoric died down with little change in policy. Another major insurance holding company, ACE Limited, redomiciled out of Bermuda earlier this year. McGavick labels that move the proverbial canary in the coal mine. He also has some advice on general public policy for Bermuda, namely not to rest on its past laurels.

One of Bermuda's leading insurance bosses ... issued a stark warning about multiple threats to the Island's future as an international business jurisdiction amid the ongoing global financial crisis.

XL Capital chief executive officer Michael McGavick told an audience at the annual general meeting of the Association of Bermuda International Companies that the threat of U.S. tax law changes punitive to the Island was now "extremely real."

He cited Ace's decision to redomicile its holding company to Switzerland earlier this year as a "warning bell" and urged Government to do more to ensure that Bermuda was able to attract -- and retain -- "the best and the brightest", who were driving the Island's economy.

Mr. McGavick, who took over the reins at XL from Brian O'Hara in May this year, ran unsuccessfully for a U.S. Senate seat as a Republican candidate in 2006 and also served as chief of staff for U.S. Senator Slade Gorton.

Talking about the tax threat, Mr. McGavick said the view he had heard widely in Bermuda was that "we have seen this come and go before", and that political rhetoric did not translate into policy. "I will tell you categorically that is wrong," Mr. McGavick said. "The threat this time around is extremely real."

Without a united effort to address the threat over the coming nine months to a year, Mr. McGavick said he expected that "tax regimes that are punitive to Bermuda and other countries will become law."

America's desperate need for funding, the feeling that "the U.S. taxpayer is being taken advantage of" being widespread, and Democratic Party control of the White House, Senate and House of Representatives, all pointed to the threat being greater this time, Mr. McGavick said.

The U.S. "will be worse off" for any tax change that negatively impacts Bermuda's insurance industry, Mr. McGavick said, adding that he and XL would do all they could to "make sure that foolishness does not come to pass."

All countries were competing for human and financial capital, and Bermuda had three particular advantages, Mr. McGavick said -- regulation, tax and talent.

He said the decision of "one of our closest brethren" to redomicile was not a good sign. Ace moved its holding company from the Cayman Islands to Switzerland in July, and its annual general meetings from Bermuda to Zurich.

"I guarantee that the financial decisions on where a company is domiciled matter," Mr. McGavick said, adding that some start-ups that would in the past have automatically been expected to set up in Bermuda had gone elsewhere. This was "a canary in the mine," he said.

The Island had been highly successful in bringing together some of the world's best talents in the insurance industry, but attracting more -- and keeping them here -- was essential for the Island to continue to prosper in the marketplace.

Government had to balance its desire to create opportunities for its own citizens with the desire to attract "the best and the brightest" from overseas, Mr. McGavick said. "I would suggest that the balance is not at the correct weight, otherwise we would see more talent coming here and sticking here for a longer time," Mr. McGavick said.

He questioned the strategy of being more concerned about protecting unskilled jobs -- which contributed the least towards society -- than in attracting outstanding talent to ensure the best workforce possible. That talent could easily flee, as never in human history had the global workforce been more flexible and mobile, he said.

"Bermuda is not exceptional in putting up barriers against the most educated and trying to keep the weakest jobs in place," Mr. McGavick said. "I believe that the countries that do the best job of flipping that approach on its head will be the most successful in future." ...

The Island's regulatory advantage, which has centered on allowing insurance companies to incorporate and open for business much faster than elsewhere, will face challenges too, Mr. McGavick added. Excellent progress had been made by the Bermuda Monetary Authority in raising the standard of regulation, he added, but that process needed to be accelerated, "because we are about to see a worldwide explosion in regulation," typical of the response to financial crises in the past.


Asia's banks largely avoided the subprime credit disasters so willingly embraced by their European and American counterparts. This has cushioned them somewhat from the consequent fallout ... which is not the same as having granted them immunity.

In a worldwide credit bust and trade contraction every financial institution will be effected. At a minimum one would expect the Asian banks' American and European clients to be sending less business their way. Longer run both Asia's increased wealth generation and their having not shot themselves in the collective foot should lead to an increased market share of the world's finance business.

HONG KONG — Bankers in Asia had been largely immune to the fallout from the global financial crisis. But as the economic malaise consumes country after country, those jobs are no longer viewed as safe.

On Tuesday (November 18), the British banking giant HSBC announced that it would cut 500 jobs in Asia. And Citigroup's roughly 50,000 employees in Asia were faced with the reality that some of job cuts announced Monday could hit them.

In addition, Mitsubishi UFJ reported that its profit had plummeted 61% in the three months that ended September 30. The bank made no comments about any possible job cuts, but the weak report highlighted how Japan's banks were being squeezed.

Strong growth in most Asian economies and a lack of exposure to the subprime mortgage market have helped shield Asian banks from the large number of layoffs of those on Wall Street and in London. But Asian banks are coming under pressure as the crisis drags on.

"The financial crisis is well and truly here now," said Andrew Oliver, managing director at Profile Search and Selection, an executive search firm in Hong Kong.

So far, Tokyo has been less affected by job cuts than other major financial centers, mainly because the Japanese banks have appeared comparatively healthy.

However, Japan and Hong Kong slipped into recession during the third quarter of this year, data released in recent days showed, while the sharp fall in the stock markets this year also has taken its toll on Japanese banks.

"As one of the world's financial centers and with the Japanese economy sliding into recession, Tokyo will inevitably feel the effects of the intensifying turmoil in global financial markets," said Matt Robinson, an economist at Moody's Economy.com in Sydney.

At HSBC, most of the 500 job cuts in Asia are planned for Hong Kong, where the unemployment rate in the financial capital edged up to 3.5% from August through October, from 3.4% in the July through September period ...

Citigroup also shocked the financial industry this week when it said it would lay off 52,000 employees, or 14% of its global work force, much more than the roughly 25,000 jobs cuts the bank had previously announced.

Citigroup declined to provide a regional breakdown on the job cuts on Tuesday. But most of the losses will be focused on the United States, leaving Asia-Pacific relatively unscathed, a person with direct knowledge of the situation said. The person spoke on condition of anonymity because affected employees have not yet been notified.

The sheer magnitude of the losses announced by Citigroup late on Monday drove home the message about how the global financial industry is being dragged down.

Likewise, Morgan Stanley and Credit Suisse, which have also recently announced job losses -- though on a smaller scale than at Citigroup -- would not provide any geographical breakdowns, officials at the banks in Hong Kong said on Tuesday.

Most of the Asia-based jobs at Lehman Brothers, the Wall Street stalwart that collapsed in mid-September, are safe since Nomura took over the bank's Asian operations and some 2,600 staff members. And job losses on the back of the collapse of Bear Stearns also were limited, because the bank only had 500 employees in Asia when JPMorgan acquired it.

This month, Australia and New Zealand Banking Group, based in Melbourne, said it would cut more than 500 jobs to contain costs. And DBS, based in Singapore, said it would eliminate 900 jobs, or 6% of its work force, in Singapore and Hong Kong after a steep fall in quarterly profit.

Recruiting firms like Michael Page, Robert Walters and Profile Search and Selection all report that they have received considerably more résumés from potential job candidates in recent months.

Most inquiries "have come from people who have already been laid off or from those who see a lay off as imminent," said David Swan, director of financial services at Robert Walters in Tokyo. "The sentiment of those who are currently employed has become much more conservative, and we see very few employed people seeking new opportunities in the finance industry."

Statistics of the number of job losses in the sector in Asia are hard to come by. Still, Mr. Swan estimates that "most of the major foreign institutions in Tokyo appear to have cut around 10% of staff numbers, which equates to about 100 to 200 on average per company."

With all this, there are widespread expectations -- in Asia as much as in the United States and Europe -- that bonuses will be minimal. "At this stage, most people in the finance industry are expecting little to no bonus for 2008," said Mr. Swan.

Job losses are also increasing in Sydney and Melbourne, where several financial institutions are making large cut backs. The unemployment rate in New South Wales jumped to 5.2% last month, from 4.8%, in part because of the downturn in Sydney's financial sector.

"I have been here during the Asian financial crisis, the downturn during SARS and the dot-com bubble bursting, and the feeling is very similar now," said Mr. Oliver of the Profile Search and Selection recruitment firm.

But some recruiters are hiring for certain strategic positions in Asia.

"Not everything is doom and gloom," said Dan Chavasse, managing director for Greater China and Southeast Asia at Michael Page International in Hong Kong. "There are job opportunities out there, especially in areas like compliance, auditing and product control, where the need for quality staff is higher than ever before."


You do not think and you ignore experience.

A friend recently alerted us to the well-honed pen of libertarian editorialist Craig Cantoni. His uncompromising approach is similar to that of most columnists on LewRockwell.com or Strike the Root, and he has an accessible and direct writing style.

Are you in the mainstream of American thinking? Do you have what it takes to be a member of Congress, president of the United States, teacher or trusted leader? Do you have the proper view of government, the economy, and other subjects? Take the following test. Good luck!

(1) Business profits average about 6% of national income of which federal, state and local governments consume about 44%. Which of the following should be reduced?:

(a) Corporate profits. (b) Government spending.

If you selected "a", you are in line with mainstream thinking. Congrats! You get a free subscription to USA Today or a comic book of your choice, whichever you can read without moving your lips.

(2) All of the experiments with collectivism in this country, such as the communitarian communities of New Harmony and Oneida, quickly failed due to the inherent fatal flaws of central planning and the collective ownership of property. Similar experiments by nation states have resulted in tyranny, mass starvation, and widespread poverty. What is best for the nation?

(a) More collectivism. b) Less collectivism.

If "a" was your answer, you should think about applying for a job at The New York Times.

(3) Governments intentionally killed over 100 million people in the 20th century alone. Industry accidentally killed a tiny fraction of this number and actually saved more lives through inventions and discoveries. Consider what happened during the Great Influenza of the second decade of the 20th century. Private medical doctors and institutions warned the government that influenza would spread and kill thousands if the government went ahead with a war bond parade in Philadelphia. The government heartlessly went ahead with the parade. What is the greatest threat to life?

(a) Business. (b) Government.

Many people who have chosen the answer "a" have experienced the terror of Ronald McDonald putting a gun to their head and forcing them to buy a Big Mac.

(4) Medical care and medical insurance are much more costly than they would otherwise be, due to the government virtually destroying a consumer market in healthcare over the last 66 years and shifting costs to third parties. What should be done to make medical care/insurance more available/affordable?

(a) Nationalize all remnants of a consumer market. (b) Restore a consumer market.

Your intellect is awesome if you chose "a". No doubt, in order to be intellectually consistent you also want the government to nationalize the food industry and require all Americans to eat at government commissaries. Burp! Excuse me.

(5) The federal government is insolvent and is printing money to hide the fact. It also has over $60 trillion in unfunded liabilities for Social Security and Medicare -- over $700,000 for each American under the age of 18. What should be done about this?

(a) Give Americans more free stuff and entitlements. (b) Give Americans less free stuff and fewer entitlements.

Run for office if you answered "a". Note: You are halfway done. If you happen to be failing the test, do not despair. You can turn the situation around by burning your extensive library of history, philosophy, and economics books, especially those by Milton Friedman, F.A. Hayek, and Thomas Sowell. Replace them with mainstream reading material, such as Newsweek, high school textbooks, and college lectures. You should also watch a lot of network news and 24/7 cable news. In short order, you will be getting the questions right.

(6) Inflation is an insidious, hidden tax. From 1776 to the passage of the Federal Reserve Act in 1913, inflation averaged almost zero. Since 1913, inflation has increased dramatically, especially after the gold peg was removed. In the last half-century, the dollar has lost about 90% of its value, and the money supply has increased by about 3,000%. Along with government housing policies, easy money was the primary cause of the latest housing bubble and subsequent collapse. Government printing presses are now running red hot to pay the cost of the bailout. High inflation will inevitably follow the current economic downturn, thus penalizing savers, who are the backbone of a healthy economy. Can you trust the government with your money?

(a) Yes. (b) No.

Correct answer: "a".

(7) Fatherless families are a leading cause of poverty, school dropouts, crime and emotional problems. A leading cause of fatherless families is men who walk away from their parental responsibilities and encourage the mothers of their children to "marry" the state. What government action would have the highest payoff in reducing poverty, school dropouts, crime, and emotional problems?

(a) Increase spending on welfare, K-12 education, childcare, tutors, and psychotropic drugs. (b) Remove the incentives for men to walk away and for women to marry the state.

Correct answer: "a".

(8) G.W. Bush increased federal spending more than any president since Lyndon Johnson. In terms of regulations, his administration set a record in 2004 for proposed and enacted rules published in the Federal Register -- 75,000 pages. His increase in regulatory spending in 2003 of more than 24% broke a 50-year record. In all, he increased regulatory spending by 68% during his two terms. Before becoming president, he made millions from taxpayer-subsidized baseball. What does this make him?

(a) A cowboy capitalist whose cutting of regulations was responsible for the mortgage meltdown and economic crisis. (b) A big-government statist like the Democrats.

If you selected "a" you have a wonderful ability to disregard facts. Are you a journalist?

(9) Franklin Delano Roosevelt protracted the Great Depression with his cornucopia of new regulatory agencies. Canada's banking system was less regulated but fared much better than the U.S. system during the Great Depression. In 1992, the highly regulated Swedish economy and banking system experienced a housing meltdown and economic crisis similar to the situation in the U.S. today. What is the primary cause of today's housing meltdown and economic crisis?

(a) A lack of regulations. (b) An assumption perpetuated by the government that home prices would always go up, although they have gone down in 50 of the last 100 years.

Correct answer: "a".

(10) Obama would get a perfect score on this test, for he would choose answer "a" for all of the preceding questions. Did you vote for him?

(a) Yes. (b) No.

If you answered "a" to every question, you are solidly in the mainstream.

If you answered "b" to every question, you feel like a stranger in a strange land, you yell at the TV, mutter at the newspaper, are seen as a crackpot, and are thinking of emigrating.

Incidentally, I failed the test.

Paying Homage to Coercion and to the Coercer Extraordinaire

Coercion does not exist in the public’s mind, because the word has been removed from the American lexicon.

It has come to this. It had to come to this. But it is still frightening that it has come to this.

We have now reached the point in our nation's history where tens of thousands of adoring fans of Barack Obama pay homage to coercion and to ask for even more of it. In a case of mass cognitive dissonance, they hate George W. Bush for the very same trait that they adore in their coercer extraordinaire.

Like GWB, the Chosen One wants to use government force to tell others how to live and to remake the world into his image. The only difference is that he wants to coerce different people and has a different image in mind than GWB did.

Ah, but in the self-righteous, sanctimonious minds of him and his acolytes, Obama's goals are noble while GWB's were ignoble. In their thinking, GWB wanted to bomb Muslims and enrich Big Oil. They, on the other hand, want to end poverty, provide free healthcare, achieve equal outcomes, and attain perfect fairness and social justice. And how do they want to do that? They want to do it by treating some folks unequally through unfair and unjust coercion, using the power of the IRS to take their money and redistribute it to other folks.

Hello, do they see the intellectual contradiction?

Of course, the coercers can live with the contradiction, because in their twisted minds, the victims of their coercion are not real people. They are caricatures of evil. They are greedy mortgage lenders, fat-cat CEOs, red-necked racists, selfish white suburbanites, rich people born into privilege, and right-wing Republicans. It is a story as old as the human race: justify coercion by demonizing the other group.

Well, my 88-year-old mom must be a demon. Why else would they want to raise the capital gains tax on her investments and increase the estate tax on her estate?

The problem is, she is a real person, not a caricature. Orphaned as an infant, she was raised by her immigrant aunt and uncle, who worked as a waiter. She worked in clerical and secretarial jobs all of her life, and her husband, my deceased dad, worked in blue-collar jobs all of his. But, oh, did my forebearers ever know how to save money. They scrimped so that their progeny, generation by generation, could climb the socioeconomic ladder, finally reaching the rung where my son is the first in the family tree to have the financial wherewithal to attend an Ivy League university, should he desire to be brainwashed in socialism and multiculturalism like Obama.

In heaven's name, what moral justification is there for using force against an 88-year-old woman? Why do they want to spit on my mom's dreams? What kind of brainwashing and mob mentality can get people to do things as a group that they would not do as individuals?

The accolytes do not even realize that force begets force. When Group A gets in power and uses force against Group B, Group B will retaliate when it gets in power. Or, speaking as an Italian-American, mess with my mom and I will bash your face in if I ever get the chance.

The nation's intellectual elites, most of whom love coercion if it is of the leftist kind, wonder why politics has become so nasty and partisan. Hey, egghead, it is because you cannot mind your own business.

Speaking of eggheads, a professor is now advising Democrat members of Congress to confiscate 401(k) savings, because, according to her deficient math skills, the rich get a bigger tax break than the poor under that provision of the tax code. It does not dawn on the yolk-for-brain professor that she is advocating coercion to solve an imagined problem that was caused by coercion in the first place. The 401(k) provision exists only because income is taxed twice, once as wages and then again as savings. Do away with the coercive tax on savings and there would be no need for subsequent coercion. There also would not be a need for armies of bureaucrats, accountants and lawyers to regulate, administer, and litigate the 401(k) provision.

The professor must be confusing America with Argentina, which has recently confiscated private retirement savings to fund the country's bankrupt treasury.

Her confusion is understandable. Once it became widely accepted by the American public that it is okay to use government force for every purpose imaginable instead of for only the legitimate purpose of protecting life, liberty and property, the yellowed parchments under glass in the National Archives would no longer keep man's genetic desire for power and control in check.

Coercion is not a slippery slope; it is a cliff of sheer ice. One step in its direction, for whatever high-minded or low-minded reason, and it is nearly impossible to stop the fall and turn back, especially without the ice ax and cleats of the Constitution.

Almost all of American politics is now about coercion -- about some group that wants to use government force against another group to achieve some end, usually to take the other group's money for themselves or their pet cause. Of course, the coercers do not put it that way and never use the word "coercion." Tellingly, the media on both the left and right do not use the word, either, perhaps because they have not been educated to think in terms of coercion.

Why would they be educated about coercion? After all, the government monopoly on K-12 education is not going to educate students about coercion when it is an institution based on coercion. In fact, the founders of the public education movement wanted to use public schools to coerce Catholics to learn WASP ways, including learning the King James Bible.

The indoctrination is so complete that the word "coercion" has almost totally disappeared from public discourse, although coercion is what Barack Obama and the rest of Congress embrace.

In 1984, George Orwell wrote that the aim of Newspeak was to "make thoughtcrime literally impossible, because there will be no words in which to express it." Similarly, coercion does not exist in the public's mind, because the word has been removed from the American lexicon.


This piece is written by a pair of Ojectivists, showing that when Ojectivists stop calling for the nuclear obliteration of Iraq and other such nonsense, and instead base their opinions on sound assumptions and reasoning, they can come up with some pretty good stuff.

Many have expressed dismay and outrage that so many of today's problems are blamed on "capitalism" when the reality is that the culprit is the antithesis of capitalism, namely coercion-based government meddling. These two authors do it particularly effectively. They note: "Whatever one wishes to call the unruly mixture of freedom and government controls that made up our economic and political system during the last three decades, one cannot call it capitalism. ... Why then should capitalism take the blame today -- when capitalism does not even exist?"

Good question. Obvious answer: Repeated telling of a big lie benefits the teller, otherwise he/she/they would not keep repeating it. Who is the purveyor of the "it is capitalism's fault" lie? Government and its beneficiaries and enablers. Voila.

Speaking of the financial crisis, French president Nicolas Sarkozy recently said, "Laissez-faire is finished. The all-powerful market that always knows best is finished."

Sarkozy was echoing the views of many, including president-elect Obama, who assume that the financial crisis was caused by free markets -- by "unbridled greed" unleashed by decades of deregulation and a "hands off" approach to the economy. And given this premise, the solution, they say, is obvious. To solve this crisis and prevent another one, we need a heavy dose of Uncle Sam's elixir: government intervention. Whether it is more bailouts, stricter regulation, a new round of nationalizations, or some other scheme, the only question since day one has been how, not whether, government is going to intervene.

And the issue is wider than the financial crisis. Millions of Americans do not have health insurance? Well, says Obama, that is because we have left the health-care system to the free market. The solution: a complete government takeover of medicine. A few companies engaged in accounting fraud? It must be because we did not impose enough regulations on businessmen. The solution: rein in corporations with Sarbanes-Oxley.

But while capitalism may be a convenient scapegoat, it did not cause any of these problems. Indeed, whatever one wishes to call the unruly mixture of freedom and government controls that made up our economic and political system during the last three decades, one cannot call it capitalism.

Take a step back. In the lead up to the "Reagan Revolution," the explosive growth of government during the ‘60s and ‘70s had left the American economy in disarray. A crushing tax burden, runaway inflation, brutal unemployment, and economic stagnation had Americans looking for an alternative. That is what Reagan offered, denouncing big government and promising a new "morning in America."

Under Reagan, some taxes were reduced, inflation was subdued, a few regulations were relaxed -- and the economy roared back to life. But while markets were able to function to a greater degree than in the immediate past, the regulatory and welfare state remained largely untouched, with government spending continuing to increase, as well as some taxes.

Later administrations were even worse. Bush Jr., often laughably called a champion of free markets, presided over massive new governmental controls like Sarbanes-Oxley and massive new welfare programs like the prescription drug benefit.

None of this is consistent with capitalism. As the economic system that fully recognizes and protects individual rights, including the right to private property, capitalism means, in Ayn Rand's words, "the abolition of any and all forms of government intervention in production and trade, the separation of State and Economics, in the same way and for the same reasons as the separation of Church and State."

Laissez-faire means laissez-faire: no welfare state entitlements, no Federal Reserve monetary manipulation, no regulatory bullying, no controls, no government interference in the economy. The government's job under capitalism is single but crucial: to protect individual rights from violation by force or fraud.

America came closest to this system in the latter half of the 19th century. The result was an unprecedented explosion of wealth creation and consequent rise in the standard of living. Even now, when the fading remnants of capitalism are badly crippled by endless controls, we see that the freest countries -- those which retain the most capitalist elements -- have the highest standard of living.

Why then should capitalism take the blame today -- when capitalism does not even exist? Consider the current crisis. The causes are complex, but the driving force is clearly government intervention: the Fed keeping interest rates below the rate of inflation, thus encouraging people to borrow and providing the impetus for a housing bubble; the Community Reinvestment Act, which forces banks to lend money to low-income and poor-credit households; the creation of Fannie Mae and Freddie Mac with government-guaranteed debt leading to artificially low mortgage rates and the illusion that the financial instruments created by bundling them are low risk; government-licensed rating agencies, which gave AAA ratings to mortgage-backed securities, creating a false sense of confidence; deposit insurance and the "too big to fail" doctrine, whose bailout promises have created huge distortions in incentives and risk-taking throughout the financial system; and so on. In the face of this long list, who can say with a straight face that the housing and financial markets were frontiers of "cowboy capitalism?"

This is just the latest example of a pattern that has been going on since the rise of capitalism: capitalism is blamed for the ills of government intervention -- and then even more government intervention is proposed as the cure. The Great Depression? Despite massive evidence that the Federal Reserve's and other government policies were responsible for the crash and the inability of the economy to recover, it was laissez-faire that was blamed. Consequently, in the aftermath, the government's power over the economy was not curtailed but dramatically expanded. Or what about the energy crisis of the 1970s? Despite compelling evidence that it was brought on by monetary inflation exacerbated by the abandonment of the remnants of the gold standard, and made worse by prices controls, "greedy" oil companies were blamed. The prescribed "solution" was for the government to exert even more control.

It is time to stop blaming capitalism for the sins of government intervention, and give true laissez-faire a chance. Now that would be a change we could we believe in.


Algorithm creates a physical key based solely on a picture of one.

This comes under the something else to worry about category. Perhaps you have heard about the stories where someone mistakenly tries his/her home door key on some random lock hundreds of miles away ... and it "miraculously" works. Not such a big coincidence, it turns out. A majority of keys marketed to consumers are basically just four to six different numbers, this article notes.

It turns out that the fairly limited set of key ridges and grooves can be readily decoded using a low resolution image taken with a basic cellphone camera, as proved by a University of California professor and his students. The bottom line is keep your keys away from cameras, just as you would your credit card. The next generation of security cameras will make it still easier to grab a key image surreptitiously.

Hide those keys. A quick camera phone picture could unlock your doors.

Scientists in California have developed a software algorithm that automatically creates a physical key based solely on a picture of one, regardless of angle or distance. The project, called Sneakey, was meant to warn people about the dangers of haphazardly placing keys in the open or posting images of them online.

"People will post pictures with their credit cards but with the name and number greyed out," said Stefan Savage, a professor at the University of California, San Diego who helped develop the software. "They should have the same sensitivity with their keys."

When Savage and his students searched online photo sharing Web sites, like Flickr, they easily found thousands of photos of keys with enough definition to replicate. A more social person could simply use their cell phone camera to snap a quick picture of stray keys on a table top.

For a more dramatic demonstration, the researchers set up a camera with a zoom lens 200 feet away. Using those photos, they created a working key 80% on their first try. Within three attempts they opened every lock.

Three attempts could take less than five minutes. The replication process is very easy. Once the researchers have the image it takes the software roughly 30 seconds to decode the ridges and grooves on the key. If the angle is off or the lighting is tricky it takes the computer take a little longer. The longest part of the process, about one whole minute, is cutting the key.

"I think that this work would be really easy for someone else to reproduce," said Savage of his work. "Someone familiar with signal processing, MATLAB, and image transformation could do it in two days if they are good."

Keys, as the researchers demonstrated, are actually fairly easy to decode. A majority of keys marketed to consumers are basically just four to six different numbers. Each number corresponds to a ridge or valley in the key. When inserted into a lock, the ridges and valleys lines up a series of small pins that lets the lock turn.

"The premise is that a key holds some kind of secret that lets you unlock something," said Savage. "But it is a very funny secret, its a secret that can easily be seen."

Creating a new key is easy enough that some locksmiths and security experts do it by sight alone. The locks the UCSD team broke were some of the most common in the country.

Marc Weber Tobias, an attorney and security expert who has been picking locks since he was a boy, says the UCSD project does a good job of underscoring the insecurity of conventional cylinder locks. But the idea of someone standing up to a mile away with high resolution camera and stealing keys with a shutter is small compared to the next generation of video cameras being installed.

"The real issue is the new digital video cameras shooting at 30 frames a second," said Tobias. "There are millions and millions of these cameras everywhere." If someone got their hands on sensitive parts of the video they could easily duplicate key sets.

Locksmiths, and the UCSD scientists will not use their talents or technology for ill-gotten gains. But not everyone is so ethical, and experts urge people to take physical security more seriously.

"This is not the biggest security threat that you might face," said Savage. "But you should only take your keys out when you are going to use them."


Andorra opens itself to foreign takeovers.

Tiny offshore haven Andorra is responding to a variety of outside pressures and opening up its legal borders to a far greater degree than before. Being on the OECD blacklist has taken its toll, as has a 25% tax imposed by Spain on services provided by Andorran companies. The changes are also made to help cushion predicted declines in tourism and construction, which are important components of the Andorran economy.

Andorra, the tiny Pyrenees principality, will on Friday (November 14) open its borders to foreign takeovers as part of efforts to modernize the economy and shake off its image as a shady financial center.

Under legislation passed in April, foreign investors will be allowed to control 100% of companies in 200 designated sectors, while controls will be eased in core activities such as construction, tourism and retailing. Foreigners will be allowed to own 49% of the capital in companies in these sectors, compared with 33% at the moment.

Friday's reforms follow the creation this year of companies' register, to which local businesses will have to file regular accounts using international standards. There are also plans to introduce corporate tax of between 5% and 10%, and value-added tax of 4%. At present, there are no direct taxes on companies and individuals in Andorra, making it a popular base for the wealthy from countries such as Spain, Portugal, France and the UK.

The changes are part of an effort to restructure the tiny economy, which relies on tourists -- mainly skiers -- for about 60% of its €2.5 billion GDP. Global turbulence is expected to hit tourism hard, and Andorra has also seen a sharp downturn in construction activity, which accounts for about 10% of GDP.

Juli Minoves, economic development minister ... described them as "important reforms, introduced at moment when they are most needed." However, the changes are also aimed at improving relations with Spain -- which slaps a punitive 25% tax on services provided by Andorran companies -- and with the OECD, which has Andorra on its list of uncooperative tax havens.

Your tax dollars at work: U.S. moves to crack down on internet gambling.

Regulations implementing 2006 U.S. federal legislation against internet gambling are now in place. The law prohibits gambling businesses from knowingly accepting payments made through credit cards, electronic funds transfers, and checks. The new rules require U.S. firms processing payments to put in a version of "know your customer" rules which are reasonably designed to prevent payments that facilitate internet gambling transactions.

"Knowingly" ... "reasonable" ... both typical subjective terms which leave a lot of enforcement discretion. One might suspect the U.S. Treasury wanted to put more power in the hands of the Executive branch. Do you think?

The U.S. Treasury Department and Federal Reserve Board approved regulations ... designed to crack down on unlawful internet gambling. In a so-called "final rule," the U.S. authorities outlined the regulations aimed at implementing an act passed by the U.S. Congress in 2006 which seeks to prohibit illegal gambling on the Web.

The law bans U.S. banks, credit card and financial companies from handling internet gambling bets and has been the target of fierce criticism that it would be an enforcement nightmare. It specifically prohibits gambling businesses from knowingly accepting payments made through credit cards, electronic funds transfers, and checks.

The Treasury Department said the final rule requires U.S. financial firms that participate in designated payment systems to "establish and implement policies and procedures that are reasonably designed to prevent payments to gambling businesses in connection with unlawful internet gambling."

Firms have until December 1, 2009 to be in compliance with the rule, the Treasury Department said in a statement. The administration of President George W. Bush has been accused of seeking to rush the regulations through before its term expires in January 20, 2009.

The law passed in 2006 was aimed at putting teeth into a de facto ban on U.S. residents placing online wagers in locations such as Britain, Canada, Antigua and Gibraltar.

But the U.S. ban on internet gambling has been challenged as an unfair trade restriction at the World Trade Organization. The European Commission has also launched an investigation into whether the U.S. gambling ban discriminated against EU firms.

U.K. Customs Authorities to Target Offshore Accounts

It is reported that HMRC is going to mount another round of offshore financial account enquiries. Also, prosecutions using evidence procured during the previous rounds is scheduled to commence.

The U.K.'s Revenue & Customs authority plans to mount a fresh round offshore tax evasion investigations, targeting customers of 25 building societies and foreign banks with U.K. operations, the Financial Times reported without saying where it got the information.

The authority is also set to start the first prosecutions for tax evasion resulting from an earlier probe of five British high street banks. The investigation recovered about £400 million ($600 million) in unpaid taxes and forced the banks to disclose details of the offshore accounts, the FT said.

Guernsey’s Transparency Improving, Says OECD

Along with Aruba, Bermuda, Isle of Man, Jersey and the Netherlands Antilles, Guernsey is meeting with the OECD's approval due to greater willingness to compromise client privacy. When the OECD's blacklist membership declines the potential-clients blacklist expands.

Guernsey is among the top six international finance centers improving its transparency and exchange of information in tax matters, according to the OECD. Along with Aruba, Bermuda, Isle of Man, Jersey and the Netherlands Antilles, the island has made substantial progress with the OECD.

Angel Gurria, OECD secretary-general, speaking at the recent conference on the fight against international tax evasion and avoidance, said there had been a number of significant breakthroughs since 2000 when the organisation launched its project to increase the exchange of information on tax matters.

'"A total of 27 tax information exchange agreements has been signed since 2000 and around 40 more are under negotiation. Most of the progress has been with just six offshore financial centres that are actively negotiating agreements."

World Bank hails pro-business Mauritius reforms.

The lastest "Doing Business in Small Island Developing States" World Bank report praises the tiny, isolated Indian Ocean nation Mauritius for its improved business environment. Among the report's universe of jurisdictions, Mauritius is #2 after Singapore in the overall ranking for ease of doing business. And it is in the top 25 globally. Impressive.

Mauritius has jumped into the top 25 of countries where it is easiest to do business and now comes second only to Singapore in the "Small Island Developing States" category, the World Bank said ...

The Indian Ocean island has undertaken a raft of reforms since Prime Minister Navin Ramgoolam took office in 2005, slashing red tape to make it easier for local entrepreneurs and foreign investors alike to set up and run businesses.

"Mauritius, the country with (sub-Saharan Africa's) most favorable business regulations, continues to reform and this year joins the top 25 globally," the bank said in the report, "Doing Business in Small Island Developing States." The study, which called itself "a cholesterol test for the regulatory environment," measures factors ranging from the ease of getting credit to paying taxes or closing a business.

Mauritius scored highest, and was ranked 7th globally, in "starting a business", which it said needed only five steps that took six days and cost 5% of income per capita. But it fared less well on the "enforcing contracts" index, which the World Bank report said took an average of more than two years to pass through the courts. In last year's survey, Mauritius was ranked 27th overall.

With a population of just 1.3 million people, an economy based heavily on sugar and textiles and huge distances between itself and its major markets, Mauritius has defied sceptics and prospered under preferential post-independence trade deals.

But with those deals ending and stiff competition from China and India in textiles, it has looked to diversify towards tourism and banking, opening up to foreign expertise and cash. The government has ushered in dozens of reforms over the last two years, including easing access to trade licences and property, facilitating foreign investment and establishing a single tier for corporate and income tax. ...

The government expects Mauritius' economy to grow 5.4% this year as the global financial crisis weighs heavily on the tourism and service sectors.