The Militant Libertarian

I'm pissed off and I'm a libertarian. What else you wanna know?

Saturday, April 11, 2009

The Bad Cop Epidemic

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Proposed New Global Currency

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The Final Push for World Government

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Did Lack of Regulation Cause the Financial Crisis?

by D. Saul Weiner

Bill Moyers recently interviewed William Black (ht Glenn Greenwald), who is a regulator who came to fame for exposing the "Keating 5" Senators for their misdeeds during the Savings & Loan crisis and wrote a book based on that experience called The Best Way to Rob a Bank Is to Own One: How Corporate Executives and Politicians Looted the S&L Industry. The interview mostly covers our current financial crisis and is well worth watching.

You may recall that as the crisis initially unfolded, there was a reflexive reaction on the part of many to blame deregulation, without presenting any evidence for that position. Black makes numerous references to a lack of regulation as being responsible for the mess, but does bring up specific examples. Black quite naturally brings with him the bias of a regulator, so it is necessary to examine what he says in order to evaluate his assertions. I have summarized some of his key points below, in the order in which they surfaced in the interview, while adding my own thoughts after each.

* This crisis was driven by fraud … on the part of mortgage loan originators, rating agencies, investment banks, and AIG.

o Black attributes the collapse to fraud and equates this with a lack of regulation. However, as Sheldon Richman pointed out in connection with the Madoff scandal, this is a false equivalence. "Dear Ms. Maddow:
Why do you call the government’s failure to pursue fraud allegations in the Madoff case "deregulation"? Laws against fraud – that is, against the acquisition of someone else’s property by deceitful means – have never been regarded as "regulation" or limits on free-market activity. They were simply part of the free market’s common-law prohibition against violating person and property. Regulation, on the other hand, consists of government interference with private parties setting their own nonfraudulent terms of exchange in the market. By equating abstention from investigating fraud with laissez faire, you have allowed your ideology to blind you. Maybe this would be a good topic for discussion on your program." In other words, failure to investigate and prosecute fraud is a fundamental breakdown in the rule of law, much as it would be to do likewise for cases of murder or conventional robbery. It is not a characteristic of a free market. If we want to get to the bottom of the problems, as I believe Black sincerely does, we need to be very careful about diagnosing the problems correctly and a prerequisite for doing so is using accurate language. This is not mere quibbling about semantics.

o It is worth noting that Black emphasizes the malfeasance of the above players, but completely ignores the roles played by the Fed’s monetary policy, Fannie, Freddie, and the Community Reinvestment Act. I won’t cover them here, as they are well documented by Thomas Woods in his book Meltdown, but will only point out here that they played a crucial role in precipitating this crisis. I am inclined to believe that this represents a blind spot in Black’s perspective.

* The FBI put out a public warning in September 2004 that there was an epidemic of mortgage fraud, which if it were to continue, would produce losses at least as large as the S&L debacle. However, there was a lack of regulation because after 9/11 the Justice Department transferred 500 white-collar specialists in the FBI to national terrorism and didn’t replace them. Thus there are now 1/5th as many such agents working on these issues for a calamity which is at least 100 times as big as the S&L crisis.

o This is clearly a problem but what does it tell us? It tells us that in government, resources will always be allocated on a political basis. After 9/11, it was politically expedient to divert resources being used for investigating bank fraud to fight terrorism instead.

o Government will always be preparing to "fight the last war." After the Enron debacle, the Sarbanes Oxley Law was instituted at great expense, yet those rules did nothing to prevent the current breakdown. Maybe there is something more fundamentally wrong than simply an administration asleep at the wheel.

# In 1999, Congress got rid of the provision of the Glass Steagall Act (a post-1929 Crash law) which separated commercial and investment banking, a measure which enjoyed bipartisan support.

* This certainly constitutes deregulation, but Black does not go on to demonstrate that this development did in fact contribute to the current breakdown. Sheldon Richman has indicated that it did not and I have yet to come across someone who could show that it did.

# Chairperson of the CFTC (Commodity Futures Trading Commission) Bern attempted to acquire authority for the CFTC to regulate Credit Default Swaps (CDS, the instrument which was the undoing of AIG) but was blocked from doing so by Congress, others.

* This is as close to a deregulation smoking gun as Black gets. I would concede that some of the problems with CDS might have been mitigated to some degree if the CFTC were given the requested authority. Whether this would have materially impacted the course of events, I am not so sure.

* That said, the whole incident calls into question the whole premise of the regulatory model. If the regulated industry can control the course of the development of the rules, as was clearly the case here, how can we ever come to rely upon the regulators to act in "the public interest"? This is the whole topic of regulatory capture, or in more colloquial terms, the fox guarding the hen house. And regulatory capture is really a subset of the larger problem we face today, which is government capture.

# The government did not enforce the Prompt Corrective Action Law, a measure passed after the S&L crisis which mandated closing failed banks. During Japan’s financial crisis, our government repeatedly told Japan to use these processes, but Japan did not and had a "lost decade."

* More government failure. Even when government appears to learn from earlier crises, whether or not those tools will be employed is at the discretion of subsequent administrations. And political considerations will decide this.

# There needs to be a Congressional investigation to get to the bottom of what happened. Executives from the failed banks need to be replaced and successful regulators need to be appointed, not the same people who got us into this mess.

* Sure, this is what ought to happen, but it won’t unless an angry mob descends upon Washington demanding that they do these things.

* More likely, to placate us we would get a "Blue Ribbon Panel" appointed by our rulers who will tell us what they want us to hear and will give a slap on the wrist to some of the "bad apples" responsible for this mess while discounting if not entirely ignoring many of the most serious criminals. When all is said and done, they will recommend sweeping new governmental powers to "ensure that a catastrophic financial breakdown will not recur."

# These problems were a result of ideologies which swept away regulation. Regulation and law enforcement mean that cheaters don’t prosper and allow capitalism to function properly and honest purveyors to succeed.

* As discussed earlier, free markets DO punish fraud, so if there was an ideology that was responsible for the non-punishment of fraud, it is not a free market one.

* Free markets also punish reckless behavior by allowing companies and individuals to endure the consequences of their actions, not get bailed out. This is another way that they allow honest and prudent people to succeed.

* Free markets also allow for open competition which over time will produce better businesses. On the other hand, for example, giving regulatory preferences to certain rating agencies will create a cartel instead, making it more likely for the poor performance of said companies noted after the crash of the Technology Bubble to continue.

# There is a Dutch saying that it is not necessary to hope in order to persevere.

* This much I think we can agree on. If more Americans felt this way, we would have President Paul right now, rather than President Obama.

* While I have criticized some of Black’s conclusions, I admire his honesty, courage and dedication.

* I would love to include Black on a Blue Ribbon Panel to investigate the causes of the crisis and to make policy recommendations, along with others like Ron Paul, Tom Woods, Sheldon Richman, etc. Uh oh, I guess I have fallen back into "Hope" mode.

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Friday, April 10, 2009

Small-Town Anarchy

by J. L. Bryan

Rothbard and many others have written about the potential benefits of a free market in protection, law, and defense. These include lower cost, greater efficiency, higher quality, more consumer choice, and protection of individual liberty.

In our current political climate, such a system can seem distant and utopian, an idea to be quietly developed by economists and philosophers until people’s attitudes and beliefs drastically change.

However, activities like the Free State Project raise another possibility. What if a small, libertarian-minded town or county, perhaps in New Hampshire or Montana, passed a law decreeing that town police and judicial services would, beginning on a certain date, be supplied entirely by the private market?

Naturally, the state (or the federal state) might oppose such action, but we shall suppose that the effort to pass the law has been successfully carried out.

Entrepreneurs would begin creating police firms, advertising their services, and signing up customers. Existing local police could seek employment among the new firms, or start their own firms (or even get going on that fishing-guide business they’ve always secretly dreamed about).

Private mediation and arbitration firms, if not already present, will spring up in anticipation of the closing of the town court. They will begin talking to the new police agencies, the agencies’ customers, and each other, to sort out some initial contracts and agreements about how they will work together.

The people of the town, knowing of the situation (having themselves pushed heavily to establish it), would study their options and decide which protectors they will choose for when the police go out of business. The smart police agencies will include a "Fines and Penalties" section in their contract stating that, if a customer commits crimes against others, the customer will be subject to fines and other specific penalties. Violent crime might lead to imprisonment. (We may as well assume that the state police would claim jurisdiction over major crimes like murder).

Other firms might experiment with other kinds of agreements. However, in order for the firm to provide full protection to all its customers, the protection must be reversible – if you want protection against theft, you must agree not to steal. If you want protection against violence, you must agree not to initiate violence.

On the appointed day, the town police, court and jail will close for business and their assets will be sold off, possibly to the new police and arbitration agencies. The town will no longer collect taxes to pay for these services, either.


From then on, whenever a person in town was a victim of a crime, he would contact his police service. They would be responsible for identifying the criminal and filing an arbitration claim against him.

If the accused criminal has a contract with a police company, then his police company will respond to the claim. They will face the victim’s police company in arbitration. If the accused is found guilty, he will be contractually obligated to suffer penalties.

If both parties subscribe to the same police agency, the situation might be handled by internal investigation and arbitration, or the agency might find it preferable to submit such conflicts to the expert third-party arbitrators.

In cases of theft or destruction of property, the most likely arbitration finding would be financial compensation paid by the criminal to the victim. After studying numerous examples of voluntary legal systems, Bruce L. Benson finds that in such systems:

If the accused offender is found guilty, the "punishment" tends to be economic in nature: restitution in the form of a fine or indemnity to be paid to the plaintiff. Liability, intent, the value of the damages, and the status of the offended person all may be considered in determining the indemnity. Every invasion of person or property is generally valued in terms of property.

Imprisonment would rarely benefit anyone in property crime situations, and imprisonment would likely require interaction with the state (unless the town jail is remade into a long-term prison, which we won’t assume).

The state would probably still claim jurisdiction over serious violent crime like murder, rather than allow private companies to handle the outcome. In local, minor cases of violence, the situation could be handled according to police contract. In these minor cases, the victim might prefer some restitution from the criminal, rather than the nothing he would receive from the state.

A completely free-market legal system could certainly handle cases of serious violent crime like murder, if needed, but that is beyond the scope of discussing a small free-market town inside a monopoly state. Town police companies would likely capture such offenders, hold them at the town jail, collect evidence, and turn it over to the state.


Because of the costs of arbitration, police agencies would seek to avoid it when possible. They would train security officers to diminish conflict and keep the peace rather than escalate any conflict. These "peace officers" could also be trained to adjudicate disputes and propose solutions and restitution on the spot.


Any roads owned by the town could be managed by a remnant of town government, by the chamber of commerce or other voluntary association, or otherwise sold off to private owners. (This could give new meaning to the Adopt-A-Highway program.) Someone will own the roads. The road owners will need to provide security, which can be purchased from the private police companies, some of which might even specialize in managing and securing roads.


We will consider the "town jail" as a local, short-term holding facility. Violent criminals would be held there until they were turned over to the state. The police companies might fund the jail through joint contributions, or the jail might be an independent business, selling its services to the police agencies through fees or subscriptions. Any nonprofit, "volunteer" neighborhood protection groups might also subscribe to the jail, so they would have a place to put violent offenders.

The customer’s contract will stipulate under what conditions he can be jailed by his own police company (and other police companies with which his company has mutuality). This might include acting violent, being destructive to others’ property, being publicly drunk and/or naked, etc.

Police companies would want to avoid unnecessarily jailing their customers, or any potential customer, because of the fear of losing business (or potential business), and because of the cost. They would need this option as a last resort, however, to fully protect the rest of their customers from violent criminals (unless the market devises a better means).

In the case of unlawful imprisonment, the victim would be able to file a kidnapping claim against those who imprisoned him. Arbitration would reveal whether the police company’s choice to jail was reasonable under the circumstances. This would also deter police companies from excessive, unnecessary jailing.


Those who are very poor and have trouble affording police services might join mutual-defense groups and contribute their own labor, instead of subscribing to a service, along with others who prefer this volunteer-organizing approach for their own reasons.

If someone does not subscribe to police protection, nor join a mutual-defense group, and is the victim of a crime, he still has a claim against the criminal. Thomas Whiston writes about the stateless legal order of medieval Iceland:

The poor were at no disadvantage. The poor could sell their right to justice to someone, such as a chieftain or another respected peer, who could collect or make right upon the victim. In this respect, the right to transfer restitution acted as an equalizer for the poor. In cases where the victim did not want restitution, the guilty parties had no obligations imposed on them.

The unprotected victim can sell his claim to a police company, who can then profit by pursuing restitution from the criminal party. The police companies might also do this in the interest of stopping a criminal before he aggresses against their own customers.

If someone is a serial offender, and persists in committing crimes, it might be that no police company wants to protect him at any price. Protecting someone who repeatedly provokes conflict can become very expensive. It would be in the interest of police companies to make the identity of such criminals known to the community, so that everyone could keep watch on the criminals and avoid putting any trust in them. Such a criminal might find it hard to get a job or do business in the community, and so would have economic incentives to move away.

He will also not enjoy any police protection in this town. Every police company could ban him from each of its protected properties, essentially exiling him from anywhere in town but his own private property. (And this might include those local roads!) If others commit crimes against him, he will find the police companies and arbitrators unhelpful.


There may be people who live in town and refuse to recognize the free market system as legitimate. If charged with a crime, they may refuse to arbitrate, and will not be contractually bound to do so. In this case, the victim or his police company could pursue a civil suit against the offender, or file charges with the state authorities. In a state-controlled society, it will sometimes be necessary for police companies and victims to interact with the state to obtain justice.

(In a completely free-market world, "refusal to arbitrate" would carry much heavier implications, possibly turning the refuser into an "outlaw." No police company will want to provide service to an "outlaw," even if he is later the victim of a crime. No arbitration company will recognize his claims. No one would suffer any legal penalties for committing crimes against him.

In such a free market world, refusal to arbitrate would be a dangerous choice, potentially sacrificing all of one’s present and future legal protections and claims. It would be in the self-interest of every police company to avoid taking on such a person as a customer, since it will only lead to trouble and expense.

But we digress.)


Out-of-towners accused of a crime might have the option of signing a contract to work within the local arbitration system, or they might insist on being handed over to the state for their crimes. In this case, the local police company involved would be happy to assist with the prosecution. Those who are victims while visiting might have the same option: the local market system, or the state.


Private police companies would have a strong incentive to treat everyone in town with courtesy and respect, unless caught in the act of a crime. Everyone is either a customer or potential customer. Abusing customers (or even non-customers) would cause people to hate the company, destroy its reputation, and lead to lost customers, lost revenue, and ultimately bankruptcy. A police-abuse victim could switch police companies and file a claim against the abusive company. The other police companies would be eager to bankrupt a rough competitor with claims, and would always be ready to use force in the defense of their customers.


A town that relinquished its police and court functions to the market would benefit from efficient protection and conflict resolution. The greatest share of costs would fall on offenders. Victims would be the center of the legal process. The private institutions would still need to interact with the larger state environment around them, but at least town matters could be handled by the police and arbitration companies. As long as consumers are free to choose their own protection, and entrepreneurs are free to start protection agencies and arbitration firms, an anarchist town would be a very free and safe place to live.

Low taxes and low crime rates would attract new residents and businesses, helping the town prosper. If one community could successfully establish a free protection and arbitration market, it would provide a model that could be imitated in communities across the country and around the world.

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Washington Pinkos

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The Truth Behind the Income Tax

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Hannity, Morris Agree with “Conspiracy People” About New World Order

Kurt Nimmo

In the video here, the former Clintonite Dick Morris, who is now a darling of Fox News, tells Sean Hannity the globalists will put the “American economy under international regulation” and “those people who have been yelling, oh, the UN is going to take over… they’ve been crazy, but now they’re right.”

“Those conspiracy people,” Sean Hannity interjects, “had suggested that for years… you’re not wrong.”

It’s the “international regulation of the financial institutions” we have to worry about, warns Dick Morris. It will happen under “IMF control… Remember, the IMF is run by the Europeans and backed by Americans.”

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Thursday, April 09, 2009

Man detained and harassed at airport for carrying CASH!

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The Fate of the Backyard Gardener

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Council on Foreign Relations Issues Report on How to Construct Global Government

by: Allison Bricker

Old Thinker News recently reported on a research program originally announced by the Council on Foreign Relations last year outlining the process how best to implement a global government. The report entitled, “International Institutions and Global Governance Program: World Order in the 21st Century” outlines the five-year research agenda, made possible by a grant from “The Robina Foundation”, to modernize and implement a scheme of world government. The CFR opines that the current structure of multilateral institutions provide an inadequate foundation on which to implement their agenda of international governance.1

The report’s thesis is merely a larger extrapolation of the philosophy espoused by President Obama’s Chief of Staff, Rahm Emmanuel:

“You never want a serious crisis to go to waste…It’s an opportunity to do things you could not do before.”

--Rahm Emanuel

The CFR report outlines four areas, which by their estimation present a window of opportunity to implement and expand mechanisms of global governance. These areas should come as no surprise as they are the same crisis/government provided solution talking points exaggerated prior to the debt recession taking center stage.

* International Response to the “Global War on Terror”
* International Protection of the Environment/Energy Security
* International Management of the Global Economy
* Supporting the doctrine of Preemptive War

The report goes on to say that one possible implementation likely to work would be a formal international organization allowing for universal membership such as the United Nations coupled along with regional or sub-regional organizations as we see with the African/European Unions, G8, NATO, etcetera. Moreover, the CFR suggests incorporating Non-Governmental Organizations (NGO’s) as well as “super-empowered individuals”, ergo Bono in order to sell the idea successfully to the public.

The Council on Foreign Relations rationalizes the need for the creation of an international government due to their flawed assessment that no single country, can address these issues on their own with out multilateral assistance. Therefore, we see yet again that the answers provided are merely a response to problems wholly created by multinational oligarchs in the first place. Whether it is the economic collapse at the hands of the world’s central bankers or the chess game of international antagonism at the behest of the United Nations, which more often than not results in the outbreak of war, the CFR seeks to implement the tired shell game of government created problem supplanted with an international governmental solution.

However, most alarming to this blogger, is the report’s outright hostility to national sovereignty and disdain for our Republic’s Constitution.

Read the rest (plus the full CFR report) at the Smoking Argus Daily.

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Are Britney Spears and Barack Obama the Same Person?

Have you ever seen Barack Obama and Britney Spears together in the same room? Did you know Britney and Barack are both sensitive about the size of their ears? I believe these two may actually be the same individual. Let us compare:

Britney -- is a huge celebrity
Barack -- is a huge celebrity

Britney -- smokes cigarettes
Barack -- smokes cigarettes

Britney -- born in America
Barack -- born in America*

Britney -- excessive spender
Barack -- excessive spender

Britney -- Mickey Mouse Club
Barack -- His Cabinet

Britney -- had her hair shaved with clippers
Barack -- has his hair shaved with clippers

Britney -- abused illicit substances and sought treatment
Barack -- abused illicit substances

Britney -- loves to show off her chest
Barack -- loves to show off his chest

Britney -- socialite
Barack -- Socialist

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Wednesday, April 08, 2009

Ron Paul: Statement Introducing HR 1866, Industrial Hemp Farming Act

Statement of Congressman Ron Paul
United States House of Representatives
Statement Introducing HR 1866, Industrial Hemp Farming Act
April 2, 2009

Madam Speaker, I rise to introduce the Industrial Hemp Farming Act. The Industrial Hemp Farming Act requires the federal government to respect state laws allowing the growing of industrial hemp.

Eight States--Hawaii, Kentucky, Maine, Maryland, Montana, North Dakota, Vermont, and West Virginia--allow industrial hemp production or research in accord with state laws. However, federal law is standing in the way of farmers in these states growing what may be a very profitable crop. Because of current federal law, all hemp included in products sold in the United States must be imported instead of being grown by American farmers.

Since 1970, the federal Controlled Substances Act's inclusion of industrial hemp in the schedule one definition of marijuana has prohibited American farmers from growing industrial hemp despite the fact that industrial hemp has such a low content of THC (the psychoactive chemical in the related marijuana plant) that nobody can be psychologically affected by consuming hemp. Federal law concedes the safety of industrial hemp by allowing it to be legally imported for use as food.

The United States is the only industrialized nation that prohibits industrial hemp cultivation. The Congressional Research Service has noted that hemp is grown as an established agricultural commodity in over 30 nations in Europe, Asia, North America, and South America. The Industrial Hemp Farming Act will relieve this unique restriction on American farmers and allow them to grow industrial hemp in accord with state law.

Industrial hemp is a crop that was grown legally throughout the United States for most of our nation's history. In fact, during World War II, the federal government actively encouraged American farmers to grow industrial hemp to help the war effort. The Department of Agriculture even produced a film "Hemp for Victory'' encouraging the plant's cultivation.

In recent years, the hemp plant has been put to many popular uses in foods and in industry. Grocery stores sell hemp seeds and oil as well as food products containing oil and seeds from the hemp plant. Industrial hemp is also included in consumer products such as paper, cloths, cosmetics, and carpet. One of the more innovative recent uses of industrial hemp is in the door frames of about 1.5 million cars. Hemp has even been used in alternative automobile fuel.

It is unfortunate that the federal government has stood in the way of American farmers, including many who are struggling to make ends meet, competing in the global industrial hemp market. Indeed, the founders of our nation, some of whom grew hemp, would surely find that federal restrictions on farmers growing a safe and profitable crop on their own land are inconsistent with the constitutional guarantee of a limited, restrained federal government. Therefore, I urge my colleagues to stand up for American farmers and cosponsor the Industrial Hemp Farming Act.

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Obama’s Attack on the Middle Class

by Paul Craig Roberts

Obama and his public relations team have made it appear that his trillion dollars in higher taxes will fall only on "the rich." Obama stresses that his tax increase is only for the richest 5 percent of Americans while the other 95 percent receive a tax cut.

The fact of the matter is that the income differences within the top 5% are far wider than the differences between the lower tax brackets and the "rich" American in the 96th percentile.

For Obama, being "rich" begins with $250,000 in annual income, the bottom rung of the top 5 percent. Compare this "rich" income to that of, for example, Hank Paulson, President George W. Bush’s Treasury Secretary when he was the head of Goldman Sachs.

In 2005 Paulson was paid $38.3 million in salary, stock and options. That is 153 times the annual income of the "rich" $250,000 person.

Despite his massive income, Paulson himself was not among the super rich of that year, when a dozen hedge fund operators made $1,000 million. The hedge fund honchos incomes were 26 times greater than Paulson’s and 4,000 times greater than the "rich" man’s or family’s $250,000.

For most Americans, a $250,000 income would be a godsend, but envy can make us blind. A $250,000 income is not one that will support a rich lifestyle. Moreover, many people prefer lesser incomes to the years of education, long work hours and stress of personal liability that are associated with many $250,000 incomes. In truth, those with $250,000 gross incomes have more in common with those at the lower end of the income distribution than with the rich. A $250,000 income is ten times greater than a $25,000 income, not hundreds or thousands of times greater. On an after-tax basis, the difference shrinks to about 6 times.

The American tax code taxes the $250,000 income at the same rate as it taxes a $100,000,000 or higher income. On an after tax basis, after the federal government grabs 30% in income taxes and state government grabs 6%, the "rich" man or woman or family earning $250,000 has $160,000. In New York City, where there is a city income tax in addition to state and federal, this sum diminishes further. State sales taxes take another 6 or more percent of most consumption expenditures.

When all is said and done, the after-tax value of a $250,000 income in New York City is about $140,000.

Is this rich? It might be in a small town in Alabama, but not in New York City. The "rich" person or family won’t be purchasing a Manhattan apartment, much less a brownstone. They won’t be driving a luxury car. Indeed, they won’t be able to afford a parking garage for an economy car. If they fly anywhere, it won’t be in a first class seat.

For the most part, $250,000 incomes are located in large cities where the cost of living is high. For example, a husband and wife who are associates at major law firms, each of whom works 60-hour weeks and has no job security, earn $125,000 each. They might both have student loans to pay down. For the Obama administration to lump these people in with Hank Paulson or billionaire hedge fund operators is propagandistic.

What is the difference between the $250,000 "rich" income and the $245,000 "non-rich" income? After Obama’s tax scheme goes into effect, the $245,000 income will benefit from a tax cut, and the $250,000 will have a tax increase. Will people in the 96th percentile ask for pay cuts that will drop them into the 95th percentile?

In America, the truly rich are those in the top 0.5% of the income distribution. These are the people with yachts, private airplanes, and who are still rich after they lose half their wealth in a stock market collapse caused by government policy that accommodated financial gangsters.

"Oh well, I was worth $600,000,000 last year and only $300,000,000 this year. Perhaps we should stop drinking $1,000 bottles of rare vintages and move down to $100 a bottle wines. Probably shouldn’t buy that new yacht or that villa in the south of France."

The upper middle class with $250,000 gross incomes are major losers of the financial collapse. Many of the people in this income class are leveraged to the hilt in order to maintain appearances and can be swept away as easily as the very poor. But those who were frugal and invested for their future have lost 50% of their savings. These wiped out people are the ones who will bear the brunt of Obama’s tax increase.

If the tax rate on a multi-million dollar annual income goes up by 5 percentage points, the cutbacks won’t really affect the lifestyle. But for the $250,000 gross income group, it means no prospect of private schools and Ivy League education for the children, who will be attending state colleges with the rest of the non-rich.

Obama is attacking the only income class that has any independence – the upper middle class professionals. The real rich are few in number and seldom present any opposition to government. Recently, the New York Times reported (March 23, 2009) that the 400 richest Americans’ "share of the nation’s total wealth has nearly doubled to more than 22 percent." The average income of the 400 richest Americans is $263 million annually. That is 1,052 times the income of the "rich" $250,000 income.

What the Obama administration is really doing is taxing ordinary people in order to bail out the super rich. The 95% of Americans who get the tax cut will find that it is offset many times by the depreciation in the dollar and the raging inflation that will result from monetizing the multi-trillion dollar budget deficits made necessary by the bailouts of the banksters.

In the United States, government has become expert at manipulating both left-wing and right-wing ideologies. It keeps those on both ends of the spectrum set at each other’s throats in order to ensure the government’s continuing independence from accountability.

Historically, the definition of a free person is a person who owns his own labor. Serfs were not free, because they owed their feudal lords, the government of that time, a maximum of one-third of their labor. Nineteenth century slaves were not free, because their owners could expropriate 50% of their labor.

Today, no American is a free person. The lowest tax rate, not counting state income, property tax and sales tax, is 15% Social Security tax and 15% federal income tax. The "free American" starts off with a 30% tax rate, the position of a medieval serf.

In medieval Europe, when tax rates reached beyond 30%, serfs rebelled and killed their masters.

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Budget Expands Government as Economy Contracts

by Ron Paul

Last week the House passed another budget that increases federal power, raises taxes, and increases the national debt. I voted against it, and was pleased to see that not a single Republican representative voted for it. Legislators often see bipartisanship as constructive, but I disagree especially where the destruction of our economy or our liberty is concerned. There has been too much bipartisan consensus on expanding government far beyond the bounds of the Constitution which we all swore to defend and uphold. Because of this, I have never been able to vote for a budget. However, it was good to see Republicans come together on this important vote, even if their alternative budget was almost as bad.

Despite the deterioration of our economy, this is the largest budget ever passed, at $3.6 trillion. Gross domestic product and tax receipts are shrinking. The government has less money to spend this year, and so it spends more – $1.5 trillion more – than it has. When the economy expands, the government expands. Worse, when the economy contracts, the government expands more. Even more troubling is that even though the size of the budget boggles the mind, it is never the final word on federal spending. No allowance has been made for future bailouts and stimulus plans that are highly likely. There are always supplemental bills passed later in the year. War spending is one of those. Spending on Afghanistan is only partially included in budget, with a supplemental request expected in the future. History shows that true costs far exceed estimates. So even though these numbers sound appalling enough, I predict spending will top $4 trillion this year, raising the national debt by over $2 trillion when all is said and done.

Some may notice that the neo-conservatives who masterminded the policy of global interventions are not complaining about the level of military and foreign spending. This is because rather than drawing down our costly interventions, Obama is largely staying the course on these issues. In fact, this week a group of leading neoconservatives met to discuss how best to support the President on foreign policy! I am disappointed and concerned that, in spite of a change in leadership, we will remain the policeman of the world, placing ourselves at grave danger in many ways.

As our mountain of debt is projected to double with the new budget, many are wondering how long our country can keep this up before serious repercussions are felt. Obviously we can’t continue down this road indefinitely. Certainly, no country has ever prospered when their public sector spent half or all of the nation’s GDP. Yet we are saddled with leadership that seems unwaveringly convinced that the key to prosperity is public spending. This will be exposed for the lie that it is when our creditors wake up and call in our debt. The temptation at that time will be for the government to simply print up dollars in the amount needed. This type of debt repudiation could signal the end of the dollar as its value sinks to zero. We are seeing all the signs that this could happen. Certainly there are no signs of the alternative, which is paying down debt and taking the path of fiscal responsibility.

Tragically, it is those who save their dollars, the most prudent and responsible among us, that will be hurt most by this irresponsibility in Washington.

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Tuesday, April 07, 2009

Still Searching for a Recovery

by Bill Bonner

Paris, France – The mobs are forming…

Give the sans-culottes a chance…and they’ll turn violent. So far, two bosses have been held hostage in France. Employees wanted something the bosses either couldn’t or wouldn’t give.

In England, the yahoos attacked poor Sir Fred Goodwin’s house. Fred ran the Royal Bank of Scotland into the ground; you’d think the rabble would be delighted.

In America, meanwhile, they organize bus tours to gawk at AIG executives’ houses…and howl for blood. Apologize, resign…or commit suicide, suggested Senator Grassley.

“The corporate security business is booming,” says the International Herald Tribune.

Until now, the whole bonus/executive pay/bailout spectacle was just an amusing diversion – diverting the public’s attention with a trifling few million dollars, while the feds picked their pockets for trillions. But now, it’s turning ugly.

Our guess is that the blood will flow…but later. It’s still fairly early in the correction. Investors have lost money – lots of it. Homeowners have lost their homes. Working stiffs and Wall Street sharpies have both lost their jobs. But the violence-prone yahoos still expect something for nothing. The bailout plans will work, they believe. The government will step in and save them. They haven’t figured out that the government’s bailouts are just making their situation worse.

Today’s International Herald Tribune tells that “shanty-towns” are beginning to appear throughout the United States. People are setting up tent communities…shacks…and Rio-style favelas – in America. The paper shows a photo of a group of tents under a California freeway. It’s not hard to understand why. Many families live paycheck to paycheck…just one week ahead of the rent payments. If the paychecks stop – even for a short time – they’re in trouble.

When credit is expanding, jobs are plentiful and credit is willing. Lose a job and you can always get another. And you can fill in the gap in your budget with credit cards. But that was then…this is now. Advertise a job opening now and you’re likely to get hundreds of applicants. And not only is it harder to get a job…it’s harder to get a line of credit too. And even people who still have credit are more reluctant to use it. They know where that leads; many would prefer to live under a highway than to run up more debt.

A big change in attitude has taken place. People used to think that whatever they needed, they could get it “just in time.” That’s why we have 24-7 liquor stores, all-night convenience shops and cash machines on every street corner. But something has gone wrong with the “just in time” system. The cash machines aren’t as yielding as they used to be. Neither is the housing market. Or the job market. Sometimes, they just say no.

Now, people want a little cash in their pocket…just in case.

But what do we know? We missed the whole credit cycle. When we were young and in need of credit, the banks were still smart enough not to lend to us. When we got older, we were smart enough not to borrow.

But pity people about 20 years younger than we are. They were just starting out…having children…buying houses…at a time when the banks had lost their minds. Credit was as easy to get as a social disease. Now, the debt is even harder to get rid of. Old people…and young people…tend to have little debt. It’s the people in between who are hurting.

But enough rambling…

Everyone’s looking for the recovery. The commentators think they see signs of it everywhere. Commodities are rising. Stocks are going up. Even houses are said to be selling better than they were a few weeks ago.

“Risk appetite grows on hope US is near bottom,” says the FT today.

The Dow rose 174 points yesterday. Oil, the dollar, and gold moved little.

Maybe you should stop reading here…before we get to the “rest of the story” …

But first, we turn to Ian in Baltimore for more news:

“On the housing front, we see a ray of hope,” writes Ian in today’s issue of The 5 Min. Forecast.

Read the rest at

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Obama OK With Spying On Your iPod...

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Senate Passes National Service Bill

The Senate on Thursday approved a major national service bill that triples the AmeriCorps program, despite concerns from some conservatives that it could allow politically charged groups to benefit from extra funding.

The Senate voted 78-20 to increase AmeriCorps to 250,000 from its current 75,000 positions. The legislation is expected to cost $6 billion over five years.

The House could take up the bill as early as Monday, sending it then to President Obama for his signature.

The package, called the Generations Invigorating Volunteerism and Education Act, or GIVE Act, encourages a broad range of Americans to give back to their communities. It would create five groups to help poor people, improve education, encourage energy efficiency, strengthen access to health care and assist veterans.

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Monday, April 06, 2009

Waco: The Rules of Engagement, Part 2/2

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Waco: The Rules of Engagement, Part 1/2

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Citizen grand jury indicts Obama

Groups in 20 more states reviewing eligibility claims by Bob Unruh

President Obama has been named in dozens of civil lawsuits alleging he is not eligible to be president, with one man even filing a criminal complaint alleging the commander-in-chief is a fraud, and now a citizen grand jury in Georgia has indicted the sitting president.

The indictment delivered to state and federal prosecutors yesterday is one of the developments
in the dispute over Obama's eligibility to be president under the U.S. Constitution's requirement that presidents be "natural born" citizens.

Orly Taitz, a California attorney working on several of the civil actions, also announced she has filed another Quo Warranto case in the District of Columbia, where, she told WND, the statutes acknowledge that procedure.

The Quo Warranto claim essentially calls on Obama to explain by what authority he has assumed the power of the presidency.

Georgia resident Carl Swensson, whose work is detailed on his Rise up for America website, told WND he got tired of the issues over Obama's eligibility, as well as his performance in office.

"I took it upon myself to find as many patriots as I could across the state, for the purpose of seating 25 for a grand jury," he said.

Over the weekend the jurors took sworn testimony from several sources, including Taitz, and then generated an indictment that later was forwarded to the U.S. attorney, the state attorney general and others in law enforcement across the state.

Swensson cites on his website as authority for the grand jury the Magna Carta, the bill of rights that formed the foundation of British common law on which U.S. law is based.

He said the members were chosen, sworn in and observed all of the rules of procedure. Swensson declined to elaborate on the specific allegations about Obama, telling WND that remains confidential at this point because of the possibility of a prosecution.

However, the website explanation of the procedure includes some intimidating language.

"If the government does not amend the error within 40 days after being shown the error, then the four members shall refer the matter to the remainder of the grand jury," it says. "The grand jury may distrain and oppress the government in every way in their power, namely, by taking the homes, lands, possessions, and any way else they can until amends shall have been made according to the sole judgment of the grand jury."

Swensson said the indictments were delivered to the U.S. attorney for the Northern District of Georgia, state officials and leaders of the Georgia Senate and House.

He told WND that since the action in Georgia, he's been contacted by groups in at least 20 other states who want to pursue a similar action.

Meanwhile, Taitz told WND she has forwarded to U.S. Attorney Jeffrey Taylor in Washington, D.C., a request for the U.S. to relate Quo Warranto "on Barack Hussein Obama, II to test his title to president."

Named as plaintiffs in the action are nine military or legislative leaders, including Allen C. James, currently on active duty in the U.S. Army in Iraq. Others include several retired military leaders as well as elected state representatives.

"Relators request that as U.S. Attorney, you institute a Quo Warranto proceeding against Obama under DC Code § 16-3502, and demand that Obama show clear title, proving, with clear and convincing evidence, that he had qualified as president elect," Taitz told Taylor.

"By each relator's constitutional oath of office, and interest above other citizens and taxpayers, relators submit that they have standing," Taitz wrote.

"In arguendo of Respondent Obama's burden of proof, motions are submitted requesting mandamus on Hawaii Gov. Linda Lingle for evidence, and on Sec. State Hillary Rodham Clinton for evidence and to request evidence from Britain and the Republics of Kenya, Indonesia and Pakistan," Taitz said.

Where's the proof Barack Obama was born in the U.S. or that he fulfills the "natural-born American" clause in the Constitution? If you still want to see it, join more than 345,000 others and sign up now!

She told WND the case was filed in the District of Columbia because the district recognizes the procedure. Taitz, who is working on her cases through the Defend Our Freedoms Foundation, cites a legal right established in British common law nearly 800 years ago and recognized by the U.S. Founding Fathers to demand documentation that may prove – or disprove – Obama's eligibility to be president.

She previously submitted a similar case to U.S. Attorney General Eric Holder.

The legal phrase essentially means an explanation is being demanded for what authority Obama is using to act as president. An online constitutional resource says Quo Warranto "affords the only judicial remedy for violations of the Constitution by public officials and agents."

John Eidsmoe, an expert on the U.S. Constitution now working with the Foundation on Moral Law, said the demand is a legitimate course of action.

Read the rest at World Net Daily.

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Ron Paul on the Proposed Budget

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