Tuesday, May 22, 2012

Drowning in Debt

Would you consider it over the top to call our government's handling of our national finances “Psychotic”? If not psychotic, then what shall we call it? Would “denial” be a more palatable term? Perhaps we could label it an “addiction” making them less accountable for their actions? However you choose to label it, we're a country that's in so deep in debt that we have reverted to simply pretending it doesn't exist, or used unsound accounting to convinced ourselves that our debt doesn't matter. More or less we have adopted a "grown-up" way of pulling the blanket over our head to hide from the monster lurking in the closet.

Liberals in this country, for the most part, will admit that we are running up “unsustainable” deficits. Yet, these same liberals adamantly oppose any and all serious efforts to do anything about it. If a private fiduciary did the same with a client's funds, we would call this a breach of ethical behavior and failure in their due diligence obligation, making the offending fiduciary liable for criminal and civil charges in a court of law. Among the general public, once again you'll find plenty of people who admit that this nation has a huge problem. Yet, when you leave generalities, get down to specifics, and start looking for programs to cut, then suddenly everyone gets nervous and says, “never mind.” At the other end of the perceived political spectrum, Conservatives claim a devotion to fiscal responsibility, but when given the opportunity to demonstrate their self discipline they fair no better than the Liberals. Regardless of what others may decide to call it, I will call it what it is, "treason."[1]

This fiscal foolishness is a natural outgrowth of ladling out public funds to special interests. There is so much collective money that few people feel or appreciate it even when billions are saved. Yet, if we yank even a few million away from special interest groups like PBS, Planned Parenthood, or the unions, they squeal like pigs that are about to accidentally be put in the wolves pen at the zoo.

In the face of that, people have to realize that this country is on pace to go bankrupt — and it could happen relatively soon if we don't start taking serious steps to control our spending. Mike Pence thinks we could be just ten to fifteen years away. Tom Coburn is less optimistic and thinks it could happen in as little as five years. If that happens, we’re not a tiny country like Greece — we’re the biggest economy in the world. That means there’s no cavalry coming to pay our bills for us because we ARE (or were) the cavalry.

What happens then? Well, we don’t know for sure, but we can make some educated guesses about what COULD happen and how it will impact YOUR life.

1. Your life savings will evaporate. Inflation is a fact of life. Thomas Sowell has noted, “As of 1998, a $100 bill would not buy as much as a $20 bill would buy in the 1960′s.” That’s under normal circumstances. However, the thing governments have traditionally done when they simply can’t pay their debts is print more money. The problem with this is the further you expand the money supply, the less the money you already have on hand is worth. This can wipe out the savings of a lifetime in a relatively short period. Imagine spending billions of dollars just to buy a loaf of bread. Sound far-fetched? Well, guess what? That has happened in the Weimar Republic, which was crushed under debts from WWI and decided to pay it off by printing more money. It could happen here, too, and all the money you’ve scrimped and saved could become worthless in a short order.

2. Your taxes will skyrocket. We've been conned into thinking that we can fund a massive government on the backs of the rich. This is simply not so. It’s not working today and it’s not going to happen in the future. We cannot tax the rich enough to pay off our debt or even enough to keep the government going long-term. Even if we could, the rich have the resources to flee the country for greener pastures if they're being taxed into oblivion. The middle class? Not so much. What that means is the more desperate the government gets, the more the average American is going to be hammered with new taxes. How much more of your income can you afford to send overseas to pay China for the money they've loaned us to keep PBS, Planned Parenthood, and the National Endowment of the Arts going? What about if the country goes bankrupt and your income tax rate shoots up to fifty percent? How are you going to pay your mortgage? How are you going to feed your kids? When the government runs out of cash and it can’t borrow any more money, then it will start leveling massive taxes on the American people.

3. Your life will be brutal. If the government goes bankrupt, you'll have an extremely angry, confused, and frustrated populace that has little faith in its leaders — combined with a horrific economy and a reduced ability of the government to keep order. Under those circumstances, widespread rioting and violent crime seem entirely plausible. When Argentina had its crisis, violence went up 142% and “young men began looting supermarkets.” Here’s some of what happened during the German hyperinflation of the currency in Weimar Republic after it started printing money night and day,

“The flight from currency that had begun with the buying of diamonds, gold, country houses, and antiques now extended to minor and almost useless items — bric-a-brac, soap, hairpins. The law-abiding country crumbled into petty thievery. Copper pipes and brass armatures weren't safe. Gasoline was siphoned from cars. People bought things they didn't need and used them to barter — a pair of shoes for a shirt, some crockery for coffee. Berlin had a “witches’ Sabbath” atmosphere. Prostitutes of both sexes roamed the streets. Cocaine was the fashionable drug.”

4. Your government checks, housing, food stamps, and health-care will disappear. Contrary to what most people believe, Medicare, Medicaid, Supplemental Security Income (SSI), and Social Security are paid out of the same fund that pays for everything else. In other words, if the government goes bankrupt, there is no money in any lock-box set aside to pay for these programs. So, if you're receiving Social Security, , Medicare, welfare, food stamps, or any other similar programs, those checks could stop or be slashed down to nothing. That seems unthinkable to people, but if the government doesn't have any money, then it can't pay it out to people. As they say, “You can't get blood out of a turnip.”

5. You will be very poor. If taxes and inflation escalate dramatically, both of which are very likely if we go bankrupt, economic activity will slow to a crawl and we'll go into a depression. We're not talking about a “This is the worst economy since the Depression” situation that we hear every time there's a mild downturn in the economy; we're talking about a REAL depression. Established and well managed businesses will fail in record numbers, the stock market will topple, unemployment will soar to heights not seen since the thirties, and the government will be too concerned with maintaining its own power to be concerned with your needs. 

If that happens in a country like America, where people have been so prosperous for so long, it’s going to produce utter misery. It’s not a lot of fun to be poor under the best of circumstances, but it’s much worse to go from having a comfortable life with a bright future to stealing vegetables or a crust of bread to eat and wondering how you’re going to keep warm while homeless in the winter.

I know what you're thinking, "it couldn't happen here in the richest country in the world", but this only displays how ill-informed you are, when one does the real accounting (assets minus liabilities) to arrive at net worth, we are far from the richest country in the world...

US Total Household Value (Home Equity + Stock Value): $48.8 trillion
US Social Security, Medicare, and Prescription Liabilities (Does not include National Debt): -$119 trillion

US Net Worth: -70.2 trillion

[1]  “Treason against the United States shall consist only in levying war against them, or in adhering to their enemies, giving them aid and comfort.” U. S. Constitution, Art III. My justification for calling their failure to address the debt issue is that by selling our debt to foreign powers, namely China, they are handing immense authority over our currency, property, and economy over to their whim.  

Saturday, March 31, 2012

A License to Kill

The Digital Millennium Copyright Act

A License to Kill

The Digital Millennium Copyright Act (DMCA) was drafted to protect copyright holders by allowing them to take infringing content off the web. This act would appear to most reasonable individuals both justifiable, and under Art. 1 Sec. 8 of the US Constitution, lawful.

[The Congress shall have Power] to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”

However, it is not the wholly noble intent of the law that has gone awry. It is the reprobates who wrote the law in collusion with those who advocated the dire need for such legislation, and their lackey cohorts who implement the law like a pack of inane automatons that have gone berserk.  While Congress may have the authority to grant “exclusive Right for a limited time” by means of copyright laws, Congress is specifically forbidden to deprive a person “…of life, liberty, or property, without due process of law”, under the 5th Amendment.

The DMCA in its application is being systematically abused by rights holders like a digital sniper against competitors both real and perceived, or to have materials they find objectionable wiped from the web. One third of the notices sent to Google are false, and companies like Microsoft censor perfectly legal sites. 
Earlier this week one of TorrentFreak’s articles was censored by Google on the authority of a  mysteriously submitted automated DMCA takedown tool. Those who tagged the article claimed it was an honest mistake, but vigilante justice, kangaroo courts, and in this case poorly written legislation tends to spawn a lot of mistakes, honest or otherwise.

Google has admitted that 57% of DMCA takedown notices were targeting a competing business and 37% were not valid copyright claims. According to my calculations, that puts the number of bogus or malicious takedown notices at 94%, and that is an unacceptable number when it comes to protecting the free flow of information and ideas that is the Internet. Rights holders who inform Google and other service providers of infringements must swear under penalty of perjury that the notices are correct, but the most cursory review of the laws surrounding DMCA will yield interesting loopholes such as those found in 17 USC § 512 - Limitations on Liability Relating to Material Online which gives tacit approval to false claims under the law while shielding the perpetrators from criminal action.

Software colossus Microsoft dispatched a spurious infringement claim against the site Cryptome.org, which is perfectly legal and offers no offense to the rights holders. In spite of a site's legitimacy, many of its pages or the entire domain can be summarily de-listed from Google's search results, directly and demonstrably harming the site's owners through lost revenues and a diminished domain name value. There is a growing body of evidence indicating that lawful site owners are being destroyed by heavy hitters like Microsoft, NBC Universal, and Warner Bros. 

Whenever one can be accused, arrested, condemned, and executed on the order of a single accuser who is immune from legal reproach you create the rule of a tyrant, the reign of a despot, or subjugation by a king. You would be right to note that there is little or no difference between those three results. Just as Congress should take notice of the disastrous results depriving honest people of life, liberty, and property without due process of law created by their Digital Millennium Copyright Act is little different than an Grand Inquisitor of the web, with the exception that the Inquisition provided for some deliberation and a modicum of judicial review before passing sentence. 

Monday, January 30, 2012

The Politics of Unintended Consequences

Who could shoot down a great idea based on sound research and motivated by the best of intentions?

If the idea crept out of the incestuous swamp we call Washington, I would summarily execute that idea. No blindfold, no last cigarette, no drum roll, as fast as they could foment new ideas; I would gun them down. 

Wait, I know what you're thinking...

"I just hate all government so it stands to reason I would hate any idea that came from government officials." 

I understand why you might feel that way, but my judgment is not based on knee-jerk emotional reactions or some visceral reflex. In truth, I have a great deal of respect for government so long as the government has a great deal of respect for the Constitution, and not a second longer. You see as long as the government respects the Constitution it is bound by the ideals it embodies. The foremost of which is, the government must respect my person, my faith, my privacy, my property, my liberty, and yours as well. When one takes the time for thoughtful deliberation rather than flying off on some rash tangent because it feels good at the moment it is a sign of wisdom. The virtue of wisdom, like all other virtues, are nearly extinct in Washington.

Unintended consequences are the political equivalent of Sir Isaac Newton's third law of motion, which states “for every action there is an equal and opposite reaction”. 

1.      The Treaty of Versailles was not supposed to incite the German people to into provoking another world war, but it did.

2.      The “Great Society” programs were not intended to increase out-of-wedlock births and broken families, but it has.

3.      Extended unemployment benefits were not meant to discourage employment searches or dissuade entrepreneurship, but it has.

4.      Guaranteeing the solvency of the banks was not meant to make them more reckless in their lending and investing practices, but it has.

5.      Social Security and Medicare was not meant to nearly eliminate personal planning for retirement, but it has.

6.      Easy credit loans were not intended to create massive foreclosures, destroying families, and their finances, but it did.

7.      Student Loans were not intended to send tuition costs skyrocketing while trapping graduates in a crushing debt load which threatens to destroy their careers before they begin, but they did.

8.      Farm Subsidies were not intended to artificially raise the price of food and diminish the production so high that low income families required Food Stamps to eat, but they did.

9.      The welfare system was not intended to become a snare for the impoverished entrapping them at a serf like subsistence existence for generations, but it does.

10.   Public schools were not intended to produce the lowest common denominator of education with continuously declining standards, but it has.

If this were the total of the unintended consequences produced by the short-sighted, herd-mentality policy makers we seem to have no shortage of in Washington it wouldn't be so bad, however it isn't the total and it is worse... 

 And yet more unintended consequences...


And more...

I could go on but at this point I'm too disgusted to write...

Wednesday, January 18, 2012

US Compared to Other Repressive Regimes

Top constitutional law expert Jon Turley notes in a must-read Washington Post article called “We are no longer the land of the free” (I have edited slightly to remove parentheses in several places):

Americans often proclaim our nation as a symbol of freedom to the world while dismissing nations such as Cuba and China as categorically unfree. Yet, objectively, we may be only half right. Those countries do lack basic individual rights such as due process, placing them outside any reasonable definition of “free,” but the United States now has much more in common with such regimes than anyone may like to admit.These countries also have constitutions that purport to guarantee freedoms and rights. But their governments have broad discretion in denying those rights and few real avenues for challenges by citizens — precisely the problem with the new laws in this country.
The list of powers acquired by the U.S. government since 9/11 puts us in rather troubling company.

Assassination of U.S. citizens
[The U.S. assassinates its own citizens.]

Nations such as Nigeria, Iran and Syria have been routinely criticized for extrajudicial killings of enemies of the state.

Indefinite detention

[The U.S. has passed a law allowing indefinite detention of American citizens.]

China recently codified a more limited detention law for its citizens, while countries such as Cambodia have been singled out by the United States for “prolonged detention.”

Arbitrary justice

The president now decides whether a person will receive a trial in the federal courts or in a military tribunal, a system that has been ridiculed around the world for lacking basic due process protections. Bush claimed this authority in 2001, and Obama has continued the practice. (Egypt and China have been denounced for maintaining separate military justice systems for selected defendants, including civilians.)

Warrantless searches

[The U.S. routinely conducts warrantless searches.]

Saudi Arabia and Pakistan operate under laws that allow the government to engage in widespread discretionary surveillance.

War crimes

[The U.S. has committed various war crimes, then refused to hold the actors to account.]

Various nations have resisted investigations of officials accused of war crimes and torture. Some, such as Serbia and Chile, eventually relented to comply with international law; countries that have denied independent investigations include Iran, Syria and China.

Secret court

[The U.S. uses secret courts under the guise of national security.]

Pakistan places national security surveillance under the unchecked powers of the military or intelligence services.

Immunity from judicial review

Like the Bush administration, the Obama administration has successfully pushed for immunity for companies that assist in warrantless surveillance of citizens, blocking the ability of citizens to challenge the violation of privacy. (Similarly, China has maintained sweeping immunity claims both inside and outside the country and routinely blocks lawsuits against private companies.)

Continual monitoring of citizens

The Obama administration has successfully defended its claim that it can use GPS devices to monitor every move of targeted citizens without securing any court order or review. It is not defending the power before the Supreme Court — a power described by Justice Anthony Kennedy as “Orwellian.” (Saudi Arabia has installed massive public surveillance systems, while Cuba is notorious for active monitoring of selected citizens.)

Extraordinary renditions

The government now has the ability to transfer both citizens and noncitizens to another country under a system known as extraordinary rendition, which has been denounced as using other countries, such as Syria, Saudi Arabia, Egypt and Pakistan, to torture suspects. The Obama administration says it is not continuing the abuses of this practice under Bush, but it insists on the unfettered right to order such transfers — including the possible transfer of U.S. citizens.
Professor Turley stresses the fact that it is the ability of powerful men to make arbitrary decisions which defines an authoritarian country:
An authoritarian nation is defined not just by the use of authoritarian powers, but by the ability to use them. If a president can take away your freedom or your life on his own authority, all rights become little more than a discretionary grant subject to executive will.
The framers lived under autocratic rule and understood this danger better than we do. James Madison famously warned that we needed a system that did not depend on the good intentions or motivations of our rulers: “If men were angels, no government would be necessary.”
In fact, we go from the land of the free to tyranny the moment we go from a nation of laws to a nation of powerful men arbitrarily making laws in secret.

Indeed, Bush and Obama have claimed some tyrannical powers that even Hitler and Stalin never claimed.

As I pointed out last month, many American leaders appear to be consciously copying China:
The American copyright bill is modeled after the Chinese system. As I noted Monday:
Given that Joe Lieberman said that America needs an internet kill switch like China, that the U.S. economy has turned socialist (at least for friends of those with control of the money spigot), and that the U.S. government used communist Chinese torture techniques specifically designed to produce false confessions in order to sell the Iraq war, I guess that the bill’s Chinese-style censorship is not entirely surprising.

Reprinted from: EquityJungle – v0.1  January 17, 2012