Thursday, June 28, 2012

#8 Many small businesses are going to be absolutely crushed by the provisions in Obamacare that require them to provide expensive health insurance coverage for their employees. This is going to make them even less competitive with companies in other countries where businesses are not required to provide healthcare for their workers. This is also going to make it even less attractive for businesses to hire new employees...

15 Reasons Why The Obamacare Decision Is A Mind Blowing Disaster For America

You can almost always count on the Supreme Court to do the wrong thing. In fact, just about every major decision by the U.S. Supreme Court over the last 40 years has been bad for America. Many were hoping that the Supreme Court would strike down Obamacare, but the truth is that we all should have known better than to expect them to get something right. So now America is headed for a complete and total disaster as Obamacare is fully implemented over the next several years. Obamacare is going to absolutely shred the infrastructure of our medical system, it is going to send health insurance premiums soaring, it is going to dramatically expand the size and the scope of government, it is going to fundamentally alter the relationships between doctors and their patients and it is one of the largest tax increases in U.S. history. Not only that, it is also going to add about a trillion dollars to our national debt over the next decade. So no, the Obamacare decision is not good news. Obamacare was one of the worst pieces of legislation in American history, and now we are stuck with it.

It was a 5-4 decision to uphold Obamacare, and the swing vote was Chief Justice John Roberts who was appointed by George W. Bush.

After the vote today, it is hard to have any faith in the U.S. Supreme Court. Many constitutional conservatives kept voting for Republicans in the hope that the direction of the Supreme Court would change, but it hasn't.

Prior to the Obama administration, Republicans controlled the White House for 20 out of 28 years. If Republicans were going to fundamentally change the nature of the Supreme Court, that was their opportunity.

But it didn't happen.

Instead, what we have is a Supreme Court that is dominated by judges that have very little respect for the U.S. Constitution. When I was in law school I got to study the Supreme Court pretty closely and I quickly realized that most of the time they simply do whatever they want to do and they make up whatever reasons they can to justify their decisions.

That sounds really bad, but that is the truth.

And thanks to the Supreme Court, we are stuck with Obamacare - at least for now.

The following are 15 reasons why the Obamacare decision is a mind blowing disaster for America....

#1 According to the U.S. Supreme Court, the federal government has the power to force you to buy private goods and services. Now that this door has been opened, what else will we be forced to buy in the future?

#2 Obamacare is another step away from individual liberty and another step toward a "nanny state" where the government dominates our lives from the cradle to the grave.

#3 The IRS is now going to be given the task of hunting down and penalizing millions of Americans that do not have any health insurance. In fact, the Obama administration has given the IRS 500 million extra dollars "outside the normal appropriations process" to help them enforce the provisions of Obamacare that they are in charge of overseeing.

#4 Obamacare imposes more than 20 new taxes on the American people. You can find a comprehensive list of Obamacare taxes right here. If you love paying higher taxes, then you are going to absolutely love Obamacare once it is fully implemented.

#5 In an attempt to "control costs" and "promote efficiency", Obamacare limits the treatment options that doctors and patients can consider. This is likely to result in a decrease in life expectancy in the United States.

#6 Obamacare is going to impose nightmarish paperwork burdens on doctors, hospitals and the rest of the healthcare system. This is going to significantly increase our healthcare costs as a nation.

#7 Obamacare is going to send health insurance premiums soaring. This is especially true for younger Americans.

#8 Many small businesses are going to be absolutely crushed by the provisions in Obamacare that require them to provide expensive health insurance coverage for their employees. This is going to make them even less competitive with companies in other countries where businesses are not required to provide healthcare for their workers. This is also going to make it even less attractive for businesses to hire new employees.

#9 Obamacare is going to make the emerging doctor shortage in America a lot worse. Surveys have found that we could potentially see hundreds of thousands of doctors leave the medical profession because of Obamacare.

#10 Obamacare has already forced the cancellation of dozens of doctor-owned hospitals.

#11 Obamacare is going to result in a much bigger federal government. In order to fully implement all of the provisions of Obamacare, hordes of new government bureaucrats will be required.

#12 Thanks to Obamacare, you are going to have to wait much longer to see a doctor. Just look at what happened once Romneycare was implemented in Massachusetts....

In fact, we have already seen the start of this process in Massachusetts, where Mitt Romney’s health care reforms were nearly identical to President Obama’s. Romney’s reforms increased the demand for health care but did nothing to expand the supply of physicians. In fact, by cracking down on insurance premiums, Massachusetts pushed insurers to reduce their payments to providers, making it less worthwhile for doctors to expand their practices. As a result, the average wait to get an appointment with a doctor grew from 33 days to over 55 days.

#13 Obamacare contains all kinds of insidious little provisions that most people don't even know about. The following is one example from the Alliance Defense Fund....

"Did you know that with ObamaCare you will have to pay for life-saving drugs, but life-ending drugs are free. One hundred percent free. If this plan were really about health care wouldn't it be the other way around?"

#14 As if the U.S. government was not facing enough of a crisis with entitlement spending, it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls. You and I will be paying for all of this.

#15 The Congressional Budget Office estimates that Obamacare will add more than a trillion dollars to government spending over the next decade. Considering the fact that the U.S. government is already drowning in debt, how in the world can we afford this?


Obamacare Complicated? Check Out The Flow Chart...

Kevin Brady's Obamacare Chart

As this graphic shows, the new law creates 68 grant programs, 47 bureaucratic entities, 29 demonstration or pilot programs, 6 regulatory systems, 6 compliance standards and 2 entitlements. What could possibly go wrong with something so-well organized?

This chart was meticulously compiled over the last four months after perusing the 2,841 pages of Obamacare that no one who voted for the bill bothered to read. This so-called “reform” has morphed into a new monstrosity of mandates, taxes & rationing, it will hurt seniors and hand healthcare into a bureaucracy which has now taken over 1/6 of our economy. This is a massive expansion of government & the bewildering complexity of this new law is overwhelming.

The HHS czar, Kathleen Sebelius, has 2200 references in the law and 600 new authorities which cannot be challenged. On the chart everything in dark blue to the left are expansions, orange are those empowered with rationing healthcare in the future. In the bottom left hand corner in blue, 150 new bureaucracies and boards have been created between doctor and patient. Those in yellow are specific mandates and there are 17 new mandates on insurance. Rep. Brady stated this law is so complex he couldn’t get the chart to fit on one page, the chart is only actually 1/3 of the size of the law so he shows “bundles of bureaucracy.” For example, one brown bundle hides 59 grant programs. Green diamonds are the taxes this law has created. In the far right corner are 19 special interest provisions, including the “Louisiana Purchase” and special interests for unions. All the lines are there because of the complexity, a la Glenn Beck’s chalkboard presentations.

Buried deep in the law are 19 special sections that cannot be challenged by the courts or any regulatory system. What the public is being sold and what the law actually has are 2 totally different things. House Republicans are dedicated to repealing this law. If they take back the House they plan to block the most egregious parts of this law & replace it with common sense reform. They are also backing states who want to block this law. Rep. Brady stated if these mandates are allowed to stand there are no boundaries to what this government can do.

And jobs created? Yes. Many. 16,500 new IRS agents to police the law and an explosion of jobs in the HHS Department with probably no jobs created in the private sector. This law will eventually need even more taxes to fund it and the US will have an “anchor around Her neck” with difficulty competing with other countries.

Please print out copies of this chart and hand to your friends, families and pass out wherever. The public needs to be educated about the impact of this law and what it will mean for their future.


Media wars: Question more...

I Hereby Secede...

Obamacare will kill your job and you...

Job Creators Alliance reacts to Supreme Court ruling on Affordable Care Act

Tom Stemberg

“The Supreme Court of the United States has dealt a critical blow to free enterprise. By upholding the mandate as a tax, the Court and this Administration has ensured that taxes will go up for middle class working families and small businesses everywhere. Legal arguments aside, Obamacare is a disaster for small business owners and entrepreneurs. It will result in thousands of lost jobs, increased health care costs and an increased inability for small businesses to provide coverage to employees.

“Today’s decision not only leaves the hurdles to job creation that Obamacare posed untouched, but adds additional uncertainty to the economy which will make it much more difficult for our economy to grow.

“Job Creators Alliance supports consumer-oriented, patient-centered, free market solutions to our nation’s healthcare problems. Whether encouraging competition though the sale of health insurance across state lines, or making health insurance portable, or expanding health savings accounts, there are better ways to increase access and control costs than a top-down, bureaucrat-centered approach based on bigger government.”


Most Arrogant Man in the World...

Reality Check: Mass. Corruption as GOP Strip Delegates of Their Credentials...

Day 17 of the Libertarian read-athon...

Repudiate the National Debt

by Murray N. Rothbard

In the spring of 1981, conservative Republicans in the House of Representatives cried. They cried because, in the first flush of the Reagan Revolution that was supposed to bring drastic cuts in taxes and government spending, as well as a balanced budget, they were being asked by the White House and their own leadership to vote for an increase in the statutory limit on the federal public debt, which was then scraping the legal ceiling of one trillion dollars. They cried because all of their lives they had voted against an increase in public debt, and now they were being asked, by their own party and their own movement, to violate their lifelong principles. The White House and its leadership assured them that this breach in principle would be their last: that it was necessary for one last increase in the debt limit to give President Reagan a chance to bring about a balanced budget and to begin to reduce the debt. Many of these Republicans tearfully announced that they were taking this fateful step because they deeply trusted their President, who would not let them down.

Famous last words. In a sense, the Reagan handlers were right: there were no more tears, no more complaints, because the principles themselves were quickly forgotten, swept into the dustbin of history. Deficits and the public debt have piled up mountainously since then, and few people care, least of all conservative Republicans. Every few years, the legal limit is raised automatically. By the end of the Reagan reign the federal debt was $2.6 trillion; now it is $3.5 trillion and rising rapidly [ed. note: $10.5 trillion, Oct. 23, 2008]. And this is the rosy side of the picture, because if you add in "off-budget" loan guarantees and contingencies, the grand total federal debt is $20 trillion.

Before the Reagan era, conservatives were clear about how they felt about deficits and the public debt: a balanced budget was good, and deficits and the public debt were bad, piled up by free-spending Keynesians and socialists, who absurdly proclaimed that there was nothing wrong or onerous about the public debt. In the famous words of the left-Keynesian apostle of "functional finance," Professor Abba Lerner, there is nothing wrong with the public debt because "we owe it to ourselves." In those days, at least, conservatives were astute enough to realize that it made an enormous amount of difference whether – slicing through the obfuscatory collective nouns – one is a member of the "we" (the burdened taxpayer) or of the "ourselves" (those living off the proceeds of taxation).

Since Reagan, however, intellectual-political life has gone topsy-turvy. Conservatives and allegedly "free-market" economists have turned handsprings trying to find new reasons why "deficits don't matter," why we should all relax and enjoy the process. Perhaps the most absurd argument of Reaganomists was that we should not worry about growing public debt because it is being matched on the federal balance sheet by an expansion of public "assets." Here was a new twist on free-market macroeconomics: things are going well because the value of government assets is rising! In that case, why not have the government nationalize all assets outright? Reaganomists, indeed, came up with every conceivable argument for the public debt except the phrase of Abba Lerner, and I am convinced that they did not recycle that phrase because it would be difficult to sustain with a straight face at a time when foreign ownership of the national debt is skyrocketing. Even apart from foreign ownership, it is far more difficult to sustain the Lerner thesis than before; in the late 1930's, when Lerner enunciated his thesis, total federal interest payments on the public debt were one billion dollars; now they have zoomed to $200 billion, the third largest item in the federal budget, after the military and Social Security: the "we" are looking ever shabbier compared to the "ourselves."

To think sensibly about the public debt, we first have to go back to first principles and consider debt in general. Put simply, a credit transaction occurs when C, the creditor, transfers a sum of money (say $1,000) to D, the debtor, in exchange for a promise that D will repay C in a year's time the principal plus interest. If the agreed interest rate on the transaction is 10 percent, then the debtor obligates himself to pay in a year's time $1,100 to the creditor. This repayment completes the transaction, which in contrast to a regular sale, takes place over time.

So far, it is clear that there is nothing "wrong" with private debt. As with any private trade or exchange on the market, both parties to the exchange benefit, and no one loses. But suppose that the debtor is foolish, gets himself in over his head, and then finds that he can't repay the sum he had agreed on? This, of course is a risk incurred by debt, and the debtor had better keep his debts down to what he can surely repay. But this is not a problem of debt alone. Any consumer may spend foolishly; a man may blow his entire paycheck on an expensive trinket and then find that he can't feed his family. So consumer foolishness is hardly a problem confined to debt alone. But there is one crucial difference: if a man gets in over his head and he can't pay, the creditor suffers too, because the debtor has failed to return the creditor's property. In a profound sense, the debtor who fails to repay the $1,100 owed to the creditor has stolen property that belongs to the creditor; we have here not simply a civil debt, but a tort, an aggression against another's property.

In earlier centuries, the insolvent debtor's offense was considered grave, and unless the creditor was willing to "forgive" the debt out of charity, the debtor continued to owe the money plus accumulating interest, plus penalty for continuing nonpayment. Often, debtors were clapped into jail until they could pay – a bit Draconian perhaps, but at least in the proper spirit of enforcing property rights and defending the sanctity of contracts. The major practical problem was the difficulty for debtors in prison to earn the money to repay the loan; perhaps it would have been better to allow the debtor to be free, provided that his continuing income went to paying the creditor his just due.

As early as the 17th century, however, governments began sobbing about the plight of the unfortunate debtors, ignoring the fact that the insolvent debtors had gotten themselves into their own fix, and they began to subvert their own proclaimed function of enforcing contracts. Bankruptcy laws were passed which, increasingly, let the debtors off the hook and prevented the creditors from obtaining their own property. Theft was increasingly condoned, improvidence was subsidized, and thrift was hobbled. In fact, with the modern device of Chapter 11, instituted by the Bankruptcy Reform Act of 1978, inefficient and improvident managers and stockholders are not only let off the hook, but they often remain in positions of power, debt-free and still running their firms, and plaguing consumers and creditors with their inefficiencies. Modern utilitarian neoclassical economists see nothing wrong with any of this; the market, after all, "adjusts" to these changes in the law. It is true that the market can adjust to almost anything, but so what? Hobbling creditors means that interest rates rise permanently, to the sober and honest as well as the improvident; but why should the former be taxed to subsidize the latter? But there are deeper problems with this utilitarian attitude. It is the same amoral claim, from the same economists, that there is nothing wrong with rising crime against residents or storekeepers of the inner cities. The market, they assert, will adjust and discount for such high crime rates, and therefore rents and housing values will be lower in the inner-city areas. So everything will be taken care of. But what sort of consolation is that? And what sort of justification for aggression and crime?

In a just society, then, only voluntary forgiveness by creditors would let debtors off the hook; otherwise, bankruptcy laws are an unjust invasion of the property rights of creditors.

One myth about "debtors'" relief is that debtors are habitually poor and creditors rich, so that intervening to save debtors is merely a requirement of egalitarian "fairness." But this assumption was never true: in business, the wealthier the businessman the more likely he is to be a large debtor. It is the Donald Trumps and Robert Maxwells of this world whose debts spectacularly exceed their assets. Intervention on behalf of debtors has generally been lobbied for by large businesses with large debts. In modern corporations, the effect of ever-tightening bankruptcy laws has been to hobble the creditor-bondholders for the benefit of the stockholders and the existing managers, who are usually installed by, and allied with, a few dominant large stockholders. The very fact that a corporation is insolvent demonstrates that its managers have been inefficient, and they should be removed promptly from the scene. Bankruptcy laws that keep prolonging the rule of existing managers, then, not only invade the property rights of the creditors; they also injure the consumers and the entire economic system by preventing the market from purging the inefficient and improvident managers and stockholders and from shifting the ownership of industrial assets to the more efficient creditors. Not only that; in a recent law review article, Bradley and Rosenzweig have shown that the stockholders, too, as well as the creditors, have lost a significant amount of assets due to the installation of Chapter 11 in 1978. As they write, "if bondholders and stockholders are both losers under Chapter 11, then who are the winners?" The winners, remarkably but unsurprisingly, turn out to be the existing, inefficient corporate managers, as well as the assorted lawyers, accountants, and financial advisers who earn huge fees from bankruptcy reorganizations.

In a free-market economy that respects property rights, the volume of private debt is self-policed by the necessity to repay the creditor, since no Papa Government is letting you off the hook. In addition, the interest rate a debtor must pay depends not only on the general rate of time preference but on the degree of risk he as a debtor poses to the creditor. A good credit risk will be a "prime borrower," who will pay relatively low interest; on the other hand, an improvident person or a transient who has been bankrupt before, will have to pay a much higher interest rate, commensurate with the degree of risk on the loan.

Most people, unfortunately, apply the same analysis to public debt as they do to private. If sanctity of contracts should rule in the world of private debt, shouldn't they be equally as sacrosanct in public debt? Shouldn't public debt be governed by the same principles as private? The answer is no, even though such an answer may shock the sensibilities of most people. The reason is that the two forms of debt-transaction are totally different. If I borrow money from a mortgage bank, I have made a contract to transfer my money to a creditor at a future date; in a deep sense, he is the true owner of the money at that point, and if I don't pay I am robbing him of his just property. But when government borrows money, it does not pledge its own money; its own resources are not liable. Government commits not its own life, fortune, and sacred honor to repay the debt, but ours. This is a horse, and a transaction, of a very different color.

For unlike the rest of us, government sells no productive good or service and therefore earns nothing. It can only get money by looting our resources through taxes, or through the hidden tax of legalized counterfeiting known as "inflation." There are some exceptions, of course, such as when the government sells stamps to collectors or carries our mail with gross inefficiency, but the overwhelming bulk of government revenues is acquired through taxation or its monetary equivalent. Actually, in the days of monarchy, and especially in the medieval period before the rise of the modern state, kings got the bulk of their income from their private estates – such as forests and agricultural lands. Their debt, in other words, was more private than public, and as a result, their debt amounted to next to nothing compared to the public debt that began with a flourish in the late 17th century.

The public debt transaction, then, is very different from private debt. Instead of a low-time preference creditor exchanging money for an IOU from a high-time preference debtor, the government now receives money from creditors, both parties realizing that the money will be paid back not out of the pockets or the hides of the politicians and bureaucrats, but out of the looted wallets and purses of the hapless taxpayers, the subjects of the state. The government gets the money by tax-coercion; and the public creditors, far from being innocents, know full well that their proceeds will come out of that selfsame coercion. In short, public creditors are willing to hand over money to the government now in order to receive a share of tax loot in the future. This is the opposite of a free market, or a genuinely voluntary transaction. Both parties are immorally contracting to participate in the violation of the property rights of citizens in the future. Both parties, therefore, are making agreements about other people's property, and both deserve the back of our hand. The public credit transaction is not a genuine contract that need be considered sacrosanct, any more than robbers parceling out their shares of loot in advance should be treated as some sort of sanctified contract.

Any melding of public debt into a private transaction must rest on the common but absurd notion that taxation is really "voluntary," and that whenever the government does anything, "we" are willingly doing it. This convenient myth was wittily and trenchantly disposed of by the great economist Joseph Schumpeter: "The theory which construes taxes on the analogy of club dues or of the purchases of, say, a doctor only proves how far removed this part of the social sciences is from scientific habits of mind." Morality and economic utility generally go hand in hand. Contrary to Alexander Hamilton, who spoke for a small but powerful clique of New York and Philadelphia public creditors, the national debt is not a "national blessing." The annual government deficit, plus the annual interest payment that keeps rising as the total debt accumulates, increasingly channels scarce and precious private savings into wasteful government boondoggles, which "crowd out" productive investments. Establishment economists, including Reaganomists, cleverly fudge the issue by arbitrarily labeling virtually all government spending as "investments," making it sound as if everything is fine and dandy because savings are being productively "invested." In reality, however, government spending only qualifies as "investment" in an Orwellian sense; government actually spends on behalf of the "consumer goods" and desires of bureaucrats, politicians, and their dependent client groups. Government spending, therefore, rather than being "investment," is consumer spending of a peculiarly wasteful and unproductive sort, since it is indulged not by producers but by a parasitic class that is living off, and increasingly weakening, the productive private sector. Thus, we see that statistics are not in the least "scientific" or "value-free"; how data are classified – whether, for example, government spending is "consumption" or "investment" – depends upon the political philosophy and insights of the classifier.

Deficits and a mounting debt, therefore, are a growing and intolerable burden on the society and economy, both because they raise the tax burden and increasingly drain resources from the productive to the parasitic, counterproductive, "public" sector. Moreover, whenever deficits are financed by expanding bank credit – in other words, by creating new money – matters become still worse, since credit inflation creates permanent and rising price inflation as well as waves of boom-bust "business cycles."

It is for all these reasons that the Jeffersonians and Jacksonians (who, contrary to the myths of historians, were extraordinarily knowledgeable in economic and monetary theory) hated and reviled the public debt. Indeed, the national debt was paid off twice in American history, the first time by Thomas Jefferson and the second, and undoubtedly the last time, by Andrew Jackson.

Unfortunately, paying off a national debt that will soon reach $4 trillion would quickly bankrupt the entire country. Think about the consequences of imposing new taxes of $4 trillion in the United States next year! Another way, and almost as devastating, a way to pay off the public debt would be to print $4 trillion of new money – either in paper dollars or by creating new bank credit. This method would be extraordinarily inflationary, and prices would quickly skyrocket, ruining all groups whose earnings did not increase to the same extent, and destroying the value of the dollar. But in essence this is what happens in countries that hyper-inflate, as Germany did in 1923, and in countless countries since, particularly the Third World. If a country inflates the currency to pay off its debt, prices will rise so that the dollars or marks or pesos the creditor receives are worth a lot less than the dollars or pesos they originally lent out. When an American purchased a 10,000 mark German bond in 1914, it was worth several thousand dollars; those 10,000 marks by late 1923 would not have been worth more than a stick of bubble gum. Inflation, then, is an underhanded and terribly destructive way of indirectly repudiating the "public debt"; destructive because it ruins the currency unit, which individuals and businesses depend upon for calculating all their economic decisions.

I propose, then, a seemingly drastic but actually far less destructive way of paying off the public debt at a single blow: out-right debt repudiation. Consider this question: why should the poor, battered citizens of Russia or Poland or the other ex-Communist countries be bound by the debts contracted by their former Communist masters? In the Communist situation, the injustice is clear: that citizens struggling for freedom and for a free-market economy should be taxed to pay for debts contracted by the monstrous former ruling class. But this injustice only differs by degree from "normal" public debt. For, conversely, why should the Communist government of the Soviet Union have been bound by debts contracted by the Czarist government they hated and overthrew? And why should we, struggling American citizens of today, be bound by debts created by a past ruling elite who contracted these debts at our expense? One of the cogent arguments against paying blacks "reparations" for past slavery is that we, the living, were not slaveholders. Similarly, we the living did not contract for either the past or the present debts incurred by the politicians and bureaucrats in Washington.

Although largely forgotten by historians and by the public, repudiation of public debt is a solid part of the American tradition. The first wave of repudiation of state debt came during the 1840's, after the panics of 1837 and 1839. Those panics were the consequence of a massive inflationary boom fueled by the Whig-run Second Bank of the United States. Riding the wave of inflationary credit, numerous state governments, largely those run by the Whigs, floated an enormous amount of debt, most of which went into wasteful public works (euphemistically called "internal improvements"), and into the creation of inflationary banks. Outstanding public debt by state governments rose from $26 million to $170 million during the decade of the 1830's. Most of these securities were financed by British and Dutch investors.

During the deflationary 1840's succeeding the panics, state governments faced repayment of their debt in dollars that were now more valuable than the ones they had borrowed. Many states, now largely in Democratic hands, met the crisis by repudiating these debts, either totally or partially by scaling down the amount in "readjustments." Specifically, of the 28 American states in the 1840's, nine were in the glorious position of having no public debt, and one (Missouri's) was negligible; of the 18 remaining, nine paid the interest on their public debt without interruption, while another nine (Maryland, Pennsylvania, Indiana, Illinois, Michigan, Arkansas, Louisiana, Mississippi, and Florida) repudiated part or all of their liabilities. Of these states, four defaulted for several years in their interest payments, whereas the other five (Michigan, Mississippi, Arkansas, Louisiana, and Florida) totally and permanently repudiated their entire outstanding public debt. As in every debt repudiation, the result was to lift a great burden from the backs of the taxpayers in the defaulting and repudiating states.

Apart from the moral, or sanctity-of-contract argument against repudiation that we have already discussed, the standard economic argument is that such repudiation is disastrous, because who, in his right mind, would lend again to a repudiating government? But the effective counterargument has rarely been considered: why should more private capital be poured down government rat holes? It is precisely the drying up of future public credit that constitutes one of the main arguments for repudiation, for it means beneficially drying up a major channel for the wasteful destruction of the savings of the public. What we want is abundant savings and investment in private enterprises, and a lean, austere, low-budget, minimal government. The people and the economy can only wax fat and prosperous when their government is starved and puny.

The next great wave of state debt repudiation came in the South after the blight of Northern occupation and Reconstruction had been lifted from them. Eight Southern states (Alabama, Arkansas, Florida, Louisiana, North Carolina, South Carolina, Tennessee, and Virginia) proceeded, during the late 1870's and early 1880's under Democratic regimes, to repudiate the debt foisted upon their taxpayers by the corrupt and wasteful carpetbag Radical Republican governments under Reconstruction.

So what can be done now? The current federal debt is $3.5 trillion. Approximately $1.4 trillion, or 40 percent, is owned by one or another agency of the federal government. It is ridiculous for a citizen to be taxed by one arm of the federal government (the IRS), to pay interest and principal on debt owned by another agency of the federal government. It would save the taxpayer a great deal of money, and spare savings from further waste, to simply cancel that debt outright. The alleged debt is simply an accounting fiction that provides a mask over reality and furnishes a convenient means for mulcting the taxpayer. Thus, most people think that the Social Security Administration takes their premiums and accumulates it, perhaps by sound investment, and then "pays back" the "insured" citizen when he turns 65. Nothing could be further from the truth. There is no insurance and there is no "fund," as there indeed must be in any system of private insurance. The federal government simply takes the Social Security "premiums" (taxes) of the young person, spends them in the general expenditures of the Treasury, and then, when the person turns 65, taxes someone else to pay the "insurance benefit." Social Security, perhaps the most revered institution in the American polity, is also the greatest single racket. It's simply a giant Ponzi scheme controlled by the federal government. But this reality is masked by the Social Security Administration's purchase of government bonds, the Treasury then spending these funds on whatever it wishes. But the fact that the SSA has government bonds in its portfolio, and collects interest and payment from the American taxpayer, allows it to masquerade as a legitimate insurance business.

Canceling federal agency-held bonds, then, reduces the federal debt by 40 percent. I would advocate going on to repudiate the entire debt outright, and let the chips fall where they may. The glorious result would be an immediate drop of $200 billion in federal expenditures, with at least the fighting chance of an equivalent cut in taxes.

But if this scheme is considered too Draconian, why not treat the federal government as any private bankrupt is treated (forgetting about Chapter 11)? The government is an organization, so why not liquidate the assets of that organization and pay the creditors (the government bondholders) a pro-rata share of those assets? This solution would cost the taxpayer nothing, and, once again, relieve him of $200 billion in annual interest payments. The United States government should be forced to disgorge its assets, sell them at auction, and then pay off the creditors accordingly. What government assets? There are a great deal of assets, from TVA to the national lands to various structures such as the Post Office. The massive CIA headquarters at Langley, Virginia, should raise a pretty penny for enough condominium housing for the entire work force inside the Beltway. Perhaps we could eject the United Nations from the United States, reclaim the land and buildings, and sell them for luxury housing for the East Side gliterati. Another serendipity out of this process would be a massive privatization of the socialized land of the Western United States and of the rest of America as well. This combination of repudiation and privatization would go a long way to reducing the tax burden, establishing fiscal soundness, and desocializing the United States.

In order to go this route, however, we first have to rid ourselves of the fallacious mindset that conflates public and private, and that treats government debt as if it were a productive contract between two legitimate property owners.

This article was published in the June 1992 issue of Chronicles.


HBO's The Newsroom vs. Mainstream media lies...

You didn't believe the first reports did you???

Latest Press: JPMorgan Loss As Large As $9 Billion

We have long said that the maximum potential loss of the JPM CIO trade based on the blow out in IG9 10 year (and associated trades complex), which has about a $200 million DV01, is far beyond not only the $2 billion that Jamie Dimon estimated on May 10, but above our own estimate which was $5 billion on that same day. Today, the NYT "according to people who have been briefed on the situation" which translated means just more media propaganda because all the news on the topic in the past month has been leaks by axed parties, says that 'Losses on JPMorgan Chase’s bungled trade could total as much as $9 billion, far exceeding earlier public estimates, according to people who have been briefed on the situation." Also according to the NYT, and roundly refuting what the other leak had told Bloomberg and other media outlets, "The bank’s exit from its money-losing trade is happening faster than many expected. JPMorgan previously said it hoped to clear its position by early next year; now it is already out of more than half of the trade and may be completely free this year." Obviously, this refutes media "reports" also based on "people familiar" or "conflicted sources" that JPM has unwound its trade, either by novating, or by transferring it over to helpful hedge funds. Bottom line: take everything with a grain of salt until Dimon himself gives an update in two weeks, as this could easily be an upper bound loss estimate starwman to set expectations very low, sending the stock soaring when the "final" announce loss comes in at ~$5 billion, courtesy of other well-known "masking" techniques such as loan loss reserve release and DVA benefits.


As JPMorgan has moved rapidly to unwind the position — its most volatile assets in particular — internal models at the bank have recently projected losses of as much as $9 billion. In April, the bank generated an internal report that showed that the losses, assuming worst-case conditions, could reach $8 billion to $9 billion, according to a person who reviewed the report.

With much of the most volatile slice of the position sold, however, regulators are unsure how deep the reported losses will eventually be. Some expect that the red ink will not exceed $6 billion to $7 billion.

Nonetheless, the sharply higher loss totals will feed a debate over how strictly large financial institutions should be regulated and whether some of the behemoth banks are capitalizing on their status as too big to fail to make risky trades.

JPMorgan plans to disclose part of the total losses on the soured bet on July 13, when it reports second-quarter earnings. Despite the loss, the bank has said it will be solidly profitable for the quarter — no small achievement given that nervous markets and weak economies have sapped Wall Street’s main businesses. To put the size of the loss in perspective, JPMorgan logged a first-quarter profit of $5.4 billion.

More than profits are at stake. The growing fallout from the bank’s bad bet threatens to undercut the credibility of Mr. Dimon, who has been fighting major regulatory changes that could curtail the kind of risk-taking that led to the trading losses. The bank chief was considered a deft manager of risk after steering JPMorgan through the financial crisis in far better shape than its rivals.

“Essentially, JPMorgan has been operating a hedge fund with federal insured deposits within a bank,” said Mark Williams, a professor of finance at Boston University, who also served as a Federal Reserve bank examiner.

A spokesman for the bank declined to comment.

In other words: the world's largest prop trading deks, with a $200 million DV01, as Zero Hedge readers have now known for just under two months.


You've been warned. Now, what are you going to do about it?

July 12, 2012: The Day ISPs Start Spying On Customers

By David K. Sutton

If you are in the habit of downloading copyrighted media, including software, music and videos, be warned that beginning on Thursday July 12th your ISP will start spying on your activity. The Raw Story reports, “That’s the date when the nation’s largest ISPs will all voluntarily implement a new anti-piracy plan that will engage network operators in the largest digital spying scheme in history, and see some users’ bandwidth completely cut off until they sign an agreement saying they will not download copyrighted materials.”

Of course the usual suspects are behind this plan including the Recording Industry Association of America (RIAA) and the Motion Picture Association of American (MPAA). The plan is backed by all major ISPs (Comcast, Verizon, Time Warner Cable, Cablevision, AT&T) and has the support of the Obama administration.

Penalties for offenders can include reduced bandwidth, access reduced to a limited number of websites, and complete internet service cut-off. ISPs can require customers to attend “an education course” if they want service restored. And of course offenders can be charged with copyright infringement by the studios.

A CNET News article quotes RIAA CEO Cary Sherman, “Each ISP has to develop their infrastructure for automating the system.” Sherman said ISPs are developing systems to keep track of repeat infringers which will allow them to send “first notice or the third notice.” CNET reports that ISPs will use a “graduated response” approach. This approach requires ISPs to “send out one or two educational notices to customers accused of downloading copyrighted content illegally. If the customer doesn’t stop, the ISP is then asked to send out ‘confirmation notices’ asking that they confirm they have received notice.” If accused customers continue to pirate material the ISP can then begin to impose the before mentioned restrictions.

Welcome to the police state folks, previously home to the ‘land of the free’.


We can't bomb John Belushi, he's already dead...

Bees Kill As Many As Terrorists: UK Watchdog

Brit Dee

In a dystopic world of constant propaganda, it makes a refreshing change when a member of the establishment draws attention to the absurdity of the vastly overexaggerated threat from terrorism.

David Anderson QC, a barrister and the Independent Reviewer of Terrorism Legislation, has done just that by pointing out as many people are killed each year in the UK by hornets, wasps and bees, as they are by terrorists.

The average number of deaths annually from terrorism in the UK this century has been a miniscule five - the same number as those who die of bee stings each year.

In a report published Wednesday Anderson said that in the 21st century terrorism had been "an insignificant cause of mortality in the United Kingdom" - whilst in 2010 alone in England and Wales, 29 people had drowned in the bath.

Mr. Anderson further undermined the government's fearmongering rhetoric by noting that no one had even been injured by a terrorist in the UK for more than two years, since pro-Iraq war MP Stephen Timms was stabbed by Muslim radical Roshonara Choudhry, and that there hadn't been a successful Al-Qaeda attack anywhere in Europe throughout 2011.

By March 2011 arrests for terrorism had fallen to 141, the lowest level since 9/11, and there'd been only one serious terror conviction in a UK court, Anderson said. He also gave voice to the obvious, which is that the government's perpetual fearmongering about terrorism is sometimes “exaggerated for political or commercial purposes”, and that they could relax some anti-terror laws without endangering public safety.

Anderson's more rational assessment contrasts sharply with the outrageously fearmongering speech given earlier in the week by MI5 head Jonathan Evans. In the speech, Evans claimed that the 'Arab Spring' had provided a new breeding ground for British terrorists, alluded to the possibility of Iranian state-sponsored terror and the prospect of a dirty bomb attack, and said that if the Eurozone collapsed we could well see more Anders Breivik-style 'lone wolf' terrorists.

Evans' warnings were revealed to be practically useless - beyond perpetuating fear, which can be exploited by the elite - when he admitted that there was “no such thing as guaranteed security” for the upcoming Olympics and that the “dog you haven't seen may turn out to be the one that bites you".

It seems that in reality it's the wasp that stings you that is statistically as likely as a terrorist to kill you.


Has statism made you ill??

You're a Victim of the State – Don’t Call 911

by Sean Covell

The state has done a wonderful job at one thing. It continues to do it every single day and most are not aware that it is happening. It’s not hard to see it really. All one has to do is look at the unemployment statistics, household savings numbers and the growing obesity epidemic to understand what has happened. Still, some have blinders on to the reality that the state is responsible for breeding generations of failures. It may be the only thing the state does well and it’s getting better at it by the minute. It should be treated as a medical epidemic. It should have it’s own class action commercial like those seen on cable news. If there was a commercial for a class action lawsuit against the state it may look something like this:

"Do you or somebody you know suffer from being a failure? Have you taken a dose of Statism ever in your lifetime and now suffer from any of the following;

Obesity – You have followed the food pyramid like a good little boy or girl. You didn’t take those nasty supplements, you ate "a balanced" diet and you took your prescribed medication like you were supposed to. You learned in school and from your doctor that you only had to eat less calories than you burned. Now, you are obese and diabetic. You continue to eat wheat, grains, high fructose corn syrup and of course breakfast cereals because you have to get those vitamins in your Cookie Crunch. You can barely move. You have three chins. You couldn’t do a push up or pull up to save you life.

The state has clearly misled you about what it takes to be healthy. Throw out everything you know. You must unlearn what you have learned. Cut the sugar, cut the wheat and most other grains. Cut the soda, the juice and actually do some research about the drugs you are taking. Stop looking for answers from the USDA, the FDA and all other state organizations that are shills for Big Pharma and farmers who are subsidized by the state. Stop eating a "balanced" diet and instead eat foods that make you healthy and have nutritional value. Above all, stop listening to fat doctors, nurses that smoke, or any other professional who reeks of hypocrisy.

Debt – You, like our government, are mired in debt. This is clearly your own doing, but it’s not entirely your fault. You went to public school and then college where you were told that you have to spend to keep the economy growing. You took President Bush’s advice to go shopping after 9/11. You took out a second and third mortgage on your house, (for which you received a government backed loan to buy) to purchase a new American made car because Detroit was in trouble. Now you have no savings and likely have to file bankruptcy. You are not alone. Millions are in your predicament. The good news is there is somebody to blame for your financial woes. Blame the state! You were simply doing what they do. By doing your part and spending everything you had, you were creating jobs, right? If you believe that, you are a Keynesian to the core. Please read anything by Mises, Hayek or Rothbard. Or, just read a Gary North article. You’ll begin to understand what money is and how wealth is created. His recent articles on Tax Loving Conservatives have been especially phenomenal.

Unemployement – Nearly 13 million Americans are out of work and 43% of those have been unemployed for over a year, according to the Organization for Economic Cooperation and Development. You may be one of these poor souls. Perhaps you got a liberal arts degree from a very reputable college, but you still can’t find work. You even got a folding chair and occupied Berkeley, New York and Los Angeles to let the world know that you can’t find a job. You also made it very clear you believe Capitalism is to blame and that the government should spend more and forgive your student loans. Although better time would have been spent looking for an apprenticeship, updating your resume, gathering capital from friends and family to start your own company or just reading about how the division of labor and the marketplace is the reason for the greatest improvements in civilized life in the history of humanity, I understand your complaints. It was state interference in the marketplace that led to tuition rates skyrocketing. It was Keynesian and Marxist curriculum that you were taught. (Trust me on this one. I can still remember clearly embarrassing my professors when I had to school them on how private property, capital accumulation and savings as well as an intense desire to improve one’s standing in life ultimately led to wealth and job creation for many people in the marketplace He was stating it wasn’t fair that a watchmaker could charge $100 for a watch when the worker only made $8.00 an hour.) Maybe you believe, like my professor, that the workers should own the watch factory and the profit from the sale of the watch. If you do, you are a certified Marxist and that is why are unemployed. Your state education has failed you. I suggest writing a letter to your Alma Mater asking for a full refund. Then, take the refund check, buy some gold, silver, a personal trainer (remember you are obese), a copy of the Primal Blueprint, The Road to Serfdom by Hayek, listen to a Ron Paul speech for free on YouTube, and then find a wise place to invest your money where you can bring value to the marketplace. Your income is related to your value in the marketplace. Make yourself more valuable and you will make more money. If you become very rich, I don’t want any of your money, but I would suggest you buy a firearm to protect your assets and your family. There are some fine articles and videos here on LRC about which firearm is suitable for you.

Depression – Let’s face it, if you are obese, unemployed and in debt, there can be no doubt you are also depressed. Your doctor prescribed you Zoloft, Xanex and Ambien to sleep. Now, you’re still depressed and as energetic as a slug. While you have every reason to be depressed and to blame the state for your unhappiness, I have news for you: sometimes life is hard. This is especially true if you make bad decisions. It’s worth noting that life is easier in the current era than every previous era in human history. Even the poor have a higher standard of living thanks to what remains of the free market. If you don’t believe me, pick up a book on the Dark Ages. Or, read about the millions killed under the fascist rule of Hitler, Mussolini, Stalin, Lenin, Pol Pot. If you think you have it bad, remember you still have choices in life. Choose to be productive and not a parasite. Choose to promote freedom and not fascism. Choose to be grateful that you’re still sucking air and above ground. College taught you that your biography is your destiny. You’ve learned that your perspective on life is based on economic class. Let me tell you that Marxist philosophy will result in the death of whatever personal freedoms you have left. You have a mind, so use it and stop focusing on how unhappy you are. Go make someone else happy, thus making yourself more valuable to others and improving your own self image.

Conclusion – If you suffer from any of the ailments above do not call 911. They will prescribe you more antidepressants, feed you more sugar, offer you food stamps and unemployment thereby creating more debt and making us all less free. If you are a failure, the state has likely been complicit. Therefore, to be a success you must accept the state cannot have any major role in your life. You must avoid it at all costs. Limit contact with it, do everything in your power to shrink it. Do not rely on it for money, food, healthcare information or anything else. After all the state has failed you already. Why would you trust it again? To be a success, you must rely on yourself and your own ability to produce something of value. You must take action. As Mises put it "Mans striving after an improvement of the conditions of his existence impels him to action. Action requires planning and the decision which of various plans is the most advantageous." You must make a plan. Plan the work, work the plan and don’t stop working until your plan becomes reality. You don’t have to be a failure despite what your college professor taught you.


Who are the global elites???

'Naming Names'

by Charles A. Burris

Over the past several weeks at LRC I have written various articles and blogs touching upon my favorite area of commentary: that of power elite analysis and the hidden history related to this subject.

These topics have included Watergate, the Bush dynasty, the 1980 October Surprise, and the 1980s Vatican Banking scandal.

I have received quite a number of enthusiastic responses from readers seeking more information on these concerns. It seems our LRC audience loves stuff which "names names," and details chapter and verse how the power elite covertly operates in ripping them off by bamboozling them.

Accordingly they have asked for book titles and references with which they can further pursue exploring power elite analysis. So here are a dozen principal books which I particularly recommend one starts with which I have found extremely insightful over the past four decades.

Let’s begin at the beginning, the beginning of the American Republic.

Two books published contemporaneously in the early 1930s must be at the top of my reading list. They are Albert Jay Nock’s Our Enemy, The State; and John McConaughy’ Who Rules America: A Century of Invisible Government. The first is readily available, the latter is almost impossible to find (read it and you will know why it has been suppressed). Both are masterfully written, unflinching in their boldness, and authoritative. I have found nothing which supersedes them in dissecting this formative period of the American state.

Moving on to the period after the Civil War (the War of Coercive National Unification), we have three titles that are essential reading: Murray N. Rothbard’s brilliant Wall Street, Banks, and American Foreign Policy; Senator Richard F. Pettigrew’s forgotten memoir, Triumphant Plutocracy: The Story of American Public Life from 1870 to 1920; and Ferdinand Lundberg’s muck-raking classic, America’s 60 Families.

The Ur-book of "Establishment studies" is Carroll Quigley’s Tragedy and Hope: A History of the World in Our Time, the importance of which I have commented upon previously at LRC.

Unsurpassed in detailed documentation is Philip H. Burch’s three volume set, Elites in American History: The Federalist Years to the Civil War, The Civil War to the New Deal, and The New Deal to the Carter Administration. Professor Burch, by his exemplary scholarship and meticulous research into the elite structure of the American Establishment, has written the landmark definitive series in the exploration of power in America.

One would be negligent in not mentioning that much-heralded hagiographic tome of "Establishment studies," The Wise Men: Six Friends and the World They Made, by insiders Walter Isaacson and Evan Thomas. The authors practically genuflect upon every page in paying homage to these overlords who once reigned supreme in the American presidium of power and privilege.

G. William Domhoff’s insightful The Higher Circles: The Governing Class in America; and the incomparable Peter Dale Scott’s American War Machine: Deep Politics, the CIA Global Drug Connection, and the Road to Afghanistan, complete this elementary canon which court historians would no doubt label "the dirty dozen."

But the intellectually curious reader should not stop here. At I have 104 Listmania! Book and DVD lists.

Here are a number of specific lists which delve further into the topic of power elite analysis:

See the rest here:

"Thus, this constitutional rebuke to Arizona has become a personal license for the president. He now has demonstrated that he will not faithfully enforce federal law as the Constitution requires. He will only enforce the laws he agrees with."

Restraining Arizona, Unleashing the President

by Andrew P. Napolitano

When the Obama administration decided that it had no interest in preventing the movement of undocumented aliens from Mexico into the southwest United States, the State of Arizona decided to take matters into its own hands. Based on a novel theory of constitutional law, namely, that if a state is unhappy with the manner in which federal law is being enforced or not being enforced, it can step into the shoes of the feds and enforce federal law as it wishes the feds would, it enacted legislation to accomplish that.

The legislation created two conflicts that rose to the national stage. The first is whether any government may morally and legally interfere with freedom of association based on the birthplace of the person with whom one chooses to associate. The second is whether the states can enforce federal law in a manner different from that of the feds.

Regrettably, in addressing all of this earlier in the week, the Supreme Court overlooked the natural and fundamental freedom to associate. It is a natural right because it stems from the better nature of our humanity, and it is a fundamental right because it is protected from governmental interference by the Constitution itself. Freedom of association means that without force or fraud you may freely choose to be in the presence of whomever you please, and the government cannot force you to associate with someone with whom you have chosen not to associate, and the government cannot bar anyone with whom you wish to associate from associating with you.

Without even addressing the now-taken-for-granted federal curtailment of the right to associate with someone born in a foreign country and whose presence is inconsistent with arbitrary federal document requirements and quotas, the Supreme Court earlier this week struck down three of the four challenged parts of the Arizona statute, which attempted to supplant the federal regulation of freedom of association with its own version. It did so because the Constitution specifically gives to Congress the authority to regulate immigration, and Congress, by excluding all other law-writing bodies in the U.S. from enacting laws on immigration, has pre-empted the field.

The court specifically invalidated the heart and soul of this misguided Arizona law by ruling definitively that in the area of immigration, the states cannot stand in the shoes of the feds just because they disapprove of the manner in which the feds are or are not enforcing federal law. The remedy for one's disapproval of the manner of federal law enforcement is to elect a different president or Congress; it is not to tinker with the Constitution.

Federal law cannot have a different meaning in different states, the court held. And just as the feds must respect state sovereignty in matters retained by the states under the Constitution (though they rarely do), so, too, the states must respect federal sovereignty in matters that the Constitution has unambiguously delegated to the feds.

The court neither upheld nor invalidated Section 2B of the Arizona statute – which permits a police inquiry of the immigration status of those arrested for non-immigration offenses – because the court found that, just as when the police stop a person for a violation of state or local law they may check their computers for outstanding warrants for the person they have stopped, so, too, they may check their computers for the person's immigration status.

Shortly after the opinion came down, the Obama administration announced that it will cease providing Arizona police with the immigration status of persons in that state, and it will not detain anyone arrested by Arizona police for immigration violations unless those violations rise to the level of a felony, which undocumented presence in the U.S. is not. Thus, this constitutional rebuke to Arizona has become a personal license for the president. He now has demonstrated that he will not faithfully enforce federal law as the Constitution requires. He will only enforce the laws he agrees with.

So, since the Arizona police cannot arrest and incarcerate anyone for undocumented presence and since they cannot deliver anyone so arrested to the feds, what legitimate governmental purpose will be served by what remains of Arizona's law? None. But the police still will harass any dark-skinned person in Arizona that they please.

Have we lost sight of the perpetual tension between human freedom and human law? Either freedom is integral to our nature, as Thomas Jefferson wrote in the Declaration of Independence, or it comes from the government, as the president and the Supreme Court demonstrated they believe this week. If it is integral to our nature, no government can tell us with whom we may freely associate. If it comes from the government, we should abandon all hope, as the government will permit the exercise of only those freedoms that are not an obstacle to the contemporary exercise of its powers.


"The globalist elites are pushing hard for U.S. accession to LOST. Those concerned about U.S. sovereignty and fearful of transferring more power to unaccountable international organizations will have to work just as hard to ensure that if and when the treaty finally does come up for a vote, the Senate has the guts to tell the globalists to get lost."

Will Our Freedoms Be LOST at Sea?

Michael Tennant

The Obama administration is pulling out all the stops in an effort to get the Senate to ratify the United Nations Convention on the Law of the Sea (UNCLOS), also known as the Law of the Sea Treaty (LOST). The administration argues that the treaty offers the United States great benefits at no cost. LOST opponents maintain that the accord’s few benefits — most of which are already enshrined in international law — are dwarfed by its price: granting an unaccountable, UN-created body control over 70 percent of the Earth’s surface.

LOST and Found

Barack Obama set up housekeeping at 1600 Pennsylvania Avenue determined to see LOST ratification through. As a candidate for President, Obama told the American Society of International Law that LOST was “clearly in the national interest” and that he would make it his “priority to build bipartisan consensus behind ratification” of it. As President, he has surrounded himself with LOST supporters, among them Vice President Joseph Biden, Secretary of State Hillary Clinton, and Secretary of Defense Leon Panetta.

The administration put LOST on the back burner for a while; but in 2011, it began pushing for ratification, aided by Sen. John Kerry (D-Mass.), Chairman of the Senate Foreign Relations Committee, who started meeting with his fellow Senators to convince them to support the treaty. However, he did not schedule a committee hearing until May 2012. Capitol Hill staffers told Foreign Policymagazine that Kerry delayed the hearing to assist his Republican counterpart on the committee and fellow LOST cheerleader, Sen. Richard Lugar of Indiana, in his primary election battle against Tea Party-backed Richard Mourdock. Lugar lost just the same, but he is now free to back LOST to the hilt without fear of voters’ wrath. (A Kerry spokeswoman denied the Lugar angle, stating that the hearing had been delayed because of Kerry’s service on the deficit supercommittee and more urgent matters before the Foreign Relations Committee.)

The May 23 hearing demonstrated the administration’s determination to move LOST through the Senate as quickly as possible. Clinton, Panetta, and Joint Chiefs of Staff Chairman Gen. Martin Dempsey, three of Obama’s heaviest hitters, all made impassioned pleas for the Senate to accede to LOST — the sooner, the better.

“I strongly believe that accession to this treaty is absolutely essential, not only to our economic interests, our diplomatic interests, but I’m here to say that it is extremely important to our national security interests as well,” Panetta told the committee.

Dempsey, too, approached LOST from a national-security angle, saying that “being a member of the Convention would better allow the United States to exercise global security leadership.” He argued that accession to the accord “would provide legal certainty to our navigational freedoms and legitimacy to our maritime operations that customary law simply cannot.” In addition, he said, the United States becoming a party to LOST would enable it to counter “illegitimate expansionism” by foreign countries.

(Panetta and Dempsey had offered similar remarks at the Law of the Sea Convention forum in Washington a fortnight earlier, again proving how serious the administration is about LOST.)

Of the three, Clinton offered the most comprehensive defense of LOST.

“As the world’s foremost maritime power,” she remarked, “the United States benefits from the Convention’s favorable freedom of navigation provisions.” Though the U.S. military currently has freedom of the seas, such freedom is based on custom combined with military might. Commercial shipping is likewise at the mercy of informal customs rather than formal law. Ratifying LOST would codify the customs of international law and secure U.S. navigational freedoms in perpetuity, benefiting both the armed forces and the private sector, she argued.

“We have the world’s second longest coastline,” Clinton said, “so the United States benefits greatly from the Convention’s favorable provisions on offshore natural resources.” In particular, LOST grants to each coastal nation an “exclusive economic zone”: Within 200 miles of its coastline the country has the sole right to determine who may extract natural resources and under what conditions. In some instances this “continental shelf” may be extended even farther — potentially as far as 600 miles off the northern coast of Alaska, she claimed.

“American companies are equipped and ready to engage in deep seabed mining,” the Secretary averred. “But the United States can only take advantage of the Convention’s provisions that accord security of tenure to mine sites in areas beyond national jurisdiction as a party to this treaty.” There are no customs governing mining in international waters, she said, “and without such security of tenure, industry has told us that it will not risk the significant investment needed to extract these valuable resources.” As long as the United States remains a non-party to LOST, she argued, America will lose out to other countries that are already staking their claims to mining sites under the treaty.

Joining the chorus of Panetta and Dempsey, Clinton maintained that ratifying LOST would enable the United States “to challenge other countries’ behavior on the firmest and most persuasive legal footing.”

Finally, she stated that the United States must accede to LOST in order to “steer its implementation.” Failure to join the Convention means that other countries, not the United States, will make the rules pursuant to the treaty — rules that Clinton said “could create precedents, positive and negative,” for the United States. “We need to be on the inside to protect and advance our interests,” she declared.

Having laid out the case for LOST ratification, Clinton then took aim at opponents of U.S. accession, saying their opposition is “based in ideology and mythology, not in facts, evidence, or the consequences of our continuing failure to accede to the treaty.”

As we shall see, however, many of the “facts” cited by LOST supporters are not quite as factual as they would have us believe; and the consequences of acceding to the treaty are far worse than the consequences of not doing so.

Socialism on the High Seas

LOST, wrote Jeremy Rabkin of the Competitive Enterprise Institute, “was largely drafted in the late 1970s, a period in which the then-new Third World majority in the U.N. General Assembly sought to recast international law to impose vast transfers of wealth from affluent to less-developed nations…. In its basic framework and underlying premises, it is a monument to the failed socialist thinking of a bygone era.”

One needn’t dig too far into LOST to see that Rabkin’s assertions are accurate. The treaty’s preamble declares that “the area of the seabed and ocean floor and the subsoil thereof, beyond the limits of national jurisdiction, as well as its resources, are the common heritage of mankind, the exploration and exploitation of which shall be carried out for the benefit of mankind as a whole, irrespective of the geographical location of States.”

“The notion that the oceans or space are the ‘common heritage of mankind’ was — and is — a dramatic departure from traditional Western conceptions of private property,” Jeane Kirkpatrick, President Ronald Reagan’s UN Ambassador at the time LOST was completed (1982), told the Senate Armed Services Committee in 1994. “Most members at upper levels of the Reagan Administration were reluctant to put our foot on that slippery slope.”

The Reagan administration also opposed LOST ratification for other reasons, such as the treaty’s dubious constitutionality and its potential erosion of U.S. sovereignty. As a result, though 161 other countries and the European Union have ratified the pact, the United States remains the most significant holdout — and with good reason.

LOST, Kirkpatrick told the committee,

establishes a sweeping claim of jurisdiction over the seabed and all its mineral wealth. It creates an International Seabed Authority in which it vests control of two thirds of the Earth’s surface. Under the LOS Treaty the power of the Seabed Authority would be vested in an Assembly made up of all participating states and an Executive Council of 36 members elected by the Assembly to represent investors, consumers, exporters of affected minerals, developing states, and all the geographical areas of the world. The formula for representation guaranteed that the industrialized “producer” countries would be a permanent minority. And they would have a majority of obligations. Most importantly, votes of the Assembly would be on the basis of one vote/one country, with a two-thirds majority binding on all parties.

The UN itself admitted how radical LOST is in a document celebrating the 25th anniversary of the treaty’s completion:

The United Nations Convention on the Law of the Sea … is perhaps one of the most significant but less recognized 20th century accomplishments in the arena of international law…. Its scope is vast: it covers all ocean space, with all its uses, including navigation and overflight; all uses of all its resources, living and non-living, on the high seas, on the ocean floor and beneath, on the continental shelf and in the territorial seas; the protection of the marine environment; and basic law and order…. The Convention is widely recognized by the international community as the legal framework within which all activities in the oceans and the seas must be carried out.

LOST, therefore, is clearly not some bland international agreement on navigational rights and deep-sea mining rules but an attempt by the UN to assume control “over everything, over, on, in, and under the oceans and seas of the world,” in the words of Larry Greenley, director of missions for The John Birch Society. Yet according to pro-LOST forces, the treaty’s critics, not its proponents, are the real radicals!

Sovereignty at Stake

What are the critics saying? For one thing, they are extremely concerned that LOST would jeopardize U.S. sovereignty, subordinating America to the will of all the other parties to the treaty, many of which are governed by corrupt, anti-American regimes.

LOST supporters claim that this fear is unfounded because the United States has been granted a “permanent veto” over the actions of the International Seabed Authority (ISA) much like the one it possesses over the actions of the UN Security Council.

Greenley called this assertion an “exaggeration,” and he would certainly appear to be correct. First of all, this so-called veto only applies to the distribution of royalties from undersea mining and drilling under Article 82 of the treaty. Second, the ISA Assembly makes all decisions regarding the disposition of such revenue; and there the United States, while footing one-fourth of the ISA’s budget, would have just one vote out of 163. According to the Heritage Foundation’s Steven Groves:

Some UNCLOS proponents maintain that the United States, if it joined the convention, would have a “veto” over such decisions because the U.S. would hold a permanent seat on the 36-member Council, which is the executive organ of the Authority. In fact, UNCLOS empowers the Council only to make recommendations to the Assembly on the disposition of Article 82 revenue, which the Assembly may approve or disapprove. Any Council recommendation that is disapproved by the Assembly is returned to the Council “for reconsideration in the light of the views expressed by the Assembly.” Therefore, in function and form, the Assembly makes final determinations regarding the disposition of Article 82 revenue….

By virtue of its seat on the Council, the United States might be able to hinder decisions to distribute Article 82 revenue for purposes to which it objects. Whether the United States would be steadfast in its objections to such distributions and whether the Assembly would make any such distributions without the consent of the Council are open questions.

Of course, even if the United States did, in fact, possess precisely the same kind of veto in the ISA that it does in the Security Council, it would, Greenley remarked, offer “scant comfort when our U.S. Executive Branch usually sides more with the interests of the UN than with the national interests of the United States.”

LOST contains provisions establishing “institutions with executive and judicial powers that in some instances are compulsory,” William J. Middendorf II, former Secretary of the Navy and former Ambassador to the Netherlands and the Organization of American States, told the Senate Armed Services Committee in 1994. By putting the entire marine area under the thumb of the ISA, Middendorf said, the treaty grants “executive powers to the authority that supersed[e] the sovereign power of the participating states.”

“Of even greater concern,” Middendorf continued, “Part XV of the Convention establishes dispute settlement procedures that are quasi-judicial and mandatory. Once drawn into this dispute settlement process, it will be very difficult for the U.S. [to] extricate itself from it.”

How might these powers be used to thwart American interests? The possibilities are endless, but LOST opponents have cited several ways in which the treaty could threaten the United States.

First, they suggest that the other parties to LOST could well interpret the treaty in such a way as to interfere with U.S. military and intelligence activities.

A 2007 Heritage Foundation WebMemo stated that under LOST, “the U.S. would sign away its ability to collect intelligence vital for American security within the ‘territorial waters’ of any other country.” “Furthermore,” continued the WebMemo, “U.S. submarines would be required to travel on the surface and show their flags while sailing within territorial waters.”

LOST also creates the International Tribunal for the Law of the Sea (ITLOS), whose job it is to adjudicate disputes between parties to the treaty. If, having joined LOST, the United States were to board and seize a ship on the high seas under the belief that it was being used to stage a terrorist attack against American interests, the state under whose flag the ship was sailing could appeal to ITLOS.

ITLOS might or might not choose to adjudicate the dispute. The language in the treaty purportedly exempts military activities from ITLOS’s compulsory arbitration process; but it is vague enough, says Rabkin, that “the only thing certain is that it will be up to ITLOS to decide how far it wants to intrude into U.S. naval strategy.”

U.S. participation in LOST would also narrow Washington’s options for adjudicating disputes over seizures of U.S. ships. A LOST party that seized an American ship could demand that ITLOS settle the dispute, leaving the United States essentially powerless to settle it in any other way, even if ITLOS ruled against America.

The External Revenue Service

Second, say LOST critics, the treaty gives the ISA the authority to collect taxes on a global scale. Clinton hotly denied this, telling the Foreign Relations Committee, “There are no taxes on any individuals, corporations, or anyone else under the Convention.”

The Secretary’s claim is true in the same sense that her husband’s assertion that he “did not have sexual relations with that woman” was true, i.e., only by defining the term as narrowly as possible.

The ISA is authorized to collect royalties from oil and gas exploration on a nation’s continental shelf beyond 200 miles from shore. In the case of the United States, those royalties currently go the U.S. Treasury; under LOST, a portion of them would be forfeited to the ISA. “Starting in the 12th year of production, about ½ of the revenue that would otherwise go to the U.S. Treasury would instead be sent to the authority,” according to Groves. That could amount to “billions, if not trillions of dollars,” the U.S. Extended Continental Shelf Task Force estimated.

Deep seabed mining in international waters also generates revenue for the ISA and another UN entity known as the Enterprise. A LOST party-based company wishing to explore a particular site for minerals must pay the ISA $250,000 for the privilege — and then hope that the Council approves its application. Furthermore, it must tell the ISA of a second, similar location that also has profit potential. The authority will then decide which site to exploit for itself and which one to let the private company mine. The company will have to pay a hefty annual fee to continue mining and share its profits with the Enterprise.

This all amounts to a forcible taking of wealth from producers the world over — which is to say it is a global tax.

And what does the ISA do with all these simoleons? It redistributes them to “developing” countries. After that, wrote Groves,

UNCLOS is silent on how UNCLOS nations that receive Article 82 royalty revenue should spend it. UNCLOS does not require recipient nations to spend the revenue on anything related to the oceans or the maritime environment. Nor does it require them to spend the revenue on humanitarian or development projects, even though most, if not all, of the eligible recipients are supposed to be poor, developing countries. Recipients are apparently free to spend the funds on military expenditures or simply deposit them into the personal bank accounts of national leaders.

In addition to the revenue it will generate, the ISA’s permit process has come under fire for its provisions regarding trade secrets and intellectual property. A company obtaining permission from the ISA to mine the ocean floor could be forced to turn over its new technologies to the Enterprise for a pittance, whereupon the technology could be shared with all other parties to LOST.

This also has national-security implications. While technology that is strictly for military use is exempted from this provision, everything else is fair game. Thus, if the United States were to ratify LOST, technology that has military as well as commercial applications could be extracted from an American company and turned over to an anti-American regime.

If America’s enemies can’t get our sensitive technologies through the permit process, they may instead be able to get it by taking the United States to ITLOS on some flimsy pretext, notes the Heritage WebMemo:

The convention requires states to transfer information and perhaps technology to mandatory dispute resolution tribunals. Under the convention, parties to a dispute are required to provide a resolution tribunal with “all relevant documents, facilities and information.” This amounts to a blanket invitation for unscrupulous foreign competitors to bring the U.S. and American companies before a tribunal for the sole purpose of obtaining sensitive data and technologies that would otherwise be unavailable to them.

Critics have also warned that U.S. accession to LOST will open a “back door” for radical environmentalists to impose their agenda on America. LOST, says the WebMemo,

states that convention participants must “take … all measures consistent with this Convention that are necessary to prevent, reduce, and control pollution of the marine environment from any source,” (Article 194). This provision goes on to require that such measures address “all sources of pollution of the marine environment … including those from land-based sources, from or through the atmosphere, or by dumping….” Signatories are also required to “adopt laws and regulations to prevent, reduce and control pollution of the marine environment from or through the atmosphere.” (Article 212).

That essentially grants the UN control over the environmental laws of every country that signs the treaty — a fact not lost on environmental activists, some of whom have already signaled that if the United States ratifies LOST they intend to use the convention to force America to comply with the Kyoto Protocol even though the Senate has never ratified that accord.

LOST also presents a constitutional conundrum. The Constitution requires the Senate, by a two-thirds vote, to ratify a treaty for the United States to become a party to it. However, the ISA Assembly, also by a two-thirds vote, can modify the terms of the treaty at any time. This, Kirkpatrick pointed out, makes LOST “an open ended commitment,” which is certainly contrary to the spirit, if not the letter, of America’s supreme law.

Bogus Benefits

U.S. accession to LOST, then, will have a significant number of negative consequences. But what about the treaty’s alleged benefits?

LOST backers claim the treaty will secure certain navigational rights for U.S. military and commercial shipping. However, the United States already enjoys such rights as a matter of customary international law. Moreover, America has for decades been a party to the International Maritime Organization, which establishes international laws with regard to shipping. Thus, to the extent LOST codifies navigational rights, it is redundant.

The treaty’s fans also argue that it will secure U.S. rights to extract natural resources from its continental shelf. As with navigational rights, the United States already exercises sovereignty over its continental shelf to a distance of 200 miles from shore; and other countries, after initially contesting the U.S. claim, adopted the policy themselves. America could similarly claim rights over its continental shelf beyond 200 miles and work out its differences with the individual nations affected by such a claim. By ratifying LOST, however, it cedes such authority to the ISA and, in addition, is forced to surrender half the royalties earned from mining and drilling in the extended continental shelf.

Although LOST supporters say U.S. accession to the treaty is necessary for American companies and their investors to feel confident that their claims to deep seabed mining sites will be recognized internationally, Rabkin observed, “It remains a fair question whether a complex U.N. regulatory bureaucracy — especially one that counts international wealth redistribution as one of its functions — is a reassuring presence for investors.” Knowing that the seemingly profitable site in which they are considering investing stands a good chance of being stolen by the Enterprise and that any profits generated from the site the company is allowed to mine — not to mention any new technologies employed — may be similarly confiscated, why would investors take such a risk?

As to the United States’ using LOST to challenge aggressive behavior by Iran (in the Strait of Hormuz) and China (in the South China Sea), it should be noted that those countries are already parties to LOST yet have proceeded with their aggressive behavior just the same. Why anyone thinks that American participation in LOST would somehow deter them is a mystery.

All Is Not LOST

Although the Obama administration is putting on the drive to get the Senate to ratify LOST, its success is by no means certain. The House of Representatives recently voted to deny the administration millions of dollars in funding for LOST organizations, which suggests that the anti-LOST movement is strong and well-organized. Kerry has said he will not bring the treaty up for a vote before the November election because, according to The Hill, “some lawmakers ‘on and off the committee’ have candidly told him they’d ‘be more comfortable’ if they could avoid having to cast the controversial vote during the campaign season” — another indication that the treaty is widely unpopular.

Kerry will likely try to get LOST through the Senate during the lame-duck session after the election. That may not be easy: At least 27 Senators have signed a letter circulated by Sen. Jim DeMint (R-S.C.) stating that they will not vote to ratify LOST, and it only takes 34 Senators in opposition to sink its ratification.

If the vote is delayed until the next President is inaugurated, it could end up being opposed from the White House, which would likely prevent ratification. Obama’s presumptive Republican opponent, Mitt Romney, has signaled his unease with LOST; and while the Libertarian Party’s nominee, Gary Johnson, does not appear to have taken a stand on LOST, the party has in the past specifically praised U.S. refusal to join the accord.

America, by rejecting LOST, cannot stop the UN from claiming control over the oceans. But, wrote Greenley, “U.S. ratification would provide that final stamp of legitimacy for the UN’s power grab over the oceans and seas and constitute a major step into world government.”

The globalist elites are pushing hard for U.S. accession to LOST. Those concerned about U.S. sovereignty and fearful of transferring more power to unaccountable international organizations will have to work just as hard to ensure that if and when the treaty finally does come up for a vote, the Senate has the guts to tell the globalists to get lost.


US military weapons being used at home?

" The criminally insane government in Washington, regardless whether Democrat or Republican, regardless of the outcome of the next election, is the greatest threat to life on earth that has ever existed."

Can The World Survive Washington’s Hubris?

Paul Craig Roberts

When President Reagan nominated me as Assistant Secretary of the Treasury for Economic Policy, he told me that we had to restore the US economy, to rescue it from stagflation, in order to bring the full weight of a powerful economy to bear on the Soviet leadership, in order to convince them to negotiate the end of the cold war. Reagan said that there was no reason to live any longer under the threat of nuclear war.

The Reagan administration achieved both goals, only to see these accomplishments discarded by successor administrations. It was Reagan’s own vice president and successor, George Herbert Walker Bush, who first violated the Reagan-Gorbachev understandings by incorporating former constituent parts of the Soviet Empire into NATO and taking Western military bases to the Russian frontier.

The process of surrounding Russia with military bases continued unabated through successor US administrations with various “color revolutions” financed by the US National Endowment for Democracy, regarded by many as a front for the CIA. Washington even attempted to install a Washington-controlled government in Ukraine and did succeed in this effort in former Soviet Georgia, the birthplace of Joseph Stalin.

The President of Georgia, a country located between the Black Sea and the Caspian Sea, is a Washington puppet. Recently, he announced that former Soviet Georgia is on schedule to become a NATO member in 2014.

Those old enough to remember know that NATO, the North Atlantic Treaty Organization, was an alliance between Western Europe and the US against the threat of the Red Army overrunning Western Europe. The North Atlantic is a long, long ways from the Black and Caspian Seas. What is the purpose of Georgia being a NATO member except to give Washington a military base on the Russian underbelly?

The evidence is simply overwhelming that Washington–both parties–have Russia and China targeted. Whether the purpose is to destroy both countries or merely to render them unable to oppose Washington’s world hegemony is unclear at this time. Regardless of the purpose, nuclear war is the likely outcome.

The presstitute American press pretends that an evil Syrian government is murdering innocent citizens who only want democracy and that if the UN won’t intervene militarily, the US must in order to save human rights. Russia and China are vilified by US functionaries for opposing any pretext for a NATO invasion of Syria.

The facts, of course, are different from those presented by the presstitute American media and members of the US government. The Syrian “rebels” are well armed with military weapons. The “rebels” are battling the Syrian army. The rebels massacre civilians and report to their media whores in the West that the deed was done by the Syrian government, and the Western presstitutes spread the propaganda.

Someone is arming the “rebels” as obviously the weapons can’t be purchased in local Syrian markets. Most intelligent people believe the weapons are coming from the US or from US surrogates.

So, Washington has started a civil war in Syria, as it did in Libya, but this time the gullible Russians and Chinese have caught on and have refused to permit a UN resolution like the one the West exploited against Gaddafi.

To get around this roadblock, fish out an ancient Phantom fighter jet from the 1960s Vietnam war era and have Turkey fly it into Syria. The Syrians will shoot it down, and then Turkey can appeal to its NATO allies to come to its aid against Syria. Denied the UN option, Washington can invoke its obligation under the NATO treaty, and go to war in defense of a NATO member against a demonized Syria.

The neoconservative lie behind Washington’s wars of hegemony is that the US is bringing democracy to the invaded and bombed countries. To paraphrase Mao, “democracy comes out of the barrel of a gun.” However, the Arab Spring has come up short on democracy, as have Iraq and Afghanistan, two countries “liberated” by US democratic invasions.

What the US is bringing is civil wars and the breakup of countries, as President Bill Clinton’s regime achieved in former Yugoslavia. The more countries can be torn into pieces and dissolved into rival factions, the more powerful is Washington.

Russia’s Putin understands that Russia itself is threatened not only by Washington’s funding of the “Russian opposition,” but also by the strife among Muslims unleashed by Washington’s wars against secular Muslim states, such as Iraq and Syria. This discord spreads into Russia itself and presents Russia with problems such as Chechen terrorism.

When a secular state is overthrown, the Islamist factions become free to be at one another’s throats. The internal strife renders the countries impotent. As I wrote previously, the West always prevails in the Middle East because the Islamist factions hate one another more than they hate their Western conquerers. Thus, when Washington destroys secular, non-Islamist governments as in Iraq and now targeted in Syria, the Islamists emerge and battle one another for supremacy. This suits Washington and Israel as these states cease to be coherent opponents.

Russia is vulnerable, because Putin is demonized by Washington and the US media and because Putin’s Russian opposition is financed by Washington and serves US, not Russian, interests. The turmoil that Washington is unleashing in Muslim states leaks back to Russia’s Muslim populations.

It has proved to be more difficult for Washington to interfere in China’s internal affairs, although discord has been sowed in some provinces. Several years from now, the Chinese economy is expected to exceed in size the US economy, with an Asian power displacing a Western one as the world’s most powerful economy.

Washington is deeply disturbed by this prospect. In the thrall and under the control of Wall Street and other special interest business groups, Washington is unable to rescue the US economy from its decline. The short-run gambling profits of Wall Street, the war profits of the military/security complex, and the profits from offshoring the production of goods and services for US markets have far more representation in Washington than the wellbeing of US citizens. As the US economy sinks, the Chinese economy rises.

Washington’s response is to militarize the Pacific. The US Secretary of State has declared the South China Sea to be an area of American national interest. The US is wooing the Philippine government, playing the China threat card, and working on getting the US Navy invited back to its former base at Subic Bay. Recently there were joint US/Philippines military/naval exercises against the “China threat.”

The US Navy is reallocating fleets to the Pacific Ocean and constructing a new naval base on a South Korean island. US Marines are now based in Australia and are being reallocated from Japan to other Asian countries. The Chinese are not stupid. They understand that Washington is attempting to corral China.

For a country incapable of occupying Iraq after 8 years and incapable of occupying Afghanistan after 11 years, to simultaneously take on two nuclear powers is an act of insanity. The hubris in Washington, fed daily by the crazed neocons, despite extraordinary failure in Iraq and Afghanistan, has now targeted formidable powers–Russia and China. The world has never in its entire history witnessed such idiocy.

The psychopaths, sociopaths, and morons who prevail in Washington are leading the world to destruction.

The criminally insane government in Washington, regardless whether Democrat or Republican, regardless of the outcome of the next election, is the greatest threat to life on earth that has ever existed.

Moreover, the only financing the Washington criminals have is the printing press. In a subsequent column I will examine whether the US economy will complete its collapse before the war criminals in Washington can destroy the world.