Thursday, July 31, 2008

About Those Tax-Havens.......


21st Century Straw-Man: What These Senators Conveniently "Forget" to Tell You about Tax Havens
Sky-high gasoline and oil prices, thousands of home mortgage foreclosures daily, U.S. troops dying in two foreign wars. It's all driving Americans to distraction.Meanwhile, up in the rarefied atmosphere of Capitol Hill, the U.S. Senate is engaged in a phony war on offshore tax havens. Eager Senators are playing to the news media gallery with bombastic and false statements about these so-called billions in lost taxes offshore.Last week, it was that dynamic duo of the U.S. Senate Finance Committee, Baucus (D-Mont) and Grassley (R-Iowa). These senators are dumping all over the Cayman Islands. They claim any American corporations with a subsidiary company offshore (which is fully legal) should be treated as suspect tax dodgers.
The Baucus/Grassley show was based on a report the two senatorial pals ordered the Government Accountability Office to write. The senators asked this congressional watchdog agency to investigate a five-story building (Ugland House) in the Caymans that is listed as the business address for corporate subsidiaries of more than 18,500 U.S. companies. That number has nearly doubled in the past four years.About half of the companies that list their address as the Ugland House are American. The principal tenant of the building is the well-respected international law firm of Maples and Calder, which performs incorporations for global clients.
The So-Called Sinister Building...a Political Straw-Man
Possibly trying to keep a straight face, Senator Baucus said that "this building in the Caymans" is "one of the most likely places shady tax transactions could be sheltered. If American companies are setting up shop at the beach just to avoid their tax obligations, we can't keep our heads in the sand. We must make sure honest American taxpayers are not footing the bill for corporations that aren't paying their fair share." Bravo, Senator! Go get 'em!
But please note the false premise of this Baucus syllogism, (i.e. his deductive scheme of formal argument, consisting of a major and a minor premise and a conclusion). His false premise is that "if" a U.S. company has an address at this building, then on that ground alone, the company automatically is suspect of tax evasion. That's a ridiculous notion at best. Not to mention a totally false conclusion.When I was in politics this sort of exercise was called setting up a "straw-man." You define an object on your own terms, then attack it for fun and political profit.
A Bunch of Phony Numbers to Support a Shaky Theory
American corporations form offshore companies so they can take advantage of U.S. tax laws (yes, I said "U.S. tax laws") that allow tax credits and other tax breaks for offshore earnings. If done properly, American corporations can use these laws to legally avoid the onerous U.S. corporate tax rate of 35%. The U.S. has one of the highest corporate tax rates in the world, so it's no wonder U.S. companies have a tough time competing globally. By the way, senators, that high tax means lost American jobs and fewer taxes paid by U.S. workers.U.S. companies also use offshore tax havens like the Cayman Islands to reduce their foreign tax liability. For example, an American company with operations in Japan can create an affiliate in the Cayman Islands. The American company can structure it so that the Cayman affiliate is earning interest, which is tax-deductible in Japan.Much of this anti-tax haven baloney consists of senators making up higher and higher numbers of how much the IRS loses to offshore tax evasion.In recent years, Senator Carl Levin has upped the fictitious lost tax number he invented from US$50 billion to US$100 billion. But at the Finance Committee hearing, Senator Baucus blew the roof off that number. He claimed the Senate must "find legislative solutions to pressure the IRS and better enable them to collect on the nearly US$345 billion annually of legally owed but unpaid taxes," according to Tax News.com. (Why stop there? Do I hear US$1 trillion senators?)

The Biggest Tax Haven of All: The United States
Several economists and tax experts dispute even the US$100 billion number. They say a surge in the number of companies in the Cayman Islands does not correlate with lost taxes. By comparison, they point out that America itself is one of the largest tax havens in the world, (for foreigners, but not for Americans). In fact, more than 850,000 companies are registered in the State of Delaware alone, including one Wilmington building where more than 200,000 companies have an address. (Better rush right up to Wilmington and investigate that spooky building, senators!)American companies also want to legally defer U.S. taxation of foreign income. Unlike many countries, including the European Union, America taxes income earned both at home and abroad. But if this money is reinvested abroad, the tax is deferred. (Thus the need for offshore subsidiaries.) The lost tax revenue from the legal deferral of income from American investments abroad totaled US$11.9 billion last year. This number is expected to reach US$12.8 billion by the end of this year, according to estimates from the Office of Management and Budget. By 2010, that number will reach US$14.6 billion, OMB estimates.
The Ruse that Jack Built
Predictable as clockwork, the Baucus/Grassley dream team called on good old Jack Blum to prove their case. Blum is a lawyer at the Washington D.C. law firm Baker & Hostetler. But more importantly, he's a paid IRS "consultant" and self-appointed specialist in innuendo. For years, senators have hauled out Jack to repeat his tired spiel for nearly every congressional anti-offshore tax hearing.
Not content with phony attacks on the Cayman Islands, professional witness Blum also went after three other Caribbean island tax havens, the British Virgin Islands (BVI), Nevis, and Belize.As if it were some sort of crime, Blum intoned: "The BVI has more than 500,000 shell companies." Not content with this implied smear he added: "It is important to understand that the structures are mere pieces of paper with no commercial reality," while insisting that in his narrow, biased opinion, "offshore tax evasion is a massive threat to the U.S. tax system."No doubt Blum knows better, but tax truth does not match his canned agenda. These "mere pieces of paper" are actually incorporation documents that allow offshore companies to qualify for legal tax breaks worth billions annually. The U.S. Internal Revenue Code authorizes these legal documents so they comply with U.S. tax code. By the way, Congress could change the law that approves these documents if they really wanted to.
What the Lazy "Journalists" Forget to Tell You
Damn, if I don't get tired doing the job of a lazy, and no doubt, biased, "news" media. These journalists just don't seem to care one bit about the truth concerning offshore tax havens."Tax havens don't necessarily detract from real investment," a professor at Harvard Business School, Mihir Desai, says. "It can actually be beneficial to tax mobile capital less than immobile capital. Otherwise the mobile capital will just go elsewhere. I would imagine that the presence of tax havens may well cost tax revenue, but that does not necessarily mean it is bad to have them around," Mr. Desai said: "Tax havens can also facilitate investment by allowing investors to reduce their tax burdens."But the politicians in Congress in both parties are far more concerned about getting headlines and their own re-election than they are about helping American business or American taxpayers.
Good Old Tom Said It:
I leave you to ponder this quote, from the late President and leading agriculturist, Thomas Jefferson of Monticello:"The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is its natural manure." And there is no place in the world where you'll find more natural manure (or tyrants) than in Washington, D.C. — especially on Capitol Hill.

IRS Lying About Missed Revenue To Increase Taxes


The Numbers Don't Add Up!
As I mentioned a moment ago, the IRS believes small businesses are evading taxes to the tune of US$100 billion annually. That's the number IRS Commissioner Mark Everson dangled in front of the Senate Budget Committee in 2006. Everson also said that if Congress unleashed the IRS against small business, it could recover "between US$50 billion and US$100 billion without changing the dynamic between the IRS and the people."Now, Congress has done exactly that. Only the numbers don't add up. A more recent study from the Treasury Department says that credit card transaction reporting would net less than US$10 billion in added revenue. And indeed, according to the Congressional Budget Office, the new provisions will raise slightly less. The Budget Office estimated they'll raise a total of US$9.8 billion over a 10-year period.
The Hidden Agenda for Reporting Credit Card Transactions
That's a lot of dough, although it's a pittance for the tax-and-spenders inside the beltway. For that reason, I don't think matching up credit card transactions with eBay power sellers is the real reason Congress enacted this part of the housing bailout bill. Instead, I think there's a hidden agenda for a much bigger take. I could be wrong, but it seems to me that setting up an infrastructure that matches credit card transactions with payments to Internet merchants is a tailor-made solution to help collect sales tax. Right now, most Internet transactions still aren't subject to any form of sales tax. States will be chomping at the bit to get the IRS to share this data with them, so they can directly bill merchants for in-state sales. Any company that does business on the Internet, but doesn't charge sales tax is at risk. It's not necessarily simple to "know what you owe," either. In addition to the sales tax regimes in effect in nearly all 50 states, online merchants that collect sales tax must negotiate a maze of city, county, and municipal taxes. Plus, they must file sales tax returns in the jurisdictions in which they sell goods or provide services. Small merchants that can't justify investing thousands of dollars in software that can make the necessary calculations, and file the necessary returns, will be forced out of business. Then there are the periodic calls for some kind of future national sales tax or value-added-tax. The infrastructure this bill creates will make this tax easy to collect. Everything will be in place, and the IRS can simply send a bill to merchants that don't pay the tax. Even if this worst-case scenario doesn't come to pass, it's quite clear that if you operate a small business, the IRS has you in its sights. And come 2011, you'd better have the data to track every dollar you spend in business expenses against the gross income reported to the IRS. And if you don't, you can count on a tax inquisition.


AND THIS:

Is the IRS About to Extend Their Reach?
IRS officials just revealed plans to tighten the rules of their so-called "Qualified Intermediary" (QI) program. Under the QI program, foreign banks have held billions of dollars offshore for American clients without legally having to disclose their names to the IRS. In exchange, the banks promised to know who their clients are, withhold any taxes due on U.S. securities in their accounts and send that money to the IRS. More than 7,000 foreign banks are enrolled in the program and paid about US$2 billion to the IRS last year.This all began in 2001. Since then, the IRS has forced foreign banks and financial institutions to become IRS informants, a.k.a. "qualified intermediaries" (QI). To put it plainly, it's just like how the IRS forced American bankers to spy on their customers with the Bank Secrecy Act and the PATRIOT Act. In the same way, the QI program turned offshore bankers into spies on their U.S. clients, at least in certain defined situations.
Since the IRS imposed the QI rules, U.S. persons holding U.S.-based investments purchased through their offshore banks did have a choice:
1. They could either have offshore banks report the American holdings to the IRS.2. Or they could have the bank withhold a 30% tax on all interest and dividends paid to them. .
To avoid either event, the U.S. investor could (and we have recommended) not hold any U.S.-based investments through an offshore bank or financial institution. If you don't have U.S. investments, then you're not required to report under the 2001 QI rules. By comparison, if you held foreign, non-U.S. investments offshore, you would have been exempt both from the QI reporting and the QI tax withholding rules...until now.

They're Going To Tax Internet Sales To Pay For Homeowner Jerks


Small Business Owners Beware: Say Goodbye to Tax-Free Internet Sales
If you can take the IRS at their word, then supposedly the U.S. Treasury loses nearly US$100 billion in unpaid taxes from small businesses. That's a big number, and I believe it's a gross overstatement. I'll explain why in just a moment. But in reality whatever the number is, the new housing bailout bill is designed to dramatically reduce it.The IRS believes that America's small businesses are evading billions of dollars in taxes through unreported credit card transactions. And for that reason, it's long been at the top of their legislative agenda to require credit card issuers and electronic payment systems like PayPal to report sales data to the IRS.
Tax Inquisition Planned to Bailout Deadbeat Homeowners
The housing bailout bill does just that, broken down in terms of payments to businesses accepting the cards. Essentially, the bill requires Visa, MasterCard, Discover, American Express, PayPal, Amazon, Google Checkpoint, and virtually every other "electronic payment system" to track, aggregate, and report to the IRS, information on nearly every electronic transaction. They must report:
The gross amount of payment card and third-party network transactions
The name, address, and taxpayer identification number of the participating merchant
However, the bill gives these systems more than two years to gear up for these requirements. Mandatory reporting won't come into effect until 2011. Basically, what the bill does is to give the IRS a way to check what a credit card company or electronic payment system is actually paying a small business compared to what the business owners are reporting on their tax returns. If the two numbers are wildly out-of-sync, then you're likely to be audited.
eBay Powersellers, Beware!
How might this bill affect you? If you're an eBay Powerseller, for instance, and sell US$40,000 of cosmetics each year over the Internet, at the moment, eBay doesn't have to tell the IRS anything about the sales. But starting in 2011, eBay will have to send you - and the IRS - an annual report. The report would say for example that Connie's Cosmic Cosmetics received US$40,172.13 in gross payments from eBay for that year. And here's where it might get very dicey with the IRS. People who operate businesses are supposed to declare their gross income on Schedule C (or a corporate tax return). Then they're supposed to deduct all the costs of doing business to arrive at a net figure of taxable income. However, a lot of small businesses don't keep particularly good records. All the owners may know are what they have left at the end of the year. And that's what they report as their income, without accounting for their gross income or their expenses. Any Internet business that takes this approach after 2011 will be in for a serious wake-up call!

Nicely Said...................Scary Too!

Ludwig von Mises warned us that governments will destroy free markets long before they ever understand how they work. I would like to add that governments will destroy free-markets if they do not like the message of the market. Government intervention after all is nothing but a blatant attempt to thwart the will of market participants in a bald manipulation to change the market’s message about the price of some good or service. - James Turk

Smell That? It's "Catastrophe" In The Air...............


Experience in Catastrophe
"One of the things that he finds worrisome is that 'things may even be worse than I first thought', which probably shows why he was not selected to be the Republican presidential nominee; he is inexperienced in catastrophe."
by The Mogambo Guru
"The Crisis Is Upon Us" is an essay by Ron Paul, a retired pediatrician and the only guy in Congress that I would trust with the future of The United States of America by electing him President, and am inconsolable that he is not the Republican nominee, and now I must instead choose between some old white guy who has never had a job where he was not either mindlessly taking orders (the military, then Vietnamese captors) or screwing things up (he is currently one of the lowlife, numbskull, corrupt, yahoo Congresspersons that got us into this economic mess that is going to destroy America), or alternatively choosing to vote for some Leftist/Marxist affirmative-action black guy who knows absolutely nothing about real life (and is also currently one of the lowlife, numbskull, corrupt, yahoo Congresspersons that got us into this economic mess that is going to destroy America).
But this is not about how Mr. Paul would have made a great President instead of Ronald Reagan after Paul Volcker got rid of the horrendous inflation that consumed the '70s because he understands economics and he wouldn't have allowed the Fed to create all that excess money and credit that is causing inflation in consumer prices nor any of the other inflations/busts in asset prices, but about how that knowledge about economics leads him to ominously say, "I have days - growing more frequent all the time - when I'm convinced the time is now upon us that some Big Events are about to occur. The world economy and political system will share in the chaos about to be unleashed."
I know what you are thinking. You are saying to yourself, "Hey! That sounds a lot like what the Stupid Loudmouth Mogambo (SLM) is always yammering about, right before he starts getting hysterical about how it is all caused by the Federal Reserve creating too much money and credit, and proceeding from there to heaping justified insults on Congress (except Ron Paul), most of the Supreme Court, the United Nations, all foreigners and malevolent alien beings from outer space who are here to undermine the system prior to conquest by flying saucers and ray guns, which predictably leads to how we are freaking doomed, and if you are not buying gold and silver then you are some kind of drooling idiot!"
As correct as that is, it gets even MORE eerily reminiscent of the Loud And Fearful Mogambo (LAFM), off on one of his rambunctious toots as Mr. Paul goes on to list inflations ("gasoline prices over $4 a gallon; skyrocketing education and medical-care costs"), deflations ("the collapse of the housing bubble; the bursting of the NASDAQ bubble; stock markets plunging"), personal miseries ("unemployment rising; massive underemployment") and the crushing debts that are becoming un-payable ("excessive government debt; and unmanageable personal debt"), all caused by Alan Greenspan and the Federal Reserve.
That is why Mr. Paul says, "The financial crisis, still in its early stages, is apparent to everyone", and that there is "little doubt" about "whether we'll get stagflation. The question that will soon be asked is: When will the stagflation become an inflationary depression?"
One of the things that he finds worrisome is that "things may even be worse than I first thought", which probably shows why he was not selected to be the Republican presidential nominee; he is inexperienced in catastrophe.
In case you were wondering, this lack of experience with catastrophe is NOT the reason that I, The Mogambo, was not nominated to be the Republican candidate. In fact, I have lots and LOTS of experience in catastrophes, mostly in the vein of coming home after midnight stinking of cheap liquor and cheaper perfume, or showing up at work both late and ditto the liquor and perfume, but mostly because I am stupid, rude and impetuous, and which are the reasons why I never get promoted around here and am still stuck in this stupid, dead-end job and which, in turn, explains my constant hostility, vengeful paranoia and sour disposition, which IS the reason I was not nominated to be President.
The point is that with my wealth of experience, I know that things are ALWAYS going to be worse than you first thought. Usually a lot worse! Hahahaha!
And George Ure atUrbanSurvival.com seems to agree with Mr. Paul's "Big Event" prediction, and says, "We're now inside the 90-day window to what I expect will be the 'Fall in the Fall' of the markets for any number of reasons."
And, apparently, Ambrose Evans-Pritchard at The Telegraph in London agrees with us, too, and writes, "we are now at the point of maximum danger. The US may soon tip into a second leg of this crisis as the fiscal package runs out and Americans lose jobs in earnest."
The reason he says this is, "US bank credit has contracted for three months" and "Real US wages fell at almost 10 percent (annualised) over May and June" (which is calculated as nominal wages less the inflationary fall in purchasing power), which makes for "a ferocious squeeze for an economy already in the grip of the property and debt crunch."
All I can say for them to do is to do what I do when a creditor calls me up demanding that I pay back some money; I say, "Mogambo fella him gone, no come back. Me no speakee English!" and hang up.

Ron paul With Some Texas Straight Talk


The Dangers of Neo-Conservative Economic Policies
The dangers inherent in the foreign policy advocated by the neo-conservatives are well known. While many Americans have become increasingly aware of those dangers, far less attention has been focused on the dangers of neo-conservative economic policies. This issue is of critical importance right now, because many are mistakenly pointing their fingers at the free market as the culprit behind our current economic plight.

There are only a few in elected office who have any real loyalty to free markets and limited government. The agenda of neo-conservatives in the economy calls for a very active central government. Indeed, while there are some neo-conservatives who continue to use the rhetoric of limited government, and who oppose increases in the federal income tax as a way to maintain the political benefits that apply to those who talk about free markets, it is now the neo-conservatives who promote fiat monetary policies even more than those on the liberal left.

While I have been a strong proponent of cutting taxes on all Americans, and therefore supported the tax reductions offered by President Bush, the neo-cons argue that tax rate reduction alone is the key to “getting the government out of the way” of economic growth. Moreover, they invariably argue for tax reductions targeted toward the wealthy, and toward multinational corporations.

Over the years, I have offered several tax plans designed to assist hard working middle-class Americans to pay for their needs, whether these needs be health-care related, educational or to pay the costs of fuel. A few years back when I introduced one such bill, a prominent Republican approached me on the House Floor and asked, half in anger and half in amazement “why did you do that?” Shortly after that, the committee chairman at the time, also a Republican, sent out a release strongly attacking my tax cut bill.

So, while the liberal economic agenda includes more taxes and spending, the neo-con economic program simply looks to target some tax cuts to preferred groups, but ignore the economic big picture. The neo-con economic agenda is to “borrow and spend” and it is that agenda, even more than the tax and spend ways of many liberals, that has cast us in economic peril at this time.

Simply, on spending, the neo-cons and the liberals share views, just as they share similar views on foreign policy. While each side tries to claim the mantle of change, reality is that more of the same is not change.

The fiat monetary policy we now follow is the most significant factor contributing to our economic peril, and it is central to the neo-con agenda. As we hear new calls to empower the Federal Reserve Board, we should be aware that underlying all neo-conservative policies is the idea of monetary inflation. Inflation is the technique used to pay for the regulatory-state and the costs of policing the world.

Nicely Said...........................

"Our political way of life is by laws of nature, of nature's God, and of course presupposes the existence of God, the moral ruler of the universe, and a rule of right and wrong, of just and unjust, binding upon man, preceding all institutions of human society and of government." -John Adams

Silver Boys At It Again..............A Good Read



FINANCIAL SURVIVAL 101
By James R. Cook
Mid-July 2008
Most people are oblivious to what’s going on in America. They don’t "get it." You may not either. If so, I’m going to give it to you straight. It’s time for a wake-up call. It’s time for you to "get it." If you don’t "get it", your financial future is dim.
Last week I was talking with my 72-year old corporate counsel, who is planning to retire. I told him he couldn’t afford to retire. "You only have a million dollars," I said. "Subtract a $100,000 a year for inflation. In nine years you have the purchasing power of $100,000. You’ll be greeting people at Wal-Mart." I was only guessing about his net worth. Perhaps he’s got $2 million or more. I continued, "You’ve got guys managing your money who don’t "get it.". You’ve got these establishment guys with conventional investments in stocks and bonds, and they don’t see the big pictures. They could wipe you out." "I suppose," he mumbled.
My lawyer doesn’t "get it," doesn’t want to "get it." I understand that because almost nobody "gets it." It’s over for the America we’ve known. We’re on the down escalator. The assets we’ve relied on to keep us secure are now riskier than ever.
In the fall of 1999 I wrote a newsletter that warned about a pending crash in the stock market. The NASDAQ collapsed a month later. Subsequently, I wrote a newsletter about a coming crash in residential real estate. In 1999 I wrote a novel about gold rising to $1,000, people losing their homes, high inflation and a bad economy. It was right on the money. I’m not bragging, I’m making a point. How did I write such accurate forecasts? I learned the economics of sound money and free markets. There are incontrovertible truths in economics and when they are violated, the outcome is easy to predict. It’s no particular brilliance on my part, only common sense conclusions that any unbiased reader would arrive at.
Eighty years ago, in 1928, Babe Ruth, the greatest baseball player of all time, made $50,000 a year. Alex Rodriguez, a Yankee star of today, makes $28 million. The Babe made 1/5 of 1% of Rodriguez’s salary. That’s .002. In a way, you could say the money of 1928 has become virtually worthless.
Let’s go back 40 years – half way to 1928. In 1968 Willie Mays was voted the most valuable player in the All-Star game. He made $120,000 that year. Do you "get it"? $50,000 - $120,000 - $28,000,000. The rate of depreciation of the dollar is increasing exponentially (the bigger it gets, the faster it grows). Somewhere in America today (or in South America), a two year old kid tosses around a rubber ball. In less than 30 years he will earn one-billion dollars a year to play baseball.
In 1934 the politicians gained control of the money. The free market had determined that gold and silver were money. (Remember, the free market is the clearinghouse for the buying choices of the citizens. In the free market the consumer is king, not the government. The consumers decide who succeeds and who fails through their buying choices. The free market is the essential component of liberty.) I’m not stumping for a return to the gold standard. There isn’t enough silver available to be money on Wake Island and gold would have to be $40,000 to $50,000 an ounce. However, the one thing to remember about the gold standard is that politicians couldn’t create it out of thin air. That’s why it was good, and that’s why they got rid of it.
When government gained the monopoly on money, abolished the gold standard and allowed politicians to gain control over spending and money creation, the die was cast. It opened the door to ever-expanding social programs, wars and deficits. Before long, money and credit creation were used to stimulate the economy. Artificially low interest rates (not free market rates) spawned booms that invariably turned into recessions when the money growth slowed or interest rates rose. Today’s bubbles are created by excessive money and credit. We currently have bubbles in farmland, commercial real estate, art, antiques and collectors items. It’s the consequence of inflationary money and credit. In 1928, the national debt was $17 billion, in 1968 $347 billion, in 2008 $9 trillion. You see it’s running away.
Wall Street doesn’t "get it," the public doesn’t "get it," the politicians and bureaucrats most certainly don’t "get it" and, it seems that even the Federal Reserve doesn’t "get it." They just keep spending, borrowing and printing more money. Government liabilities may now exceed $60 trillion and the astronomical expenses from government social programs are going ballistic. Furthermore, the current crisis is calling for billions to finance bailouts and other guarantees. There’s no possibility of paying for all this without debasing the currency. Washington claims the inflation rate is under 4% and Wall Street, Main Street and the media buy it hook, line and sinker. Truly they don’t "get it."
The high inflation of today ruins the plans of retirees and throws many of them into poverty. Our inflation rate of 15% (my estimate) also acts as a hidden tax. It impacts the poor, low income workers and those on fixed incomes at exactly the same rate as the rich who can better afford it. This cruel tax, brought to us exclusively by the government, makes poorer those who can least afford it. No person, rich or poor, escapes this terrible depreciation of their money and the subtraction of their purchasing power.
That’s not all. Historically, inflation stokes hatred towards business persons and free enterprise. It elevates left-wing demagogues who promise redistribution. It encourages a bigger nanny state, more lobbying, political corruption and loud demonstrations by subsidized activist group. Ultimately, runaway inflation leads to enormous social unrest, civil disobedience, riots, strikes, radical politics and other destabilizing upheavals.
In the history of severe inflations (including the Weimar Republic and two fiat money episodes in 18th century France) only a few nimble investors and speculators survived and prospered. The vast majority of people lost their shirt. Most of them didn’t know or understand what was happening. They didn’t "get it." There was much speculation gambling, debt and leverage, but in the end, all was lost.
Figure it out for yourself. Stocks are down 20% and inflation is 15% (Shadowstats.com says inflation is 12%). That means many investors are out 1/3, and if inflation stays at this level, in twelve months they will be down 50%. Virtually everyone will argue with this viewpoint. That’s because they don’t "get it." Eventually they face ruin.
Savers and bondholders are also taking a shellacking. Back in 1980 there was an elderly currency analyst by the name of Franz Pick who spoke at monetary conferences. He was fond of saying, "Bonds are certificates of guaranteed confiscation." He may have been premature in 1980, but no longer. In 2000 I bought an old Superman comic book. This high-grade 1941 copy has more than doubled. So far in this century comic books have been better than government bonds.
The secret to financial survival now and in your retirement is to own tangible assets that will appreciate at a level that exceeds the rate of inflation. Convert depreciating paper assets into tangible assets. Make sure they are not in a bubble, and still promise appreciation. Don’t use leverage. Never try to make a killing. Be patient. Do not wind up on the financial scrap heap with the vast army of inflation-ravaged investors who didn’t "get it." Most investors are going to get killed. Be one of the select few who "gets it." Remember that in every big inflation those who listened to government spokesmen were ruined.
I don’t want to terrify you, but there is one more thing I see happening. It could happen soon or it could be a long way off. Pray it’s the latter. Foreigners who hold trillions of U.S. dollars are losing billions as the dollar sinks. The Asians could have losses approaching $2 trillion. Chinese exports to the U.S. amounted to only 2.1% of their rapidly growing economy last year. The world doesn’t need our business as they once did. The stronger the world economy outside of the U.S., the less they’re going to be willing to hold depreciating dollars. Plus, many countries would like to stick it to us.
If too many countries abandon the dollar as the world’s reserve currency, and if a few large Asian countries are unwilling to buy our bonds, our government would soon be insolvent. The dollar would be next to worthless and a paralyzing hyperinflationary depression would lay the U.S. low. Don’t think it’s impossible. We can’t live beyond our means for decades, bury ourselves in debt, and consume more than we produce without a day of reckoning. That sad day is coming, I promise you.
THE SOLE SILVER PRICE DEPRESSANT
By Theodore Butler
(This essay was written by silver analyst Theodore Butler, an independent consultant. Investment Rarities does not necessarily endorse these views, which may or may not prove to be correct.)
In a recent article, I likened the silver market to a multi-ringed circus, with several activities occurring at once. Among the factors combining to push prices higher are investment flows, supply and demand fundamentals, and a long-term depletion of world silver inventories. Current fears concerning financial system stability increase demand for silver as a flight to quality asset.
In stark contrast to the myriad bullish factors in silver, stands a single force depressing the price - a small group of short sellers. Without these short sellers, the price of silver would be multiples of the current price. To be sure, the dedicated small group of short sellers, operating primarily on the COMEX (and now also in the big silver ETF, SLV) are aided and abetted by the issuers of unbacked silver certificates and pool accounts. But without the COMEX short sellers, the low price of silver would not exist.
For positions held as of July 1st, the commercials, as a group, increased their net short position by 35 million ounces on the recent $2 rally. The eight largest traders accounted for most of that amount, increasing their net short silver futures position to a two-month high of 70,728 contracts, or more than 353 million ounces. That’s the equivalent of more than 196 days of world mine production. No other commodity comes close to that.
The eight largest COMEX silver traders now hold more than 79% of the net
short position of the entire COMEX silver futures market (all spreads removed). This level of concentration is unquestionably manipulative. This would not be tolerated by the regulators on the long side of silver or gold or any other market. This is a level of concentration only exceeded by the COMEX gold market, at more than 81%. In gold, the commercial net short position increased by more than 40,000 contracts for the week, the largest weekly increase in almost a year. If silver and gold sell-off sharply, it will be engineered by the commercials.
At 353 million ounces, the documented net short position of the eight largest COMEX traders is almost equal to all the known silver in the world. The only problem is that the concentrated shorts don’t own all, or even a significant chunk, of the known silver in the world. If they did, the CFTC and COMEX would have responded to my complaints of manipulation by proclaiming real silver backs up the short positions.
Why are they short? I have asked myself that question everyday for more than 25 years, since first discovering the outsized COMEX silver short position. The most plausible explanation is that, years ago the short position grew so large it took on a life of its own. It had become so large that it could not be resolved without a scandal and disorderly market.
Yes, the short players have changed over the years. Yes, the shorts have been incredibly nimble in managing their positions profitably (thanks to their counterparties, the tech funds). Yes, the regulators have looked the other way. Yes, the price has climbed sharply over the past few years. In spite of all these things, the short position has endured. If the silver short position had been reduced to levels comparable to other commodities, I would have dropped the matter. But the short position has only grown larger and more concentrated over the years.
Much like a parasitic tapeworm or tumor that has grown larger in mass than its host victim, the removal or resolution of the silver short position threatens the very existence of the silver market. More precisely, the resolution of the short position threatens the continued existence of the silver manipulation and guarantees sharply higher prices.
In addition to the documented concentrated short position on the COMEX, strong circumstantial evidence has surfaced of a new unreported silver short position in the big silver ETF, SLV. In an article three weeks ago, "A Hidden Silver Default?," I speculated that unreported naked short selling of SLV shares amounted to as much as the equivalent of 50 million ounces of silver, or more. In the past three weeks I would estimate as much as the equivalent of ten million additional ounces have been shorted. I base my figures on several facts.
The canned response and denial that everyone received from Barclays was tepid and weak. They should have been outraged by my allegations, and issued a strong and unequivocal denial. Instead, they merely acknowledged that short selling existed and it was normal. Barclays inadvertently confirmed my allegations.
The same methodology (SLV share volume and price action), that led me to conclude that up to 50 million equivalent ounces had been sold short from April 15 to early June, tells me up to 10 million additional ounces have been sold short in the past three weeks. In addition, the 2 million ounces of gold deposited into the big gold ETF over that period makes the lack of any silver added to the SLV more suspect. After all, silver’s price had advanced as much as gold’s price and we had previously witnessed growth in silver deposits while GLD’s holdings actually declined. All other public and objective evidence (such as US Mint statistics and reports from retail dealers) confirm stronger silver demand than gold. The most plausible explanation for the lack of growth in SLV holdings is unreported naked short selling.
While I believe the large concentrated short sellers on the COMEX and in SLV shares are largely one and the same, there is a critical and important distinction in the motives behind the short selling on the two venues. Sure, the short selling in both markets share a price capping or manipulation motive, but the selling in SLV shares goes beyond price control.
I am convinced the prime motive in the unreported short selling in SLV is incredibly simple and straight-forward - the physical silver needed to be purchased to back up new share issuance is just not available. It’s not there without immediately forcing the price of silver sharply higher. Since the real silver isn’t available for purchase at near current prices, the market makers in the SLV have no choice but to sell short the new shares being purchased by investors without depositing the required new silver.
What I have just described is a default and a massive fraud. It is illegal by any possible definition. It is a desperate, last-ditch attempt by the manipulative short sellers to buy time before silver explodes in price. Will that desperation translate into a final sell-off? Maybe. Should this concern the long-term silver investor? Not in the least. That’s because the desperate and illegal short selling in SLV proves one thing beyond doubt - that we are in the midst of a bona fide wholesale silver shortage.
I believe the naked and unreported short selling in SLV shares is occurring because if the real silver was being purchased, as it should be, industrial users around the world would be denied the silver they depend on for their operations. If industrial users were denied silver, that would set off a silver inventory buying panic the likes of which the world has never seen.
So, the shorts in SLV, who are also the wholesale silver suppliers to the industrial users, have made the choice to supply the users at the expense of SLV investors. In reality, there is little choice. Meeting the fiduciary requirements to SLV investors to have 10 ounces of silver behind every share issued would cause the silver manipulation jig to be up. After all, it is possible to short sell to SLV investors, while there is no way to short sell a silver delivery to a user. Either you deliver to a user or you don’t. If and when you don’t, all hell will break loose.
Long-term silver investors should be positioning themselves for the inevitable day when the silver shortage causes all hell to break loose. If I knew which day that was, I would tell you. What I do know is that the evidence shows that day is closer than ever.
A PENALTY ON PROGRESS
By James R. Cook
"People who make more are taxed more. That’s being punished for being more productive. And then you’re being rewarded for being a parasite. If you don’t do anything, if you’re just a bum, why, you can go on relief. You get something for nothing. That’s a violation of rationality and morality in the short run too. The less you do, the more you get. The more you do, the more you’re punished. That’s a fine standard for a culture! The most productive people are punished the most for being productive; the ones who produce the least are rewarded for being parasites. Now, if I tried to design an irrational structure of a society, this is exactly what I’d pick." Andrew J. Galambos
In the winter I spend some time on a little island in southwest Florida. This tropical paradise runs seven miles long and is two blocks wide. A small toll bridge connects it to the mainland. For the most part, the four thousand residents (in peak season) are wealthy. One or two are in the Forbes 400.
Every morning a constant stream of autos and trucks cross onto the island. They contain people who work on the homes and the yards of the affluent. This constant flow of carpenters, maids, plumbers, landscapers, air conditioning contractors, handymen, pool cleaners, security guards, repair men, cable guys, gardeners and decorators make their livelihood off the rich. When taxes are raised on the wealthy, fewer of these workers will be employed.
Left-wing schemes to raise taxes to 60% are aimed exclusively at high-income earners. This money will supposedly go to equalize the low incomes of the subsidized underclass. The late economist, Murray Rothbard, had this to say about this tax gouging. "The modern welfare state, highly touted as soaking the rich to subsidize the poor, does no such thing. In fact, soaking the rich would have disastrous effects, not just for the rich but for the poor and middle class themselves. For it is the rich who provide a proportionately greater amount of saving, investment capital, entrepreneurial foresight, and financing of technological innovation, that has brought the United States to by far the highest standard of living – for the mass of the people – of any country in history."
Rich people and people attempting to get rich create the jobs. Unemployment will rise when taxes are increased. If you want to impoverish the populace of a country, tax the rich out of existence. In that way you can turn the country into a third world hellhole. There are no millionaires in Bangladesh or similar economic backwaters. The more million-aires and billionaires in a country, the higher the standard of living. All the former communist countries have learned this lesson. They continue to push tax rates lower towards 10%. Their economies are on fire. Eventually their standard of living will pass ours.
Our liberals and socialists intend to raise taxes and somehow pass out money to alleviate income inequality. That’s the main plank of their campaign. Unfortunately, this redistribution scheme does just the opposite. It makes everybody worse off. Taking money from those who earned it for the government to waste on a myriad of follies reduces our national wealth and prosperity.
The emotional mix of envy and altruism, which comprises modern liberalism, pays no heed to century old lessons of economics. Rather, it relies on socialist misconceptions. The liberal tax agenda is the harbinger of economic retrogression and national failure. Every citizen at every economic level will suffer because of it.
OPPORTUNITY
In a memo to our brokers last week, Ted Butler had this to say, "You have the opportunity to sell something to your customers that can’t possibly hurt them long term and will, most likely, enhance their financial circumstances dramatically, just like it has over the past 7-8 years. You have the opportunity to rescue them from something that can hurt them and put them into something that can truly help them. Silver can’t go bankrupt or just disappear overnight. It is not dependent on government guarantees, which become shakier by the day. It will not be influenced by an accounting or reporting rule change. None of us should be rooting for bad times, but bad times shouldn’t hurt, but should help silver.
"It may sound corny, but I tell Jim Cook often that you should bless each day silver is under $20, as those days are numbered. If I were to be worried about anything, it would be in not fully utilizing the present opportunity to have your customers buy as much silver at what will be looked back upon as bargain prices. There is precious little time remaining. Everyday we stay here or move lower is a blessing."

Tough Road Ahead For WTO (Couldn't Happen To A Bunch Of Nicer Pricks)


Global fallout over trade talks hints at tough future for WTO

By Ethan McNern
CHINA blamed "selfish" wealthy western nations yesterday for the latest failure to conclude long-running talks to free up global trade, while Asian rival Japan pointed the finger at the region's emerging giants.
China's official news agency, Xinhua, said the negotiations at World Trade Organisation headquarters in Geneva collapsed ultimately because the United States and the European Union were unwilling to scrap huge subsidies they pay their farmers. But
Japan upbraided China and India, as growing economic powers, for not shouldering greater responsibilities in the WTO.The talks collapsed on Tuesday over a proposal to help poor farmers deal with floods of imports.Xinhua said rich countries cared too much about their own interests and too little about those of developing nations.Not only were Washington and Brussels unwilling to face down their farm lobbies, but they put huge pressure on poor countries to slash tariffs on industrial imports and throw open their financial services markets to western banks and insurers."This selfishness and short-sighted behaviour has directly caused the failure of this WTO ministerial meeting, which will have a number of serious consequences," Xinhua said.But the Japanese government said China was less sinned against than sinning. "Frankly, I'd have to wonder whether China and India weighed their words and actions commensurate with their responsibility and how much they considered the overall global economy as they focused too much on their own interests," Nobutaka Machimura, the chief cabinet secretary, said. Both India and China now wield more economic influence than they did when the trade talks were launched in Doha, the capital of Qatar, in 2001, Mr Machimura added."In other words, their responsibilities have also grown bigger, too," he said. "I hope China and India will address international negotiations like the WTO talks with a sense of how big a role they play in the world economy."China, too, chided India for the way the talks ended, in what the commerce minister, Chen Deming, called "tragic failure". But trade experts in India dismissed any idea that New Delhi had been obstructionist.The recriminations reflect the many fault-lines running through the WTO talks, which must reconcile the different political and economic priorities of the body's 153 members.China was ready to intensify its bilateral links with other WTO members, especially developing countries, Mr Chen said.The number of preferential trade deals involving Asia- Pacific countries has exploded in recent years, largely due to the deadlock in the WTO, and experts expect the trend to continue.

Nicely Said...................


"Taxes come from the sweat of the American people." -Ron Paul

Does It Scare Anyone Else How Much These Institutions Are "Borrowing" From The Fed???



Banks, Wall Street firms step up Fed borrowing

By JEANNINE AVERSA
AP Economics Writer
WASHINGTON (AP) -- Banks and Wall Street firms stepped up their borrowing over the past week from the Federal Reserve's emergency lending program.
A Fed report released Thursday said commercial banks averaged $17.5 billion in daily borrowing over the past week. That compared with $16.4 billion in the previous week.
Investment houses in March were given similar loan privileges as commercial banks after a run on Bear Stearns pushed the nation's fifth-largest investment bank to the brink of bankruptcy. The situation raised fears that other Wall Street firms might be in jeopardy.
Bear Stearns was eventually taken over by JPMorgan Chase & Co. in a deal that involved the Fed's financial backing.
For the week ending July 30, Wall Street firms averaged $3 million in daily borrowing. In the prior week, the companies didn't draw such loans. Their borrowing rose as high as $38.1 billion in early April.
The identities of commercial banks and investment houses are not released. Commercial banks and investment companies now pay 2.25 percent in interest for the loans.
In the broadest use of the central bank's lending power since the 1930s, the Fed in March scrambled to avert a market meltdown by giving investment houses a place to go for emergency overnight loans. The Fed extended those loan privileges into next year. Originally they were supposed to last only through mid-September.
Trying to stem eroding investor confidence, the Fed earlier this month said mortgage giants Fannie Mae and Freddie Mac could draw emergency loans from the central bank if they needed. There was no indication in the weekly report that they had done so. Shares of the mortgage giants were clobbered last week as investors grew worried about the companies' financial shape.
Separately, as part of efforts to relieve credit strains, the Fed auctioned nearly $28.1 billion in Treasury securities to investment companies Thursday.
In exchange for the 28-day loans of Treasury securities, bidding companies can put up as collateral more risky investments. These include certain mortgage-backed securities and bonds secured by federally guaranteed student loans.
The auction program, which began March 27, is intended to make investment companies more inclined to lend to each other. A second goal is providing relief to the distressed market for mortgage-linked securities and for student loans.

New York to sell roads, bridges, tunnels to close budget gap?

{I'm more and more amazed that stories like this pop up and Americans don't remind their elected civil servants that the roads were paid for long ago; and aren't really in the domain of politicians to sell.......................This is all FUBAR Ed. SOC}

CRISIS PUTS NY IN 'SELL' HELL

July 30, 2008 --
ALBANY - Warning of an approaching economic calamity, Gov. Paterson yesterday called an emergency session of the state Legislature - and raised the specter that New York may have to sell off roads, bridges and tunnels to close a massive budget deficit.
In a rare televised address, the Democratic governor cited "private-public partnerships" involving the sale of state assets - widely condemned by critics as fiscal gimmickry - as one way to stem a tide of red ink brought on by the sagging economy and woes on Wall Street.

"We can't wait and hope that this problem will resolve itself," Paterson said. "These times call for action, and today I promise you there will be action."
Profit-tax collections from the state's 16 biggest banks, which were at $173 million in June 2007, fell to $5 million last month, Paterson noted. That's a shocking 97 percent plunge.
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But the governor's five-minute speech offered few specific solutions to a three-year budget deficit. The gap has ballooned to $26.2 billion from $21.5 billion - a whopping 22 percent increase - in just 90 days.
Next year alone, the state expects to face a budget deficit of $6.4 billion, up from a projection in March of $5 billion.
Paterson promised to examine ways to trim the state work force and consider deeper budget cuts beyond the 3.3 percent he ordered after taking office this spring.
"We're going to end the legislators' vacations and bring them back to Albany to reprioritize the way we manage New York state's finances," he said.
Paterson said he would ask lawmakers during the session on Aug. 19 to take up his proposal to cap school property taxes at 4 percent a year.
In a nod to the tax cap's chief opponent, Assembly Speaker Sheldon Silver (D-Manhattan), the governor also promised action on Silver's pet proposal to increase home-heating subsidies.
But Silver reacted coolly.
"If it is our intention to ask working families to shoulder the burden of these cuts, we must ensure that our most affluent citizens share that burden," he said.
Senate Majority Leader Dean Skelos (R-LI) cautioned Paterson that any cuts to school funding were off the table.
The "sale" of state assets has been tried in the past during difficult economic times and has been met with condemnation from budget watchdogs.
The most famous - or infamous - example: former Gov. Mario Cuomo's sale of Attica prison to a semi-independent state agency in 1991 to raise $200 million. Many critics noted that the bond sale cost the state hundreds of millions extra over the next few years.
"One gets a little concerned when 'selling off state assets' and 'budget deficits' get mentioned in the same sentence," said Elizabeth Lynam, a state policy expert with the Citizens Budget Commission.
"If it's used to close a budget gap, it's a one-shot. It's doesn't help you in the long run. It's a fiscal gimmick."
Mayor Bloomberg last night praised Paterson's effort "to tackle the serious problems we face" this year.
"The governor demonstrated that he is ready to stand up to the interest groups that will no doubt protest before the State House, just as they took to the steps of City Hall earlier this year," Bloomberg said.

Aliens Run Free


Illegals off the hook? ICE tells aliens: 'Deport yourself'

Now illegal aliens can get a free ticket home by turning themselves in to Immigration and Customs Enforcement rather than spend time in prisons.
The newest government plan to cut back on an ever-increasing population of illegals will be unveiled next week, the San Antonio Express-News reports.
ICE director Julie Myers announced the idea to a Spanish television network Sunday.
"The program basically gives an opportunity to those seeking an organized way to self-deport," Myers told UnivisiĆ³n anchor Jorge Ramos.
"Operation Scheduled Departure" will give illegal aliens who don't have criminal histories a chance to turn themselves in and avoid detention.
Myers said the plan was hatched in response to illegal alien complaints. Many detainees said they would rather go home than spend time in immigration prisons.
The illegals can now walk into ICE, schedule their departure, have several weeks to pack their belongings and fly or bus out of the country without facing arrest. She said the program helps illegals dodge home and work raids, but it doesn't offer incentives for self-deportation.
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According to the Express-News, illegal immigration supporters called the program laughable and said it would not work without providing additional rewards to those who turn themselves in.
"It's pure fantasy," said Doug Rivlin, spokesman for National Immigration Forum. "An attempt to entice people to sign away their rights and get out of the country as quickly as possible before even talking to a lawyer."
Rivlin said illegals would buy a bus or plane ticket home rather than check into ICE.
Ira Mehlman, spokesman for the Federation for American Immigration Reform, one of the nation's chief anti-illegal-immigration lobbies, said he agrees with Rivlin's point that the government would need to offer an incentive. He suggested allowing illegals the opportunity to apply for legal citizenship in return for turning themselves in to authorities.
"It certainly makes sense to create conditions to make people understand that if they're here illegally, it's not going to benefit them to stick around," he said.
According to the Express-News, the same idea has worked well for the U.S. Marshals Service. "Fugitive Safe Surrender" allows nonviolent U.S. criminals to self-arrest rather than be hunted down. More than 16,000 offenders have turned themselves in.

Oil? Ah, Let Russia Have It.....................


Oil? Ah, let Russia have it

State Department gives away 125,000 square miles of Alaskan ocean floor

Even if Congress follows President Bush's lead in opening off-shore oil exploration, there exist over 125,000 square miles of sea bottom that won't be explored, because the State Department – amid controversy and against the will of Alaskans – has surrendered the land to Russia.
Eight islands and their surrounding sea floors were ceded to the former Soviet Union as part of the U.S.-U.S.S.R. Maritime Boundary Treaty in 1991, a treaty signed by the U.S. Senate and President George Bush but never ratified by the Soviets. Nonetheless, an executive agreement enforcing the terms of the treaty until ratification has been in place through three presidencies, meaning the State Department officially recognizes the islands as Russian territory.
Alaskan legislators, who were given no input or authority on the island giveaway, have long protested the treaty, declaring it null and void without Russian ratification.
And since last week's U.S. Geological Survey estimating that 90 billion barrels of oil lie undiscovered and technically recoverable above the Arctic Circle, those 125,000 square miles of seabed have taken on newly appreciated value. Five of the islands lie north of the Artic Circle, and the other three sit at the western end of Alaska's Aleutian island chain.
Carl Olson, a retired U.S. Navy Lieutenant Commander and chairman of State Department Watch, a nonpartisan foreign policy watchdog group, explained to WND the significance of the State Department's stance: "The area off the coast of an island that a nation may use is called the exclusive economic zone. The group in charge of defining that is the State Department. So (the president and Congress) can say the off-shore areas are opened up, but still not recognize these quarter of a million square miles available for American oil exploration."
Alaska state Rep. John B. Coghill told WND earlier, "The issues involve not only state sovereignty over vital territories but also significant national defense concerns and substantial economic losses over fisheries and petroleum."
The Alaskan legislature and a sympathetic California legislature have both passed resolutions asking Congress to allow Alaska at the bargaining table with Russia to resolve the islands' ownership. After almost 20 years of official protests, the U.S. State Department has yet to acknowledge Alaska's arguments.
"It's totally anti-public, anti-Congress, anti-state actions – but unfortunately the State Department thinks it has the power to adopt this boundary line with the Russians without anybody's consent outside themselves, " Olson told WND. "The State Department is basically chopping off a piece of Alaska and giving it to a foreign government without Alaska having any say in it."


The lands in dispute include the islands of Herald, Bennett, Henrietta, Jeanette, Copper Island, Sea Lion Rock, Sea Otter Rock, and Wrangel, which is the largest of the eight, roughly the size of Rhode Island and Delaware combined.
The U.S. purchased Alaska from Russia in 1867, including the Aleutian Islands, which presumably would include Copper Island, Sea Otter Rock and Sea Lion Rock. In 1881, U.S. Captain Calvin L. Hooper landed on Wrangel Island and claimed it for the U.S. Also in 1881, the U.S. Navy claimed the islands of Bennett, Jeannette, and Henrietta. The British held Herald Island, but they gave up that claim, permitting the U.S. to take it.
American citizens had occupied Wrangel Island from approximately 1881 to 1924, when Russian soldiers landed and forcibly removed the American occupants from its shores. The Russians then reportedly used the island as a concentration camp.
Many Alaskan legislators believe the islands were part of their state, even after the Wrangel invasion, though the U.S. State Department officially disagrees. Without a ratified treaty designating them as Russian, those same legislators and Carl Olson believe the islands still are American territory and can be reverted to the U.S. easily.
The only thing binding the islands to Russia is "in the form of an executive agreement," Olson told WND, "which means it can be changed with the stroke of a pen by the president, because it has no force of law."
"We have been steadily maintaining the pressure," said Olson. "It's just a matter of finding sympathetic people in Washington and the other states to go for it. There's plenty of organizations who have endorsed our efforts, so we keep up the drumbeat."
Coghill has also sought the support of other states, claiming that the federal State Department has overstepped its authority in giving away a state's land. "If they can do this to Alaska," he warns, "they can do this to any state."
U.S. State Department officials did not return WND telephone calls to discuss the matter, but a State Department webpage devoted to the island controversy denies that islands were ever claimed by the United States and explains that though the treaty between the U.S. and Russian Federation was never fully ratified, "In a separate exchange of diplomatic notes, the two countries agreed to apply the agreement provisionally."
The webpage concludes, "The U.S. has no intention of reopening discussion of the 1990 Maritime Boundary Treaty."

Reparations.....................OH BOY, HERE WE GO!


Obama suggests reparations to blacks, Native Americans

'The most important thing to do is not just offer words, but offer deeds'
Posted: July 30, 20088:50 pm Eastern

Sen. Barack Obama told a meeting in Chicago the U.S. should review how it can make amends for "offenses" committed during its history.
And one author is speculating that might even include reparations for al-Qaida soldiers, since, after all, they've been held in violation of their "rights."
Obama's comments came in a meeting with members of UNITY '08, an event for journalists who claim membership in various minorities.
Obama, according to the report in the Honolulu Star-Bulletin, stopped just short of endorsing an official U.S. apology to various groups. He said instead the nation should acknowledge treating certain groups poorly.
"There's no doubt that when it comes to our treatment of Native Americans as well as other persons of color in this country, we've got some very sad and difficult things to account for," Obama told the convention.
He has told Hawaii reporters he supports a federal plan to recognize native Hawaiians. He was asked for his thoughts about a formal U.S. apology to American Indians.

"I personally would want to see our tragic history, or the tragic elements of our history, acknowledged," he told conventioneers.
"I consistently believe that when it comes to whether it's Native Americans or African-American issues or reparations, the most important thing for the U.S. government to do is not just offer words, but offer deeds," he said.
The issue of reparations to African-Americans for the historic slave trade or Native Americans for the "invasion" by Europeans periodically has been raised. Several years ago a lawsuit was filed claiming damages for labor at a current value of $1.4 trillion.
At Renew America, Michael Gaynor also publicly wondered about Obama's statements to a recent "Meet the Press."
Obama said, "The biggest problem that we have in terms of race relations, I think, is dealing with the legacy of past discrimination which has resulted in extreme disparities in terms of poverty, in terms of wealth and in terms of income. Our inner cities are a legacy of what happened in the past. And the question is less assigning blame or rooting out active racism, because that's not the reason that those inner cities are in such bad shape, but rather figuring out are we willing to make the investments to deal with that past history so we can move forward to a brighter future? And that involves investing in early childhood education, fixing the schools in those communities, being willing to work in terms of job retraining. And those are serious investments."
Asked Gaynor, "Is 'serious investments' code for 'reparations'? And how expensive and devastating would Obama's income redistribution policy be?"
The comments were being discussed just as the U.S. House of Representatives issued an apology to black Americans for the "fundamental injustice, cruelty, brutality and inhumanity of slavery and Jim Crow" segregation."
The resolution sponsored by Rep. Steve Cohen, D-Tenn., a white Jew who earlier this year tried unsuccessfully to join the Congressional Black Caucus, was passed on a voice vote.
In February, the Senate apologized to Native Americans, and in 2005 it apologized for standing by during the lynching of blacks last century.
But at the American Spectator, Jeffrey Lord, CEO of QubeTV and former Reagan White House political director, said the logical extension of such thought obviously could include reparations for al-Qaida.
"Does Barack Obama believe it's time for America to apologize to al-Qaida?" he asked. "You think I'm joking, right? Wrong."
"The push has begun among Obama's fellow-liberals for reparations to Osama bin Laden's al-Qaida warriors. Look no further than the Los Angeles Times review of the new book by liberal journalist Jane Mayer, 'The Dark Side: The Inside Story of How The War on Terror Turned Into a War on American Ideals.' Mayer's indictment of the Bush administration's fight against terrorism has predictably received glowing reviews from the gatekeepers of liberalism, including a July 15th review from Times staff writer Tim Rutten.
"In wonderfully liberal style that is beyond parody, Rutten uses a book review to endorse the idea of paying money to Osama's fighters who, in the eyes of liberals, have been denied their 'right' of habeas corpus at Guantanamo. The denial of habeas to non-Americans captured on foreign battlefields is, of course, also a major campaign point for Senator Obama. Obama, restating his long-held position about captured al-Qaida fighters having the right of habeas corpus, was prompted by the recent 5-4 Supreme Court decision in Boumediene v. Bush.
"The liberals on the Court, with the mind-boggling addition of Reagan appointee Anthony Kennedy, held that contrary to Bush administration and congressional policy, not to mention all of American history, the prisoners of war or 'detainees' picked up off the battlefields (in this case Afghanistan and Iraq) are in fact entitled to the same constitutional rights as American citizens."
Obama's allies now are "lobbying not simply for habeas corpus rights for al-Qaida but reparations as well," Lord wrote.
"In other words, if you have been captured on the field of battle fighting the U.S. military on behalf of the global jihad and, as a result, are now on an extended stay at Gitmo, liberals feel the appropriate policy of the United States government is to 1) apologize for capturing you and 2) pay you some cold American cash to ease your pain and humiliation."
Lord cited the Nuremberg trials for war criminals from Nazi Germany. "We still gave them a day in court and that taught the entire world about who we are but also the basic principles of rule of law," he quoted Obama saying.
But he said that's wrong. "If America's only problem was with a sum total of about 1,800 German soldiers, why all that disturbing fuss known as World War II."
In reality, half a million prisoners of war were "stashed in 511 internment camps sprinkled all around the good old USA from North Carolina to Iowa to California," he wrote. "Not a single one of these men were given their habeas corpus rights. They were not tried. Not one. They were held as prisoners, forced to do whatever labor their American captors thought suitable until America had won the war."
He continued: "Will Obama … have the courage to follow [the] arguments to their logical conclusions? If the idea is to have American taxpayers fork over damages to Osama's men, why not Hitler's? Where are the trial lawyers who have been flocking to Guantanamo? The size of the damage pot in a suit against the U.S. government for the treatment of Nazis would, one suspects, be considerable."
"What is the difference between, say, German detainees Hans, "R," and Jerry and an al-Qaida Gitmo resident named Abdullah Salih al Ajmi? The first three remained lawyerless while they waited out World War II in Iowa and Minnesota. The last, Abdullah, went through Gitmo's thoroughly lawyered process and was released. On March 23, 2008, he showed up in Mosul, Iraq, when he drove a truck packed with 5,000 to 10,000 pounds of explosives into an Iraqi Army base. He killed 13 Iraqi soldiers and wounded 42 on his last mission, a mission that would never have occurred were he still in Gitmo."

Tuesday, July 29, 2008

Surviving This Depression


Depression Survival 101

Source: James West, Midas Letter 07/28/2008
Watching the complete collapse of share prices in the resource sector would be doubly disheartening if were not occurring around the globe irregardless of sector. From tech stocks to transports, from China to Brazil, markets are in a slow steady freefall. The question of “how do I profit from my investments?” is rapidly evolving into one of “how do I keep my house and investments and 401K from becoming worthless?”On Wednesday last week, the House passed a bill that essentially creates another $800 billion worth of U.S. dollar funny money out of thin air by raising the national debt ceiling to $10.6 trillion from $9.815 trillion. Treasury Secretary Hank Paulson now has carte blanche to inject as much effervescent capital in stroke-inflicted Fannie Mae and Freddie Mac as is required to keep the patients breathing, including buying up their stock if deemed necessary.The bottom line here for the American tax-payer is that whereas we’re going to use this emergency bailout package to stay foreclosures (until 2009 at least), we’re going to reach into your other pocket at the same time and exchange those dollar bills for lumps of coal. (No…wait a sec…coal has value!). Worse, we’re going to put you down for another $3,200 as your contribution to the national bottomless pit we call the National Debt. The greatest threat to a relatively comfortable standard of living comes from the diminished purchasing power of the dollar should a global vote of no confidence take it down til it's on par with the peso or yen. So far, the U.S. government has tackled the problem of too much currency by printing more currency. Now with global U.S. denominated foreign assets plummeting in value, most sovereign banks and funds are in the uncomfortable position of having to play along and support the dollar through the acquisition of U.S. Treasuries, or else watch the value of their portfolios collapse. An inadvertent (or so we’re to believe) case of self-inflicted blackmail.Never mind recession...this is the road to full-scale depression. At some point, hyperinflation a la 1923 Germany is a very likely possibility. During this period at its worst, one U.S. dollar was equal to 80 billion Mark. Germans used bundles of the notes for firewood because they burned longer than an equivalent amount of firewood that could be purchased with them.In the spirit of disaster planning, as individuals it's beyond time to hope for best and plan for the worst. That said, these are the measures as I see them that will best preserve what equity you may have:


1. If you own any U.S. dollar denominated assets, sell them and put them into gold and silver. As the dollar plummets, these metal prices, expressed in U.S. dollars, will rise, thereby preserving value.

2. If you own your house, sit tight. Don’t sell it and whatever you do, don’t mortgage it. One of the direst outcomes of hyperinflationary or stagflationary periods is high interest rates. Remember the 80’s when interest rates suddenly soared to 20% and beyond. In December of 1980, interest rates averaged 21.50 percent on mortgage loans.

3. If the bank owns your house, you might consider mailing them the keys, and walking away – especially if the mortgage you’re carrying is more than your house is valued at. If you think it’s a struggle now trying to make ends meet, just wait til food and energy prices continue their upward trajectory, and the U.S. dollar purchasing power continues its downward trajectory. Besides, having a bad credit rating rating for seven years might just be the discipline you need so that “no” becomes part of your vocabulary again. No matter that you’re being told no instead of saying no yourself. Consider it “rehabilitation”.

4. If you own anything that consumes lots of gasoline or diesel, sell it. I’m riding around on a scooter these days that costs me about $40 a month in fuel. Takes some getting used to, especially on rainy days, but it’s the best hedge against high gas prices yet. One important thing to bear in mind.


Right now, it may not look like things are so bad. Sure we’re in a spot of trouble, but it will be no more than dealing with a hangover after a particularly exuberant party that goes on for too long. That would be a normally optimistic approach.But his party has been going on for years. In fact, it's more analogous to career in alcoholism. The many health conditions that evolve from such a profession have wide-reaching and long lasting systemic deteriorative effects. And whereas it may seem that nothing is going to happen overnight, the condition of the global economy is like going out for an afternoon in a sailboat.One minute, you’re cruising along in perfect conditions, and suddenly, everything turns to mayhem as a gale comes up out of the southeast and you’re suddenly healed over and clinging to the rails for dear life.

"Speculators?" or the Statist Establishment Controlling Food Supply?


Speculators Trying to Buy Control of Food Supply
adminPrison PlanetJuly 29, 2008
[1] George Washington’s Blog Tuesday, July 29, 2008
According to the [2] New York Times, [3] Financial Times, and [4] others, hedge funds and other investors are buying up farms, farmland, fertilizer, grain elevators, shipping equipment and other necessities for producing food.
Given the meltdown in the housing and financial sectors and the weakness in the U.S. economy, large investors figure that everyone has to eat, and so investing in food production is a sure thing.
That means that speculators will drive up food prices.

As Jim Hightower [5] puts it:
“By ‘owning structure,’ they mean centralizing control of food in the hands of financial manipulators who have only one crop in mind: fat profits.
***Price? Aha! That’s what consolidation of farms and storage facilities is all about. If you can lock down production and stockpile the supply – you can control price. If corn prices are lower than what investors want them to be, simply store the corn and force prices up. Or, if corn prices are down in the U.S., ship it to Japan or wherever else might be more profitable. And if these distortments cause a food crash? Hey, the speculators will already have sucked out billions in profits, and they will just move to the next hot investment.
Hedge funds bring nothing but greed and grief to the farm economy and our food supply, and they should be banned from ‘owning structure.’”

Hightower may be right: we should demand that Congress prevent speculators from buying up one of the main necessities.
Moreover, this just strengthens my conviction that we should guarantee our access to inexpensive and healthy food. See [6] this and [7] this.

Funny That CNN Is Ripping Alternative Energy Choices...................REAL FUNNY


Wind power: A reality check
Plans are afoot to prod the nation into using much more renewable energy. Can it be done, and what's the cost?
By Steve Hargreaves, CNNMoney.com staff writer
Last Updated: July 24, 2008: 11:04 AM EDT
NEW YORK (CNNMoney.com) -- High-profile personalities have been telling the nation to ditch that dirty fossil fuel and turn to renewable energy.
T. Boone Pickens, the billionaire oilman, has been hitting the airwaves, pitching a plan to use wind to replace all the natural gas that's used to produce electricity, then using that saved natural gas to fuel cars.
In addition to weaning the nation from foreign oil, Pickens' plan is not entirely altruistic. He's investing hundreds of millions of dollars on a giant wind farm in the Texas panhandle, and his hedge fund, BP Capital, is said to own stakes in several companies that equip cars to run on natural gas. If his energy efforts pan out, he could get even richer in the process.
Then there's Al Gore. The former U.S. vice president and Nobel Prize winner said last week that electricity generation should be completely fossil-fuel free in 10 years.
The question is, are these plans realistic or just dreams?
"It's not out of the realm of technical feasibility," said Chris Namovicz, a renewable energy analyst at the government's Energy Information Agency. "But they come with pretty significant price tags."
The order is indeed tall.
The nation currently relies on coal - the dirtiest of all fossil fuels - for 50% of its electricity production. Natural gas makes up about 21%, and nuclear power comprises about 20%. Hydro and oil each contribute a bit as well, while traditional renewables - wind, solar, biomass and geothermal - ring in at only 3% combined, according to the EIA.
Pickens has a loosely detailed plan to replace the natural-gas-produced electricity with wind energy. He says it could be done in 10 years.
"That is extremely aggressive," said Dave Hamilton, director for global warming and energy projects at the Sierra Club. "But it's in the right direction. It's a good thing we have an oilman saying we can't drill our way out of this problem."
Unpredictable wind
One of the big challenges with using wind to replace natural gas is that, unlike the steady flame from natural gas, the wind doesn't blow all the time.
To make sure enough power is available when the wind isn't blowing, backup generators would be needed, said Paul Fremont, an electric-utility analyst at the investment bank Jefferies & Co.
That could mean maintaining those natural gas plants in case of emergency, or implementing even more novel ideas like systems in Europe that use excess wind electricity to pump water uphill when the wind is blowing, then release it through hydro dams when the wind stops.
Either way, any type of backup system comes with a price.
"It's very costly, and very inefficient for society as a whole," said Fremont. "Policy makers will have to decide if the benefits are worth it."
The utility industry also has reservations about using wind on a large scale, again pointing to the fact that it doesn't blow all the time.
The Sierra Club's Becker downplayed the problem. While a challenge now, he said technological advances will allow several wind farms from varying regions of the country to be tied together in the same electricity grid; when some are idle, others could make up the difference.
"The more we focus on how to get this done, the quicker we'll solve our problems," he said.
Government regulations
Another impediment to large-scale wind generation is a lack of turbines and infrastructure, said Hamilton. Companies like General Electric (GE, Fortune 500), India's Suzlon and Spain's Gamesa, which make wind turbines, aren't building enough of those turbines to meet demandbecause government tax credits offered to energy producers expire every two years. These tax credits are a big incentive for people to invest in wind energy - Pickens would net $60 million a year, according to Jefferies' Fremont, and that is likely why he's currently pitching his plan to lawmakers.
Companies fear that, if the tax credits aren't renewed, they will be stuck with unwanted wind turbines if energy producers scale back their demand for wind power.
Also impeding the development of wind power is the fact that the government is unclear about how or whether it will regulate greenhouse gas emissions. If regulations were enacted, investments in wind energy would likely increase as utilities seek cleaner sources of power.
Wind farms also could benefit when companies or people buy carbon offsets - essentially payments to producers of clean energy and others who take steps in reducing greenhouse gasses.
Despite these challenges, wind power's ability to produce 21% of the nation's electricity needs isn't out of the question. While wind currently only makes up 0.8% of the country's total electricity production, and would need to grow well over 20 times that to replace gas, it's worth noting that wind capacity has increased twelvefold since 1990, according to the EIA.
The second part of Pickens' plan - using natural gas to power vehicles - is perhaps easier.
While automakers are betting on electric cars as the vehicle of the future, those electric cars will still need backup engines to recharge the battery on long trips, at least for the foreseeable future.
Those backup engines could run on natural gas, said Julius Pretterebner, a vehicles and alternative-fuels expert at Cambridge Energy Research Associates.
Pretterebner also pointed to a host of other reasons why natural gas in cars is a good idea: It's about half as expensive as gasoline and 30% cleaner; the infrastructure to get it to service stations already exists; it's relatively cheap to convert existing cars ($500 to $2,000 per car, he said); and natural gas can be carbon neutral, if it's made from plants, a process he said requires no new technology.
"It's maybe the best alternative fuel we have, and the quickest way to get off foreign imports," he said.
As for Gore's call, there aren't any specific measures to analyze. But if Pickens' timetable is aggressive, Gore's is like Pickens' gone wild.
"It's completely impractical to imagine that we could totally wean ourselves off fossil fuels," said Jim Owen, a spokesman for the Edison Electric Institute, the utility industry's trade association.
Impractical, maybe. But using more renewables is certainly worth looking into. The EIA estimates that by 2015, wind energy will cost 7 cents per kilowatt-hour to produce, just a half-cent more than coal or natural gas.
The EIA says if strict greenhouse gas restrictions become law, renewables might go from 3% percent of the nation's electricity mix to around 25%. Coal, meanwhile, would likely go from more than half to less than a quarter. The EIA said that under the worst-case scenario in bringing about this shift, electricity prices may double.
Given the dangers global warming may pose - U.N. scientists predict severe droughts and floods unless greenhouse gasses are drastically reduced - more-expensive electricity may be a cost Americans are willing to bear.

Nancy Pelosi Hates Your Car (And Your Mobility)


Pelosi Blocks Gas Price Relief

July 29, 2008
House Speaker Nancy Pelosi told CNN that she would block any vote to allow offshore drilling. This remarkable stance comes in the face of the latest poll that says 73 percent of Americans favor offshore drilling, while only 27 percent oppose it. Nancy Pelosi again displays her contempt for her employer, the American people. Her arrogance and wrong-headed philosophy have led Congress to an approval rating of a staggering 14 percent, the lowest ever.
The arguments she advances in defense of her position are, at best, silly, and at worst, devious. She says she will not allow additional reserves to be drilled because oil companies already hold leases on 68 million acres of federal land that are not being drilled. She ignores the testimony of oil company representatives who tell her that had they found oil under these lands, they would be pumping it. The oil companies need to drill where the oil is.
There is plenty of oil to drill. Known reserves offshore, in Alaska, the Bakken fields of North Dakota and Montana, and elsewhere, can meet the energy demand for at least 100 years. But Pelosi and her colleagues don't want this oil produced. Pelosi says that it will take 10 years for this new oil supply to reach the pump, and then, it would reduce the price by only two-cents per gallon. This price projection is pure fiction.
As an alternative, she says the president should release 70 million barrels of oil from the strategic reserves, which would provide immediate price relief. Is this silly, stupid, or just more of Pelosi's political doublespeak? This alternative would supply less than four days of the U.S. demand, which would not likely even be noticed at the pump. It would do nothing to solve the underlying problem of too little supply.
Pelosi, like Al Gore, wants to end America's reliance on oil, and switch to new, exotic, yet-to-be-developed energy sources such as wind, solar, hydrogen, and in particular, electric cars. America has been investing heavily in research in all these areas for years. Some significant progress has been made. No one in their right mind -- which includes Al Gore -- can think this new technology can be available within the next ten years, with enough distribution to make hydrogen filling stations and recharging for electric cars viable options. It is certain, however, that by developing known oil reserves, the U.S. energy demand can be met in 10 years, or less.
There is a big disconnect between the rush to convert automobiles to batteries, and the reality that the electricity to recharge those batteries would require a massive new generating capacity. The same flawed excuse of "protecting the environment," has also blocked the expansion of electricity generating capacity. If the self-appointed gods of environmental protection won't allow the expansion of electricity generation, how are the batteries of all these new electric vehicles going to be recharged every night?
Another major disconnect between the rush to replace oil with renewable sources such as wind and solar is the negative environmental impact of these renewable technologies. For example, to replace a single 50-megawatt coal-fired generating plant, which may occupy as much as 20 acres of land, approximately 3,000 acres of land would have to be occupied by wind turbines. To produce 50-megawatts of electricity from solar panels would virtually cover even more land. How can these protectors of the environment justify blanketing the land with whirling bird-killers and solar panels that block the sun from all forms of life beneath them?
Some environmental purists genuinely want America and the world to return to the stone-age. Nancy Pelosi is no environmental purist. She is a political creature, which is a person so intoxicated by power that the instinct to retain and expand it overwhelms common sense, logic, ethics, morality, or anything else that might get in the way.
By her refusal to even allow debate on proposals to expand oil development -- where oil is known to exist -- she stands like a barricade between thirsty consumers and a new mountain stream. She apparently sees herself as a self-appointed savior; she is, in truth, acting as judge and jury, condemning a nation desperate for more energy to spiraling energy costs for possibly another generation.
This is not a new posture for Democrat leadership. Democrats in the House, the Senate, and the White House have blocked expansion of oil supplies for more than a decade. Had Bill Clinton not vetoed the bill that would have opened the Arctic National Wildlife Refuge more than a decade ago, gas prices would not be as high as they are today. Millions of jobs would have been created, and every American could have saved the money needlessly paid to foreign sources for oil, simply because one man played God and defied the express will of the people.
Nancy Pelosi is now playing God, standing where Bill Clinton stood more than a decade ago, defying the expressed will of the people by blocking access to the known oil reserves that are so desperately needed by the entire nation.