Leaders meet to discuss secret second phase of NAFTA.

Extending NAFTA's Reach
Laura Carlsen August 24, 2007


Americas Program, Center for International Policy (CIP)
americas.irc-online.org
Faced with opposition from the left and the right, George W. Bush, Felipe Calderon, and Stephen Harper met August 20-21 in Montebello, Canada to discuss the little-known second phase of the North American Free Trade Agreement (NAFTA). Declarations to the press acknowledged public concerns about the content and the secrecy of the talks, but said nothing to clear up doubts about the closed-door proceedings or disclose specific policies under discussion.
Beyond the vague feel-good rhetoric about a "prosperous neighborhood" and "common commitments" the Canadian, U.S., and Mexican leaders each seemed to have his particular agenda. Canada fears another economically disastrous border closing like the one following the 2001 terrorist attacks and wants to assure it doesn't happen again. Bush emphasized the corporate wish-list of eliminating remaining barriers and harmonizing regulations. Calderon fears that Mexico is losing its NAFTA edge in the U.S. market and called for forming a regional trade bloc to compete with other regions of the world. No joint policy decisions or objectives were announced.
No wonder the public's confused.
A Short History
The Security and Prosperity Partnership (SPP) was launched in Waco, Texas in March 2005. The heads of state of the three NAFTA countries, other government officials, and business groups have met periodically to hammer out agreements to speed up integration and increase security. This has been done with almost no public input or Congressional oversight.
Since the SPP is not a law or a treaty or even a signed agreement, there are no formal mechanisms of accountability built in. It is essentially a "gentleman's agreement" between the executive branches and major corporations in the three nations.
This is what has people worried. Largely unknown to the public, the SPP has spawned numerous working groups, reports, and recommendations. In 2006, the private sector was brought in with the formation of the North American Competitiveness Council (NACC). This body is made up of business representatives from industries involved in intercontinental trade and investment, including Wal-Mart, Lockheed Martin, the Mexican Foreign Trade Council, Canada's Suncor Energy, and others. The Council does not include representatives of labor, environmental, or civil society organizations.
Government officials have justified the secrecy by stating that the SPP is merely a forum for refining rules and standards for transborder transactions. However, the little that is known about it reveals that some major issues are on the table.
Many of those go way beyond what was passed by North American legislatures under NAFTA. They include extraterritorial rights over natural resources, extension of the Bush administration's vastly unpopular counter-terrorism agenda to Canada and Mexico, liberalization of financial services, and most likely a billion-dollar counternarcotics aid package to Mexico.
Although rarely identified as such, some SPP recommendations have already popped up in policies and regulation reforms. These include accelerating environmentally damaging oil production in Mexico and Canada, and "harmonizing" national standards so they sing to the tune of corporate profits rather than consumer protection.
For example, Canada has agreed to raise the amount of pesticide residues allowed in some foods and Mexico has adopted a counter-terrorism law that contradicts its own foreign policy principles. In the United States, proposed highway construction to facilitate intercontinental trade has angered environmentalists and local populations and raised questions about what exactly is the overall "vision" that the SPP purports to have.
Many of the recommendations of the SPP will have a long-term impact on citizens' lives. While opposition has focused on resource use, consumer norms, and infrastructure, the security component of the partnership may prove to be the most far-reaching of all.
The Security and Prosperity Partnership was born in the post-9/11 era, when President Bush sought to extend U.S. counter-terrorism strategies to Mexico and Canada, and Homeland Security became a major player in the trilateral relationship. The counternarcotics proposal falls under the rubric of this new area. The package would include the delivery of U.S. arms and surveillance equipment, sophisticated espionage programs, and training for Mexico's police and army.
Although negotiations on security issues have been among the most tightly guarded, immigration crackdowns on Mexico's southern border and Canada's "no-fly" list of people banned from air travel were most likely negotiated in the context of the SPP.
The Forgotten Issues of Integration
As the SPP extends its purview, the most pressing challenges to trinational integration have been inexplicably left off the agenda. Immigration, which has experienced a two-fold increase since NAFTA, has been discarded as too politically sensitive in the United States to discuss as a regional issue—despite the fact that integration processes in other parts of the world have recognized that labor flows are a central issue of regional integration.
Calderon reportedly expressed concern over harsh new employer sanctions in the United States and the "void" left in the immigration law following the recent failure of the U.S. Congress to pass reforms that effectively deal with the estimated 12 million undocumented U.S. residents. However, no mention was made of measures to reduce deaths and human rights violations on the shared U.S.-Mexico border, provide compensation funds to Mexico's displaced sectors, or regularize Mexican immigrants in U.S. communities.
Another taboo subject was the total elimination of tariffs on corn and beans in Mexico, slated for January of 2008 under NAFTA's agricultural chapter. Mexican small farmers have demanded renegotiation of the chapter, charging it will drive them out of business and increase out-migration. But according to government representatives, the three governments decided not to take up the issue in Montebello.
Nor did those driving the latest stage of regional integration deign to deal with urgent matters such as the impact of NAFTA on job loss and job quality in the United States, or the growing monopolistic control of production and markets exercised by transnational corporations—a subject understandably off the table of a "competitiveness council" led by global market gobblers like Wal-Mart.
Voices of Dissent
Citizen groups have mobilized in all three countries to demand information and protest the priorities of "deep integration" designed in the upper spheres of commerce and government. Canadian citizen groups on hand to protest the summit proceedings were met with tear gas, pepper spray, and police provocateurs.
Elected representatives have also objected to the secrecy of the SPP. In May the Mexican legislature passed a resolution that requires President Calderon to send the Senate a detailed report on all agreements that government officials have assumed in SPP working groups. The U.S. House of Representatives approved an amendment that prohibits the use of Department of Transportation funds in SPP working groups until the Congress has reviewed and assessed the SPP agenda. Although this amendment was rejected in the Senate, several more anti-SPP resolutions have been presented. A motion that calls for public consultations on the SPP has been tabled in the Canadian Parliament.
The United States, Canada, and Mexico trade a total of $883 billion under NAFTA. The three nations clearly need mechanisms to assure that these flows are safe, orderly, and mutually beneficial.
The SPP, however, has surreptitiously proceeded well beyond the regulatory mandate into areas that threaten the sovereignty of the three nations and will have long-term effects on the lives of their citizens. This has happened not only without citizen participation, but also in many cases without citizens' knowledge.
Trilateral decisions that affect entire populations should be open to the public and subject to citizen review. The priority should always be placed on increasing the long-term well-being of the people. As democracies we cannot allow the course of North American integration to be dictated by a closed group of corporate and cabinet representatives.
At stake is the future of our three nations, and the continent we share.

FBI now can tap into any land-line or cell phone conversation with a mere click of the mouse.

Point, Click ... Eavesdrop: How the FBI Wiretap Net Operates
By Ryan Singel 08.29.07 2:00 AM
The FBI has quietly built a sophisticated, point-and-click surveillance system that performs instant wiretaps on almost any communications device, according to nearly a thousand pages of restricted documents newly released under the Freedom of Information Act.
The surveillance system, called DCSNet, for Digital Collection System Network, connects FBI wiretapping rooms to switches controlled by traditional land-line operators, internet-telephony providers and cellular companies. It is far more intricately woven into the nation's telecom infrastructure than observers suspected.
It's a "comprehensive wiretap system that intercepts wire-line phones, cellular phones, SMS and push-to-talk systems," says Steven Bellovin, a Columbia University computer science professor and longtime surveillance expert.

DCSNet is a suite of software that collects, sifts and stores phone numbers, phone calls and text messages. The system directly connects FBI wiretapping outposts around the country to a far-reaching private communications network.
Many of the details of the system and its full capabilities were redacted from the documents acquired by the Electronic Frontier Foundation, but they show that DCSNet includes at least three collection components, each running on Windows-based computers.
The $10 million DCS-3000 client, also known as Red Hook, handles pen-registers and trap-and-traces, a type of surveillance that collects signaling information -- primarily the numbers dialed from a telephone -- but no communications content. (Pen registers record outgoing calls; trap-and-traces record incoming calls.)
DCS-6000, known as Digital Storm, captures and collects the content of phone calls and text messages for full wiretap orders.
A third, classified system, called DCS-5000, is used for wiretaps targeting spies or terrorists.
What DCSNet Can Do
Together, the surveillance systems let FBI agents play back recordings even as they are being captured (like TiVo), create master wiretap files, send digital recordings to translators, track the rough location of targets in real time using cell-tower information, and even stream intercepts outward to mobile surveillance vans.
FBI wiretapping rooms in field offices and undercover locations around the country are connected through a private, encrypted backbone that is separated from the internet. Sprint runs it on the government's behalf.
The network allows an FBI agent in New York, for example, to remotely set up a wiretap on a cell phone based in Sacramento, California, and immediately learn the phone's location, then begin receiving conversations, text messages and voicemail pass codes in New York. With a few keystrokes, the agent can route the recordings to language specialists for translation.
The numbers dialed are automatically sent to FBI analysts trained to interpret phone-call patterns, and are transferred nightly, by external storage devices, to the bureau's Telephone Application Database, where they're subjected to a type of data mining called link analysis.
FBI endpoints on DCSNet have swelled over the years, from 20 "central monitoring plants" at the program's inception, to 57 in 2005, according to undated pages in the released documents. By 2002, those endpoints connected to more than 350 switches.
Today, most carriers maintain their own central hub, called a "mediation switch," that's networked to all the individual switches owned by that carrier, according to the FBI. The FBI's DCS software links to those mediation switches over the internet, likely using an encrypted VPN. Some carriers run the mediation switch themselves, while others pay companies like VeriSign to handle the whole wiretapping process for them.
The numerical scope of DCSNet surveillance is still guarded. But we do know that as telecoms have become more wiretap-friendly, the number of criminal wiretaps alone has climbed from 1,150 in 1996 to 1,839 in 2006. That's a 60 percent jump. And in 2005, 92 percent of those criminal wiretaps targeted cell phones, according to a report published last year.
These figures include both state and federal wiretaps, and do not include antiterrorism wiretaps, which dramatically expanded after 9/11. They also don't count the DCS-3000's collection of incoming and outgoing phone numbers dialed. Far more common than full-blown wiretaps, this level of surveillance requires only that investigators certify that the phone numbers are relevant to an investigation.
The Justice Department reports the number of pen registers to Congress annually, but those numbers aren't public. According to the last figures leaked to the Electronic Privacy Information Center, judges signed 4,886 pen register orders in 1998, along with 4,621 time extensions.
CALEA Switches Rules on Switches
The law that makes the FBI's surveillance network possible had its genesis in the Clinton administration. In the 1990s, the Justice Department began complaining to Congress that digital technology, cellular phones and features like call forwarding would make it difficult for investigators to continue to conduct wiretaps. Congress responded by passing the Communications Assistance for Law Enforcement Act, or CALEA, in 1994, mandating backdoors in U.S. telephone switches.
CALEA requires telecommunications companies to install only telephone-switching equipment that meets detailed wiretapping standards. Prior to CALEA, the FBI would get a court order for a wiretap and present it to a phone company, which would then create a physical tap of the phone system.
With new CALEA-compliant digital switches, the FBI now logs directly into the telecom's network. Once a court order has been sent to a carrier and the carrier turns on the wiretap, the communications data on a surveillance target streams into the FBI's computers in real time.
The Electronic Frontier Foundation requested documents on the system under the Freedom of Information Act, and successfully sued the Justice Department in October 2006.
In May, a federal judge ordered the FBI to provide relevant documents to the EFF every month until it has satisfied the FOIA request.
"So little has been known up until now about how DCS works," says EFF attorney Marcia Hofmann. "This is why it's so important for FOIA requesters to file lawsuits for information they really want."
Special Agent Anthony DiClemente, chief of the Data Acquisition and Intercept Section of the FBI's Operational Technology Division, said the DCS was originally intended in 1997 to be a temporary solution, but has grown into a full-featured CALEA-collection software suite.
"CALEA revolutionizes how law enforcement gets intercept information," DiClemente told Wired News. "Before CALEA, it was a rudimentary system that mimicked Ma Bell."
Privacy groups and security experts have protested CALEA design mandates from the start, but that didn't stop federal regulators from recently expanding the law's reach to force broadband internet service providers and some voice-over-internet companies, such as Vonage, to similarly retrofit their networks for government surveillance.
New Technologies
Meanwhile, the FBI's efforts to keep up with the current communications explosion is never-ending, according to DiClemente.
The released documents suggest that the FBI's wiretapping engineers are struggling with peer-to-peer telephony provider Skype, which offers no central location to wiretap, and with innovations like caller-ID spoofing and phone-number portability.
But DCSNet seems to have kept pace with at least some new technologies, such as cell-phone push-to-talk features and most VOIP internet telephony.
"It is fair to say we can do push-to-talk," DiClemente says. "All of the carriers are living up to their responsibilities under CALEA."
Matt Blaze, a security researcher at the University of Pennsylvania who helped assess the FBI's now-retired Carnivore internet-wiretapping application in 2000, was surprised to see that DCSNet seems equipped to handle such modern communications tools. The FBI has been complaining for years that it couldn't tap these services.
The redacted documentation left Blaze with many questions, however. In particular, he said it's unclear what role the carriers have in opening up a tap, and how that process is secured.
"The real question is the switch architecture on cell networks," said Blaze. "What's the carrier side look like?"
Randy Cadenhead, the privacy counsel for Cox Communications, which offers VOIP phone service and internet access, says the FBI has no independent access to his company's switches.
"Nothing ever gets connected or disconnected until I say so, based upon a court order in our hands," Cadenhead says. "We run the interception process off of my desk, and we track them coming in. We give instructions to relevant field people who allow for interconnection and to make verbal connections with technical representatives at the FBI."
The nation's largest cell-phone providers -- whose customers are targeted in the majority of wiretaps -- were less forthcoming. AT&T politely declined to comment, while Sprint, T-Mobile and Verizon simply ignored requests for comment.
Agent DiClemente, however, seconded Cadenhead's description.
"The carriers have complete control. That's consistent with CALEA," DiClemente said. "The carriers have legal teams to read the order, and they have procedures in place to review the court orders, and they also verify the information and that the target is one of their subscribers."
Cost
Despite its ease of use, the new technology is proving more expensive than a traditional wiretap. Telecoms charge the government an average of $2,200 for a 30-day CALEA wiretap, while a traditional intercept costs only $250, according to the Justice Department inspector general. A federal wiretap order in 2006 cost taxpayers $67,000 on average, according to the most recent U.S. Court wiretap report.
What's more, under CALEA, the government had to pay to make pre-1995 phone switches wiretap-friendly. The FBI has spent almost $500 million on that effort, but many traditional wire-line switches still aren't compliant.
Processing all the phone calls sucked in by DCSNet is also costly. At the backend of the data collection, the conversations and phone numbers are transferred to the FBI's Electronic Surveillance Data Management System, an Oracle SQL database that's seen a 62 percent growth in wiretap volume over the last three years -- and more than 3,000 percent growth in digital files like e-mail. Through 2007, the FBI has spent $39 million on the system, which indexes and analyzes data for agents, translators and intelligence analysts.
Security Flaws
To security experts, though, the biggest concern over DCSNet isn't the cost: It's the possibility that push-button wiretapping opens new security holes in the telecommunications network.
More than 100 government officials in Greece learned in 2005 that their cell phones had been bugged, after an unknown hacker exploited CALEA-like functionality in wireless-carrier Vodafone's network. The infiltrator used the switches' wiretap-management software to send copies of officials' phone calls and text messages to other phones, while simultaneously hiding the taps from auditing software.
The FBI's DiClemente says DCSNet has never suffered a similar breach, so far as he knows.
"I know of no issue of compromise, internal or external," DiClemente says. He says the system's security is more than adequate, in part because the wiretaps still "require the assistance of a provider." The FBI also uses physical-security measures to control access to DCSNet end points, and has erected firewalls and other measures to render them "sufficiently isolated," according to DiClemente.
But the documents show that an internal 2003 audit uncovered numerous security vulnerabilities in DCSNet -- many of which mirror problems unearthed in the bureau's Carnivore application years earlier.
In particular, the DCS-3000 machines lacked adequate logging, had insufficient password management, were missing antivirus software, allowed unlimited numbers of incorrect passwords without locking the machine, and used shared logins rather than individual accounts.
The system also required that DCS-3000's user accounts have administrative privileges in Windows, which would allow a hacker who got into the machine to gain complete control.
Columbia's Bellovin says the flaws are appalling and show that the FBI fails to appreciate the risk from insiders.
"The underlying problem isn't so much the weaknesses here, as the FBI attitude towards security," he says. The FBI assumes "the threat is from the outside, not the inside," he adds, and it believes that "to the extent that inside threats exist, they can be controlled by process rather than technology."
Bellovin says any wiretap system faces a slew of risks, such as surveillance targets discovering a tap, or an outsider or corrupt insider setting up unauthorized taps. Moreover, the architectural changes to accommodate easy surveillance on phone switches and the internet can introduce new security and privacy holes.
"Any time something is tappable there is a risk," Bellovin says. "I'm not saying, 'Don't do wiretaps,' but when you start designing a system to be wiretappable, you start to create a new vulnerability. A wiretap is, by definition, a vulnerability from the point of the third party. The question is, can you control it?"

But I Thought We Beat The Spanish......

The High Noon of Empire
It was a cold day in New Haven, Connecticut, in the winter of 1899. That year, an arctic blast created record-making blizzards and snowfall. Ice flows in the Mississippi would run all the way to the Gulf of Mexico. (An event, by the way, recorded only one other time — Feb. 13, 1784).
Nonetheless, a packed house gathered in the old College Street Hall, where William Graham Sumner took the stage. The respected 59-year-old American intellectual delivered a talk titled “The Conquest of the United States by Spain.”
It was a provocative title. America had “won” the Spanish-American War in 1898. It had taken possession of Spain’s old colonial territories — Puerto Rico, the Philippines, and Guam.
But Sumner was not talking about the physical war. He spoke about the realm of ideas. “Expansionism and imperialism,” Sumner warned, “are nothing but the old philosophies of national prosperity, which have brought Spain to where she is now.” America, Sumner maintained, had adopted the imperial ideas of its vanquished foe. And it was America that would wind up no different than Spain, which was, in Sumner’s words, “a poor, decrepit, bankrupt old state.” Those with a nose for empire often mark America’s as beginning with the victory in 1898.

I thought of Sumner when I heard Kevin Phillips speak at a recent event held in Washington, D.C. Like Sumner, Phillips is one of those eggs who study empires as biologists study the California condor or the spotted owl. He is the author of an impressive study of the implications of American empire. The title is American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century.
Phillips draws from the experience of empires past, including — as Sumner did — the Spanish empire. He also draws insights from the Dutch, British, Hapsburg, and Roman empires. His book has many threads that show how America is well along the familiar life cycle of empires. But I want to focus on just two: the rise of finance and America’s oil dependency.
Empires get hooked on certain fuel sources like dope addicts. The Dutch were masters of wind and water. But their commercial dominance faltered with the rise of coal. Coal fed the British Empire. But it eventually gave way to the oil-powered might of the United States. Phillips maintains that the inevitable transition to a post-oil global economy — whether it is based on natural gas, hydrogen, greater nuclear reliance, renewable energy, or whatever — “could see the United States displaced by a new leading economic power, probably an Asian one.” The history of modern empires is one in which transitions to new fuel sources are just not successful.
Instead, the fading empire fights it out. Not surprising that natural resources fueled many conflicts in earlier centuries. North American fisheries. Baltic timber. East Indian spices. Caribbean sugar and salt. The gold and silver of the New World. The powers of empire hinged on the command of valuable natural resources such as these.
Today, that hinge is oil. America’s oil infrastructure is old, past its zenith. Meanwhile, the car culture drinks gasoline in rivers with no sign of slowing down. Cars and trucks burn two out of three barrels of oil in the U.S. Of the 530 million cars in the world, more than 200 million are in the U.S. All of this has led to America’s consuming 25% of the world’s energy while holding only 5% of the resource.
There was a time when those numbers went the other way. For most of America’s rise to power in the 20th century, it produced far more oil than it consumed. As late as 1964, the U.S. found 48 billion barrels of oil and used only 23 billion. Ever since, it’s been getting tighter. By 1988, it was dead even. By 2005, America used 5 times more than it found.
As a result of this great surge in demand, oil has been the magic pixie dust that created many an American fortune. In 1948, half of the 16 richest companies in America were oil companies. As late as 1982, half of the 30 richest Americans counted oil as the initial source of their wealth.
Now America’s oil dependence is the Achilles’ heel of its international dominance. Phillips quotes Michael Klare, a theorist on the resumption of global resource wars. Klare writes that oil is no longer just a commodity but a national security matter. The U.S. military has become a “global oil-protecting service.”
People will say it is not so important to own the resource as it is to have the ability to pay for it. That is true. And that brings us the second mark of empire: the rise of finance at the expense of making things. Empires past all had their manufacturing capabilities hollowed out. In place of that stood the business of financing things, of pushing paper, of printing money.
Spanish observers in the 17th century wrote smugly about how London made fine fabrics, Holland chambrays, Florence cloth, and India linens. But it was Spain that enjoyed these things, because Spain had money. The Dutch and British held a similar conceit. The British economist William Stanley Jevons wrote with assurance: “The plains of North America and Russia are our cornfields, Chicago and Odessa are our granaries, Canada and the Baltic our timber forests, Australia our sheep farms…” and on and on. The whole world worked for Britain, which paid in sterling.
But this prosperity has a sort of soap bubble fragility to it. It depends on debt and easy credit. The empires of the past became bankrupt because of their spendthrift ways and financial ineptitude.

In the U.S., Phillips writes, “It’s finally happened: Moving money around has surpassed making things as a share of U.S. gross domestic product.” Historically, this has been a mark of late-stage degeneration. Massive budget shortfalls and a rising national debt point to the seemingly irreversible fiscal decline of the government. Debt loads on consumers at or near record highs speak to the precarious foundation of American families.
Then there is the rise of complex financial instruments, which no one seems to know anything about. Take collateralized debt obligations, or CDOs. They are complex investments that allow investors to buy pools of credit risk. They came out of nowhere in 1997 to total more than $1 trillion in 2001 and over $3 trillion by 2003. Today, CDOs probably top $8 trillion in notional value. And what is a CDO? A big mound of paper no one really knows the worth of. Recent market events, though, suggest the CDOs are not worth much.
It is the high noon of empire. That is the phrase I keep thinking of. Sumner saw its dawn. Phillips foretells its dusk. Investing well while all this mess is going on is more important than ever. In this, the old advice is still the best: Own things and sell paper. Oil, natural gas, water rights, land, timber — the tangible assets, and all the supporting cast, that built the fortunes of old, will also build the fortunes of the future.

An Investment Posting

CARPETBAGGING

One of the best means of racking up great yields is to knowwhen to buy when others are dumping and running for the exits.This is what our man Doug Casey used to call “crisis investing.”Blood in the streets means we can pick up stocks, bonds, fundsand other investments for dimes on the dollar. It also means that many of our own favorites are awash in thesame bloodbath; it’s not without some pain that we can gocarpetbagging. But if you follow along, we can get throughsome of the muck of the markets while bolstering our portfolio’s cash flows for the quarters and years to come.

Start with one of my key edicts of investing: Own plenty of investments that pay us well with lots of cash flow. Even ifthe market sends their stock prices into the cellar, if the companies are solid and the checks keep coming we can sufferthe near-term woes. Cash buys time. It’s as simple as that. And it’s not just for those who live off their portfolios. Cash piling up is the most certain way to grow portfolio values over time.

This brings us to edict No. 2: Pile up the cash you don’t need to spend and wait for buying opportunities. Too many folks on Wall Street talk about reinvestment the wrong way. They tout dividend reinvestment plans, or DRIPs, away for companies or their appointed brokers to automatically take dividends paid and immediately buy more shares. Theprocess is meant to help folks build up their portfolios in anefficient manner. But a DRIP isn’t the best way to accomplish that goal. Companies like DRIPs because they give them built-in demand for stock shares. And open-end mutual funds and those devilishexchange traded funds (ETFs) love them for the same reason.Brokers and financials love them because they provide a lockedstream of monthly or quarterly trades--all on autopilot. What results is a ready campaign to get more of us on board withthis process. But the real way to reinvest is to take the cash, pile it up in your account, follow the market prices for our investment picks and buy more when others are selling.

Ron Paul's Responsibility & Accountability Act

Congressional Responsibility and Accountability Act
by Ron Paul
Before the U.S. House of Representatives on August 1, 2007
Madame Speaker, I rise to introduce the Congressional Responsibility and Accountability Act. This bill requires Congress to specifically authorize via legislation any proposed federal regulation that will impose costs on any individual of at least $5,000, impose costs on a business or other private organization of at least $25,000, impose aggregate costs on the American people of at least $250,000, or cause any American to lose his or her job.
According to some legal experts, at least three-quarters of all federal laws consist of regulations promulgated by federal agencies without the consent, or even the review of, Congress. Allowing unelected, and thus unaccountable, executive agencies to make law undermines democracy. Law-making by executive agencies also violates the intent of the drafters of the Constitution to separate legislative and executive powers. The drafters of the Constitution correctly viewed separation of powers as a cornerstone of republican government and a key to protecting individual liberty from excessive and arbitrary government power.
Congress’s delegation of law-making authority to unelected bureaucrats has created a system that seems to owe more to the writings of Franz Kafka than to the writings of James Madison. The volume of regulations promulgated by federal agencies and the constant introduction of new rules make it impossible for most Americans to know with any certainty the federal laws, regulations, and rules they are required to obey. Thus, almost all Americans live with the danger that they may be hauled before a federal agency for an infraction they have no reasonable way of knowing is against the law.
While it is easy for members of Congress to complain about out-of-control federal bureaucrats, it was Congress that gave these agencies the ability to create laws. Since Congress created the problem of lawmaking by regulatory agencies, it is up to Congress to fix the problem and make certain that all federal laws are passed by the people’s elected representatives. Therefore, Madame Speaker, I urge my colleagues to cosponsor the Congressional Responsibility and Accountability Act.

Dr. Kurt Richebacher R.I.P.

The world is a much poorer place this week. The venerable Kurt Richebacher has passed away and left us without a wise, intelligent economist/prognosticator to point out our folly. Sad that he wasn't gifted with a few more years to help out humanity, but he was a stalwart spokesman for a sound money policy. I'm sure at the dinner table in heaven, there is some spirited discussion with Kurt offering his intelligent gems of wisdom. Godspeed Mr. Richebacher.

August 29, 2007
A Tribute: Dr. Kurt Richebacher

by Wilfred Hahn
It doesn't seem just: The patriarch of the current "anti-bubble" camp," Dr. Kurt Richebächer, has died at age 88. He did not live to see his long-running warnings come to be vindicated. Just as he fell ill, events began to cascade into the vicious credit crash that erupted this past August.
Kurt Richebächer was well known around the world as an authoritative financial economist and author subscribing to the Austrian School. He had an illustrious career; his public profile spanning six decades, leaving few contemporaries. After earning his Doctorate in Economics from the University of Berlin, he quickly established himself as one of the most influential voices on economic policy in West Germany while a financial journalist. He was appointed a Director of the Dresdner Bank in 1964, serving as its "lightning rod" Chief Economist.
His outspoken and incisive "no holds barred" approach often raised the hackles of government leaders. At one point, then Chancellor Helmut Schmidt reputedly asked the head of Dresdner Bank, Jürgen Ponto, to quell Kurt's incendiary criticism of his government. Ponto then set up Richebächer with his own independent newsletter as Kurt's analysis and insights were widely respected.
Dr. Richebächer was quoted around the world, frequently contributing guest articles in prominent publications. His commentary was so influential -- and provocative at times -- central bankers on both sides of the Atlantic paid attention to him. At his retirement party from Dresdner Bank in 1982, no less than Otto Pohl (then head of the West German Bundesbank), Paul Volcker of the US Fed and other well-known economic luminaries attended. Speaking at this occasion, Volcker said, "Sometimes I think it's the job of each Fed chairman to try to prove Richebächer wrong."
Kurt was one of the first broadly-known of the new breed of international financial economist. It was on his first transatlantic trip visiting the Fed in 1964, that an economist received him by the name of Paul Volcker. They became good acquaintances and kept in touch well into their later years.
Thankfully for another generation of investors, Kurt did not take down his shingle after he retired. He carried on his weighty newsletter, Currencies & Credit Markets, producing it faithfully for another 25 years. It continued to enjoy a solid distribution around the globe in various forms, most recently under the name The Richebächer Letter. Readers may sometimes have sensed an authoritative and prophetic aura in his writing ... as rumbling admonitions rolling down the slopes of Mount Sinai. The Doctor produced his last letter in February of this year.
It is a sure observation that many analysts around the world secretly relied upon Kurt for his cogent analysis and the sharply articulated causality supporting his views. He was the man that could validate theoretically what for many were just "gut feelings." At heart, Richebächer was an economic theorist, capable of producing a clarity of logic that could be devastatingly crushing to his opponents. He was widely read, his prodigious library including many original editions of the classic economic authors.
Certainly no market timer and not at all disposed to the frenzied short-term trading fraternity and its cheerleading cadre of Wall Street economists, in latter years he was seen more as a bane to the broader financial community. Yet, due to Kurt's brilliant and insightful analysis, there are today thousands of investors around the world who have been alerted to the unsustainable foundations to present-day monetary and financial follies.
Urbane and warmly affable in private, it sometimes seemed that his existence was lived entirely inside economic theorems and monetary mechanisms. His idea of prompting dinner conversation on occasion was to ask the question, "What do you think of the economy?" My wife, a photographer and homemaker for many years, faced that question numerous times. He was always ready for a debate, and seemingly never doubtful about the correctness of his opinions.
Kurt was a family friend. I came to know him and his wife Anne-Marie some two decades ago through a business partner, Albert Schwenzer. We had thought it would be a capital idea to have Kurt as an official advisor to our global investment firm. Albert, having been familiar with Kurt's work, called him up cold. We struck a deal. Kurt would be an official advisor. In return, I would edit and translate his newsletter for the English-speaking market.
At first, his newsletter would arrive across the fax in bits, some of it in German. Prior to that time, the English-version of the letter had been translated from German. Already verging on 70 and also fluent in French and English, it wasn't long before his English writing gained great vigor. I continued to help on Kurt's letter as associate editor for some 6 years alongside responsibilities as chief and CIO of Canada's largest global investment group. Eventually, I could no longer spare the time and Kurt soldiered on. In the meantime, I had gained a most invaluable education for which I will remain grateful.
Over the years we remained friends, visiting in Frankfurt, Cannes and Toronto. After his wife Anne-Marie passed away in 1994, he stayed with us more frequently, even braving cold Canadian winters for New Years' companionship. We'd take long drives and talk about economics and markets. (What else was there to talk about?) I might at best get a few points in with him from time to time. With his irrepressible intellect, he could bowl anyone over with his torrential logic. Sometimes, even if you disagreed on a point, interjecting with ever louder counterarguments, you'd simply have to step down. That was Kurt ... yet a truly lovable character.
In recent years, Dr. Richebächer became ever more despondent about the runaway financial inflation he was seeing in America ... and nascently, also around the globe. He was sometimes apoplectic, disbelieving that such recklessness were possible. He'd often mention how few financial economists were left on Wall Street and its sister centers around the globe who knew anything about theory and causality. Without such understanding, he regarded the quantitatively-driven research of Wall Street as so much voodoo.
He found less and less contacts in financial circles that he could dialogue with. On one phone call a few years ago, he said something to me that I will no doubt continue to cherish, though surely undeservedly: "You are the last one in North America that I can talk to." But now this thudding thought: What great eminence now remains for us to talk with?
The Doctor -- a bright beacon, an anchor of sensibility, a purist in theory -- is gone. He now leaves us "shadow Austrian economists" to make our own way. One wonders if there are any that could assume his mantle. Most contenders seem too enslaved to the readership survey or the sensationalist media sound bite.
No, Kurt Richebächer was an original. There can be no copies.
Thankfully, many of Kurt's newsletters are text book material. I have kept them all ... every one of the past few decades. In the future, should financial conditions become even more raucous and banal, I will be reading them. They will be sure to help guide a proper, theoretical foundation from which to decipher current economic developments.
Hopefully, the Good Lord will have some new work worthy to occupy Kurt's talents in the beyond. There may be no more financial malfeasance to contend with, nor monetary corruption born of fractional reserve banking systems. But perhaps he will be busily studying the workings of an eternal economy, having finally found the perfect Austrian School system.
Kurt leaves behind two sons -- Thomas in Colorado, USA and Axel in Königstein, Germany -- one daughter, Sabine in Zurich, Switzerland, and five grandchildren.

US/Mexico as Failed Economies

http://www.321gold.com/editorials/willie/willie083007.html

Way too big to post, but well worth your time to read.