Our January 20, 2008 Newsletter Edition
IN THE NEWS:
YOU HAVE EVERY RIGHT TO A SECOND PASSPORT
By Bob Bauman - January 8, 2008
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In all the news media ballyhoo before the Iowa caucuses and the New Hampshire primary, a disturbing, indeed radical proposal by Republican presidential candidate (and Iowa winner), Mike Huckabee, seems to have slipped by unnoticed. Huckabee claims to be for less government and more freedom, but his proposal is no less than Big Brother in action. The former Arkansas governor wants to impose a federal law that would deny American citizens the right to hold dual citizenship. Never mind the fact that the U.S. Supreme Court upheld this right in several cases decades ago. Huckabee actually claims he wants to make it a crime for a potential estimate of 40 million Americans, who now have a right to dual citizenship, even to use a foreign passport for travel or business purposes.
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In 1967, the U.S. Supreme Court upheld the right of U.S. citizens to hold a second, foreign passport in the case of Afroyim v. Rusk, 387 U.S. 253 (1967). Prior to this ruling, the official U.S. stance was that a person acquiring second nationality automatically lost U.S. citizenship. Since the 1967 ruling, the government must presume a U.S. citizen does not wish to surrender citizenship. The U.S. government has the burden of proof to show intentional abandonment of U.S. citizenship. This presumption is also set forth in a U.S. Department of State publication, Advice About Possible Loss of U.S. Citizenship and Dual Nationality, (1990). As a matter of policy, the U.S. Government now recognizes dual nationality but does not encourage it because of what the federal bureaucracy views as problems and conflicts that may result.
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http://www.sovereignsociety.com/offshore2423.html
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EDITORS NOTES: There still seems to be a large number of US citizens who are under the impression that dual citizenship is illegal, but this is not true, at least at the moment. Which is to say, one can speculate that as Americans possibly continue to expatriate at the rates they have been in the past (and take their money with them, which we tend to believe is the real concern), the politicians of course may certainly look to change things going forward as they become alarmed over the exodus. Heck, they might just enact some draconian measures for merely thinking about it (see below).
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THINKING FOR YOURSELF IS NOW A CRIME
By Paul Craig Roberts - January 4, 2008
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What was the greatest failure of 2007? President Bush's surge in Iraq? The decline in the value of the US dollar? Sub-prime mortgages? No. The greatest failure of 2007 was the newly sworn in Democratic Congress.
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On October 23, 2007, the House passed a bill sponsored by California Democratic congresswoman Jane Harman, chairwoman of a Homeland Security subcommittee, that overturns the constitutionally guaranteed rights to free expression, association, and assembly. The bill passed the House on a vote of 404-6. In the Senate the bill is sponsored by Maine Republican Susan Collins and apparently faces no meaningful opposition. Harman's bill is called the Violent Radicalization and Homegrown Terrorism Prevention Act. When HR 1955 becomes law, it will create a commission tasked with identifying extremist people, groups, and ideas. The commission will hold hearings around the country, taking testimony and compiling a list of dangerous people and beliefs. The bill will, in short, create massive terrorism in the United States. But the perpetrators of terrorism will not be Muslim terrorists; they will be government agents and fellow citizens.
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We are beginning to see who will be the inmates of the detention centers being built in the US by Halliburton under government contract. Who will be on the extremist beliefs list? The answer is: civil libertarians, critics of Israel, 9/11 skeptics, critics of the administration's wars and foreign policies, critics of the administration's use of kidnapping, rendition, torture and violation of the Geneva Conventions, and critics of the administration's spying on Americans. Anyone in the way of a powerful interest group--such as environmentalists opposing politically connected developers--is also a candidate for the list.
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http://www.counterpunch.org/roberts01042008.html
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BILL A THREAT TO CIVIL LIBERTIES - By Mike Hoeflich - January 2, 2008
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As the media daily reports government abuses of individual civil and constitutional rights in the name of the war against terrorism, and as the now Democratic-controlled Congress continues to hold public hearings on the worst of these abuses, a new threat to the civil liberties of Americans quietly wends its way through the halls of Congress. On April 19, 2007, Rep. Jane Harmon, Democrat of California, introduced H.R. 1955 onto the floor of the House of Representatives. On Oct. 24, 2007, this bill, named the Violent Radicalization and Homegrown Terrorism Prevention Act of 2007 was passed by a bipartisan majority by the House. Its Senate counterpart, S.1959, introduced by Sen. Susan Collins, Republican of Maine, is now in committee awaiting action. While it is good to see that Congress is still capable of bipartisan activity, one might have hoped that this cooperation would not have extended to this bill.
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H.R. 1955 and S. 1959 are designed to establish a new National Commission on the Prevention of Violent Radicalization and Ideologically Based Violence. This commission is given broad powers to investigate homegrown terrorism, ideologically based violence, and violent radicalization anywhere in the United States. The definitions provided for these activities are frighteningly broad and include both violence against individuals and property as well as coming quite close to creating what some in the media have referred to as thought crimes.
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http://www2.ljworld.com/news/2008/jan/02/bill_threat_civil_liberties/
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EDITORS NOTES: Why is this new legislation necessary and how many Americans are even aware of it? Just when you think they have already gone to the extreme in terms of abolishing civil liberties, they come up with something else.
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According to Mr. Marty Luster, commenting on this same new legislation in a January 9 article from the Ithaca Journal: The bill also raises the specter of government-imposed restrictions of access to Internet-provided information and greater surveillance of Internet users. Among its legislative findings is this: The Internet has aided in facilitating violent radicalization, ideologically based violence, and the homegrown terrorism process in the United States by providing access to broad and constant streams of terrorist-related propaganda to United States citizens (end of quote).
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The US Congresswoman, Ms. Jane Harman (D-Calif.), who sponsored this, is quoted as declaring back on Nov. 7, that the new National Commission to be set up will propose to both Congress and the secretary of homeland security, initiatives to intercede before radicalized individuals turn violent. Intercede based upon what? What someone may opine in a newspaper article, on-line bulletin board or blog? And what exactly does intercede mean? I thought Joe McCarthy was dead and buried? It was a nice country, once upon a time. Rather, it was a free country, once upon a time.
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Why is this so alarming and who cares? Well, for starters, the Internet indeed has become the last bastion of the interdependent media, plus free and unfettered thought (we can't have that, now can we?). Some of it good, stimulating, thoughtful and provocative. Some of it, rude, unpleasant and dare I say, politically incorrect. However, if you believe in a free society, then you believe in everyone's right to express an opinion regardless of however with all your might you may disagree. Also, in a modern society with hopefully educated citizenry, people can quickly make up their own minds what they wish to read, and agree with (or are we all that stupid, that we cannot think for ourselves anymore?).
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Democracy does not function in a vacuum, whereby the only ideas or information presented are solely of government origin. Also, there are hidden or undeclared outcomes, like termites you never see, that eventually tumble your house down. Calamity Jane (my new moniker for Rep. Jane Harman) will have you believe that access to information and ideas poses a grave and present danger. Funny how that is exactly what the totalitarian government in China believes also. The Chinese have become more like the US in terms of free market capitalism, and it would seem the US government is trying to become more like the Chinese in terms of government spying and censorship. I am not sure where this is all going, but I for one, would not interpret this as being a positive.
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On a similar note, a client sent in the following news item to us regarding even more invasion of privacy as it pertains to electronic communications (email, telephone). The article dated January 14, 2008 says: National Intelligence Director Mike McConnell is drawing up plans for cyberspace spying that would make the current debate on warrant-less wiretaps look like a walk in the park, according to an interview published in the New Yorker's print edition today. Ed Giorgio, who is working with McConnell on the plan, said that would mean giving the government the authority to examine the content of any e-mail, file transfer or Web search. The infrastructure to tap into Americans' email and web search history may already be in place. In November, a former technician at AT&T alleged that the telecom forwarded virtually all of its Internet traffic into a secret room to facilitate government spying. Whistleblower Mark Klein said that a copy of all Internet traffic passing over AT&T lines was copied into a locked room at the company's San Francisco office -- to which only employees with National Security Agency clearance had access -- via a cable splitting device.
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http://rawstory.com/news/2007/US_drafting_plan_to_allow_government_0114.html
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STANDING FOR OUR PRINCIPLES EVEN WHERE WE'RE TERRIFIED
By Leonard Pitts Jr. - January 6, 2008
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The authorities would just come into your home, grab your mother, your brother, your dad, and take them away. No warning, no warrant, no appeal. Thirty thousand people were disappeared that way, she told me. This was in an interview three years ago, and Ruth Cox was describing her childhood in Argentina under military dictatorship. Cox, a teacher in Charleston, S.C., said families never learned what happened to their loved ones. Or why. People were taken and that was it. The government was not accountable.
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My first response was a vague pride that those kinds of things can't happen here. My second response was to realize that my first response was naive. These last years have provided a jolting education in the sorts of things that can, indeed, happen here. Mass surveillance, detention without access to courts, no right to confront, or even know, the evidence against you, torture. And a government that is not accountable. And here, a line from a Bruce Springsteen song seems apropos. The flag flying over the courthouse means certain things are set in stone. Who we are, and what we'll do and what we won't. Sadly, the list of what we won't do has narrowed dramatically since 2001.
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http://seattletimes.nwsource.com/html/opinion/2004108070_pitts06.html
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CIVIL LIBERTIES UNDER THREAT IN MAJOR WESTERN COUNTRIES
January 1, 2008
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As the new year took hold, an international rights group said individual privacy was under threat in the United States and across the European Union, where surveillance and information-gathering measures had been increasing in an effort to secure and control borders. Privacy International, which surveyed 47 countries, said Greece, Romania and Canada had the best privacy records the surveyed countries, while Malaysia, Russia and China were ranked worst. The London based organization said both Britain and the United States fell into the lowest-performing group.
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http://story.malaysiasun.com/
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GASTARBEITER AND CRIME - January 9, 2008
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In politically correct Germany, even pointing out facts can be controversial, as Roland Koch discovered. We have too many foreign juvenile criminals, the governor of the state of Hesse told the daily Bild recently. He called for tougher punishments, including deportation. Mr. Koch's straight talk prompted his political opponents to accuse him of xenophobia -- a charge that stings in a country still haunted by its Nazi past. Mr. Koch, a Christian Democrat, is in a tough re-election race when voters in his state go to the polls on January 27. His Social Democrat opponents claim he is just trying to attract the bigot vote. Whatever his motives, the statistics back up Mr. Koch. In Berlin, for example, one recent study shows that 70% of repeat offenders are foreigners or children of immigrants. As in much of Europe, Germany is struggling to integrate its immigrants, especially Muslims, who constitute roughly 25% of the immigrant population.
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http://online.wsj.com/article/
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EDITORS NOTES: Make no mistake about it. One of the major problems facing Europe is the rash of immigrants who are placing pressures on the social welfare systems, and in some cases, contributing to the crime situation as well. This is not to say all immigrants are criminals, and the same can be said of Latin American or other immigrants in the United States as well. Meaning, many immigrants are hard working and law abiding people. However, the crime and welfare statistics do not lie. In Paris, it has been calculated that up to 40 percent of the Muslim immigrant population living there (both first and second generation immigrants) are bleeding the welfare system dry. Again, not a negative commentary about immigration per say or any particular group, but rather a comment regarding a state welfare apparatus that allows for the newly arrived to game the system. Can you blame them? Who would not want to move from a developing country whereby they might have been surviving on a few dollars a day in the past, to find that the new country allows for a mere pulse and signature alone to qualify for a government check representing a substantial increase in cash flow (from what they had before) or free housing, free medical care, etc. ? It's a good deal, but the problem is, can these countries continue to afford it?
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Someone is paying for all this, and we can surmise it is the honest, legally employed middle class doing so. The point is, both in terms of Europe and North-America, how much longer can this go on? With dramatically large numbers of so-called baby boomers coming into retirement and placing financial strains on the government payment schemes on both sides of the Atlantic, can these welfare states continue economically in this fashion? Many of our European and American clients have cited these concerns as one of the reasons that they are relocating, and we have to believe this will only continue (and get worse as a financial pressure point).
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BUSINESS IN 2008: A YEAR FOR THE BRAVE AND WEALTHY
By John Gapper - December 26, 2007
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Eleven years ago, Alan Greenspan, then chairman of the Federal Reserve, mused: How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? The answer was we do not; we only discover afterwards. But we do know when exuberance has turned to fear and that is the mood in which many businesses enter 2008.
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As this new year approaches, the US has had a perilous few months in markets and the rest of the world is realizing how bad the contagion could be. The UK is feeling the effects of the Northern Rock debacle and there are fears of both a housing market crash and a falling currency. The European Central Bank is still pouring liquidity into financial markets. Only the Middle East and Asia motor smoothly onwards, if anything faster. All of this brings varying degrees of uncertainty and worry to business leaders for 2008, depending on which industries and countries they are in. The common theme is that the landscape is more treacherous than a year ago. It could also be a year in which the brave and deep-pocketed thrive at others expense.
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http://www.ft.com/
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EDITORS NOTES: I take issue with the comment that: the brave and deep-pocketed thrive at others expense. After all, is it really true that the man (or woman) that did not live off of credit cards, foolishly use their home as an ATM, or otherwise got themselves into a negative financial situation can be said to have done so at the expense of someone else? We think not, and if anything, such persons probably denied themselves a newly leased BMW or some other such indulgence in the process of keeping their own personal finances in the black. However, this sort of thinking that the solvent is culpable, is what we are concerned about. Which is to say, an attack on the non-broke (or brave, to use the above journalists terminology) to remedy the issues of others who participated in so-called irrational exuberance. Once again, not a case of mean spiritedness or cold heartedness, but rather what is fair and honest. Should the pious person that gave up the new BMW and instead stayed put with the ten year old Toyota now be forced to suffer via higher taxation, inflation, or any other so-called remedies? The result is that some segment of the population is economically punished for sound behavior. Watch out for this theme of class warfare going forward as politicians possibly look to placate the foolish by plundering the so-called brave (and also as they look for more revenue to pay for the mess they have made).
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If history is any guide, we will now see in 2008, a repeat of the old political slogan: We Are All in This Together (misery loves company). Indeed we now see political hacks trying to figure out a way to legislate their way out of recession (as it would seem Ben Bernanke cannot do it alone - surprised?) by coming up with so-called financial stimulus money (and the call is for political bipartisanship, in other words, we are all in this together). Who is going to pay for this? They have already put the US government US$9 Trillion Dollars in debt and already continue to spend more money than they take in (in terms of tax revenues). Now they want to send out government checks with money they do not have? How much trouble are they in really, and who is going to pay? Will they try to borrow even more money from the Chinese or Arabs?
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Recessions are all part of the natural business cycle in a free market capitalistic economy. No one likes it, and it is not pleasant. But, it is sort of like a good spring cleaning when things go out of joint, and it signals a necessary change in behavior by business and consumers. Sort of like when your body all of a sudden develops a fever, it is a signal that you have an infection (and you should probably go see a doctor, or start taking care of your self). However, if you take fever reduction medication without finding out why you have an infection (so you can cure the problem instead of just masking the symptoms) then you are asking for more trouble later on, in terms of your health. So it is with economic policies as well.
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OUTLOOK WORST SINCE DOTCOM BUST
By Chris Giles and Delphine Strauss - January 2, 2008
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Britain this year faces the most difficult economic conditions since the Dot-com bubble burst, according to the Financial Times annual survey of leading economists. It shows deepening pessimism about the impact of the global credit squeeze. The survey of 55 top economists shows confidence has tumbled from a year ago. The experts also fear that compared with 2001-02, the scope for financial authorities to mitigate any downturn is far more limited. Nearly nine in 10 think public finances are not in good order so there is no leeway for discretionary tax cuts or increases in public expenditure. The third most-mentioned risk to the economy is inflation, limiting the ability of the Bank of England to cut interest rates. Nearly two-thirds of the economists - from the City, academia and including five former members of the monetary policy committee - thought house prices would fall this year (2008)
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http://www.ft.com/
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EDITORS NOTES: This is right about the time that the cheeky fellow who wrote the previous article in the Financial Times of early December (chastising the Americans for their foolish behavior, financially speaking) needs to take out his handkerchief (to wipe the egg off his face). Also from the article: Inflation is seen as a threat, but a majority hope the Bank of England will turn a blind eye to short-term inflationary risks and cut interest rates, since they believe that the slowdown will curb these pressures (end of quote). Say what? A majority of people want the Bank of England to let inflation run wild because they think it will solve the problem? Very surprising stuff coming from a country that was the birth place of some of the worlds leading economists over the last century.
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TOP ECONOMIST SAYS AMERICA COULD PLUNGE INTO RECESSION
By Suzy Jagger- December 31, 2007
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Losses arising from America's housing recession could triple over the next few years and they represent the greatest threat to growth in the United States, one of the world's leading economists has told The Times. Robert Shiller, Professor of Economics at Yale University, predicted that there was a very real possibility that the US would be plunged into a Japan-style slump, with house prices declining for years.
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http://business.timesonline.co.uk/tol/business/economics/article3111659.ece
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EDITORS NOTES: Could plunge, or already is in a recession? In a article by Greg Robb titled: January 5, 2008Economists Say 2008 Will Be A Year To Forget:
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Dean Baker, co-director of the Center for Economic and Policy Research says that The recession is likely to be a serious one, and he estimated losses in prime mortgages will be two to three times the $160-$200 billion hit seen in the sub-prime sector. This, he said, will lead to large losses at banks and difficulty for Fannie Mae and Freddie Mac. Alistair Milne, a professor at the City University of London's Cass Business School, says that the economy won't likely get back on track until 2010 and will require more capital from overseas.
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http://www.marketwatch.com/news/story/economists-say-2008-year-forget/
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EDITORS NOTES: Well, one very interesting thing is to take note of where all the bail-out money is coming from (note the quote from the above article that says: will require more capital from overseas). Why is it exactly that the money has to come from overseas? Is the US broke?
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Merrill Lynch recently reported cash infusions to the tune of about US$7 Billion, Citibank writes off US$18 Billion worth of bad debt - and the rescue money all coming from Singapore, Kuwait and Saudi Arabia (and not US entities). Nothing wrong with it, just an interesting thing to see and how this may affect politics, etc. Which is to say, instead of spying on US citizens, maybe the answer is to pressure the Saudi's to stop funding religious schools that preach hatred and the like. But wait, we cannot offend them, as we need their money to bail out the bankrupt banks and brokerage firms. Never mind. Hey, maybe the US can get an emergency loan from the IMF (if they can qualify via stipulated reforms and higher taxes).
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UNEMPLOYMENT SOUNDS WARNING ABOUT ECONOMY
By Peter S. Goodman and Michael M. Grynbaum - January 5, 2008
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The unemployment rate surged to 5 percent in December as the economy added a meager 18,000 jobs, the smallest monthly increase in four years, the Labor Department reported on Friday. Economists viewed the report as the most powerful indication to date that the United States could well be falling into a recessionary downturn. Evidence of widening unemployment heightened anticipation that the Federal Reserve would further cut interest rates this month, perhaps by an unusually large half a percentage point, in a bid to prevent the economy from sliding into the muck. The swift deterioration in the job market resonated as a warning sign that troubles once confined to real estate and construction are spilling into the broader economy, threatening the ability of American consumers to keep spending with customary abandon.
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http://www.nytimes.com/2008/01/05/business/05econ.html
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EDITORS NOTES: Well, it's not all bad. Recent statistics suggest that the new jobs are in the service industry, with health care leading (about 30 to 40 percent) followed by waitresses and bartenders (21 to 29 percent). So, if you can juggle a few bottles of Heineken on a platter or change a bedpan with lightning speed, you might be alright.
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PREPARE FOR A GLOBAL ECONOMIC DOWNURN BUT NOT A DISASTER
By Wolfgang Munchau - January 1, 2008
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North America remains the global economy's hub. Any assessment of the world economy in 2008 depends on the likelihood, depth and length of a US economic downturn and the magnitude of a global spillover. Any forecast is thus contingent on how we answer the following three questions. Will the financial crisis continue in 2008? Will inflation expectations rise further? Last, will there be a disorderly process of global rebalancing? If we answer all three questions with Yes, we should prepare for a global depression. If the answer is No, the world economy will have another good year. There are many intermediate scenarios as well. I would answer the first question with an unqualified Yes. The financial crisis will probably linger on for most of the year and may get worse before it gets better. This is not really a sub-prime or credit crisis, as it is frequently called. This is a banking crisis. Economic history has taught us time and again that banking crises do not simply go away.
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http://www.ft.com/
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EDITORS NOTES: Well the gentleman starts off well enough with the headline ending on a positive note, but then he goes to say: If we answer all three questions with Yes, we should prepare for a global depression. In which case he adds: I would answer the first question with an unqualified Yes. He also comments that: The housing markets in the US and several other economies are headed for a severe downturn. The second risk is inflation for two reasons. First, persistent high inflation could destabilize global government bond markets, a rare pillar of stability in an uncertain financial environment. Second, high inflation places constraints on monetary policy. This in turn could make the downturn harder and longer, and the banking crisis more severe. The problem for central banks is not the rise in headline inflation rates, but the rise in inflationary expectations (end of quote).
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Where do expectations comes from, if not from experience? In addition, is it true that central banks should not be concerned with the actual inflation they created? Whatever these people are smoking, I think I want some (must be good stuff). Regardless, we do agree with one thing, and that is, this housing mess is going to take years to work itself out. However, as long as these dingbats keep printing the money, or allowing cheap money to circulate by keeping the interest rates artificially low (which has the same effect) then who in their right mind would NOT have expectations for higher inflation? Where is Paul Volker when you need him?
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$100 OIL WILL HURT AT MORE THAN THE PUMP
By Brett Clanton - January 6, 2008 - Houston Chronicle
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From light bulbs to golf balls, items tied to petroleum may cost you extra. U.S. consumers are likely to feel the sting of $100 oil soon, and in perhaps more ways than they realize. More directly ominous for consumers, AAA reported Friday that the average price for a gallon of regular gasoline nationwide was $3.07, up from $2.32 a year ago. In Houston, the average price at the end of the week was $2.92, up from $2.18 last January. Higher gasoline prices likely will pinch consumers most as bigger crude costs are passed through to drivers, analysts said. Fuel costs also could push up airfares. But if oil prices stay up, Americans also may see higher prices for a host of other petroleum-derived products, from light bulbs and paint to golf balls and deodorant.
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http://www.chron.com/disp/story.mpl/front/5431391.html
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EDITORS NOTES: We surmise that the American Oil companies are trying to keep a lid on retail gasoline price increases temporarily, that is, in consideration of the current US Presidential election. With that said, they may have no choice but to bump up prices sometime in the second quarter, but regardless, with oil at US$90 or above, the retail price at the pump probably should be somewhere about US$7 per gallon. A January 6 article from the Courier Post (New Jersey) reported that: Between June and December, increased costs for fuel and food, due, in part to higher shipping expenses, drained a combined $45 billion in discretionary income from American households. Inflation is confiscation by stealth, it always has been, and always will be.
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DOUBLE OR NOTHING: TRADERS BET ON OIL REACHING $US200 A BARREL BY YEAR'S END. By Grant Smith - January 8, 2008
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The fastest-growing bet in the oil market these days is that the price of crude will double to $US200 a barrel by the end of the year. Options to buy oil for $US200 on the New York Mercantile Exchange rose 10-fold in the past two months to 5533 contracts, a record increase on any similar period. The contracts, the cheapest way to speculate in energy markets, have appreciated 36 per cent since early December, with crude oil futures reaching a record $US100.09 on January 3.
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While analysts at Merrill Lynch and UBS say the slowing US economy will lead to the biggest drop in prices since 2001, the options show some traders expect oil to rise for a seventh consecutive year. Demand will increase 2.5 per cent this year, the International Energy Agency (IEA) says. US oil inventories fell to a three-year low on December 28. Production from Mexico is declining and Saudi Arabia is behind schedule in opening its newest field.
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One hundred dollars a barrel is actually 14.9 cents a cup, so we're still talking about oil being remarkably cheap, said Matthew Simmons, the chairman of Simmons & Co International, an investment bank that focuses on energy. Inventories are tight as a drum and I don't see how we get out of this box, he said in an interview on Bloomberg television last week. Demand clearly isn't starting to slow down. World consumption will rise to 87.8 million barrels a day this year, 2.1 million more than last year, or about the amount that Nigeria supplies, says the IEA, which advises oil-consuming nations. Demand from China alone will rise 5.7 per cent to 8 million barrels a day as imports expand to support an economy that is likely to grow 11 per cent.
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http://business.smh.com.au/
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CITY RETIREMENT VILLAGE DOUBLES SENIORS FEES
By Alexandra Zabjek, The Edmonton Journal - January 5, 2008
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Life at a pioneering resort-style retirement community has turned into a financial disaster for dozens of seniors at a local condominium complex. Residents of the upscale Touchmark at Wedgewood, at 184th Street and Lessard Road in southwest Edmonton, were notified last week that their living expenses would jump as much as 100 per cent or more in the coming months. The cost increases have shocked and outraged many at the facility.
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The mental and emotional stress cannot be discounted, said Inese Clark, whose 92-year-old mother has lived at Touchmark since December 2006. People do budget planning and estate planning, they extrapolate the amount of money they have and say, Can I manage this even with reasonable increases? she said. Then a year later, to receive a 100-per-cent increase? That puts enormous hardship on people. More than 100 people -- many using canes, walkers, scooters and oxygen tanks -- attended a meeting Friday morning at Touchmark. However, it was the sons, daughters, nieces and nephews of residents who dominated the meeting with questions about the cost increases. One woman said her mother's expenses will rise 180 per cent. Another said her parents face a 225-per-cent increase. Another resident's living costs will go to $2,000 a month from about $1,000.
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http://www.canada.com/edmontonjournal/
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EDITORS NOTES: One of the top growth industries (if you want to call it that) in Mexico is nursing homes for elderly gringos. As cost of living, maintenance fees and the like escalate in the US and Canada, there is an outsourcing of sorts going on, regarding the aged heading south of the border and often enough, it is the children sending parents there as a cost effective alternative. However, there is a better way, although it involves expatriation just the same, but the result is that the family stays together and the children get to grow up with their grand-parents. In short, the idea involves the purchase of a 3,000 square foot home on a property in Ecuador, the Dominican Republic, or some similar locale, whereby you can have an entire household staff (cook, maid, chauffer, nanny) for what it costs to cover the monthly costs in these North-American based nursing homes. The kids live well for less, and the elderly parents are not alone in some institution located miles away. In summary, expatriating to another country is not about making a political statement, nor an act of treason. It is about economic survival, plain and simple.
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COST OF LIVING TO STRAIN AREA RESIDENTS
By Bonnie Pfister, Pittsburgh Tribune Review - January 1, 2008
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Everything's going up and up and up, except my salary, says Deborah Jomisko, who is trying to counter the rising cost of heating her Knoxville home. Soaring natural gas prices in the past two years have doubled the cost of heating her Knoxville home to $159 last month. Her 1970 Chevy Monte Carlo needs $2,000 worth of repairs, so she's relying on Port Authority buses, whose fares are about to go up. Jomisko said she lost her job as an optical technician when her boss closed his practice in March. Opportunities for a woman in her 50s have been scarce. Everything's going up and up and up, except my salary, said Jomisko, who worked through the holidays as a cashier at PPG Place ice rink. (Gasoline) is going up, and food is going up. Meat, milk, eggs; I'm buying the same things every week, but they're costing me more.
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http://www.pittsburghlive.com/x/pittsburghtrib/news/cityregion/s_545349.html
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COST OF LIVING IN SIOUX FALLS GOES UP - January 1, 2008
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With the new year, the cost of living in Sioux Falls is going up. Operating the city's utilities have become more expensive with the city's constant growth and higher fuel prices. Sioux Falls Public Works Director Mark Cotter says utility expenses for consumers will increase to just over a hundred dollars extra over the next year. Waste-water rates are going up by nearly 20%. In addition, the landfill-tipping fee is going up for the city by 22%. And if your electric bill is from the city, a 16% increase means you'll pay an extra $3.31 every month to keep your lights on.
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http://www.keloland.com/News/
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EDITORS NOTES: Ms. Anne Kates Smith has written a recent article for (personal finance magazine) whereby she reports that: Food and beverage prices are rising at a 4.4% annual rate. But Kiplingerdairy prices are up 13% (and 26% for a gallon of whole milk alone), thanks to price supports and brisk exports of powdered milk. Meanwhile, meat prices are up 6%, and bakery products are up 4.6% because corn is being converted into ethanol instead of animal feed, muffins and sweetener. We haven't seen an increase of this magnitude in grocery prices since 1990, says Bureau of Labor Statistics economist Patrick Jackman.
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Where is this all going? A severe skewing of incomes, with basically two tiers economically speaking. Meaning, some in the middle class are moving up, but a whole lot more are moving down. Couple that with increased tax collection (especially for social welfare programs, such as social security) and you can easily understand why those with a few dollars and common sense are heading for the exit sign. That in turn motivates politicians to try and stop people from leaving with their money (instead of trying to fix the reasons why people are leaving in the first place) and thus the vicious cycle ensues. Sort of like watching a movie whereby you already know the ending (because you read the book before they made it into a film).
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BUILDING BOOM FUELED BY DRUG MONEY
By Andrew Beatty - December 31, 2007
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The shiny skyscrapers that soar above Panama City's coast and loom over the small Central American capital give it a skyline more suited to an Asian powerhouse like Hong Kong or Singapore. While a sub-prime mortgage crisis batters the United States, construction has been booming in Panama. According to the most ambitious construction plans, Panama was to have been home to nine of Latin America's 10 tallest buildings by the end of the decade. But the lights are off in many of the luxury apartments, new buildings sit empty, and suspicion is growing that Panama's property boom may turn out to be a bubble built by speculators on South American drug money. Real estate agents say the large number of temporary residents in the country is the reason for the city's dim skyline at night. U.S. anti-drug officials say a more likely reason is that Colombian drug cartels use the real estate sector to launder money.
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Around 11,000 apartments are forecast to come on the market in Panama City before the end of the decade, according to estate agent Sam Taliaferro. More luxury apartments could be built in Panama over the next few years than the number built in Miami between 1995 and 2005. While Panama is a major shipping route and the canal is undergoing a $5 billion expansion, the country's economy remains small and few Panamanians say developers can justify the need for so many skyscrapers. The increasing numbers of Americans who retire in Panama head for the country's cooler mountain region, for instance. Even without the suspected drug money, real estate agents say speculators are creating a dangerous bubble that is pushing up rents throughout the country, where 40 per cent of the population lives on less than $2 a day, and could litter Panama City with half-finished, abandoned buildings.
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http://www.theglobeandmail.com/
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EDITORS NOTES: We call your attention to this news item for a few reasons, and NOT necessarily to agree with the Canadian journalist who wants to offer an explanation that Panama's growth in the real estate sector is from illicit funds (although if you want to be honest about it, Miami was certainly re-built on drug money in the 1980's and real estate always has been the number one venue for laundry operations, regardless of the location, and not the banking industry exclusively or necessarily).
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Which is to say, first off we wish to highlight our previous comments about speculation driving up the prices in some foreign real estate markets (as mentioned in our last newsletter) and to also call attention to whom the buyers are (foreigners). Local real estate agents in Panama stress that many of the residents are temporary or seasonal occupants (we can says speculators), where as US officials are of course quick to offer that vendors of unregistered recreational pharmaceuticals are to blame. Of course, that must be it. What else could it be? I mean, who in their right mind would want to invest or live in Panama other than those involved with the drug trade, right? Maybe, just maybe, it is not recreational pharmaceutical funds but rather all those Americans we told you about previously, who were playing Three Card Monty with home equity loans on their US real estate, who were speculating in real estate elsewhere. It seems to be a bit too timely or convenient that all of a sudden all this neatly corresponds with the sub-prime issues in the US. After all, I was always lead to believe that businesses involving drugs, prostitution and gambling were recession proof and uncorrelated to other things going on in the economy, but I could be wrong. Never the less, we do find the explanation to be a bit incredulous. However, assuming for just one moment that this comment about drug money is correct, once again we can revert back to our previous comments of the housing or building boom in these markets being funded with CASH. While there may very well be an excess of new buildings (and apartments by reasoning) we can at the same time predict NO credit crisis, mortgage crisis or rash of home foreclosures either. Cash is cash, regardless of where it comes from. It is borrowed money that always leads to problems.
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In any event, just to review the US real estate scenario for 2008, it is reported that in Santa Cruz County (California) foreclosures are up 250 percent and foreclosure sales, up 404 percent. In Monterey County, foreclosures are up 450 percent and foreclosure sales a whopping 916 percent. In San Benito County, foreclosures are up 300 percent. I wish these numbers were a mistake, but stuff like this you just couldn't make up no matter how vivid your imagination. Maybe that's all the fault of the drug peddlers too.
IN THE NEWS:
YOU HAVE EVERY RIGHT TO A SECOND PASSPORT
By Bob Bauman - January 8, 2008
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In all the news media ballyhoo before the Iowa caucuses and the New Hampshire primary, a disturbing, indeed radical proposal by Republican presidential candidate (and Iowa winner), Mike Huckabee, seems to have slipped by unnoticed. Huckabee claims to be for less government and more freedom, but his proposal is no less than Big Brother in action. The former Arkansas governor wants to impose a federal law that would deny American citizens the right to hold dual citizenship. Never mind the fact that the U.S. Supreme Court upheld this right in several cases decades ago. Huckabee actually claims he wants to make it a crime for a potential estimate of 40 million Americans, who now have a right to dual citizenship, even to use a foreign passport for travel or business purposes.
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In 1967, the U.S. Supreme Court upheld the right of U.S. citizens to hold a second, foreign passport in the case of Afroyim v. Rusk, 387 U.S. 253 (1967). Prior to this ruling, the official U.S. stance was that a person acquiring second nationality automatically lost U.S. citizenship. Since the 1967 ruling, the government must presume a U.S. citizen does not wish to surrender citizenship. The U.S. government has the burden of proof to show intentional abandonment of U.S. citizenship. This presumption is also set forth in a U.S. Department of State publication, Advice About Possible Loss of U.S. Citizenship and Dual Nationality, (1990). As a matter of policy, the U.S. Government now recognizes dual nationality but does not encourage it because of what the federal bureaucracy views as problems and conflicts that may result.
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http://www.sovereignsociety.com/offshore2423.html
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EDITORS NOTES: There still seems to be a large number of US citizens who are under the impression that dual citizenship is illegal, but this is not true, at least at the moment. Which is to say, one can speculate that as Americans possibly continue to expatriate at the rates they have been in the past (and take their money with them, which we tend to believe is the real concern), the politicians of course may certainly look to change things going forward as they become alarmed over the exodus. Heck, they might just enact some draconian measures for merely thinking about it (see below).
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THINKING FOR YOURSELF IS NOW A CRIME
By Paul Craig Roberts - January 4, 2008
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What was the greatest failure of 2007? President Bush's surge in Iraq? The decline in the value of the US dollar? Sub-prime mortgages? No. The greatest failure of 2007 was the newly sworn in Democratic Congress.
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On October 23, 2007, the House passed a bill sponsored by California Democratic congresswoman Jane Harman, chairwoman of a Homeland Security subcommittee, that overturns the constitutionally guaranteed rights to free expression, association, and assembly. The bill passed the House on a vote of 404-6. In the Senate the bill is sponsored by Maine Republican Susan Collins and apparently faces no meaningful opposition. Harman's bill is called the Violent Radicalization and Homegrown Terrorism Prevention Act. When HR 1955 becomes law, it will create a commission tasked with identifying extremist people, groups, and ideas. The commission will hold hearings around the country, taking testimony and compiling a list of dangerous people and beliefs. The bill will, in short, create massive terrorism in the United States. But the perpetrators of terrorism will not be Muslim terrorists; they will be government agents and fellow citizens.
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We are beginning to see who will be the inmates of the detention centers being built in the US by Halliburton under government contract. Who will be on the extremist beliefs list? The answer is: civil libertarians, critics of Israel, 9/11 skeptics, critics of the administration's wars and foreign policies, critics of the administration's use of kidnapping, rendition, torture and violation of the Geneva Conventions, and critics of the administration's spying on Americans. Anyone in the way of a powerful interest group--such as environmentalists opposing politically connected developers--is also a candidate for the list.
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http://www.counterpunch.org/roberts01042008.html
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BILL A THREAT TO CIVIL LIBERTIES - By Mike Hoeflich - January 2, 2008
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As the media daily reports government abuses of individual civil and constitutional rights in the name of the war against terrorism, and as the now Democratic-controlled Congress continues to hold public hearings on the worst of these abuses, a new threat to the civil liberties of Americans quietly wends its way through the halls of Congress. On April 19, 2007, Rep. Jane Harmon, Democrat of California, introduced H.R. 1955 onto the floor of the House of Representatives. On Oct. 24, 2007, this bill, named the Violent Radicalization and Homegrown Terrorism Prevention Act of 2007 was passed by a bipartisan majority by the House. Its Senate counterpart, S.1959, introduced by Sen. Susan Collins, Republican of Maine, is now in committee awaiting action. While it is good to see that Congress is still capable of bipartisan activity, one might have hoped that this cooperation would not have extended to this bill.
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H.R. 1955 and S. 1959 are designed to establish a new National Commission on the Prevention of Violent Radicalization and Ideologically Based Violence. This commission is given broad powers to investigate homegrown terrorism, ideologically based violence, and violent radicalization anywhere in the United States. The definitions provided for these activities are frighteningly broad and include both violence against individuals and property as well as coming quite close to creating what some in the media have referred to as thought crimes.
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http://www2.ljworld.com/news/2008/jan/02/bill_threat_civil_liberties/
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EDITORS NOTES: Why is this new legislation necessary and how many Americans are even aware of it? Just when you think they have already gone to the extreme in terms of abolishing civil liberties, they come up with something else.
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According to Mr. Marty Luster, commenting on this same new legislation in a January 9 article from the Ithaca Journal: The bill also raises the specter of government-imposed restrictions of access to Internet-provided information and greater surveillance of Internet users. Among its legislative findings is this: The Internet has aided in facilitating violent radicalization, ideologically based violence, and the homegrown terrorism process in the United States by providing access to broad and constant streams of terrorist-related propaganda to United States citizens (end of quote).
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The US Congresswoman, Ms. Jane Harman (D-Calif.), who sponsored this, is quoted as declaring back on Nov. 7, that the new National Commission to be set up will propose to both Congress and the secretary of homeland security, initiatives to intercede before radicalized individuals turn violent. Intercede based upon what? What someone may opine in a newspaper article, on-line bulletin board or blog? And what exactly does intercede mean? I thought Joe McCarthy was dead and buried? It was a nice country, once upon a time. Rather, it was a free country, once upon a time.
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Why is this so alarming and who cares? Well, for starters, the Internet indeed has become the last bastion of the interdependent media, plus free and unfettered thought (we can't have that, now can we?). Some of it good, stimulating, thoughtful and provocative. Some of it, rude, unpleasant and dare I say, politically incorrect. However, if you believe in a free society, then you believe in everyone's right to express an opinion regardless of however with all your might you may disagree. Also, in a modern society with hopefully educated citizenry, people can quickly make up their own minds what they wish to read, and agree with (or are we all that stupid, that we cannot think for ourselves anymore?).
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Democracy does not function in a vacuum, whereby the only ideas or information presented are solely of government origin. Also, there are hidden or undeclared outcomes, like termites you never see, that eventually tumble your house down. Calamity Jane (my new moniker for Rep. Jane Harman) will have you believe that access to information and ideas poses a grave and present danger. Funny how that is exactly what the totalitarian government in China believes also. The Chinese have become more like the US in terms of free market capitalism, and it would seem the US government is trying to become more like the Chinese in terms of government spying and censorship. I am not sure where this is all going, but I for one, would not interpret this as being a positive.
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On a similar note, a client sent in the following news item to us regarding even more invasion of privacy as it pertains to electronic communications (email, telephone). The article dated January 14, 2008 says: National Intelligence Director Mike McConnell is drawing up plans for cyberspace spying that would make the current debate on warrant-less wiretaps look like a walk in the park, according to an interview published in the New Yorker's print edition today. Ed Giorgio, who is working with McConnell on the plan, said that would mean giving the government the authority to examine the content of any e-mail, file transfer or Web search. The infrastructure to tap into Americans' email and web search history may already be in place. In November, a former technician at AT&T alleged that the telecom forwarded virtually all of its Internet traffic into a secret room to facilitate government spying. Whistleblower Mark Klein said that a copy of all Internet traffic passing over AT&T lines was copied into a locked room at the company's San Francisco office -- to which only employees with National Security Agency clearance had access -- via a cable splitting device.
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http://rawstory.com/news/2007/US_drafting_plan_to_allow_government_0114.html
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STANDING FOR OUR PRINCIPLES EVEN WHERE WE'RE TERRIFIED
By Leonard Pitts Jr. - January 6, 2008
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The authorities would just come into your home, grab your mother, your brother, your dad, and take them away. No warning, no warrant, no appeal. Thirty thousand people were disappeared that way, she told me. This was in an interview three years ago, and Ruth Cox was describing her childhood in Argentina under military dictatorship. Cox, a teacher in Charleston, S.C., said families never learned what happened to their loved ones. Or why. People were taken and that was it. The government was not accountable.
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My first response was a vague pride that those kinds of things can't happen here. My second response was to realize that my first response was naive. These last years have provided a jolting education in the sorts of things that can, indeed, happen here. Mass surveillance, detention without access to courts, no right to confront, or even know, the evidence against you, torture. And a government that is not accountable. And here, a line from a Bruce Springsteen song seems apropos. The flag flying over the courthouse means certain things are set in stone. Who we are, and what we'll do and what we won't. Sadly, the list of what we won't do has narrowed dramatically since 2001.
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http://seattletimes.nwsource.com/html/opinion/2004108070_pitts06.html
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CIVIL LIBERTIES UNDER THREAT IN MAJOR WESTERN COUNTRIES
January 1, 2008
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As the new year took hold, an international rights group said individual privacy was under threat in the United States and across the European Union, where surveillance and information-gathering measures had been increasing in an effort to secure and control borders. Privacy International, which surveyed 47 countries, said Greece, Romania and Canada had the best privacy records the surveyed countries, while Malaysia, Russia and China were ranked worst. The London based organization said both Britain and the United States fell into the lowest-performing group.
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http://story.malaysiasun.com/
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GASTARBEITER AND CRIME - January 9, 2008
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In politically correct Germany, even pointing out facts can be controversial, as Roland Koch discovered. We have too many foreign juvenile criminals, the governor of the state of Hesse told the daily Bild recently. He called for tougher punishments, including deportation. Mr. Koch's straight talk prompted his political opponents to accuse him of xenophobia -- a charge that stings in a country still haunted by its Nazi past. Mr. Koch, a Christian Democrat, is in a tough re-election race when voters in his state go to the polls on January 27. His Social Democrat opponents claim he is just trying to attract the bigot vote. Whatever his motives, the statistics back up Mr. Koch. In Berlin, for example, one recent study shows that 70% of repeat offenders are foreigners or children of immigrants. As in much of Europe, Germany is struggling to integrate its immigrants, especially Muslims, who constitute roughly 25% of the immigrant population.
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http://online.wsj.com/article/
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EDITORS NOTES: Make no mistake about it. One of the major problems facing Europe is the rash of immigrants who are placing pressures on the social welfare systems, and in some cases, contributing to the crime situation as well. This is not to say all immigrants are criminals, and the same can be said of Latin American or other immigrants in the United States as well. Meaning, many immigrants are hard working and law abiding people. However, the crime and welfare statistics do not lie. In Paris, it has been calculated that up to 40 percent of the Muslim immigrant population living there (both first and second generation immigrants) are bleeding the welfare system dry. Again, not a negative commentary about immigration per say or any particular group, but rather a comment regarding a state welfare apparatus that allows for the newly arrived to game the system. Can you blame them? Who would not want to move from a developing country whereby they might have been surviving on a few dollars a day in the past, to find that the new country allows for a mere pulse and signature alone to qualify for a government check representing a substantial increase in cash flow (from what they had before) or free housing, free medical care, etc. ? It's a good deal, but the problem is, can these countries continue to afford it?
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Someone is paying for all this, and we can surmise it is the honest, legally employed middle class doing so. The point is, both in terms of Europe and North-America, how much longer can this go on? With dramatically large numbers of so-called baby boomers coming into retirement and placing financial strains on the government payment schemes on both sides of the Atlantic, can these welfare states continue economically in this fashion? Many of our European and American clients have cited these concerns as one of the reasons that they are relocating, and we have to believe this will only continue (and get worse as a financial pressure point).
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BUSINESS IN 2008: A YEAR FOR THE BRAVE AND WEALTHY
By John Gapper - December 26, 2007
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Eleven years ago, Alan Greenspan, then chairman of the Federal Reserve, mused: How do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? The answer was we do not; we only discover afterwards. But we do know when exuberance has turned to fear and that is the mood in which many businesses enter 2008.
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As this new year approaches, the US has had a perilous few months in markets and the rest of the world is realizing how bad the contagion could be. The UK is feeling the effects of the Northern Rock debacle and there are fears of both a housing market crash and a falling currency. The European Central Bank is still pouring liquidity into financial markets. Only the Middle East and Asia motor smoothly onwards, if anything faster. All of this brings varying degrees of uncertainty and worry to business leaders for 2008, depending on which industries and countries they are in. The common theme is that the landscape is more treacherous than a year ago. It could also be a year in which the brave and deep-pocketed thrive at others expense.
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http://www.ft.com/
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EDITORS NOTES: I take issue with the comment that: the brave and deep-pocketed thrive at others expense. After all, is it really true that the man (or woman) that did not live off of credit cards, foolishly use their home as an ATM, or otherwise got themselves into a negative financial situation can be said to have done so at the expense of someone else? We think not, and if anything, such persons probably denied themselves a newly leased BMW or some other such indulgence in the process of keeping their own personal finances in the black. However, this sort of thinking that the solvent is culpable, is what we are concerned about. Which is to say, an attack on the non-broke (or brave, to use the above journalists terminology) to remedy the issues of others who participated in so-called irrational exuberance. Once again, not a case of mean spiritedness or cold heartedness, but rather what is fair and honest. Should the pious person that gave up the new BMW and instead stayed put with the ten year old Toyota now be forced to suffer via higher taxation, inflation, or any other so-called remedies? The result is that some segment of the population is economically punished for sound behavior. Watch out for this theme of class warfare going forward as politicians possibly look to placate the foolish by plundering the so-called brave (and also as they look for more revenue to pay for the mess they have made).
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If history is any guide, we will now see in 2008, a repeat of the old political slogan: We Are All in This Together (misery loves company). Indeed we now see political hacks trying to figure out a way to legislate their way out of recession (as it would seem Ben Bernanke cannot do it alone - surprised?) by coming up with so-called financial stimulus money (and the call is for political bipartisanship, in other words, we are all in this together). Who is going to pay for this? They have already put the US government US$9 Trillion Dollars in debt and already continue to spend more money than they take in (in terms of tax revenues). Now they want to send out government checks with money they do not have? How much trouble are they in really, and who is going to pay? Will they try to borrow even more money from the Chinese or Arabs?
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Recessions are all part of the natural business cycle in a free market capitalistic economy. No one likes it, and it is not pleasant. But, it is sort of like a good spring cleaning when things go out of joint, and it signals a necessary change in behavior by business and consumers. Sort of like when your body all of a sudden develops a fever, it is a signal that you have an infection (and you should probably go see a doctor, or start taking care of your self). However, if you take fever reduction medication without finding out why you have an infection (so you can cure the problem instead of just masking the symptoms) then you are asking for more trouble later on, in terms of your health. So it is with economic policies as well.
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OUTLOOK WORST SINCE DOTCOM BUST
By Chris Giles and Delphine Strauss - January 2, 2008
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Britain this year faces the most difficult economic conditions since the Dot-com bubble burst, according to the Financial Times annual survey of leading economists. It shows deepening pessimism about the impact of the global credit squeeze. The survey of 55 top economists shows confidence has tumbled from a year ago. The experts also fear that compared with 2001-02, the scope for financial authorities to mitigate any downturn is far more limited. Nearly nine in 10 think public finances are not in good order so there is no leeway for discretionary tax cuts or increases in public expenditure. The third most-mentioned risk to the economy is inflation, limiting the ability of the Bank of England to cut interest rates. Nearly two-thirds of the economists - from the City, academia and including five former members of the monetary policy committee - thought house prices would fall this year (2008)
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http://www.ft.com/
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EDITORS NOTES: This is right about the time that the cheeky fellow who wrote the previous article in the Financial Times of early December (chastising the Americans for their foolish behavior, financially speaking) needs to take out his handkerchief (to wipe the egg off his face). Also from the article: Inflation is seen as a threat, but a majority hope the Bank of England will turn a blind eye to short-term inflationary risks and cut interest rates, since they believe that the slowdown will curb these pressures (end of quote). Say what? A majority of people want the Bank of England to let inflation run wild because they think it will solve the problem? Very surprising stuff coming from a country that was the birth place of some of the worlds leading economists over the last century.
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TOP ECONOMIST SAYS AMERICA COULD PLUNGE INTO RECESSION
By Suzy Jagger- December 31, 2007
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Losses arising from America's housing recession could triple over the next few years and they represent the greatest threat to growth in the United States, one of the world's leading economists has told The Times. Robert Shiller, Professor of Economics at Yale University, predicted that there was a very real possibility that the US would be plunged into a Japan-style slump, with house prices declining for years.
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http://business.timesonline.co.uk/tol/business/economics/article3111659.ece
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EDITORS NOTES: Could plunge, or already is in a recession? In a article by Greg Robb titled: January 5, 2008Economists Say 2008 Will Be A Year To Forget:
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Dean Baker, co-director of the Center for Economic and Policy Research says that The recession is likely to be a serious one, and he estimated losses in prime mortgages will be two to three times the $160-$200 billion hit seen in the sub-prime sector. This, he said, will lead to large losses at banks and difficulty for Fannie Mae and Freddie Mac. Alistair Milne, a professor at the City University of London's Cass Business School, says that the economy won't likely get back on track until 2010 and will require more capital from overseas.
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http://www.marketwatch.com/news/story/economists-say-2008-year-forget/
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EDITORS NOTES: Well, one very interesting thing is to take note of where all the bail-out money is coming from (note the quote from the above article that says: will require more capital from overseas). Why is it exactly that the money has to come from overseas? Is the US broke?
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Merrill Lynch recently reported cash infusions to the tune of about US$7 Billion, Citibank writes off US$18 Billion worth of bad debt - and the rescue money all coming from Singapore, Kuwait and Saudi Arabia (and not US entities). Nothing wrong with it, just an interesting thing to see and how this may affect politics, etc. Which is to say, instead of spying on US citizens, maybe the answer is to pressure the Saudi's to stop funding religious schools that preach hatred and the like. But wait, we cannot offend them, as we need their money to bail out the bankrupt banks and brokerage firms. Never mind. Hey, maybe the US can get an emergency loan from the IMF (if they can qualify via stipulated reforms and higher taxes).
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UNEMPLOYMENT SOUNDS WARNING ABOUT ECONOMY
By Peter S. Goodman and Michael M. Grynbaum - January 5, 2008
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The unemployment rate surged to 5 percent in December as the economy added a meager 18,000 jobs, the smallest monthly increase in four years, the Labor Department reported on Friday. Economists viewed the report as the most powerful indication to date that the United States could well be falling into a recessionary downturn. Evidence of widening unemployment heightened anticipation that the Federal Reserve would further cut interest rates this month, perhaps by an unusually large half a percentage point, in a bid to prevent the economy from sliding into the muck. The swift deterioration in the job market resonated as a warning sign that troubles once confined to real estate and construction are spilling into the broader economy, threatening the ability of American consumers to keep spending with customary abandon.
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http://www.nytimes.com/2008/01/05/business/05econ.html
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EDITORS NOTES: Well, it's not all bad. Recent statistics suggest that the new jobs are in the service industry, with health care leading (about 30 to 40 percent) followed by waitresses and bartenders (21 to 29 percent). So, if you can juggle a few bottles of Heineken on a platter or change a bedpan with lightning speed, you might be alright.
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PREPARE FOR A GLOBAL ECONOMIC DOWNURN BUT NOT A DISASTER
By Wolfgang Munchau - January 1, 2008
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North America remains the global economy's hub. Any assessment of the world economy in 2008 depends on the likelihood, depth and length of a US economic downturn and the magnitude of a global spillover. Any forecast is thus contingent on how we answer the following three questions. Will the financial crisis continue in 2008? Will inflation expectations rise further? Last, will there be a disorderly process of global rebalancing? If we answer all three questions with Yes, we should prepare for a global depression. If the answer is No, the world economy will have another good year. There are many intermediate scenarios as well. I would answer the first question with an unqualified Yes. The financial crisis will probably linger on for most of the year and may get worse before it gets better. This is not really a sub-prime or credit crisis, as it is frequently called. This is a banking crisis. Economic history has taught us time and again that banking crises do not simply go away.
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http://www.ft.com/
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EDITORS NOTES: Well the gentleman starts off well enough with the headline ending on a positive note, but then he goes to say: If we answer all three questions with Yes, we should prepare for a global depression. In which case he adds: I would answer the first question with an unqualified Yes. He also comments that: The housing markets in the US and several other economies are headed for a severe downturn. The second risk is inflation for two reasons. First, persistent high inflation could destabilize global government bond markets, a rare pillar of stability in an uncertain financial environment. Second, high inflation places constraints on monetary policy. This in turn could make the downturn harder and longer, and the banking crisis more severe. The problem for central banks is not the rise in headline inflation rates, but the rise in inflationary expectations (end of quote).
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Where do expectations comes from, if not from experience? In addition, is it true that central banks should not be concerned with the actual inflation they created? Whatever these people are smoking, I think I want some (must be good stuff). Regardless, we do agree with one thing, and that is, this housing mess is going to take years to work itself out. However, as long as these dingbats keep printing the money, or allowing cheap money to circulate by keeping the interest rates artificially low (which has the same effect) then who in their right mind would NOT have expectations for higher inflation? Where is Paul Volker when you need him?
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$100 OIL WILL HURT AT MORE THAN THE PUMP
By Brett Clanton - January 6, 2008 - Houston Chronicle
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From light bulbs to golf balls, items tied to petroleum may cost you extra. U.S. consumers are likely to feel the sting of $100 oil soon, and in perhaps more ways than they realize. More directly ominous for consumers, AAA reported Friday that the average price for a gallon of regular gasoline nationwide was $3.07, up from $2.32 a year ago. In Houston, the average price at the end of the week was $2.92, up from $2.18 last January. Higher gasoline prices likely will pinch consumers most as bigger crude costs are passed through to drivers, analysts said. Fuel costs also could push up airfares. But if oil prices stay up, Americans also may see higher prices for a host of other petroleum-derived products, from light bulbs and paint to golf balls and deodorant.
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http://www.chron.com/disp/story.mpl/front/5431391.html
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EDITORS NOTES: We surmise that the American Oil companies are trying to keep a lid on retail gasoline price increases temporarily, that is, in consideration of the current US Presidential election. With that said, they may have no choice but to bump up prices sometime in the second quarter, but regardless, with oil at US$90 or above, the retail price at the pump probably should be somewhere about US$7 per gallon. A January 6 article from the Courier Post (New Jersey) reported that: Between June and December, increased costs for fuel and food, due, in part to higher shipping expenses, drained a combined $45 billion in discretionary income from American households. Inflation is confiscation by stealth, it always has been, and always will be.
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DOUBLE OR NOTHING: TRADERS BET ON OIL REACHING $US200 A BARREL BY YEAR'S END. By Grant Smith - January 8, 2008
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The fastest-growing bet in the oil market these days is that the price of crude will double to $US200 a barrel by the end of the year. Options to buy oil for $US200 on the New York Mercantile Exchange rose 10-fold in the past two months to 5533 contracts, a record increase on any similar period. The contracts, the cheapest way to speculate in energy markets, have appreciated 36 per cent since early December, with crude oil futures reaching a record $US100.09 on January 3.
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While analysts at Merrill Lynch and UBS say the slowing US economy will lead to the biggest drop in prices since 2001, the options show some traders expect oil to rise for a seventh consecutive year. Demand will increase 2.5 per cent this year, the International Energy Agency (IEA) says. US oil inventories fell to a three-year low on December 28. Production from Mexico is declining and Saudi Arabia is behind schedule in opening its newest field.
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One hundred dollars a barrel is actually 14.9 cents a cup, so we're still talking about oil being remarkably cheap, said Matthew Simmons, the chairman of Simmons & Co International, an investment bank that focuses on energy. Inventories are tight as a drum and I don't see how we get out of this box, he said in an interview on Bloomberg television last week. Demand clearly isn't starting to slow down. World consumption will rise to 87.8 million barrels a day this year, 2.1 million more than last year, or about the amount that Nigeria supplies, says the IEA, which advises oil-consuming nations. Demand from China alone will rise 5.7 per cent to 8 million barrels a day as imports expand to support an economy that is likely to grow 11 per cent.
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http://business.smh.com.au/
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CITY RETIREMENT VILLAGE DOUBLES SENIORS FEES
By Alexandra Zabjek, The Edmonton Journal - January 5, 2008
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Life at a pioneering resort-style retirement community has turned into a financial disaster for dozens of seniors at a local condominium complex. Residents of the upscale Touchmark at Wedgewood, at 184th Street and Lessard Road in southwest Edmonton, were notified last week that their living expenses would jump as much as 100 per cent or more in the coming months. The cost increases have shocked and outraged many at the facility.
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The mental and emotional stress cannot be discounted, said Inese Clark, whose 92-year-old mother has lived at Touchmark since December 2006. People do budget planning and estate planning, they extrapolate the amount of money they have and say, Can I manage this even with reasonable increases? she said. Then a year later, to receive a 100-per-cent increase? That puts enormous hardship on people. More than 100 people -- many using canes, walkers, scooters and oxygen tanks -- attended a meeting Friday morning at Touchmark. However, it was the sons, daughters, nieces and nephews of residents who dominated the meeting with questions about the cost increases. One woman said her mother's expenses will rise 180 per cent. Another said her parents face a 225-per-cent increase. Another resident's living costs will go to $2,000 a month from about $1,000.
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http://www.canada.com/edmontonjournal/
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EDITORS NOTES: One of the top growth industries (if you want to call it that) in Mexico is nursing homes for elderly gringos. As cost of living, maintenance fees and the like escalate in the US and Canada, there is an outsourcing of sorts going on, regarding the aged heading south of the border and often enough, it is the children sending parents there as a cost effective alternative. However, there is a better way, although it involves expatriation just the same, but the result is that the family stays together and the children get to grow up with their grand-parents. In short, the idea involves the purchase of a 3,000 square foot home on a property in Ecuador, the Dominican Republic, or some similar locale, whereby you can have an entire household staff (cook, maid, chauffer, nanny) for what it costs to cover the monthly costs in these North-American based nursing homes. The kids live well for less, and the elderly parents are not alone in some institution located miles away. In summary, expatriating to another country is not about making a political statement, nor an act of treason. It is about economic survival, plain and simple.
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COST OF LIVING TO STRAIN AREA RESIDENTS
By Bonnie Pfister, Pittsburgh Tribune Review - January 1, 2008
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Everything's going up and up and up, except my salary, says Deborah Jomisko, who is trying to counter the rising cost of heating her Knoxville home. Soaring natural gas prices in the past two years have doubled the cost of heating her Knoxville home to $159 last month. Her 1970 Chevy Monte Carlo needs $2,000 worth of repairs, so she's relying on Port Authority buses, whose fares are about to go up. Jomisko said she lost her job as an optical technician when her boss closed his practice in March. Opportunities for a woman in her 50s have been scarce. Everything's going up and up and up, except my salary, said Jomisko, who worked through the holidays as a cashier at PPG Place ice rink. (Gasoline) is going up, and food is going up. Meat, milk, eggs; I'm buying the same things every week, but they're costing me more.
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http://www.pittsburghlive.com/x/pittsburghtrib/news/cityregion/s_545349.html
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COST OF LIVING IN SIOUX FALLS GOES UP - January 1, 2008
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With the new year, the cost of living in Sioux Falls is going up. Operating the city's utilities have become more expensive with the city's constant growth and higher fuel prices. Sioux Falls Public Works Director Mark Cotter says utility expenses for consumers will increase to just over a hundred dollars extra over the next year. Waste-water rates are going up by nearly 20%. In addition, the landfill-tipping fee is going up for the city by 22%. And if your electric bill is from the city, a 16% increase means you'll pay an extra $3.31 every month to keep your lights on.
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http://www.keloland.com/News/
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EDITORS NOTES: Ms. Anne Kates Smith has written a recent article for (personal finance magazine) whereby she reports that: Food and beverage prices are rising at a 4.4% annual rate. But Kiplingerdairy prices are up 13% (and 26% for a gallon of whole milk alone), thanks to price supports and brisk exports of powdered milk. Meanwhile, meat prices are up 6%, and bakery products are up 4.6% because corn is being converted into ethanol instead of animal feed, muffins and sweetener. We haven't seen an increase of this magnitude in grocery prices since 1990, says Bureau of Labor Statistics economist Patrick Jackman.
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Where is this all going? A severe skewing of incomes, with basically two tiers economically speaking. Meaning, some in the middle class are moving up, but a whole lot more are moving down. Couple that with increased tax collection (especially for social welfare programs, such as social security) and you can easily understand why those with a few dollars and common sense are heading for the exit sign. That in turn motivates politicians to try and stop people from leaving with their money (instead of trying to fix the reasons why people are leaving in the first place) and thus the vicious cycle ensues. Sort of like watching a movie whereby you already know the ending (because you read the book before they made it into a film).
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BUILDING BOOM FUELED BY DRUG MONEY
By Andrew Beatty - December 31, 2007
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The shiny skyscrapers that soar above Panama City's coast and loom over the small Central American capital give it a skyline more suited to an Asian powerhouse like Hong Kong or Singapore. While a sub-prime mortgage crisis batters the United States, construction has been booming in Panama. According to the most ambitious construction plans, Panama was to have been home to nine of Latin America's 10 tallest buildings by the end of the decade. But the lights are off in many of the luxury apartments, new buildings sit empty, and suspicion is growing that Panama's property boom may turn out to be a bubble built by speculators on South American drug money. Real estate agents say the large number of temporary residents in the country is the reason for the city's dim skyline at night. U.S. anti-drug officials say a more likely reason is that Colombian drug cartels use the real estate sector to launder money.
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Around 11,000 apartments are forecast to come on the market in Panama City before the end of the decade, according to estate agent Sam Taliaferro. More luxury apartments could be built in Panama over the next few years than the number built in Miami between 1995 and 2005. While Panama is a major shipping route and the canal is undergoing a $5 billion expansion, the country's economy remains small and few Panamanians say developers can justify the need for so many skyscrapers. The increasing numbers of Americans who retire in Panama head for the country's cooler mountain region, for instance. Even without the suspected drug money, real estate agents say speculators are creating a dangerous bubble that is pushing up rents throughout the country, where 40 per cent of the population lives on less than $2 a day, and could litter Panama City with half-finished, abandoned buildings.
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http://www.theglobeandmail.com/
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EDITORS NOTES: We call your attention to this news item for a few reasons, and NOT necessarily to agree with the Canadian journalist who wants to offer an explanation that Panama's growth in the real estate sector is from illicit funds (although if you want to be honest about it, Miami was certainly re-built on drug money in the 1980's and real estate always has been the number one venue for laundry operations, regardless of the location, and not the banking industry exclusively or necessarily).
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Which is to say, first off we wish to highlight our previous comments about speculation driving up the prices in some foreign real estate markets (as mentioned in our last newsletter) and to also call attention to whom the buyers are (foreigners). Local real estate agents in Panama stress that many of the residents are temporary or seasonal occupants (we can says speculators), where as US officials are of course quick to offer that vendors of unregistered recreational pharmaceuticals are to blame. Of course, that must be it. What else could it be? I mean, who in their right mind would want to invest or live in Panama other than those involved with the drug trade, right? Maybe, just maybe, it is not recreational pharmaceutical funds but rather all those Americans we told you about previously, who were playing Three Card Monty with home equity loans on their US real estate, who were speculating in real estate elsewhere. It seems to be a bit too timely or convenient that all of a sudden all this neatly corresponds with the sub-prime issues in the US. After all, I was always lead to believe that businesses involving drugs, prostitution and gambling were recession proof and uncorrelated to other things going on in the economy, but I could be wrong. Never the less, we do find the explanation to be a bit incredulous. However, assuming for just one moment that this comment about drug money is correct, once again we can revert back to our previous comments of the housing or building boom in these markets being funded with CASH. While there may very well be an excess of new buildings (and apartments by reasoning) we can at the same time predict NO credit crisis, mortgage crisis or rash of home foreclosures either. Cash is cash, regardless of where it comes from. It is borrowed money that always leads to problems.
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In any event, just to review the US real estate scenario for 2008, it is reported that in Santa Cruz County (California) foreclosures are up 250 percent and foreclosure sales, up 404 percent. In Monterey County, foreclosures are up 450 percent and foreclosure sales a whopping 916 percent. In San Benito County, foreclosures are up 300 percent. I wish these numbers were a mistake, but stuff like this you just couldn't make up no matter how vivid your imagination. Maybe that's all the fault of the drug peddlers too.
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