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(Especially noteworthy articles’ headings highlighted in gold.)
BRITAIN’S LONG DEBATE ON EMBRACING THE EURO
The long debate that was supposed to produce a verdict this month on whether to push for the euro as Britain’s currency has instead lapsed into a contest over how much longer to postpone the final reckoning. Reaching a decision on the euro was never going to be easy because it is a freighted subject in Britain, extending well beyond economics to engage the politics of sovereignty and national identity. Some Britons dismiss this island nation’s traditional standoffish relationship with the Continent as dated, but many others consider it defining.
The issue has caused divisions within business, labor unions and political parties since Labor came to power in 1997 promising, as Prime Minister Tony Blair described it, to fulfill Britain’s destiny to be at the heart of Europe. It has also attracted public attention because it sets Mr. Blair at odds with his internal rival for influence over Britain’s future, Chancellor of the Exchequer Gordon Brown.
Britain, Denmark and Sweden are the only European Union countries that have not adopted euro notes and coins, and more than 300 million Europeans now use them as their national currency. The 12 countries that made them legal tender in January 2002 are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. Many of the 10 countries from Eastern and Southern Europe soon to enter the union are likely to want to join them.
Opponents of the euro point out that Britain, with its pound sterling, has more economic stability, lower inflation and less unemployment than the countries in the so-called eurozone.More on this story here.
U.S. GOVERNMENT SAYS IT CAN PRY INTO THE ATTORNEY-CLIENT RELATIONSHIP ALL IT WANTS
Charges against Lynne Stewart, a New York human-rights lawyer, strike at the heart of the U.S. Constitution’s Sixth Amendment guarantee that all people accused of a crime are entitled to effective representation by an attorney. Courts have long held that attorney-client confidentiality is essential to that right; without the ability to speak freely about what they have, and have not, done, defendants are severely impaired from learning their legal status and options, and attorneys cannot mount the best defense. But Stewart’s case has broader implications. In the future, attorneys will be less willing to represent clients like Sheikh Omar Abdel Rahman, who is serving a life sentence in connection with the first World Trade Center bombing in 1993 and who Stewart represented as a member of his court-appointed defense team.
Since Stewart’s indictment, Ashcroft has gone further, declaring noncitizens, and later, U.S. citizens as well, “enemy noncombatants” so as to hold them indefinitely without charges, denying access to any attorney at all. Whether or not the “enemy noncombatant” ruse is eventually ruled unconstitutional, Stewart’s case risks setting a precedent that could literally destroy an accused terrorist’s right to counsel -- while allowing the government to choose who qualifies as a “terrorist”.
Ashcroft’s provisions, announced and implemented without public notice or comment less than three weeks after 9/11 allow the monitoring of attorney-client conversations without a court order or supervision or even the suspicion of criminal behavior by the attorney, if the client is accused of terrorism. The regulation allows surveillance “to the extent determined to be reasonably necessary for the purpose of deterring future acts of violence or terrorism.” The Department of Justice alone does the determining. Among other things, such monitoring allows the government complete access to everything the defense knows and every strategy the defense plans.
Lynne Stewart is a guinea pig -- a chance for the Bush administration to see how far it can push its evisceration of the Bill of Rights. The attack on attorney representation is only one of a staggering number of its post-9/11 assaults on the Constitution, but it is one of the most important.More on this story here.
SOME FEAR LOSS OF PRIVACY AS SCIENCE PRIES INTO BRAIN
Using magnetic resonance imaging machines that detect the ebb and flow of brain activity, researchers have become so good at peering into the workings of the human mind that their work is raising a new and deeply personal ethical concern: brain privacy.
One study of white students found that although they expressed no conscious racism, the seat of fear in their brains still fired up more when they looked at unfamiliar black faces than at unfamiliar white faces. Another recent imaging study reported that certain parts of the brain work harder when a person is lying than when telling the truth, raising the prospect of a brain-based lie detector. A marketing research company is already starting to use the machines to gauge consumers’ unconscious preferences by looking at the pattern of brain activity as they respond to products or messages.
Brain-scanning is too new and imperfect to have engendered real-life tales of invasion of brain privacy, but controversy is easy to imagine. What if a court, a potential employer, or a suspicious spouse wants to scan an individual’s brain for telltale signs of something she would prefer not be known or something the individual may not even know about himself?More on this story here.
DOES GLOBAL FINANCIAL INTEGRATION LIFT COUNTRIES UP? NOT ALWAYS
Those who believe that globalisation throttles democracy, gouges the poor and fouls the environment are bound to regard today’s mostly open markets for international capital as evil. However, this does not prove that unimpeded flows of capital are a good thing. The capital market has vindicated its critics and embarrassed its would-be defenders too often of late. It has been responsible for, or at least deeply implicated in, some very costly economic breakdowns. Perhaps the anti-globalists are on to something.
Trade is good. But even the most enthusiastic advocate of economic integration may be starting to wonder whether unimpeded flows of capital are quite such a blessing. Economic principles suggest that they should be. Economics relies heavily on the idea that wider opportunities make people better off -- or at least that they do not make them worse off. Whatever else trade does, it widens opportunities.
Essentially the same logic applies to international finance. Just as a closed economy can consume only what it produces, it can invest only what it saves -- no more, no less. Trade in capital makes it possible for countries to separate their saving and investment choices.
So how can you be worse off if you are given choices you did not have before, without being obliged to take them up? The answer is that you may make choices you come to regret.More on this story here.
SMOKING OUT AMERICA’S “REEFER MADNESS”
When the author of best-selling exposé Fast Food Nation turned his sights on America’s underground economy, he found a mountain of government hypocrisy among all the pot and porn. In Reefer Madness, his second book, author Eric Schlosser broadens his target from fast food and takes a swipe at what he sees as the river of moral and economic contradictions that run through America’s so-called “free market” economy.
“The free market ideology is a myth,” said Schlosser. “The government is intervening all the time in the market, but on whose behalf? Is it protecting somebody who wants to smoke marijuana in their home, a migrant worker forced to live in a cave, or, more likely, a multi-national corporation drilling for oil?” he said in a recent interview in London.
In his new book, Schlosser investigates three pillars of the American underground, marijuana, the traffic in illegal immigrants and pornography, and asks why some private pleasures are strongly punished while public crimes can pass unnoticed.
“The average convicted killer spends 11 years in prison in the United States and 110,000 people are killed every year by alcohol, but the punishment for possessing even a small amount of marijuana can be life in prison. At a time of so-called ‘Orange and Red’ terror alerts, the government is using scarce law enforcement resources to round up people making bongs and roach clips and thousands are in prison for marijuana offences,” he said.More on this story here.
SUPREME COURT ALLOWS DUE PROCESS DOUBLE STANDARD FOR ALIENS
Sixty-seven years ago, the Supreme Court reviewed a case involving a confession coerced by torture from a black defendant in Mississippi. The deputy sheriff who presided over the interrogation admitted that the defendant had been whipped, “but not too much for a Negro”. The Supreme Court rejected that reasoning and held that the due process prohibition on coerced confessions applies equally to all detainees, no matter what their race.
Last week the Supreme Court resurrected a due process double standard, ruling that incarcerating people without any individualized showing of need was not too much for an alien. By a 5 to 4 vote, the court for the first time upheld a law authorizing the preventive detention of individuals on a categorical basis. It did so by insisting that the constitutional guarantee of due process means something different for a noncitizen than for a citizen, thus reneging on its own statement 50 years earlier that the due process clause does not “acknowledge any distinction between citizens and resident aliens”.
Since September 11 the government has for the most part not asked the citizenry to make that difficult choice, but instead has offered to sacrifice the liberties of foreign nationals -- especially Arab and Muslim foreign nationals -- for the security of the rest of us. That is an easy political choice, as foreign nationals cannot vote. But precisely for that reason, it is the court’s obligation to resist such double standards. Yet last week’s decision openly endorses double standards discriminating against the nation’s most vulnerable population. History shows that what the government does to foreign nationals in the name of national security eventually gets extended to U.S. citizens.More on this story here.
“THE RIGHTS OF ENGLISHMEN” -- THE WRONGS OF AMERICAN PROSECUTORS
Be warned: law, once a shield of the innocent, is now a weapon in the hands of government. Conservatives generally ignore such warnings, feeling that criticism of the criminal justice system plays into the hands of criminals.
Accidents and civil offenses have been criminalized, and the prohibitions against crimes without intent, retroactive law, and self-incrimination have been removed. Even the attorney-client privilege is being eroded. Conservatives are not alarmed by these developments. They continue to support sweeping definitions of criminal liability and harsher penalties.
Prosecutors have been granted wide discretion by social welfare regulation, which criminalizes behavior that bears no relationship to moral wrongs (such as murder) which traditionally defined criminal acts. Today Americans draw prison sentences for unknowingly violating vague regulations, the meanings of which are interpreted by the regulatory police who enforce the regulations.
The fact that law is interpreted and enforced by unelected regulatory authorities violates the requirement of our political system that law must be accountable to the people. Law, which once served a concept of justice, has been replaced by a tyranny that answers only to the conscience of prosecutors.More on this story here.
DOUG CASEY: GOOD DAY, FELLOW INCOME-TAX PAYERS, AKA “SERFS”
The average tax payer never consider how the government gets money: Namely, by forcible extraction from its subjects. Every other person and entity creates goods and services which are exchanged voluntarily; only the State makes a purely one-sided demand. It is a sign of the continuing degradation of life in America that the subject is even worthy of discussion.
The average guy may hear about the IRS destroying someone’s life from time to time, but he has been pretty well brainwashed into believing they somehow deserved it. In any event, it probably bothers him about as much as it does a bovine when a predator cuts another cow out of the herd –- he figures if they are gutting someone else, they are distracted from him for the time being.
Even when there is a muffled complaint, it tends to center on the system’s lack of “fairness” (as if the nebulous concept of fairness had any meaning in this context), or its lack of “efficiency” (thank God for small favors), or some other tangential issue. People may whine about taxes being “too high,” but, unfortunately, they rarely talk about the legitimacy of taxation itself.
Nowhere, except perhaps in a few newsletters, which are preaching to the choir, do you ever hear an attack on the principle of taxation itself. Rather odd when, in point of fact, taxation is theft. My dictionary defines theft as “the act of depriving another of his property by force or fraud.” It does not go on to say “unless you’re the government, then it’s not theft anymore.” Or, perhaps, “unless the money is used for good purposes.”More on this story here.
THE CASE FOR AN END TO DOUBLE TAXATION
The essential problem is that a dollar of U.S. corporate earnings is taxed at a rate of 35% for the largest corporations, leaving 65 cents of after-tax income. When this is paid as dividends, an additional tax of up to 40% is due, resulting in a combined tax rate of 61%. Even if the 65 cents is retained and reinvested by the business, the stockholder will have a “capital gain” equal to the after-tax income of 65 cents because of the increased value of corporate assets represented by a share of stock. When realized, a capital gains tax of 20% is due, bringing the combined tax to 48%. Double taxation occurs whether dividends are paid or the income is realized as an increase in stock price. The Bush plan would end both sources of double taxation, bringing the total tax rate down to the corporate tax rate, the same as the top rate for individual income tax after 2005.
With double taxation, corporations must offer higher returns to compensate for the extra tax. This raises their cost of capital, or the rate of return that they must earn to justify profitable investments, which, in turn, reduces capital investment. A smaller capital stock, in the form of equipment, buildings or working capital means that workers’ productivity is impaired and this lowers their real earnings. The Bush plan would lower the cost of capital substantially, reversing these adverse effects. The Council of Economic Advisers conservatively estimates that this change will lower the cost of capital by 14% and that this tax reform will raise stock prices by 10%. Even these large benefits could underestimate the effects, however, perhaps by as much as half.More on this story here.
HEDGE FUNDS GOING RETAIL
Eager to get back at least some of what they have lost in the bear market, a growing number of investors are turning to the risky hedge-fund industry, which has outperformed the general stock market in the past three years. Once open only to those with a cool million to invest, but now you can get started with as little as $25,000 to put into a fund of funds.
This has helped fuel an explosion of interest in hedge funds. Though it is hard to judge how many funds exist in the largely unregulated industry, the advisory firm Hennessee Group estimates there are about 5,700 funds with $592 billion in assets, up from 4,800 funds with $408 billion in 2001. The fastest-growing sector is the funds of funds.
This growth has sparked some concern at the Securities and Exchange Commission. The agency is holding a two-day roundtable in Washington, D.C., this week to help it determine whether hedge funds should be subject to more disclosure and regulatory requirements.
So just what are hedge funds? Though the term has become a catch-all for privately managed pooled investments, traditional hedge funds bet on stocks or other securities going both up and down to reduce market risk. They can also become highly leveraged, and this can cause serious trouble if the fund manager bets wrong.More on this story here.
THE WAR OVER TAXES
The Bush tax proposal is big enough and the public issues it raises are important enough that it deserves better than he-said, she-said coverage. The proposal has set off a classic philosophical tug-of-war over the proper role of government in a $10 trillion economy. It reopens a historic debate that seemed settled nearly a century ago when angry populists pushed through the Sixteenth Amendment in 1913, establishing the essential progressive structure of the income tax as we know it today. The debate could have ramifications for decades to come, and it will almost certainly set the tone for the next election.
So the tax proposal and the crossfire it has ignited are particularly compelling, with their own set of challenges for the news media. How do we give this difficult story the coverage it deserves?More on this story here.
WHY DOES THE LEFT DESPISE JOE MCCARTHY?
Why do they keep digging up the corpse of Joe McCarthy for a ritual flogging? Even if what is alleged is true -- that McCarthy bullied witnesses and accused men of disloyalty who only made mistakes -- that still does not explain why the left cannot let go of him.
The answer: As no other man, Tailgunner Joe stripped the old establishment of its reputation, credibility and moral authority in the eyes of the people. McCarthy convinced Middle America that FDR and Truman had been duped by “Uncle Joe” Stalin, had tolerated treason, and had blundered and lost in five years all the fruits of the victory won by the blood and sacrifice of the Greatest Generation in World War II.
The establishment has never recovered from that beating.More on this story here.
AMERICA IS A POLICE STATE
First, a definition: The Internet’s dictionary.com website defines “police state” as: “A state in which the government exercises rigid and repressive controls over the social, economic and political life of the people, especially by means of a secret police force.”
Simple enough! All we have to do now is discern whether or not our beloved country exercises what might be called “rigid and oppressive controls” over our “social, economic and political life”. I am certainly not here to argue that America has become a police state in the image of any number of communist, fascist or theocratic regimes you could name. Let us just say that we need to look at this picture a bit more closely.More on this story here.
INTERNATIONAL PROVISIONS OF TAX BILL UNDERMINE U.S. COMPETITIVENESS
The Senate Finance Committee tax bill contains a number of provisions that would undermine American competitiveness and restrict fundamental rights of labor and capital to cross national borders. If approved, these provisions will undermine the parts of the tax bill -- such as the acceleration of marginal tax rate reductions and small-business expensing -- that promote economic growth. Three provisions are particularly damaging.
Current law tries to limit the damage of America’s worldwide tax regime by taxing workers only on annual income above $80,000 -- a policy known as the Section 911 exclusion. According to PricewaterhouseCoopers and Johns Hopkins University economists, eliminating Section 911 would reduce U.S. exports by $8.7 billion and result in a loss of nearly 150,000 U.S.-based jobs.
If the Senate Finance Committee bill is enacted, companies that re-charter in low-tax jurisdictions will be treated as if they were still chartered in the United States. American companies trying to compete in global markets could then (a) passively allow their market share to decline, or (b) become takeover targets for foreign-based competitors. The idea is contrary to the commonsense notion of taxing only income earned inside national borders.
The Senate Finance Committee bill imposes heavy exit taxes on American residents who emigrate -- including a tax on unrealized capital gains. The Senate bill is to the left of even the United Nations. The 1948 Universal Declaration of Human Rights states that “Everyone has the right to leave any country, including his own” and that “No one shall be... denied the right to change his nationality.” The taxation of emigrants is almost unprecedented, at least among democratic governments.More on this story here.
THE GROWING THREAT OF FASCISM
Fascism and communism are ideological kissin’ cousins -- just a few degrees to the right of communism. Both fascism and socialism favor -- to one degree or another -- government control of production and distribution. The only thing that distinguishes fascism from socialism in economic theory is how they get that control. Fascists realize the government does not need to own industry to control it. Through regulation and taxation, fascists know they can achieve the same results without nearly as much work and responsibility.
Most so-called “liberals” think they hate fascism. They equate it, understandably, with Nazism, Hitler, Mussolini, racism, anti-Semitism and imperialism. But they forget what the definition of fascism is. Yet, these “liberals” today are not democratic socialists. They are not really Marxists. Instead, they are pragmatists -- just like Mussolini. As did Il Duce, they dream of making the trains run on time. They cannot wait for their turn to make the economy lumber along at a 2.5% growth rate. Whatever deals need to be cut with big business to make that happen are OK with them. If they need to sell some corporate favors for campaign contributions, that is just political expediency. If they feel it is time to arm agents of the Environmental Protection Agency to put more teeth into enforcement of the Endangered Species Act, who could blame them?
Welcome to the world of “democratic fascism”. This is the tyranny most Americans are perfectly willing to impose on themselves.
It is not just economics, either. Look at the way we have abdicated our individual liberties in favor of “group rights”. That is a fascist concept.More on this story here.
SWISS BANK RULES SLAMMED FOR COSTS TO DEVELOPING WORLD
Switzerland’s banking secrecy rules are costing the world’s poorest countries billions in lost revenue every year, according to a new campaign. Non-governmental organisations are urging the Swiss government to crackdown on tax evasion and ensure revenue is returned to developing countries.
The campaign, involving 50 charities and NGOs from 20 countries, aims to raise awareness of the wider impact of the existence of “tax havens”. Campaigners accuse banking centers such as Switzerland, Luxembourg and the Channel Islands of managing fortunes that are beyond the reach of the relevant tax authorities.More on this story here.
U.S. SENATE VOTES TO SCRAP EXPAT TAX BREAK
The Senate voted 51-49 for the Jobs and Growth Reconciliation Act of 2003, which includes ending the income tax exemption U.S. expatriates currently enjoy on the first $80,000 they make abroad -- a provision U.S. lawmakers say is worth $35 billion a year, the largest single revenue generator in the 11-year bill.
The American Chamber of Commerce in Moscow has lobbied heavily against ending the exclusion, which it says will hurt the competitiveness of U.S. citizens on the international job market while simultaneously encouraging tax delinquency.
Chamber president Andrew Somers said that eliminating the exclusion would also have a disproportionate effect on low-wage earners. “It will hit the teachers and the guys on the oil rigs much worse than the executives,” he said.
Bill Henry, director of tax at Ernst & Young in Moscow, said that “This amendment will make U.S. companies less competitive in the global market. It will discourage U.S. citizens from foreign assignments. It will encourage tax evasion. ... And it is illustrative of how unmanageable U.S. tax policy has become due to the complexities of the U.S. tax code relative to the technical comprehension of members of Congress.”More on this story here.
WE’RE FROM THE GOVERNMENT ... AND WE’RE HERE TO TAKE AWAY YOUR FREEDOM -- FOREVER
“The Men in Black” came for Gerry Weber last week. Weber -- who is not an alien but who dabbles in a concept totally alien to the Bush regime, liberty -- was giving a speech at Georgia Tech when guys in shades and dark suits grabbed him and hauled him off. No explanation, no reading him his rights, no phone call to a lawyer, no public record of his detention -- just a vanishing act.
Was it the books Weber checked out at the library that did him in? Was it that he marched in a demonstration that disrupted traffic? Or did the government have no reason -- other than that it did not like Weber?
OK, it was only a little theater, starring the legal director of the Georgia ACLU and intended to illustrate the civil libertarians’ warnings that our rights are threatened. It is a clear and present danger. And it is not Osama bin Laden and Saddam Hussein who have our liberties in their gun sights; it is George Bush and John Ashcroft.
Weber came back. But rights and people are disappearing in America. They might never return. And hardly anyone is noticing. Or, they are afraid to say what they see.
Long before Mohammed Atta and his colleagues flew jetliners into the twin towers, the government had drafted its draconian assault on civil liberties. That is not a disputed fact, although it is neglected in most reporting of what has been egregiously misnamed the USA Patriot Act.More on this story here.
Patriot Act forces companies to play informant on customers.
We all know homeland security is an expensive proposition. Assault-weaponed forces standing guard in front of all the bridge and tunnel entrances in New York City do not come cheap. And the cost for airport inspectors from the Transportation Security Administration to fill barrels full of confiscated cuticle scissors at the nation’s airports runs upwards of $5.8 billion annually.
But what you may not have realized is just how much of the expense of our antiterrorism efforts is being borne by private industry. The USA Patriot Act, well known as a law that sacrificed civil liberties in the name of national security, may also be one of the largest unfunded mandates on private business since Social Security.
Section upon section of the law imposes new obligations on businesses to produce the personal records of their customers, or to spy and snitch on their customers as a condition of operating. Million-dollar fines and criminal liability are punishment for noncompliance.More on this story here.
USING OFFSHORE CORPORATIONS TO EXPLOIT INTANGIBLE ASSETS -- RISKS AND REWARDS
There has been considerable talk of the tax benefits of using offshore corporations to exploit intangible assets. The idea is to have a corporation located in a low-tax, or no-tax, country acquire intangible assets, and to earn fee income from use of these assets. The intangibles can include patents, copyrights to software or music, mailing lists, etc. The company can earn income from actively selling products based on the intangibles (for instance, selling software), or by receiving royalties from licensing these assets to others.
The goal is to earn fees and royalties taxable only in the low-tax or no-tax country. The tax benefits of this arrangement are great, but so are the hurdles to making it work. This two-part article briefly looks at the benefits and pitfalls of exploiting offshore intangibles.More on this story here.
Passive Foreign Investment Company (PFIC) primer.
A foreign corporation with one or more U.S. shareholders is a PFIC if 75% or more of its income is passive income or if at least 50% of its assets would be invested in instruments which produce interest, dividends and/or capital gains. Unlike a controlled foreign corporation or a foreign personal holding company , there is no minimum percentage ownership by U.S. shareholder to trigger application of the PFIC rules.
If a foreign corporation has a high enough percentage of passive income or assets, it is a PFIC as regards any U.S. shareholder no matter how small their ownership percentage of the foreign corporation and regardless of whether the U.S. shareholders, individually or in the aggregate, have the ability to control the business or investments of the foreign corporation.
The consequences to a U.S. resident or citizen of owning stock in a PFIC are rather severe.More on this story here.
TIA CUBED: A SPY MACHINE OF DARPA’S DREAMS
The Pentagon is about to embark on a stunningly ambitious research project designed to gather every conceivable bit of information about a person’s life, index all the information and make it searchable. What national security experts and civil libertarians want to know is, why would the Defense Department want to do such a thing?
The embryonic LifeLog program would dump everything an individual does into a giant database: every e-mail sent or received, every picture taken, every Web page surfed, every phone call made, every TV show watched, every magazine read.
All of this -- and more -- would combine with information gleaned from a variety of sources: a GPS transmitter to keep tabs on where that person went, audio-visual sensors to capture what he or she sees or says, and biomedical monitors to keep track of the individual’s health.
On the surface, the project seems like the latest in a long line of DARPA’s “blue sky” research efforts, most of which never make it out of the lab. But DARPA is currently asking businesses and universities for research proposals to begin moving LifeLog forward. And some people, such as Steven Aftergood, a defense analyst with the Federation of American Scientists, are worried.More on this story here.
From books you check out to credit card purchases, money transfers to medications, your activities are now subject to federal surveillance. Uncle Sam now has a blank check to search and pry -- all in the name of security.
Last October, then House Majority Leader Dick Armey branded our own Justice Department “the biggest threat to personal liberty in the country.” And while that characterization of a Republican Justice Department makes many conservatives cringe, the DOJ has been working overtime to expand its power -- and the biggest danger may be yet to come.
The Patriot Act was rushed into law before any effort was made to understand why the feds failed to stop the 9/11 attacks. The government could have done a better job of tracking the terrorist suspects, but the feds had all the relevant information to detect and block the conspiracy to hijack four airplanes. The Joint House-Senate Intelligence Committee observed that the FBI’s negligence “contributed to the United States becoming, in effect, a sanctuary for radical terrorists.”
The success of the 9/11 hijackers was due far more to a lack of government competence than to a shortfall in government power, but the administration rewarded failure by the FBI and intelligence agencies with bigger budgets, more power, and presidential commendations. The Bush administration has successfully suppressed investigations and revelations of federal failures, thereby permitting Ashcroft and others to portray new government powers as the key to national safety.
Proposed additional powers are embodied in a draft version the Domestic Security Enhancement Act -- quickly dubbed Patriot II. Portrayed as a benign sequel, it is anything but.
Three months after 9/11, Ashcroft announced, “To those who scare peace-loving people with phantoms of lost liberty, my message is this, your tactics only aid terrorists for they erode our national unity and ... give ammunition to American’s enemies.” Ashcroft is wrong to portray any criticism of Bush administration civil liberties policies as aiding and abetting terrorism. America is overdue for a searching examination of the powers the Bush administration has seized and the powers it is seeking.More on this story here.
GOP ASSAULTS ON PRIVACY DRIVE MORE WEALTH OFFSHORE
The increasing volume of offers to help one protect one’s assets and even one’s person offshore, in recent years, raises several very serious questions. If so many companies are getting into this very specialized business, what does that say about how many of America’s wealthy are leaving? What will happen to our tax base, as they leave? What will happen to the jobs that their wealth supported, after they and their investment capital are gone?
I could easily argue the unconstitutionality of several of the laws and regulations that will be discussed here, such as the USA Patriot Act (PDF copy of law here) and Homeland Security Act (HSA) (PDF copy of law here). But many highly qualified legal analysts have already proven that point much better than I could. Yet, many conservatives still seem indisposed to criticize the lawmakers who passed those laws and regulations, since those lawmakers are, for the most part, Republican. So, rather than rehash the unconstitutionality of these actions, I will concentrate on their outcome, in the hope that when conservatives and even liberals see how their own pocketbooks will be affected, they will wake up.
The growth of the offshore investment market is only the symptom of a much deeper and very insidious problem facing America. The problem is that increasingly, the wealthy perceive, whether correctly or incorrectly, that they are under attack by their own government and they are taking the only rational option left open to them. They are taking their wealth and leaving.More on this story here.
DISTINGUISHING BETWEEN GOOD AND BAD OFFSHORE FUNDS
Choosing wisely is a tough problem for savers in investment funds in general. It is harder on those in the offshore world. Regulatory oversight of funds tends to be more lax, and disclosure by fund management companies is less open, too.
One way to choose wisely is to concentrate on a fund’s rating. This is a letter or number given by a credit rating agency which purports to capture in a nutshell the fund’s quality. Performance, riskiness, quality of management -- all are factored in to the final rating.
It is also worth looking behind the scenes at what fund ratings actually do, and what they can actually tell you. Before you trustingly buy a fund rating agency’s recommendation, you should be aware of what they can really tell you and what they cannot.
A problem in using rating as a measure of quality is that past performance can be a bad guide to the future. Some say it is virtually worthless. Research has shown that in the long term, investment funds do little better than chance.More on this story here.
PRESERVING OUR LIBERTIES WHILE FIGHTING TERRORISM
Government officials typically respond to terrorist attacks by proposing and enacting “antiterrorism” legislation. To assuage the wide-spread anxiety of the populace, policymakers make the dubious claim that they can prevent terrorism by curtailing the privacy and civil liberties of the people. Because everyone wants to be safe and secure, such legislation is usually very popular and passes the legislative chambers of Congress with lopsided majorities. Many people indulge in the assumption that they are now safe, since the police, with their newly acquired powers, will somehow be able to foil the terrorists before they can kill again. The plain truth, however, is that it is only a matter of time before the next attack.
This cycle of terrorist attack followed by government curtailment of civil liberties must be broken -- or our society will eventually lose the key attribute that has made it great: freedom. The American people can accept the reality that the president and Congress are simply not capable of preventing terrorist attacks from occurring. Policymakers should stop pretending otherwise and focus their attention on combating terrorism within the framework of a free society.More on this story here.
Full text of policy analysis here (PDF file).
BEWARE E-MAIL BANK SCAMS
E-mail scammers have recently launched two nearly identical campaigns to dupe users into divulging their bank account information and other personal data, and they are meeting with some success. The two scams, both of which started in the past two weeks, take the form of e-mail messages that tell recipients that there is a problem with their online banking account. The messages include links to Web sites where the recipient is asked to enter either his online banking user name and password or some other sensitive information.
In the most recent instance, customers and noncustomers alike receive an e-mail that appears to come from the Bank of America customer support department. There are several misspellings and grammatical errors, however, that make it easy to identify the message as a fake. The message arrives from custommersupport@ bankofamerica.com with a subject line reading: “Security Server Update”.More on this story here.
Latest Internet scam goes after the good-hearted.
Many Internet scams rely on victims’ avarice to draw them in. The new scam depends instead on people’s ignorance of obscure banking rules and their desire to return money that is not theirs.
The hardest hit was the 38-year-old Shawnee, Missouri man, stung after he posted a car for sale on the Internet for $17,500. Someone agreed to buy the car and sent what appeared to be a $92,000 cashier’s check to the man’s credit union, according to a police report. Then the con artist told the seller that his secretary had sent the wrong check and asked him to send the extra $74,500 back. The story sounded fishy to the Shawnee man, so he said he would wire the money back to the buyer’s account in the United Kingdom, but only after the cashier’s check had cleared.
The victim said CommunityAmerica Credit Union told him the check cleared by April 29, so he wired the money out of his account. On May 8 the credit union told the Shawnee man the cashier’s check had turned out to be a worthless counterfeit. He was on the hook for more than $74,000.
The scam, which officials first noticed last summer, takes advantage of a federal rule requiring financial institutions to make money available within days, even for transactions that have not officially cleared. The Federal Deposit Insurance Corp. requires banks to make money from cashier’s, certified or teller’s checks available in one to five days. But a well-made counterfeit check can bounce around the financial system for two weeks before anyone realizes it is worthless.More on this story here.
GRAND FAÇADE: HOW THE GRAND JURY WAS CAPTURED BY GOVERNMENT
The grand jury is perhaps the most mysterious institution in the American criminal justice system. While most people are generally familiar with the function of the police officer, the prosecutor, the defense lawyer, the judge, and the trial jury, few have any idea about what the grand jury is supposed to do and its day-to-day operation. That ignorance largely explains how some over-reaching prosecutors have been able to pervert the grand jury, whose original purpose was to check prosecutorial power, into an inquisitorial bulldozer that enhances the power of government and now runs roughshod over the constitutional rights of citizens.
Like its more famous relative, the trial jury, the grand jury consists of laypeople who are summoned to the courthouse to fulfill a civic duty. However, the work of the grand jury takes place well before any trial. The primary function of the grand jury is to inquire into the commission of crimes within its jurisdiction and then determine whether an indictment should issue against any particular person. But, in sharp contrast to the trial setting, the jurors hear only one side of the story and there is no judge overseeing the process. With no judge or opposing counsel in the room, grand jurors naturally defer to the prosecutor since he is the most knowledgeable official on the scene. Indeed, the single most important fact to appreciate about the grand jury system is that it is the prosecutor who calls the shots and dominates the entire process. The grand jurors have become little more than window dressing.
At present, Congress seems to be interested only in proposals that will further expand the powers of the grand jury. Recent “anti-terrorism” proposals, for example, have sought to remove critical limitations on the dissemination of grand jury material. Because the grand jury can easily function as a stalking horse for prosecutors to bypass the constitutional rights of individuals and organizations, it is imperative that its powers be scaled back, not unleashed.Story here. Full text of policy analysis here (PDF file).
FLORIDA LAWYERS BLAST NEW RULES FOR DEFENDING TERRORIST SUSPECTS
The federal government’s ground rules for military trials of foreign terrorist suspects detained on and off the battlefield are just out, and they are sending chills through veteran civilian defense lawyers.
The new rules spell out 33 crimes of war to be prosecuted and procedures for imposing sentences that include death. In addition, the U.S. Department of Defense’s set of eight “military commission instructions” imposes conditions of service on civilian defense counsel that some lawyers say will make it extraordinarily difficult to win acquittal for clients -- and will impose financial hardships that will discourage involvement by skilled and successful private attorneys.
“A competent attorney will face incredible obstacles in simply presenting a meaningful defense,” said Georgetown University law school professor David Cole.
To be eligible to participate, civilian attorneys must swear an oath that includes the following: “I understand that my communications with my client, even if traditionally covered by the attorney-client privilege, may be subject to monitoring or review by government officials using any available means, for security and intelligence purposes.”More on this story here.
A MODEST PROPOSAL: RON PAUL FOR PRESIDENT
“These are the times that try men’s souls.” So wrote the noted American patriot Thomas Paine in urging his countrymen to fight King George the Third. Well now we have another George, who is not a king, but increasingly seems to act like one. And this George also threatens Americans’ freedoms.
When the American revolutionaries made their case for independence from Britain, they believed that a decent respect for “the Opinions of Mankind” required that they give their reasons. Let me, like them, say why we would be better off with Mr. Bush out of office and retired to Crawford, Texas for a much-needed rest.
It is time to end the madness. There are many ways to skin a cat and I offer one such way. My modest proposal is that Republican Congressman Ron Paul of Texas run for the Republican nomination for President. I have no illusion that Dr. Paul would win, delightful as that result would be. What Ron Paul could do is similar to what Senator Eugene McCarthy did to Lyndon Johnson’s ambitions in 1968, that is, destroy them.
I could go on and on about Ron Paul and the depth, sincerity, and wisdom he has that he brings to all the issues he faces. He clearly outshines not only Mr. Bush, but also all of the Democratic contenders for the nomination. Dr. Paul is likely to get not only a lot of votes from Republicans, but also crossover votes from Democrats and independents who are disgusted by the failure of the Democratic party to yield an unabashedly anti-war candidate. This, in fact, is what happened in Congressman Paul’s latest election, where, even though the Texas Republicans tried to redistrict him out of a seat, he won 68% of the vote with crossovers.More on this story here.
Past articles by Congressman Ron Paul here.
PERILOUS POWER PLAY: FBI VS. HOMELAND SECURITY
A war has broken out on American soil, largely below the public radar screen. On May 13 Attorney General John Ashcroft and Secretary of Homeland Security Tom Ridge signed a “Memorandum of Agreement” between the Department of Justice and the Department of Homeland Security (DHS) that gives the Federal Bureau of Investigation (FBI) unprecedented unilateral control of all terrorist-financing investigations and operations. The agreement raises questions about the need for a Department of Homeland Security, if the FBI will be handling all relevant terror investigations.
Several seasoned government agents fear for the nation’s security should the FBI be tackling most terrorism cases, as their ineptitude in preventing terrorism has been established time and time again. Yet, the memorandum between Ashcroft and Ridge places the FBI in an incredibly powerful position over Homeland Security.
The FBI now has the power to create or kill any terrorist-financing investigation it deems appropriate or inappropriate to investigate. This puts the FBI in a position to control too much and is eerily reminiscent of the former Soviet Union’s oppressive intelligence agency, the KGB. Like the KGB, the FBI seeks to run itself with no checks and balances, a necessary hallmark of the American system of government and civil rights.More on this story here.
US “FACES FUTURE OF CHRONIC DEFICITS”
The Bush administration has shelved a report commissioned by the Treasury that shows the US currently faces a future of chronic federal budget deficits totaling at least $44.2 trillion in current US dollars. The study, the most comprehensive assessment of how the US government is at risk of being overwhelmed by the “baby boom” generation’s future healthcare and retirement costs, was commissioned by then-Treasury secretary Paul O’Neill.
But the Bush administration chose to keep the findings out of the annual budget report for fiscal year 2004, published in February, as the White House campaigned for a tax-cut package that critics claim will expand future deficits.
The study asserts that sharp tax increases, massive spending cuts or a painful mix of both are unavoidable if the US is to meet benefit promises to future generations. It estimates that closing the gap would require the equivalent of an immediate and permanent 66% across-the-board income tax increase.More on this story here.
GARY NORTH: THE MYTH OF THE GOLD STANDARD
The person who calls for the re-establishment of “the” gold standard -- nobody agrees as to exactly what “the” gold standard should be -- begins with an unstated judicial presupposition: “The State has a legitimate legal right to control the issue of money.” This is another way of saying: “Monetary policy is an example of market failure.” More than this, it implies the following: “Because money is the central economic institution in a high division of labor economy, the State has a legal right and a moral obligation to control money, so as to retain influence over every area of the market.”
Kings and governments have long asserted an authority, if not an absolute monopoly, over the coinage. It has to do with control over the images. It has to do with the ability of the state to extract wealth from the public by means of currency debasement: taxation by stealth, whose negative effects can be blamed on private speculators. But, from the standpoint of economic theory, this monopoly over money has to do with a theory of market failure.
“As good as gold” is a phrase that presents gold as the standard of comparison. It usually is applied to something that is not as good as gold. In monetary affairs, it applies to a substitute for gold, or what is called a fiduciary instrument. It is a piece of paper that is offered in lieu of gold. It is easier to counterfeit paper than to counterfeit gold. It is easier to sign a promise to pay gold than to pay gold. All of the defenders of the gold standard believe -- I am not making this up -- that the best way to reduce the practice of counterfeiting is to hand over a legal monopoly over money creation to the most accomplished and universally recognized counterfeiters in history: civil governments.
A gold standard is a promise made by a self-licensed professional counterfeiter that he will always stand ready to redeem his pieces of paper and official digits in exchange for gold at a fixed ratio. As the mid-1950’s comedian George Gobel used to say, “Suuuuuuure he will.”
There are conservatives who still present this 2,700 year-old con job of State-issued honest money as a philosophy of limited government. Whenever I hear this assertion, I always hear the faint sound of a piano playing Scott Joplin’s The Entertainer. My mind becomes clouded by an image of Paul Newman and Robert Redford, arm in arm, walking away with my gold. Fade to black.More on this story here.
AMNESTY INTERNATIONAL WARNS OVER WAR ON TERROR
The US-led war on terror is trampling human rights worldwide, Amnesty International warned in its newly-released annual report. The organization accuses several countries, including the US and the UK of exploiting the fear that followed 9/11 and “ignoring, undermining or openly violating fundamental principles of international human rights and humanitarian law.”
“What would have been an outrage in western countries during the cold war -- torture, detention without trial, truncated justice -- is readily accepted,” Amnesty’s Secretary General Irene Khan told a press conference in London.
Ms. Khan criticised the US for “undermining the tools of international justice” with their refusal to support the International Criminal Court, and instead entering into bilateral agreements aimed at protecting US citizens accused of human rights violations. “What we are seeing is the development of a two-tier system of justice -- one for the most powerful country in the world, the other for the rest.”More on this story here.
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