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The Daily Reckoning | Monday, December 19, 2011 Questioning skeptics vs. Cows awaiting the pneumatic ram, The long arm of the US Government tax department, Plus, Bill Bonner wishes us all a merry little depression, and more... ------------------------------------------------------ The three ugliest money scandals of 2012... Be careful. Three shocking money scandals could send gold prices soaring even higher. And according to a frightening new video, there may be only one way to protect yourself. Click here to watch it now. ------------------------------------------------------ Joel Bowman, passing on some offensive information from Rancho Santana, Nicaragua... The following two news items ought to offend you. More correctly, the content of the following two news items ought to offend, or at least alarm, you. Bill sent them through to us this morning...and they provide an illustrative backdrop for today’s guest editorial, which you will find below. Dwindling Freedom How US Policymakers are Making It Hard to Live Almost Anywhere Bill Bonner Reckoning today from Baltimore, Maryland... “Poor America...” writes a French friend. “It’s not the land of the free anymore. Now, it’s the land of slaves.” The FATCA law (Foreign Account Tax Compliance Act) will force banks across the globe to collaborate with the IRS. An explanation of the huge repercussions this legal precedent will have on banks and banking clients. Once FATCA — Foreign Accounts Tax Compliance Act — is enacted on January 1, 2013, banks worldwide will find themselves subject to the American tax administration bureau known as the IRS (Internal Revenue Service). Adopted in March, 2010, FATCA is a facet of the broader Hiring Incentives to Restore Employment (HIRE) Act which is designed to promote employment opportunities in the United States. In order to finance the HIRE Act, fighting tax evasion is even more in the spotlight than it has been in the past and Washington wants to use its political clout to get its message across this time. What this really means is that foreign banks — or FFIs (Foreign Financial Institutions) — will be obliged to conform to a long series of procedures designed to identify US Persons (US citizens & Green Card holders) subject to American taxes. This naturally concerns American citizens but likewise extends to American nationals’ foreign spouses. However, the l ong arm of the US administration will even be going so far as to include foreigners residing outside American borders, some of whom may have never even set foot on US soil. This is due to the fact that non-American banks will be obligated to report portfolios which include American assets even if they belong to foreigners with no ties to the US. “We used to be so happy when we got to the US,” said another European. “We felt we could breathe more freely. The country was so big...so prosperous...and so open. “That was what I remember from about 20 years ago. But now it is quite different. I dread coming to the US. We came through US customs in Atlanta a few weeks ago. My wife had a half-eaten sandwich in her bag...which she had forgotten about. They put us in a special room and treated us like we were criminals. It was ridiculous...and humiliating. “But there’s always something. Someone is always yelling at you. Everything is illegal or forbidden. It just doesn’t seem like the same country it was a few years ago. So, we only come here when we have to for business reasons.” *** “There goes the republic,” says an article at Truthdig, by Robert Scheer. The defense authorization bill that Congress passed and President Obama had threatened to veto will soon become law, a fact that should be met with public outrage. Human Rights Watch Executive Director Kenneth Roth, responding to Obama’s craven collapse on the bill’s most controversial provision, said, “By signing this defense spending bill, President Obama will go down in history as the president who enshrined indefinite detention without trial in US law.” On Wednesday, White House press secretary Jay Carney claimed “the most recent changes give the president additional discretion in determining how the law will be implemented, consistent with our values and the rule of law, which are at the heart of our country’s strength.” What rubbish, coming from a president who taught constitutional law... Sadly, this flagrant subversion of the constitutionally guaranteed right to due process of law was opposed in the Senate by only seven senators, including libertarian Republican Rand Paul and progressive Independent Bernie Sanders. A Wealth Chance This Extreme Pops Up Once Every Few Lifetimes Only 62 people know exactly why these four companies could change the world. Starting right now, you’re #63 on the inside. That means you’re on the verge of massive wealth. Click here for the full story — you can’t afford to miss this epic, one-time wealth chance. The Daily Reckoning Presents We've Crossed the Rubicon Eric Peters Do you suppose cows have any idea what’s coming as they’re marched down the chute? Or do they stare with bovine indifference at the tail and hind quarters in front of them, until they’re suddenly — and very briefly — startled by the man with the nail gun? Perhaps Americans will — likewise too late — ask themselves what happened in the very near future. Perhaps just after the midnight knock comes and they are taken away into the night. It is not an exaggeration. America is now on the cusp of becoming a state that does exactly such things — things exactly like the things done by 20th-century horror shows such as National Socialist Germany or Stalin’s USSR. Literally. Not “this is where it might lead” or “the tendency is similar.” Exactly, literally, the same thing. The only difference is that it awaits being done on a mass scale. But the power to do it openly — brazenly — has been asserted. And is about to be sanctified by law. The National Defense Authorization Act will make it official. It will confer upon the executive branch and the military (increasingly, the same things) the permanent authority to snatch and grab any person, US citizens included, whom they decree to be a “terrorist” — as defined or not by the executive or the military — and imprison him indefinitely, without formal charge, presentation of evidence or judicial proceeding of any kind. These “detainees” will have neither civilian rights in the civil court system nor — crucially — even the minimal rights to due process and decent treatment conferred upon prisoners of war. (And we are allegedly “at war,” are we not?) The language of the bill specifically includes American citizens “caught” within the borders of the United States — aka, the “battlefield.” It is claimed by sponsors that only those awful them — you know, the enemies of freedom the Chimp and his successors like to reference as they systematically gut our freedoms — need worry. But read the actual document, and be afraid. The wording is such that any shyster lawyer for the government will be able to draw up a memorandum at some point in the near future equating, say, criticism of the federal government’s policies in the Middle East with “substantially supporting” the enemies of the United States. As defined by the United States. That is, as defined by the government. At its whim. At the personal discretion of whomever happens to be the Maximum Leader, or even one of the ML’s duly appointed minions. As the always excellent Matt Taibbi of Rolling Stone recently observed, what happens when some nutjob who attended a few Tea Party meetings tries to bomb a federal building? Will the Tea Party itself — and anyone who “substantially supports” it — be thus transformed into an “enemy combatant”? How about the OWS protestors? How about this newsletter or website — and this author — which have on several occasions called b******* on the federal government’s usurpations and follies? How hard will it be, really, to describe such actions — such thoughts expressed in an article or an interview — as “substantially supporting” whatever the government decides amounts to “terrorism” or the threat thereof against itself? Surely, the door is now wide open for such an interpretation by some John Woo or Dick Cheney waiting in the wings. Prospective jefe Newtie is practically turgid at the prospect of getting his hands on such power. And there is no longer (or soon won’t be) any legal means available to contest a one-way trip to Treblinka in Topeka — or wherever it is they will send you. Taibbi writes: “The really galling thing is that this act specifically envisions American citizens falling under the authority of the bill. One of its supporters, the dependably unlikeable Lindsey Graham of South Carolina, bragged that the law ‘basically says...for the first time that the homeland is part of the battlefield’ and that people can be jailed without trial, be they ‘American citizens or not.’ New Hampshire Republican Kelly Ayotte reiterated that ‘America is part of the battlefield.’” Graham further stated: “It is not unfair to make American citizens account for the fact that they decided to help al-Qaida to kill us all and hold them as long as it takes to find intelligence about what may be coming next. And when they say, ‘I want my lawyer,’ you tell them, ‘Shut up. You don’t get a lawyer.’” The key thing being...it is entirely up to the government to decide what constitutes “helping” al-Qaida. It can be nothing more than a vague assertion. Indeed, no evidence of any kind whatsoever is necessary to “hold them as long as it takes” in order to “find intelligence” (not defined, either) by any means it wishes to employ. As Taibbi notes: “If these laws are passed, we would be forced to rely upon the discretion of a demonstrably corrupt and consistently idiotic government to not use these awful powers to strike back at legitimate domestic unrest.” The Fuhrer (oops, President Obama) is about to sign this latter-day enabling act, and when he does, it will mark the moment that America’s coffin is nailed shut. The corpse has been on view since Sept. 11. But there was always some hope that, perhaps, it might be jolted back into life. Now we know the awful truth. Death is permanent. And it’s coming for us. Regards, Eric Peters, for The Daily Reckoning $1.82 Stock About To Make History! This little-known stock is set to shock the world and win the global race to rare earth production outside China. This could be the market story of the century and your shot at life-altering profits. Click here for the full details. And now back to Bill Bonner with the rest of today’s reckoning from Baltimore, Maryland... Collective Action to Prolong a Depression Bill Bonner Have yourself a merry little depression... What’s this? Christine Lagarde, IMF chief, said last week that the world’s nations needed to work together to avoid a 1930s-style depression. But seeing the way they work together...and where they seem to be headed...we’d prefer a depression. The idea of the world’s authorities is not to solve the debt problem, but to make it larger. One bank goes bust; they get a bigger bank — a central bank — to bail it out. One country goes broke; they get a bigger country to bail it out. The US bailed out its financial sector. Europe has had trouble getting together to bail out its fringe nations. But gradually, in fits and starts, the pieces are coming together. We will all bail each other out. Then, we will all be bailed out. Together. We need to act “as collectively as possible,” says Lagarde. She means that we all have to accept more debt...in order to prevent depression. That is, all the feds’ horses and all the feds’ men are supposed to make sure that 1) stock holders don’t lose money...2) bankers don’t go broke...3) speculators don’t get wiped out...4) business executives don’t lose their jobs... Daily Reckoning readers will note, with a wry smile, that these are precisely the things that OUGHT to happen. Which also happens to be what a depression would accomplish... It’s why we have depressions...and why we need them. They don’t have to be long, drawn-out disasters. They can be short and sweet. But they have to get the job done. On the other hand, let us look at what all this collective, depression-preventing action is accomplishing. In a word or two, it is protecting the insiders at the expense of the outsiders. That is, it is doing what government always does. But it is doing it in a particularly galling way. Here’s the latest on what the insiders are up to, from the Guardian: Revealed: huge increase in executive pay for America’s top bosses Exclusive survey shows America’s CEOs enjoyed pay hikes of up to 40% last year — with one chief executive earning $145m Chief executive pay has roared back after two years of stagnation and decline. America’s top bosses enjoyed pay hikes of between 27 and 40% last year, according to the largest survey of US CEO pay. The dramatic bounceback comes as the latest government figures show wages for the majority of Americans are failing to keep up with inflation. America’s highest paid executive took home more than $145.2m, and as stock prices recovered across the board, the median value of bosses’ profits on stock options rose 70% in 2010, from $950,400 to $1.3m. The news comes against the backdrop of an Occupy Wall Street movement that has focused Washington’s attention on the pay packages of America’s highest paid. Three of this year’s top 10 earners come from the healthcare industry. Top earner John Hammergren at McKesson, the world’s largest healthcare firm, made $145,266,91 last year — most of it from stock options. 2010 was a great year to lose your job as a CEO. Four of the 10 highest paid CEOs were retired or departing executives. Ronald Williams, former head of Aetna, a health insurer, exercised 2.4m options for a profit of $50.4m. Aetna’s stock price declined by 70% from when Williams assumed the role of CEO in February 2006 until his retirement. At pharmacy chain CVS, Thomas Ryan made a $28m profit on his options. During Ryan’s 13-year tenure as CEO, CVS Caremark’s stock price decreased almost 54%. Omnicare’s Joel Gemunder retired last August and received cash severance of $16m, part of a final-year pay package worth $98.28m. Interesting, no? Many of the top earners are in the zombie health care industry. It is a zombie industry because it is so heavily controlled, subsidized, and protected from competition by the zombie government. In our way of seeing things, no CEO is worth $145 million. Or even $1 million, for that matter. But that’s what you get in a degenerate pseudo-capitalist system. Meanwhile, the average working man — who has no clue about the whys of it — is getting pretty chuffed. “$740 billion pay gap threat to US recovery” says The Financial Times. That amount is the money that would have gone to US working people if they had maintained their share of national income at post-war average. The FT is scratching its head, trying to figure out how the economy can recover when the people who do the buying have so little money. According to its figures, the average worker would have $5,000 more this year alone, if wages were still at 63% of national income. Instead, they have sunk to only 58% of national income...with more going to the bosses and stockholders. For his part, the working stiff is less concerned with what it means to the economy and more concerned with what it means to him: “Like a lot of Americans, I’m pretty ticked off,” said an Occupy Wall Street protestor. “It’s not that there are rich people. It’s that the people with a lot of money over the past few decades have rigged the system so that there’s not a fair chance to anyone anymore.” He’s right. The system is rigged. Probably not the way he thinks. But rigged nonetheless. The feds rigged it. They turned America’s leading business sectors into zombie-controlled, value-destroying industries. They turned the nation’s money into an ersatz currency. And they pushed the country’s middle class households in debt holes they find it difficult to climb out of.... And then, when the whole degenerate system was ready to come crashing down...they bailed out the debt-mongers...and propped up the whole corrupt system with $29 trillion in money that didn’t belong to them. A merry little depression would have been so much better. Regards, Bill Bonner, for The Daily Reckoning ------------------------------------------------------- Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor at joel@dailyreckoning.com Man for All Seasons More Upside for Gold as Government Spending Continues Unabated In or Out: How to Play the Swings in the Gold Price Striking Portfolio Balance with Gold Stocks Kim Jong Il’s Death Sends a Shiver Across the Markets Weekly Jobs Data is Positive, Pushing the Dollar Lower The Daily Reckoning: Now in its 11th year, The Daily Reckoning is the flagship e-letter of Baltimore-based financial research firm and publishing group Agora Financial, a subsidiary of Agora Inc. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. Published daily in six countries and three languages, each issue delivers a feature-length article by a senior member of our team and a guest essay from one of many leading thinkers and nationally acclaimed columnists. 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