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Our July 25, 2006 Newsletter Edition
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IN THE NEWS:
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HUNDREDS OF AMERICANS EVACUATE LEBANON
By Zeina Karam and Hamza Hendawi - Associated Press - July 18, 2006
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BEIRUT, Lebanon -- At least 320 Americans left Lebanon by sea and air
Tuesday, but hundreds more waited in frustration for a cruise ship
hired by the U.S. to take them to Cyprus. The U.S. Embassy tried to
calm their fears, saying everyone who wanted to leave will eventually
get out. The move out did not start until a team of U.S. security
experts arrived in Lebanon over the weekend to plan the operation,
which will bill the evacuees. U.S. Ambassador Jeffrey D. Feltman
said 1,000 more Americans will leave Wednesday. We at the embassy
don't have the experience to move a lot of people. Luckily, the U.S.
government does, he said. Security and safe travel were what's on
our minds. By the end of the week, 1,000 Americans a day will be
evacuated, he said, without elaborating. To get on the ship,
Americans must sign a note pledging to reimburse the U.S. government.
They will be charged the cost of a single commercial flight from Beirut
to Cyprus _ usually about $150 or $200, although officials refused to
specify. If they have no way to fly onward, they also will be asked to
reimburse the cost of an airline ticket from Cyprus to the United
States.
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http://www.chron.com/disp/story.mpl/ap/world/4054937.html
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EDITORS NOTES:
There must be a misprint and some dark humor at work (its just that I
do not get the punch line). The article says: U.S. security
experts arrived in Lebanon over the weekend to plan the operation,
which will bill the evacuees. To get on the ship, Americans must
sign a note pledging to reimburse the U.S. government. This
cannot be a news article from the Associated Press about the US
Government, but rather something satirical out of Mad Magazine.
They wait before doing something (The French and Italians already got
their people out, and I will have you know the French rescued 50
Americans as well - FREE OF CHARGE), as of July 18 have thousands of
innocent citizens still stranded - and they are going to BILL THEM for
the cost of evacuation. Come on, how broke can they really
be? Well, pretty darn broke according to the St. Louis Federal
Reserve (see below). Of course to be fair, the Canadians have it
worse (and they pay even more taxes than Americans do).
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CANADIANS TRAPPED IN LEBANON WAIT NERVOUSLY FOR WORD ON EVACUATION - By Dennis Bueckert, Canadian Press - Tuesday, July 18, 2006
.
OTTAWA (CP) - Spencer Osberg's voice cracks with anxiety as he
describes life under bombardment in Beirut and waits with thousands of
other stranded Canadians for an evacuation he still isn't convinced
will happen. I called the embassy on the second day of what was
happening here and I said, If things really go bad here are you going
to evacuate me or do I have to find my own way out of the country? The
response that I got was, Well, we're working with a set of changing
circumstances and were not sure, you know. I asked four times . .
. and they wouldn't tell me. His German girlfriend called the
German embassy and was promptly assured she would be evacuated. Now
Osberg has put his name on the German list.
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http://www.canada.com/topics/news/national/
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EDITORS NOTES:
The man says he put his name on the German List. That's pretty
wild stuff. You have to pretend to be a citizen from another
country because your own country will not help you. Here is a
quote from a British Citizen interviewed by the BBC: We've seen
American people getting on the French ships, we've seen a British
person getting on a French ship, we've seen every nationality getting
out and if you think you're close enough to get out and it's safe to do
so, then you should try, because the embassy I don't think will help
you do it unless you help yourself. So tell me one more time
because I forgot - why is it we pay taxes again? If we have to
help ourselves anyway, then why are we paying the government for this
service? I am confused, although from this situation it does seem
a good deal to be a Frenchman (or woman).
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PAY-AS-YOU-GO EVACUATION ROILS CAPITAL HILL
By Johanna Neuman and Peter Spiegel, Times Staff Writers- July 19, 2006
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WASHINGTON -- As U.S. citizens scrambled to escape the fighting in
Lebanon and the Pentagon announced a massive evacuation effort, another
kind of battle -- this one bitterly political -- broke out in
Washington over whether the evacuees should be billed for the costs of
their own rescue. Those seeking to leave were being asked to sign
a promissory note, pledging to repay the U.S. government within 90 days
for the costs of their evacuation. The paperwork in Beirut sent tempers
through the roof in Washington, not to mention among some under fire in
Lebanon who have been asked to sign the notes. We've spent
hundreds of billions of dollars in Iraq, we've paid Halliburton money
that they haven't even earned, and yet we charge individual Americans
who are caught in the crossfire in Lebanon for their transportation
costs to get out, said House Minority Leader Nancy Pelosi (D-San
Francisco). At the White House, Press Secretary Tony Snow blamed
Congress for a 2002 mandate requiring the administration to recover
evacuation costs to the maximum extent practicable. The
provision, he said, is causing heartburn for a number of people, but it
is the law, and the State Department has to abide by it.
Throughout the day, congressional leaders and the administration traded
accusations over who was to blame, and each urged the other to rush
through a waiver to the repayment law. Tuesday evening, the State
Department announced that it would waive the requirement that American
citizens leaving Lebanon repay the government for travel costs.
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http://www.latimes.com/news/nationworld/world/la-fg-
repay19jul19,1,6342412.story?coll=la-headlines-world
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AMERICANS TOOK EVACUATION INTO THEIR OWN HANDS
By Sudarsan Raghavan and Thomas E. Ricks - Washington Post Staff Writers
Thursday, July 20, 2006
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Shayna Silverstein and her friends jumped into expensive taxis and sped
from Beirut to Damascus, preferring to dodge bombs and bribe border
officials rather than wait for the U.S. government to evacuate
them. Ann Ainslay Chibbo said she desperately phoned friends back
home, urging them to contact the State Department to get her name onto
an evacuation list. She said she couldn't get through by phone to the
U.S. Embassy in Beirut. What's my government doing for me?' I
thought, said Silverstein, 27, a graduate student who returned to her
home in Spokane, Wash., on Tuesday. It's unacceptable that the United
States is five days behind European nations in evacuating its nationals
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http://www.washingtonpost.com/wp-
dyn/content/article/2006/07/19/AR2006071901844.html
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US FORCED TO WAIVE BEIRUT EVACUATION FEE
United Press - July 19, 2006
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BEIRUT -- The US government has backed down from billing evacuees from
the besieged city of Beirut for their helicopter flights to
safety. On Tuesday, US military helicopters began shuttling
people in groups of 30 from the US embassy, and the State Department
said the evacuees would be asked to pay "the going commercial rate for
transport out," or about $150, the New York Daily News reported on
Wednesday. While White House spokesman Tony Snow said a 2003 law
requires the reimbursement for rescues and assistant secretary of state
Maura Harty said no one would be denied boarding because they left
their checkbook or credit card behind, the policy met with widespread
criticism in the United States and elsewhere. Canada has sent
seven boats to rescue an estimated 50,000 of its own, and said all
would be flown home for free, as did several other countries with
smaller numbers of expatriates. Late on Tuesday, Secretary of
State Condoleezza Rice announced she was ordering the rescue fees
waived, CNN reported.
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http://www.metimes.com/articles/normal.php?StoryID=20060719-025713-8871r1
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EDITORS NOTES:
The bottom line is this, forget about Big Brother coming to the rescue
- thanks for the tax payments, but you're on your own. Uh-oh,
Sorry, Umm - yeah, well even though we really cannot afford it, we have
decided we are not going to charge you. If this is not a wake up
call as to why you need a second citizenship and second passport, then
I do not know what is. The irksome thing is that there was even a
thought process at all to do this in the first place (charge citizens
for a rescue effort). Which is to say, the fact that they came
out with this policy in the first place is disturbing, and not the
backing off due to international mockery of the idea. It would
seem that this is the shape of things to come. Heed the warning, and
start thinking about what you are going to do IF there is a severe
economic crisis comes and IF they decide to do some other very unusual
things (charge you for things you thought your tax money already paid
for, if not outright confiscation in the future) with your money.
Having dual citizenship and a second passport is like fire insurance
(its of no use if there is a fire and you have no insurance, plus it is
difficult to call an insurance agent after the house already caught
fire). As this recent case of events in Lebanon demonstrate,
having dual nationality and a second passport could literally save your
life (and maybe your financial well being going forward if the next
article is true).
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THE COMING FINANCIAL COLLAPSE OF THE U.S. GOVERNMENT: FED PAPERS REVEAL WHAT'S IN STORE FOR AMERICANS
Monday, July 17, 2006 by Mike Adams
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The bankruptcy of the United States government has been talked about
for years by independent observers. If you've read the book, Empire of
Debt, then you know where the U.S. is headed financially. But most
people have no idea about the ultimate financial consequences of
decades of borrowing and spending by Washington, and they remain
irrationally convinced that the status quo will remain intact for
eternity. No one in any position of authority, you see, has yet
admitted that the U.S. government is indeed going bankrupt. Until
now, that is. In a remarkable paper posted by the Federal Reserve
of St. Louis, and authored by a Boston University teacher named Prof
Kotlikoff, it is revealed in blunt, powerful language that the era of
borrowing and spending without consequence may soon come to a close.
The paper, entitled - Is the United States Bankrupt? - may not remain
posted for very long once the public gets word of what it actually
says. And what, exactly, does it say? For starters, Kotlikoff
explains, Unless the United States moves quickly to fundamentally
change and restrain its fiscal behavior, its bankruptcy will become a
foregone conclusion.
.
These radical reforms are necessary because the future gap between what
the government owes and what it stands to receive in revenues is
already monstrously large, and it's growing by the minute. This gap,
called the Gokhale and Smetters measure, currently stands at an
astonishing $65.9 trillion. (Yes, with a "T".) As Kotlikoff explains,
This figure is more than five times U.S. GDP and almost twice the size
of national wealth. One way to wrap one's head around $65.9 trillion is
to ask what fiscal adjustments are needed to eliminate this red hole.
The answers are terrifying. One solution is an immediate and permanent
doubling of personal and corporate income taxes. Another is an
immediate and permanent two-thirds cut in Social Security and Medicare
benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143 percent. If you read that last paragraph with any presence of
mind, you now begin to understand the magnitude of the fiscal problem
facing the United States. It could be solved, as explained above, by
doubling all personal and corporate income taxes. But then what's the
point in working? It could also be solved by slashing promised benefits
in Social Security and Medicare - - But what about the inevitable
street riots? None of these solutions are likely to occur. And
that leaves the Ace up the sleeve. It's the Ace that all government
eventually play on their way to bankruptcy and collapse, and it's the
Ace that the United States will ultimately be forced to play, too:
hyperinflation. The U.S. will have to print more money to escape the
financial consequences of its unbridled spending.
.
It's not like it hasn't happened before. Hyperinflation is actually the
norm, not the exception, and it's the escape route taken by virtually
every country suffering under the burden of payment promises is cannot
possibly keep. Whether we're talking about Germany after World War I,
or the United States over the next few years, hyperinflation is the
only option remaining for politicians who refuse to practice fiscal
sanity. No politician ever got elected by promising voters their
entitlements would be halted, did they? Political popularity is derived
from promising voters precisely what the nation cannot afford: Endless
entitlements and runaway spending without apparent consequence.
.
The only thing keeping the U.S. afloat right now is the temporary
willingness of Asian countries to keep buying U.S. debt, thereby
pumping up the U.S. economy with dollars earned on the backs of Chinese
laborers. But even the Chinese -- known for their tolerance of
hard times and manual labor -- may eventually tire of lending money to
a posh, arrogant Western nation that has all but abandoned the concept
of saving money. Says Kotlikoff, China is saving so much that it's
running a current account surplus. Not only is China supplying capital
to the rest of the world, it's increasingly doing so via direct
investment. The question for the United States is whether China will
tire of investing only indirectly in our country and begin to sell its
dollar-denominated reserves. Doing so could have spectacularly bad
implications for the value of the dollar and the level of U.S. interest
rates. By spectacularly bad implications, Kotlikoff means the
value of the U.S. dollar would plummet, the level of U.S. interest
rates would skyrocket, and hyperinflation would be well underway. U.S.
citizens would find not only their dollars to be near worthless on the
global market, but their savings to be all but wiped out as well. Sure,
you'll still have the same number of dollars in your bank account, but
they won't be worth anything.
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http://www.counterthink.org/019659.html
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EDITORS NOTES:
As the author of the article says, download it from the St. Louis
Federal Reserve while you still can (you will need Adobe Acrobat Reader
as it is a PDF file):
.
http://research.stlouisfed.org/publications/review/06/07/Kotlikoff.pdf
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So, it is now summertime 2006 and the US Federal Reserve Bank knows the
country is going down the toilet. The question is - why don't you
know? Read the comments by Former Fed Chairman Paul Volcker in
another article below (he does not say much, but what he does say is
enough). Also, consider this. Why would you specifically
put a new guy in charge of the US Federal Reserve who advocates running
the printing press? Is that what they are planning? Why do
we all of a sudden have a severe problem with drugs and money
laundering that now requires scrutiny of financial transactions and
even confiscation as the cure? This, even after the statistics
currently show money laundering has an occurrence rate of less than ONE
PERCENT in the banking and financial services industry? Are they
trying to mentally prepare the general public for something, so it is
not so shocking later (this is the way we have always done it: war on
drugs, money laundering, chasing Ali Baba)? Why is it that the
use of cash is demonized, and the use of plastic encouraged?
Maybe because cash is anonymous and can be easily transported, whereas
with the plastic, someone need only hit a button on a computer screen
and the plastic is useless in a nanosecond? All open-ended
questions, but I think questions worth asking just the same.
.
If history has taught us anything, it is that desperate people do
desperate things, and desperate governments do desperate things as
well. The last so-called great depression taught us that even in
so-called freedom loving democratic countries (like the US) it is not
beyond the politicians to reach out and take some of your money or your
stuff. The last time they took the gold away from private
citizens by force. What will they take next time? I don't
know and I don't want to know - I want to be far away when they try
it. For sure, one idea is to increase taxes (see below).
Another idea is to cut the social welfare benefits (social security
retirement checks, etc.). Yet another is to run the printing
press and devalue the money. While I hate to sound like a modern
day chicken little, I do think in the least it warrants some serious
thought. There are no guarantees that such a crisis will come to
be, as it is pointed out, there are things that can be done IF there is
leadership and a political will to turn it around. Of course, the
longer you wait, usually the more painful the medicine. The
question I have is - do you see any serious political leadership and a
will to avoid disaster later on? I do not, but that is just my
opinion. I instead see the stars aligning for something
else. I see a government desperate for money (or perhaps we
should use the term operating capital instead). I see little
pieces of the puzzle coming together that would indicate what they are
planning, and believe me, it does not look to be beneficial for a large
number of people. Someone once told me, do not listen to what
people say, but rather observe what he or she does instead. Talk
is cheap and action precious.
Exactly.
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What do you do? Preserve the value of your assets, which means
move them away from those that may have sticky fingers, convert them,
and get out of debt. Maybe get out of the country (a bit drastic
for some I know, but do you really want to be around a whole load of
ticked off people that just woke up to the fact they are now
broke?) Read the economic tarot cards and connect the dots.
The not so well known (to the general public that is) Pension Benefit
Guaranty Corporation (a US government agency set up to insure private
pension plans of companies - should those companies go belly up) is
BROKE today to the tune of US$23 Billion Dollars. They have
already cut a deal to absorb the pension liabilities of United Airlines
(that is, the responsibility of paying these private pensions has now
been socialized and passed on to every other US citizen) and they have
not even gotten started yet, and they are insolvent right now, never
mind about tomorrow. Imagine if the pension liabilities of AC
DELCO - - (one of the largest auto parts manufacturers that has
declared US bankruptcy by the way, but spun off its Chinese operation
as a separate, very profitable other entity not liable for the US
obligations) and possibly now General Motors is also folded into the
PBGC - where is the money coming from? If it is really true as
the song says - Don't worry be happy - why are government social
insurance funds and so many individual citizens broke (in a so-called
healthy, growing economy)? Politicians lie, but numbers and
statistics do not.
.
Where do you go? I like developing countries - know why?
For one thing, they usually offer a lower cost of living (and certainly
lower real estate costs), not something to be taken lightly when your
home or domestic currency is losing value day by day. In
addition, most of these economies are basically operated on cash (at
the citizen level for the most part) and not credit (most people own
their homes for cash, no mortgage and do not have access to credit
cards either). They say the problem with poor developing
countries is that they have too many poor developing people in
them. Exactly. Who is more dangerous? The guy that
just lost his job, his leased BMW, his house (via a no money down, no
equity mortgage) and his wife OR the guy that never had a credit card,
pays cash for everything, grows his own vegetables and has the same
donkey today that he had yesterday? Think about it. I do
know it is much easier for a poor man to adapt more easily to a
wealthier life style than it is for a wealthy man (or someone living
large, as they say) to go back down. Multiply that out, and that
is whole lock of angry, depressed, ticked off people (who will probably
give political support to politicians to start confiscating assets of
those that still have any). Imagine how ticked off they will be
also when they find out you are not broke and they are. Man o
manochevitz. Amway meetings are famous for telling would be
diamonds, emeralds and other such walking jewelry to show their wealth
and success (as a recruiting mechanism). Believe me, you do not
want to do that when half the folks in your neighborhood are broke and
homeless (who just yesterday were not, and were considered to be your
peers not long before). Some people think these are ideas and
comments filled with smoke or hot air, the ravings of anarchists and
aging hippies if you prefer. Maybe so and maybe not, but kind of
curious that this information now appears in the July/August 2006 issue
of The Federal Reserve Bank of St. Louis Review - Don't cha
think? Why go to the trouble of printing the ideas of a wacko
economics professor from Boston University - unless of course you know
he is telling the truth (and is not so wacko).
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EXPATRIATE AMERICANS, AND THEIR EMPLOYERS, FACE A TAX INCREASE
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July 10 (Bloomberg) -- For the last decade, a lower U.S. tax bill has
been one of the major perks Mark Welles has enjoyed as an American
living and working in Hong Kong. Now, those savings have vanished with
the stroke of a pen. Welles, the 46-year-old head of Asian sales
at TradeCard Inc., says his taxes will increase by more than $30,000
this year because of a last-minute change to a law passed in May that
extended the 15 percent rate on dividends and most capital gains. He's
asking his employer, a New York-based technology-services firm, to make
up the difference. I'm in the process of educating our
human-resources folks about this, he says. More than 300,000
Americans living abroad are facing a $2.1 billion tax increase over the
next 10 years. While the new law increases the amount of foreign-earned
income that can be exempted from U.S. taxes to $82,400 from $80,000, it
also for the first time imposes taxes on housing, educational and other
subsidies that are commonly provided by employers to expatriate
workers. U.S. workers will continue to get a tax credit for taxes
paid overseas, and the change will have little effect on those residing
in high-tax countries. Hardest hit will be Americans who work in places
such as Switzerland, the Persian Gulf, some Asian countries and the
financial centers of the Caribbean, where taxes are lower than in the
U.S. and housing costs -- often subsidized by employers -- are higher.
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http://www.bloomberg.com/
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EDITORS NOTES:
We highlighted this story in previous newsletters, so it is not new.
However, again, kind of interesting to me to see taxes going up for the
easiest targets first (politically speaking) - those damn
expatriates. I have an idea. Tell them to take the passport (and
citizenship) and do you know what with it. If I cannot rely on my
own government to help when I need it (such as evacuating me from a
foreign war zone) AND if and when they do, they are going to charge me
for it, I think it is time to change countries and citizenship.
Got a passport from a small, poor country that has limited
resources? So what. If you have a passport from one of the
wealthiest nations on the planet, first of all help will be too little
too late, and even then you are going to pay out of your own pocket
anyway - so, what's the difference? The small obscure poor
country has probably NOT taken 40, 50, 60 percent of your money in
taxes from you during the course of the calendar year, so chances are
you will have the extra money in your pocket to pay for a private, do
it yourself evacuation (plus, you will most likely have a bit more in
your pocket remaining afterwards in the bargain). I do not know
about you, but I ask the question: Do these people (politicians) have
no shame at all? If they are willing to do something like this
(and only rescind it later due to public and international outrage),
how far of a leap is it really to start confiscating 401K accounts or
other kinds of assets when the you know what hits the you know
what? I am sorry to say it, but not only are they financially
bankrupt, they are MORALLY bankrupt as well.
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RACE TO LOWER CORPORATE TAXES HURTING GOVERNMENTS' BOTTOM LINE - By Haider Rizvi, OneWorld US - Fri., Jul. 7, 2006
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NEW YORK, Jul 7 (OneWorld) - Increasing attempts by governments and
corporations alike to decrease the share of taxes paid by multinational
companies could lead to a crisis situation for public funding in many
parts of the world, warns a new study released by one of the leading
international trade union organizations. Nearly one-third of the
largest U.S.-based multinational corporations either failed to pay any
taxes or managed to get a refund in at least one of the years between
2001 and 2003--a practice that adds to the burden of taxation for
millions of working people--according to the study entitled, Having
Their Cake and Eating It Too - the Great Corporate Tax Break. The
statistical data used in the study shows that similar trends are
prevalent in many countries in the industrialized world where
governments are more than willing to lower corporate tax rates. Among
others, they include Britain, Japan, Germany, and Italy. In the
past 20 years, industrial countries have witnessed a 15 percent decline
in the rate of corporate tax - a trend that reflects increased official
backing for corporate interests. Ryder suggested that governments
should cooperate with each other in closing the legal loopholes that
have allowed companies to get away with what he calls a kind of
behavior that would land an ordinary citizen in jail for many
years. The study points out that corporations as large as Boeing,
Halliburton, Morgan Stanley, Pepsi, Citigroup, and Xerox are either
incorporated in tax havens or have a large number of subsidies there,
which allows them to underreport their profits for the purposes of tax
payment.
.
http://us.oneworld.net/article/view/136076/1/4536
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EDITORS NOTE:
Let us see now. Corporations can do it, but individual citizens
cannot? So, why don't we all go out and make ourselves
corporations? On second thought, that is exactly what we have
been telling our clients for the past ten years. I hate it when I
am right. By the way, you can complain all you want, but this
trend will continue. Corporations contribute 95 percent of all
political campaign funds in the US, and you know all too well that
money talks. See below for a very recent case in point.
Television News Anchor Lou Dobbs has been railing about these kinds of
issues for quite some time, yet the hits just keep on coming. My
philosophy is - why get upset (and go broke) over something no one
wants to change or address politically? Sell the house (if you
can) buy an airline ticket and take a permanent vacation. Oh, and make
yourself an offshore corporation. It was a former US President
who said, what is good for American Business, is good for
America. Well then, if Boeing, Halliburton, Morgan Stanley,
Pepsi, Citigroup, and Xerox can do it - why not you? It is not as
difficult or expensive as you might think.
.
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OFFSHORE COMPANY SEEKS U.S. TAX LOOPHOLE
Midland Reporter-Telegram, July 2, 2006
.
WASHINGTON -- The language in the House measure seems innocuous
enough. Tucked into the Coast Guard budget bill, it says merely
that Section 608 (c) (1) - is amended by striking the second
sentence. Two years ago, after extensive negotiations with its
competitors, Nabors won from Congress what amounted to a temporary
exemption that ends in August 2007. So now the company's chief
executive, Eugene M. Isenberg, is asking Congress to make the exemption
permanent. Kenneth J. Kies, the most influential tax lobbyist in town,
has been making the case for Nabors, and he confirmed that only Nabors
would benefit from deleting the sentence. But what that language
would do is allow one company, Nabors Industries, to gain permanent
access to business open only to U.S. companies. The language is needed
because Nabors, a big oil drilling company, moved its tax headquarters
to Bermuda and its legal headquarters to Barbados in 2001 to avoid
American taxes. Deleting that one sentence from the Coast Guard
budget law amounts to giving Nabors Industries a permanent waiver from
the Jones Act, a law enacted in 1920 that intended to protect national
security. The Jones Act requires that all ships moving people and cargo
between domestic ports be U.S.-owned, U.S.-built and sailed by U.S.
crews. Since Nabors gave up its status as an U.S. company in
December 2001, it has been fighting to keep operating its ships in the
domestic supply trade. Nabors moved its tax headquarters to
Bermuda in 2001, although its working headquarters remained in Houston.
The move allowed it to convert what would otherwise be taxable profits
in the United States into tax-deductible business expenses. When
Nabors and some other companies, including Ingersoll Rand and
TransOcean, did this starting in 2001, it set off a fierce debate in
Congress with both parties promising voters to crack down on what were
called "Benedict Arnold companies. Congress ended up passing a
law before the fall elections in 2002 that bars companies that moved
their tax headquarters to tax havens from getting government contracts.
But the law opened a loophole, allowing U.S. subsidiaries of these
companies to get government contracts. Nabors reported $428.4
million in profits in the United States last year. At the average tax
rate actually paid by large U.S. companies, Nabors would have owed
about $86 million in taxes. Nabors told its shareholders that it paid
less than $6 million. It paid $60.8 million in taxes to the federal
government in 2001, the last year it was a U.S. company. This
year, Nabors expects a much bigger American tax bill, more than $100
million, according to Kies, because Nabors' profits are so big this
year. Even if they weren't paying any tax, Kies said, they
operated in, and structured themselves, in reliance on the law,
followed the rules exactly as they were written to become a Bermuda
company and still comply with the Jones Act.
.
http://www.mywesttexas.com/site/
.
EDITORS NOTES:
The only Nabors I ever recall hearing about was Jim Nabors (he had a
thing going with Rock Hudson or so the rumors go). Anyway, this
other Nabors, an oil industry company, I guess greased someone (a
politician I'm thinking) and voila - something gets slyly added on in
to a bill meant to fund the coast guard. OK, sign me up, I am
ready to become a non-living, non-breathing corporate person, with all
the rights of a citizen (albeit one that cannot be put in jail, one
that can change nationality quickly and cheaply) including many that
human beings do not have (such as getting exemptions from obeying the
law, not paying taxes, good stuff like that). Hey - if you cant
beat them, then why not join them?
.
.
THE DEVIL'S BANKERS
By Ibrahim Warde - July 18, 2006
.
Money laundering was the crime of the 1990s and throughout that decade
money laundering laws and regulations grew exponentially. Beyond drug
dealing, the range of crimes covered expanded to include almost 200
offences, among them racketeering, theft, trafficking in human organs
and endangered species, and, of course, terrorism. In parallel, the US
effort against dirty money was internationalized through the FATF,
created by the G7 in Paris. As it expanded, the anti-money
laundering apparatus was criticized: the supply of illegal drugs had
steadily increased while the amounts of dirty money seized by the
government were negligible. In 2001 Paul O'Neill, the Bush
administration's first Treasury Secretary, noted that there was little
to show for the $700m a year spent by the government on money
laundering: over 15 years there had been only one substantial catch.
Although the apparatus gave law enforcement agencies plenty of
opportunities to go after smalltime dealers, major drug lords, who
could afford to skirt the rules and use the services of the best
lawyers, remained elusive.
.
http://mondediplo.com/2006/07/18clearstream
.
EDITORS NOTES:
So, the article quotes former US Treasury Secretary Paul O'Neill as
saying they have little to show after spending US$700 Million Dollars
of taxpayer funds to fight the so-called money laundering behemoth
(other than there are more drugs floating around, not less). No
kidding? Say, that seems to correspond with other findings that
claims less than ONE PERCENT of all financial transactions reviewed
offered up any tangible proof of, shall we say, less than kosher goings
on.
.
.
BETTING AGAINST THE DOLLAR
By Matthew Swibel, Forbes - July 24, 2006
.
Maybe Warren Buffett is right that trade deficits will sink the U.S.
currency. There are a lot of ways to make this bet. The dollar is
weak, definitely not good news for Americans traveling overseas. That
Hermès scarf bought in Paris costs an American 7% more than it
did Jan. 1. The euro is hovering at 52-week highs. Investors, however,
can ride this trend to their advantage. The ever-canny Warren
Buffett has taken huge bets against the dollar, both by shorting the
currency in futures contracts and by buying foreign stocks. For a while
last year the anti-dollar play looked dumb, but this year it looks
clever. The case made by the dollar bears hangs on the U.S.
balance-of-payments deficit ($809 billion over the last four quarters).
When foreigners who are now stockpiling dollar assets like Treasury
notes tire of them, so goes the argument, they will unload dollars, and
dollars will sink like stones in the currency markets. Emerging
Asian economies are under pressure from trade partners to allow their
currencies to appreciate. The incoming Treasury secretary, Henry
Paulson, seems to embrace a weaker dollar, to make American goods more
competitive abroad. You don't have to be a billionaire to
speculate against the dollar. Frank H. Randall Jr., 77, invests to
preserve something for his grandchildren. He has put $80,000, or 10% of
his portfolio, into foreign currencies. Says Randall, a former
electronics engineer and two-term Colorado state legislator, The U.S.
is printing money at the speed of light, and it's scary. I worry more
about the risk our country is taking than the risk I am taking.
.
http://www.forbes.com/global/2006/0724/062.html
.
.
VOLCKER SAY BERNANKE FACES TOUGHER TASK THAN WHEN HE RAN FED - By Matthew Benjamin, Bloomberg News Service
.
July 14 (Bloomberg) -- Paul Volcker, who took over the Federal Reserve
a generation ago at a time of soaring prices and stagnant growth, said
the current central bank chief, Ben S. Bernanke, faces an even tougher
challenge. While he said the global economy is doing well,
Volcker voiced concern that the good times can't last. The U.S.
current-account deficit exceeded $208 billion in the first quarter. The
figure, which includes trade as well as transfer payments and
investment income, declined from $223 billion the previous quarter. It
was still the second largest on record and requires the U.S. to attract
$2.3 billion in foreign capital each day fund the gap. We are
consuming too much and investing too little, said Volcker, who also
indicated that higher taxes may be needed to narrow the budget deficit.
.
http://www.bloomberg.com/
.
EDITORS NOTES:
Good ole Paul Volcker thinks that higher taxes may be needed eh?
I have a radical idea - why not stop spending so much unnecessary
taxpayer monies instead. One cost savings could be the closure of
all those military bases in Western Europe. Surely the Germans,
the French and so on now have enough money (and capability) to defend
themselves and besides, the Soviet Union is extinct (just like the
dinosaur). If the Germans and French have enough money to start
buying up American car companies, they cannot be broke (Daimler bought
Chrysler and current negotiations pit Renault as a possible buyer of
General Motors). In the least we know now they rescue their own
citizens from a war zone - and do not attempt to charge them for it (so
the financial situation must be OK - no?). Besides, Russia is a
capitalist country now (doing quite well with it so it would seem) and
not a threat. After all, most capitalists usually find it to be a
bad idea to kill their customers (Russia is the largest supplier of
natural gas to the EU), and Russia is trying to integrate with the EU
rather than, shall we say, take another antagonistic approach.
Just a thought on my part, but what do I know? The politicians
and the folks at the Federal Reserve must know what they are doing - no?
.
.
WHERE BANKS BURY THEIR GOLD - by Stephen Corley
.
Faced with gold price increases, central banks are accused of a grand
conspiracy to manipulate global movements of money. Having already
survived the resurgence of flares, platform shoes and the reincarnation
of ageing rock bands, investors are now being buffeted by the return of
commodity market trends from the 1970s. Security worries in Iran,
rampant demand from emerging market economies and the motorist's love
affair with gas guzzling vehicles have created a prolonged spike in the
oil price that has confounded every prediction that it could not go any
higher.
.
Few economists today advocate a return to the gold standard. However,
many prominent economists are sympathetic with a hard currency basis,
and argue against flat money. The current monetary system relies on the
US dollar as an anchor currency against which, major transactions, such
as the price of gold itself, are measured. Currency instabilities,
inconvertibility and credit access restriction are a few reasons why
the current system has been criticized. A host of alternatives have
been suggested, including energy-based currencies, market baskets of
currencies or commodities; gold is merely one of these alternatives.
The reason these visions are not practically pursued is much the same
reason the gold standard fell apart in the first place; a fixed rate of
exchange decreed by governments has no organic relationship between the
supply and demand of gold and the supply and demand of goods. So,
people place their trust in paper money, even though it's possible to
argue that the acceptance of a flat currency is nothing more than a
sales job. Gold advocates maintain that people are naïve and will
believe anything if told enough times. Perpetuation of the myth, so it
goes, needs careful management; a few key players and mass-market
psychology will do the rest. At present, some fund managers and
analysts believe that fiat currency is the greatest con in history. The
gold lobby believes it to be doomed and that the current environment is
poised to deliver the death blow, whilst governments, in desperation do
their utmost to fend off the inevitable. When governments have to
manipulate markets, whether stock, bond, currency or gold, these are
signs of desperation.
.
The US is printing new money at an unprecedented rate, under which
circumstances the dollar would normally depreciate because of its
dilution. This is where 'management' comes into play, through its
biggest 'tool' - the price of gold. As an overprinted currency
depreciates, it would normally cause the price of gold and silver to
rise. When gold and silver prices rise sharply, that could send a
warning signal that the currency is going south. The US government is
undoubtedly facing the inevitable demise of its currency but desperate
to delay things. The route it appears to have taken has been to depress
the price of precious metals by flooding the market through central
bank selling.
.
http://www.itp.net/business/features/
.
.
WILL THE FEDERAL RESERVE CREATE THE NEW SOCIALIST MAN?
By Karen De Coster and Eric Englund
.
Personal character and money are linked. No, we are not implying that a
person of great wealth is necessarily an individual with high
character. All one needs to do is look at the moral sewer known as Wall
Street in order to comprehend how a whole host of elites have traded
their souls for mind-boggling sums of money. The linkage between
character and money has everything to do with self-ownership. Aside
from one's body, the most personal property one may possess is the
fruit of one's labor. In a capitalist society, typically, this labor
gets rewarded in the form of money -- a paycheck. Hence, a person's
sense of value and self-worth is significantly influenced by how
society values his labor -- with money not only being that most
personal asset, but also being the measuring rod. In days gone by, an
individual developed character by learning that an honest day's work
would be rewarded with honest money (i.e., gold). Never has there been
a more stable measure of value than gold. Over the past
ninety-three years, since the founding of the Federal Reserve, the
dollar has depreciated by over 95%. With money no longer being a stable
repository of value - thanks to inflation - a predictable shift in the
American character has occurred. Gone are the low-time-preference days
where hard work and savings paved the road to a better life for parents
and children.
.
As our fiat money perniciously lost value, time preferences shifted
upwards as it made more sense to spend a depreciating currency today
than save for the future. And, better yet, what is more seductive than
to borrow ever-depreciating fiat money - as heavily encouraged by the
Federal Reserve - and pay the principal back with money that has become
worth even less? Gradually, savings becomes a vice, profligacy a
virtue, and the character of a people regresses to a permanent state of
adolescence -- as all sense of value is forgone in favor of instant
gratification. Without a doubt, the measuring rod of money is
broken. Indeed, money is loaned into existence by the Federal Reserve's
banking cartel. Fractional-reserve banking allows it to be created out
of thin air. Who needs a gold standard for self-measurement when any
adult with a pulse can borrow and spend hundreds of thousands of
dollars on McMansions, luxury automobiles, flat screen TVs, country
club memberships, and spare-no-expense vacations? What a wonderful life
the Federal Reserve has brought to Americans! Easy money and credit
bring immediate indulgence. As long as you have absolutely no fear of
debt, you too can look extremely successful without ever having had to
save a dime. Accordingly, this has given rise to America's new
insolvent class: the two-thousandaires. Let's delve a little
further into the characteristics of a two-thousandaire. To be sure,
they appear successful -- with the nice house, great cars, enormous
entertainment center, boutique clothes, and most of it purchased on
credit. For the most part, two-thousandaires do not have high-paying
jobs. They just live beyond their means. Moreover, these debt-ridden
adults live from paycheck to paycheck. There are no savings to fall
back upon when that rainy day comes. Just imagine having hundreds of
thousands of dollars in debt and only $2,000 in cash savings. Not to
worry. This is what credit cards and home equity lines of credit are
for. The Federal Reserve will always ride to the rescue with more fiat
money and credit.
.
Americans are stepping up to mainline this new kind of drug known as
debt. Instant money, after all, is something that provides on-the-spot
gratification and pacifies their anxieties about their status in the
social order. Indeed, one can have it all, at the drop of a (fiat)
coin, and without the standard save-and-wait period which earlier
generations experienced. Ultimately, this dependency on credit is
tantamount to being dependent upon the state. With hundreds of thousand
of dollars of debt, and little savings, two-thousandaire parents serve
as negative role models demonstrating that financial independence and
self-reliance are unimportant. Children see that parents simply muddle
through life trying to pay bills for all of the goodies while praying
that no medical, home, or other expenses emerge unexpectedly. The
lesson children learn is that one must not think about the consequences
of one's actions -- moral relativity takes root. If mom or dad loses a
job, then the family can always turn to the state for welfare and
credit relief. Accordingly, it is the state that provides solutions --
not parents.
.
America's middle class, as personified by the two-thousandaire,
is on the cusp of absolute moral and financial collapse. With the
demise of the gold standard and the rise of fiat money, the character
of a people has been hollowed out. Strong indicators of this include
the trend toward relativism along with the abandonment of the basic
self-ownership concept of being responsible for one's own body. Modern
moral developments are such that one's body merely becomes a vessel
seeking one form of amusement after another. Life itself becomes a
video game. The game goes on as long as it is fueled by the central
bank's easy money and credit policies. As adherents to Austrian
economics know, the Federal Reserve-induced economic boom must turn to
bust. People who have lived high, yet have truly earned nothing, will
not fare well in the coming bust. Such cash-strapped and indebted
families will head toward financial collapse and thus will turn to the
state for welfare and credit relief. As to welfare, parent and child
become virtual wards of the state. And, tragically, a person's
self-worth shall now be measured by whether or not some faceless
bureaucrat deems him worthy to receive a welfare check. Dependency on
the state will become deeper and more entrenched. Bureaucrats will
promise security and democratically sanctioned wealth transfers (i.e.,
welfare) in exchange for votes and loyalty.
.
http://www.mises.org/story/2221
.
.
THE WELFARE STATE'S ATTACK ON THE FAMILY
By Vedran Vuk - Wednesday, July 12, 2006
.
Most people listening to libertarian ideas are thrown off by the
thought that private charity, in absence of government programs, will
handle problems involving truly helpless people. Charitable
organizations are active but no one knows for sure how much donations
would increase in a tax-free society. When a person becomes old
without savings, what is he or she supposed to do without socialist
programs such as Social Security? The forgotten institution of charity
here is the family. When libertarians talk of charity, we don't just
mean the Salvation Army, but taking care of your relatives as
well. When my brother and I were babies, my grandparents stepped
in to take care of us while my mother and father worked. My parents in
turn provided for the whole household living under one roof to save
money. When my father moved to the United States and made more money,
he made sure that my grandparents would be taken care of.
.
During the Balkan War, members of my family were forcefully removed and
became refugees due to the conflict. When they lost everything, guess
who took care of them? The whole family together sent money and
whatever supplies that they could. So was the rule everywhere
before the welfare state: your parents who took care of you financially
as a child -- you may need to help them in the future. This basic
element of family life seems to be mind-boggling to supporters of the
welfare state. Proponents of the welfare state constantly speak about
our responsibility to society through redistributionist taxes.
.
I have no responsibility to society as a whole - to some stranger I've
never met. I personally feel that I do have a responsibility toward my
immediate family. Programs like TANF (Temporary Assistance for Needy
Families), Social Security, and unemployment insurance take away our
responsibility to the family and place it in the hands of the state.
They crowd out our sense of moral responsibility. Family was an
integral way of caring for individuals as a whole for centuries.
Supporters of the welfare state forget the past. Before the
advent of Social Security, what happened to people who lived past 65
years? Did these people just starve to death from hunger by the tens of
thousands? No. Did a huge wave of charitable organizations come to
their rescue? Not always. So, how did they survive? Everyone can agree
that there were no mass deaths of 65-year-old people recorded in the
Great Depression before Social Security took effect. These people
survived under a basic principle in life. You take care of your kids,
and one day, they will take care of you. In the past, having children
was an investment in your future. You knew that one day your children
would take care of your needs as you took care of theirs. This
created many incentives that produced a healthy family. For one thing,
you had to be somewhat nicer to your children and make sure that you
instilled good values. Children without a good work ethic or good
values are not likely to perform well in the job market. A parent would
have to teach these values to children to insure his or her own needs
at a later time. Responsibility to the family ranked highly. Without
this ingrained in a child, he or she might grow up one day and never
return the nurturing given by parents early in life. With
government attempting to smooth over every mistake in life, we get very
different incentives. If your parents are entirely subsidized on
welfare, how much do they really care about your future?
.
http://www.mises.org/story/2218
.
EDITORS NOTES:
This is what still goes on in countries like the Dominican
Republic. Family still matters and government is not involved in
any significant way economically in terms of social welfare. It
is a good system, and it works (providing you do not raise selfish
brats of course). Not only that, it puts a motivator in place to
raise responsible kids and maintain stability within the family.
Some people look at many so-called Third World nations and say they are
backwards because they often lack the expensive social welfare programs
that exist in the so-called modern, educated and wealthier
countries. I disagree such nations are backwards (they may have
less financial resources, but they are richer in many, many other non
financial ways), and in fact such nations whereby this sort of
self-help family values scenario do exist, are in a good position to do
well over the next twenty to fifty years as the welfare states become
unraveled. In Latin culture especially, and Chinese culture also,
it is not uncommon for married adult children to take in the elderly
parents or in-laws. In the US, the answer is to dump the elderly
into a nursing home (and of course have the state, via Medicare or
Medicaid pay for it). In the other scenario (taking in the
parents), children grow up interacting with the grandparents. Mom
and dad have a built-in baby sitter available who is a family member
(and not some stranger working for money). Granddaughters learn
to cook or garden or sew from Grandma. Grandsons learn how to
build birdhouses or install electrical things (or whatever else) from
Grandpa, while dad is certainly out of the house trying to earn a
living to support everyone. What have citizens learned and
practiced in the wealthy welfare states? Certainly they have been
taught the all benevolent and all knowing government will take care of
them (yeah, sure they will), so they never really learn how to fend for
themselves. In addition, the government also becomes the
arbitrator for family matters and supercedes the family decision making
process, so you no longer have exclusive say on how to raise your
children, when it might be appropriate to spank them (or not),
etc. The government and the politicians know best, so they would
seem to believe, when it comes to saving your money, raising your
children and almost everything else. Are you better off? Is
society really better off when government supplants the family
structure?
.
.
LATIN AMERICA AND ISLAND NATIONS LEAVE UNHAPPY EUROPE BEIND
Wednesday -July 12, 2006
.
Europeans lag far behind Latin Americans and Pacific Islanders when it
comes to happiness, a new study has claimed. According to the New
Economics Foundation (NEF), the tiny island of Vanuatu is the happiest
country on the planet, while no less than nine Latin American countries
feature in the top ten. Vanuatu, an archipelago in the South
Pacific Ocean consisting of about 80 islands, topped the Happy Planet
Index (HPI) after ecological footprint, life-satisfaction and life
expectancy were taken into account. The island nation scored 68.3
on the HPI, just ahead of Colombia (67.2), Costa Rica (66) and Dominica
(64.6) in the list. According to the CIA, most Vanuatu islanders
do not have access to a reliable supply of potable water and have to
put up with tropical cyclones and volcanic eruption, yet they are
apparently more than twice as happy as the USA. European nations
fared less well on the happiness scale, with Austria the highest nation
in the list with an HPI of 48.8 in 61st place. And the UK was
even more discontent according to the list, coming in 108th place,
behind Nepal, Libya and Georgia. The US is unhappier still, being
named as the 150th happiest country out of 178 with a HPI of just 28.8.
.
http://www.inthenews.co.uk/news/news/international-affairs/latin-america
-and-island-nations-leave-unhappy-europe-behind-$444586.htm
.
EDITORS NOTES:
The Happy Planet Index - what will they think of next? Well, I
guess there is something to be said for living on a tropical island
knowing you will never freeze to death in the wintertime, plus when you
get a bit hungry - you can always grab a coconut or banana growing wild
all over the place. And yet they also claim the US and European
countries are towards the bottom of the happiness list - now why do you
suppose that is? Maybe the following article sheds some light.
.
MOST OVERPRICED PLACES IN THE U.S. 2006
By Lacey Rose - July 11, 2006
.
Ever complained about the cost of gas? Guilty. How about a movie
ticket? Guilty. Utilities? Transportation? Real estate? Guilty, guilty,
guilty. Every American adult gripes about the price of daily
life, from a gallon of milk to a posh dinner. But in some areas, where
ever-increasing living costs and real estate prices are pitted against
lackluster salaries and job growth, complaints are more legitimate.
There's no way around it--such locales are anything but bargains.
That we're talking about places like New York City, Los Angeles and San
Francisco should come as no surprise. But what about Tucson and Essex
County, Mass? Both made our annual list of the most overpriced places
in the United States. In fact, Essex County, which lies north of
Boston and comprises a host of waterfront locales, topped off the
ranking. With the idyllic views come high living costs and expensive
real estate. We saw a lot of waterfront property being bought and
smaller homes being torn down and replaced by million dollar mansions
during the dot-com boom, explains Sara Young, economic development
manager at the Cape Ann Chamber of Commerce. Now you'll find a lot of
those homes on the market, and they aren't selling because NOBODY CAN
AFFORD them anymore.
.
http://www.forbes.com/forbeslife/realestate/
.
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