The "Tax Mahal": A Shrine to Corporate Socialism

According to architect Jonathan Levi,
the renovation of the IRS regional headquarters in Andover, Massachusetts
is a "visionary" project that "will be relevant 50 years from now."

This is true  in exactly the same sense that the Soviet-era monuments that still disfigure the Russian countryside remain relevant reminders of that omnivorous state. 

Our descendants would be exceptionally fortunate if the Andover IRS "service center" were among the institutional tombstones marking the demise of history's most profligate kleptocracy.

This morning's headlines bring fresh evidence that the Regime may implode far sooner than many expect: The Federal Government's debt will exceed the gross domestic product no later than 2012, a development that will most likely initiate a "debt super cycle" in which we will experience both hyperinflation and extortionate interest rates. 

The IRS's "Tax Mahal"

Like their antecedents in the Gorbachev-era Communist Party of the Soviet Union, the American nomenklatura is preparing for the impending implosion by siphoning away whatever wealth they can find. This is why maintaining and enhancing the State's instruments of coercion and wealth extraction is the Regime's most urgent priority. 

The $92 million "stimulus" -funded expansion and renovation of the Andover IRS "service center" is a tangible illustration of that fact. But as with so many other things, it's the backstory here that is most significant. 

Until two years ago, the IRS planned to shut down the Andover outpost no later than 2009. At the time, the facility -- which processed paper tax returns -- was already obsolete, since a majority of tax victims now fill out and file those documents on-line. This development -- which had been anticipated since 2002 -- would have left roughly 1,400 tax-subsidized chair-moisteners without employment.

It's quite common for private businesses to undergo workforce reductions as a result of changing technology and market demands. For example, just last week Hewlett-Packard announced that it would be shedding 9,000 jobs as a result of what it described as "consolidation" and "streamlining" of its operations. 

An earlier monument to state profligacy. 

Despite the best efforts by the IRS to mimic the behavior of productive people -- calling those it plunders "customers," for instance, a term that applies to tax victims in the same way the word "lover" could be used to describe a victim of prison rape, and for exactly the same reason -- the IRS is, unalterably, a government entity. 

Since it doesn't conduct "business," it cannot go out of business, and its employees receive special solicitude from the political class. 

In April 2008, six New England Congressbeings, led by Massachusetts Rep. Niki Tsongas, began to pressure IRS commissar Douglas Shulman and the Treasury Department to find some way to keep the 1,400 surplus cubicle-dwellers on the public payroll. The pressure campaign grew increasingly shrill and insistent as the June 30, 2009 deadline for closing down the Andover office drew closer. 

Beginning in early 2009, many of the Andover functionaries were given sinecures distributing "stimulus" checks to other appendages of the Leviathan. But this simply wasn't enough to keep the trough filled. Displaying a certain depraved creativity, Rep. Tsongas and her comrades suggested that IRS employees be given another make-"work" position courtesy of the Troubled Asset Relief Program (TARP), the corporate socialist centerpiece of the October Revolution of 2008. 


Tsongas and her crew fired off a letter to TARP Special Inspector General Neil M. Barofsky urging him to guarantee a "preference" for Andover IRS employees in handing out pork-barrel positions. This is because, as every dutiful collectivist will tell you, prosperity is a product of government control over the economy.

"The creation and preservation of jobs within the federal government are paramount toward rebuilding and strengthening America's economy," insisted Tsongas and her colleagues. "Keeping America's workforce working is key to rebuilding our broken economy." (Emphasis added.) 

Commissar Barofsky, Special IG for the TARP rip-off

Note well that "America's workforce" as defined in that letter consists entirely of people in the tax-consuming class, rather than the wealth-producing sector. Note also that keeping the parasites firmly attached to the dying host is of "paramount" concern. 

All of these efforts to save IRS jobs in Andover are delaying actions intended to keep the payroll swollen with tax-engorged apparatchiks until the Tax Mahal is complete. 

The IRS was permitted to keep $92 million in confiscated wealth -- an amount designated as "stimulus" funds -- to expand and "modernize" its Andover "campus." Supposedly justified in the name of reducing the regional office's "carbon footprint," the funding is actually being used to pimp out the facility in Cadillac fashion. 

Among the new appointments and appurtenances, reports the Boston Herald, will be a reflecting pool, an art gallery, indoor gardens, a 7,000-square-foot cafeteria and an ampitheater.” The objective, explains architect Jonathan Levi, is to turn the IRS facility into “a comfortable, collaborative environment. It will be welcoming for the people who use it.” 

The "comforts," of course, are for the benefits of the government-employed predators who will staff the office. Visitors who find themselves on the receiving end of the IRS’s malign attentions won’t find any consolation in the extravagant appointments and ornamental touches. 

This is how the Regime ruling us defines economic "recovery": 

Two years ago, that building was scheduled to be shut down, with a corresponding reduction in the wealth-devouring population. Now it's being expensively renovated, and plans are being finalized to expand the ranks of tax-gatherers and paper-polluters stationed therein. 


On April 1 -- the symbolic birthday of anyone who still believes that government is in any sense compatible with civilized living -- Tsongas and 14 other Congressional figures ("representatives" doesn't work)  from Massachusetts and New Hampshire sent another letter to IRS commissar Shulman urging him to exploit "this state-of-the-art resource by expanding the number of employees at the facility." Not surprisingly, one specific personnel recommendation was to expand the number of auditors stationed in Andover. 


Boston Herald columnist Howie Carr, who enjoys goading gangsters in both the private and public sectors, points out that "last year, 626 streetlights were turned off" in Andover "because the town couldn't afford them anymore."


"Billions are sucked out of what remains of the economy's productive sector to pay ever-more-outrageous salaries and benefits to politically correct layabouts who spend all day e-mailing one [another] and sharpening pencils, assuming they show up at all," observed Carr. "Meanwhile, on Main Street, every week you drive by more empty storefronts, not to mention shuttered factories or car dealerships, and further out of town, dying or abandoned malls."


While contemplating the exertions undertaken by the political class infesting New England to save 1,400 IRS jobs, I was reminded of Bill Clinton's April 1993 "Timber Summit" in Portland, Oregon. 

Fallen Idol: A statue of Lenin is consigned to history's dustbin.

The advertised purpose of that event was to draw together "stakeholders" in the Pacific Northwest to devise a federal management plan that would expand endangered species protection for the spotted owl, while inflicting no "net job loss" for the region. 

 The substantive purpose of that event, of course, was to offer patently insincere gestures of  comfort to the hundreds of thousands of families in the Northwest whose livelihoods were about to be destroyed by a land lockup program that had already been finished behind the scenes. 


Screwing his face into what would become a nauseatingly familiar simulacrum of sympathy, Clinton told the audience at the Timber Summit that although he would try to save their jobs, "I can't repeal the laws of change." Those purported "laws" dictated that millions of acres be locked up by Washington, leaving entire towns destitute and reducing their residents to dependency on federal welfare. 

This wasn't the ineluctable outcome of impersonal historical forces, or a product of market demand; it was a result of deliberate choices imposed on millions of productive Americans by the Regime that presumes to rule them. 

On the other hand, the trends that would have resulted in the closure of the IRS's Andover office reflected natural, organic change, at least in terms of the relevant technology. Yet the same government that ravaged the Northwest's timber industry has spared no expense or effort to spare the paychecks of 1,400 tax-consumers on the IRS's payroll. 

Immunizing the wealth-devouring population from the "laws of change" is just one element of the Regime's full-spectrum lawlessness. It is devoutly to be wished that our descendants will be both wiser and freer than we have been, and will transmit to their heirs the dismal lessons they have learned as they sift through the rubble of the state that presently afflicts us.

Tune in for Pro Libertate Radio each Saturday evening from 8:00-11:00 Mountain Time on the Liberty News Radio Network.

For those who missed last week's installment, here's a link to the archives.







Dum spiro, pugno!

Our Money's No Good Here

The graveyard of discarded fiat currencies: Heaps of Soviet-era rubles decompose in a landfill. Chances are the fraudulent instrument of debt called the "dollar" will soon reach the same destination.







For decades, the American ruling establishment has enjoyed the privilege of exporting inflation.


This has been done, acknowledges Ben Steil of the Council on Foreign Relations (a group I'm not in the habit of quoting favorably), by compelling other governments around the world to print huge mounds of their own currencies to prop up the dollar by buying Treasury Notes.


Thus when the Fed inflates, central banks world-wide follow suit, thereby driving up consumer prices for those ruled by satraps of Washington's global empire. Not surprisingly, at least some of those on the unfavorable end of this equation are getting restive, which is why the Gulf Cooperation Council has been making noises about removing the "dollar peg" that holds this corrupt arrangement together.


He just can't leave wretched enough alone, can he? The execrable Alan Greenspan at an investment conference in Saudi Arabia, urging the region's petro-oligarchs to abandon the dollar.



Oh -- and wasn't it cute of Alan "I'm Forever Blowing Bubbles" Greenspan, addressing an investors' conference in Jedda, to advise GCC governments to drop the dollar peg in order to protect them from the consequences of his own inflationary policies?

Foreign purchases of our debt bonds started to taper off three years ago. If the GCC governments act on Greenspan's advice, it will probably provoke a world-wide flight from the dollar and, in short order, the end of our status as a First World nation. I wouldn't blame the GCC or anybody else for bailing on the buck, of course. But it is indigestibly rich to see Greenspan wielding the pin that may be used to pop the dollar bubble he so diligently inflated during his term as Fed Commissar.


To understand the likely consequences of the course Greenspan now prescribes, a different metaphor is called for.


For decades, the fiat dollar has been the world's reserve currency, issued by the world's largest debtor. The results of this unprecedented combination were entirely predictable: Washington has generated a flood tide of inflation that has inundated more or less the entire world.

A tide is a reciprocating phenomenon -- if it goes out, it must come back in. But how do we describe what happens when a relatively small stretch of coastline suddenly has to absorb the impact of every returning tide from all the world's oceans all at once? "Tsunami" is an entirely inadequate term.


Well, in economic terms, we're going to find out, and probably sooner than any of us will admit. And auguries of this potentially apocalyptic development abound.


For instance: "Euros only" signs have sprung up on the streets of Manhattan. No, this doesn't mean proprietors of small shops would flatly reject FRNs (Federal Reserve Notes) if offered in sufficient quality. It does mean, however, that with the inversion of the exchange rate in favor of the European Union's flavor of fiat currency, and the corresponding influx of European tourists, at least some small businessmen in New York -- particularly those who have traveled to Europe recently, and learned just how little a dollar will buy on the Continent -- are trying to avoid the hassle and stress of converting currencies.


"I need euros," one street vendor from Niger explained to the Washington Post. "The dollar's going down. I don't want to change it before I go home."*


We'd better get used to that kind of thing. In fact, it would be a good idea for Americans to study what's happening to another dollar, the Zimbabwean variety. The regime led by the demented Marxist thug Robert Mugabe will admit to an official inflation rate of 100,580 percent in January, up dramatically from a more, ahem, modest rate of 66,212 percent last December. But unofficial -- which is to say, more reliable -- estimates put the rate at around 150,000 percent.


A millionaire street beggar in Zimbabwe displays bundles of that nation's increasingly worthless fiat currency. He has an endearing and radiant smile now, but the history of hyperinflation suggests this young man is in for incredibly hard times. Say a prayer for him.



The typical Zimbabwean is a multi-millionaire: The country's per capita gross domestic product is $9 dollars (U.S.), or about 70 million of that country's dollars. But then again, a kilo of chicken goes for 15 million Zimbabwean dollars.


While Zimbabwe's "millionaires" starve, its ruler and his posse feast. Amid chronic shortages of gasoline, food, and other essentials, the sub-cretinous hordes who compose that nation's ruling elite recently raised 3 trillion Zim-dollars to celebrate the Dear Leader's 84th birthday.


Of course, we're not suffering Zimbabwe-style hyperinflation, at least not yet. But here's the cold, unyielding reality: As measured by our current account balance (which is not the sole definitive measure of an economy, I hasten to point out), our country is poorer than Zimbabwe, at least according to the CIA's World Factbook (a fact brought to my attention by the diligent folks who run the Freedom's Phoenix newssite). Of the 163 nations on the CIA's list, Zimbabwe is 95th. The United States is dead last.


Our nation is broke in a way no country has ever been broke before. And as households, Americans are about to grow much poorer.


William Lapp of Advanced Economic Solutions recently told participants a the USDA's Outlook Forum that a wave (there's that image again) of "real food inflation" is about to reach consumers. His assessment was seconded by Larry Pope of Smithfield Foods, the nation's largest pork processor: "I think we need to tell the American consumer that [prices] are going up.... We're seeing cost increases that we've never seen in our business." (Emphasis added.)


Joseph Glauber, the USDA's chief economist, took note of a fact that should be obvious to anybody who's shopped for breakfast cereal recently: The price of wheat has surged dramatically, and stands at nearly $20 a bushel, an increase yet to be fully factored into consumer prices.

As Lapp soberly pointed out, we're just at the beginning of this trend. And the kind folks at the United Nations, who never met a problem they couldn't transform into a crisis, or a crisis they couldn't nurture into a full-blown humanitarian catastrophe, is reportedly drawing up plans for food rationing in urban areas should commodity price inflation go hyperbolic and food riots ensue.


Of course, this kind of thing would only happen in desperately impoverished countries without the means to meet the obligations imposed on them by their governments, and whose populations can't afford to buy food. You know, countries like Zimbabwe today ... and perhaps the United States in the near future.


Liberty in Eclipse is on sale now at The Right Source.











_______

*I experienced a moment of mild and bitter amusement reading this observation in the Post story: "U.S. currency is the only legal tender money in the United States, but parties can agree to satisfy a debt by other means."

Oh, really? Well, what if the parties agreed to an exchange of goods for Liberty Dollars, which are either made of, or fully redeemable in, the only constitutionally permissible money -- gold and silver? The Feds regard an equitable transaction between fully informed parties that involves real money to be a species of "forgery." What the Post meant to say, apparently, is that parties are free to conduct transactions using other fiat currencies.


Dum spiro, pugno!

Monopoly "Money"

Bernard von NotHaus, the creator of the Liberty Dollar, is optimistic that he and his associates will have the benefit of “a spectacular trial” for the supposed crime of providing customers with something of value – platinum, gold, silver, and copper coins – in exchange for something innately value-less – the decorated ragpaper and junk metal slugs the Regime insists we treat as money.

Speaking with the New York Sun – the quasi-official publication of the Warfare/Homeland Security State – von NotHaus anticipated the opportunity to “put this country's monetary system on trial.”

He said this as if he truly believes the Regime would permit such a thing to happen. And even if von NotHaus were permitted the luxury of a trial – as opposed to having his company's wealth simply stolen through “asset forfeiture,” which appears to be the case at present – it's entirely possible that our monetary system will effectively collapse before the case against the Liberty Dollar is aired in a courtroom.

Relics of a time when there was money in U.S. currency: Kennedy Half-Dollars minted in 1964, the last year the Regime put silver in its official coins.

Should that collapse occur, von NotHaus – who, like most intelligent observers, has warned that the fiat money system eventually must destroy itself -- won't be allowed to argue that truth is a perfect defense. The FBI's investigation -- which took two years and employed the services of “confidential informants” and other covert means to collect evidence of peaceful, mutually beneficial commercial exchanges – is designed to set up a political trial, if a trial is even permitted.

According to the affidavit (.pdf) filed by FBI Special Agent Romagnuolo, the political objective of von NotHaus's organization, The National Organization for the Repeal of the Federal Reserve and Internal Revenue Codes (NORFED) makes it a subversive criminal conspiracy.

“As the organization's name implies,” writes Romagnuolo, “the goal of NORFED is to undermine the United States government's financial systems by the issuance of a non-governmental competing currency for the purpose of repealing the Federal Reserve and the Internal Revenue Code.”

As we should expect of someone good enough for government work, Romagnuolo is dishonestly amalgamating two issues here – the first being NORFED's creation of a currency intended to compete with the “dollar” (the quotation marks are apposite here, since the fiat scrip known by that name is not a dollar as defined in law), the second being the effort to repeal the measures that created the Federal Reserve and Income Tax systems. The latter is a far broader movement than the former, and it includes many millions of people who had nothing to do with NORFED or the Liberty Dollar.

Romagnuolo being a Fed, can't write with economy or clarity (only the top-of-the-line tax feeders can even speak clearly), so it's difficult to know to what extent conscious dishonesty, rather than mere ineptitude, is in play here. But his description of the “criminal activity” NORFED and its associates supposedly engaged in leaves the impression that anyone who seeks the same objectives is likewise engaged in criminal conduct, albeit through other means.

Consider: What are the elements of this supposed crime? More specifically, what is the mens rea, or criminal intent? The allegation is not that von NotHaus and his associates sought to commit robbery or fraud, but rather that they sought to bring about the repeal of existing laws, and changes in present institutions, through peaceful, consensual means.

Where “undermining” the nation's financial system is concerned, nobody does it better than the Fed. The greenback's relentless decline is driving economically marginal Americans toward starvation, while buoying the spirits of foreign detractors. Yet we are supposed to believe that NORFED's largely unsuccessful efforts imperil whatever remains of our national prosperity.

Now that Chavez and Ahmadinejad have made explicit public mention of the innate worthlessness of the fiat dollar, it wouldn't surprise me to see the Regime make an attempt to describe NORFED, the Liberty Dollar (and perhaps even the Ron Paul presidential campaign) as “ideational co-conspirators” with our foreign enemies du jour. Implausible as such a charge would be, it would still make as much sense as the “crime” alleged in the FBI affidavit.

The “offense” here, in fact, is to find a creative and peaceful way to challenge the Regime's fraudulent financial system, which is upheld by lethal force. And it's not as if the Liberty Dollar crack-down illustrates that “the government hates competition,” in the words of a familiar punchline.

Nobody involved in the Liberty Dollar movement ever compelled anyone to accept the private currency, or deliberately defrauded people into accepting it. That's the government's racket. Nor did the movement circulate counterfeit US currency – that is, non-official counterfeit currency. As the FBI affidavit concedes, the Liberty Dollar was exactly what it was advertised – privately minted coins made out of precious metals, or warehouse receipts backed by the same.

Tyranny exists wherever government exercises the power to force people to live a lie. NORFED threatened to “undermine” the fraudulent and tyrannical system under which we live by providing a tangible example of a hard money system in operation.

Critics of the Liberty Dollar -- the kind of people who mistake sub-sophomoric snarkiness for substance -- sometimes describe it as the equivalent of Monopoly money, because it's not backed by the "full faith and credit" of the Regime. The inescapable truth, however, is that the dollar is an instrument of force and fraud, and since the Regime claims a monopoly on the same, it is the federal "dollar" that is best described as monopoly "money."

Dum spiro, pugno!

Briefly Considered: Here Comes the Wrecking Ba'al

"Then they [the prophets of Ba'al] called on the name of Ba'al from morning till noon: `O Ba'al, hear us!' they shouted. But there was no response; no one answered. And they danced around the altar they had made. At noon Elijah began to taunt them. `Shout louder!' he said. `Surely he is a god! Perhaps he is deep in thought, or busy traveling. Maybe he is sleeping and must be awakened.' So they shouted louder and slashed themselves with swords and spears, as was their custom, until the blood flowed. But there was no response, no one answered, no one paid attention." I Kings 18:26-27 (NIV)


It is fortunate that some conscientious soul removed all of the sharp objects from the studio before CNBC's Jim Cramer, who is among the most histrionic evangelists of the Fed's loose money policies, suffered the following breakdown:





Cramer -- like the pagan priests of Ba'al -- is overwrought with anguish because of the indifferent silence from his deity, in this case the Federal Reserve and its current avatar, Ben Bernanke. The Fed has the power to conjure "money" from the ether (in the digital age, most fiat "money" remains purely ethereal anyway), and Bernanke has expatiated on the supposed virtues of official counterfeiting at great length and with considerable passion.

Yet the divine Fed withholds the much-desired benison, even as the sub-prime mortgage industry collapses like a federally constructed highway bridge, crushing lenders and borrowers beneath the weight of its accumulated corruption, and wreaking collateral damage on the entire consumer economy.

As with everything Cramer does on his "Mad Money" program, his August 3 seizure was largely theatrical, and inspired by a desire to cover his posterior. He "went outside of character" to "talk about the humanity of the situation" -- specifically, the 7 million people who accepted former Fed Commissar Greenspan's invitation to take out mortgages on "teaser rates" beginning in 2005. Cramer believes that they will soon lose their homes and suffer ruination.

"I want my conscience clean ...when -- I think `when' not `if' -- things unravel in the way that I've spoken," Cramer explains. Having staged his perfunctory fit of conscience, Cramer has since returned to form, hymning the praises of loose money and speculative investment.

I suspect that Cramer remembers what happened to the original Prophets of Ba'al at Kishon Valley. His fit of conspicuous agony for the "forgotten man" would thus be meant to immunize himself against the possibility of being pitched over the precipice with the other pagan Fed-worshipers when the ruination he foresees really gets underway.


And awaaaaaaay they go: The Prophets of Ba'al experience a brief and invigorating lesson in applied physics before suffering death through deceleration trauma.


















A brief personal note....

I wish to offer my thanks, once again, to those who have contacted me to express their care and concern for Korrin and our family, and particularly those who have generously donated to us; as time permits I intend to express my thanks to each of you personally.

Korrin has been hospitalized for a month, and she has been relocated to a more distant facility to get specialized treatment. I won't be able to see her as often, but her prognosis is very good. I wish to emphasize that her condition, while life-changing, is not directly life-threatening. It has been very difficult for our children to spend nearly the entire Summer without their mother. Once again, to those who have offered prayers and offered financial and material help to our family, thanks and God bless you.

It is because of the developments mentioned above that I have been somewhat austere in writing new posts. This will soon change, and I appreciate your patience.

Please be sure to visit The Right Source and the Liberty Minute archive.

Your Next "Landlord" Will Speak Chinese

Meet your future landlord: Thanks to the Federal Reserve and our own profligacy, Washington is looking to China to bail out the distressed mortgage industry.


It takes a mind better attuned than mine to the arcane science of high finance to understand why the Dow briefly crested 14,000 today (July 17). The mystery deepens considerably when items such as this are taken into account:

"[Homebuilders] declined after the National Association of Home Builders/Wells Fargo sentiment index fell this month to 24, the lowest since January 1991, from 28 in June. Readings less than 50 mean most respondents view conditions as poor."

For several years, the manic real estate/mortgage/refinancing industry has been the only engine keeping our consumer economy aloft. The Federal Reserve, the Power Elite's official counterfeiters since 1913, has done everything it can to keep the housing and re-fi bubble inflated, as the dollar's increasing decrepitude demonstrates.

The official rationale for the Federal Reserve -- whose officers don't have the cojones to be honest and brazen thieves -- is that they exist to regulate and rationalize the economy by exercising sober, adult authority over the banking system. R-i-i-i-i-i-ight. That's why they spent the last decade or so pumping out money and credit with the giddy enthusiasm of a prankster spiking the Prom punchbowl with Spanish Fly.

This led to years of promiscuous mortgage lending in which financial institutions would open their wallets on very short acquaintance to practically anybody, irrespective of his background or qualifications. As a result, countless people on both ends of such deals got screwed, and the economy is pregnant with awful possibilities. I'd elaborate on some of them, but I think I've overworked this metaphor already.

We can already see the expanding collapse of the "sub-prime" mortgage sector, which in some communities is undermining property values for conscientious homeowners and (odd as this might seem at first) abetting the growth of the police state. Not surprisingly, investors are bailing out of the sub-prime market.

Trying to stem that hemorrhage is a task assigned to Housing and Urban Development (HUD) Secretary Alphonso Jackson (who is nowhere near as cool as virtuoso bassist Alphonso Johnson -- and no, that's not Basil Fawlty on lead guitar, but rather a very young John Scofield).

Where does a US government official go these days in search of investment capital?

That's right -- Beijing.

"Hey, honey -- our new neighbors are here to throw a house-warming party!"


His hat in his hand, Secretary Jackson took Mendicant Airlines to Beijing, seeking to persuade China's central bank "to buy more mortgage-backed securities after a surge in defaults by risky borrowers in the world's largest economy eroded demand for such instruments," reported Bloomberg News. Specifically, Jackson sought to sell the Chinese some securities issued by Ginnie Mae, a federally backed mortgage lender operating through HUD.


Ginnie Mae is a better investment than its better-known cousins Freddie Mac and Fannie Mae, Jackson insists, because HUD's mortgage association has the "full backing of the US government."

In other words: When Ginnie's mortgages go bad, Congress covers for them and gets the Fed to print up the "money" to cover the costs; other Government-Sponsored Enterprises (GSEs) such as Freddie and Fannie offer no such guarantees, even though they're widely believed to.

HUD is also seeking to sell mortgage securities to Chinese commercial banks, and Jackson intends to sign a "memorandum of understanding" on this matter with Chinese construction minister Wang Guangtao when he visits Washington in August.


Refinancing a mortgage with the First Bank of Mao is a little ... different. For some reason you have to agree to repaint your house in festive Proletarian red. The mortgage papers come bound in a little Red Book. And you have to sign with this huge ceremonial pen containing an embedded explosive charge.


Amazing as it may seem, as of June 2006, Beijing held over $107.5 billion in US mortgage securities. This is a trifling amount once it's understood that there is something on the order of $11.8 trillion in outstanding mortgages. But the bubble's collapse has just begun -- and Beijing is awash in cash. Although Washington is looking for Beijing's help to bail out its mortgage-granting GSEs, but given the extent to which the economy still depends on that sector, there's no reason to expect that our rulers would want the Chinese to stop there.

Until a "homeowner" pays off his mortgage, he's actually renting his home from the lending institution. I wouldn't be surprised if, several years hence, millions of American "homeowners" discovered that the "landlord" to whom they're making mortgage payments is the Chinese government.

A brief postscript....

Look, I'm aware that China has changed dramatically since the Cultural Revolution; in fact, according to friends and relatives who spend a considerable amount of time there, it has changed dramatically in just the last decade. While the Chinese government still describes itself as the vessel of "Marxism-Leninism-Maoism-Deng Xiaoping Thought," its commitment to global revolution is considerably weaker than that of the demented ideologues who surround the Dimwit-in-Chief. The Chinese themselves are astonishingly bright and admirably entrepreneurial. The regime, like governments everywhere, is run by some thoroughly nasty people. I would like to think that China is big enough and old enough that it can transcend Communism, but I'm not optimistic. I would love to be proven wrong.

And a personal request...

Please keep Korrin in your prayers. She is not doing well.

Please visit The Right Source and the Liberty Minute archive.

I'd Buy That For A Dollar: Approaching “RoboCop” World

"Stay out of trouble!": Meet the future of law enforcement.

Until recently, Juan Rodriguez was a freeway patrolman employed by the City of Chicago. Now he cruises the Chicago Skyway “for private owners,” reports the current issue of Business Week. “In the past, [Rodriguez] had to write out a ticket for each problem” -- such as disabled vehicles, potholes, tire debris, and other traffic impediments. It would often taken the sclerotic municipal services department days to deal with the backlog.

However, on this particular morning all of the problems are cleared up before 10:30, which demonstrated to Rodriguez that the Skyway's new owners “are taking the Skyway to a whole new level.”

Those absentee owners belong to an international consortium created by the Australian-owned Macquarie Bank's Infrastructure Group and Cintra Concesiones de Infraestructura del Transporte of Spain. The same outfit now owns the Indian Toll Road. It is also deeply involved in the proposed 4,000-mile-long Trans-Texas Corridor, a project that would involve condemning huge tracts of private property (over 9,000 square miles of land) in the name of “eminent domain.”

When news of the T-TC hit rural Texas and Oklahoma, residents became understandably concerned. The editorial pages of the newspapers that serve those small communities began to resound with outrage: Nobody had asked them for input regarding a deal with a foreign-owned business combine that would drive many of them off their land – and create a toll road that would sluice profits into the coffers of that same foreign combine.

The Macquarie-Cintra combine heard those complaints, and acted swiftly: Macquarie purchased all of the small-town newspapers along the T-TC route. Now the newsrooms that once resounded with opposition to the combine are owned by it.

In just the last few years, Macquarie Bank – roughly a decade old – has become a major player in the new niche market of buying up transportation infrastructure, such as bridges and roads. It has spent billions of dollars to buy assets of that sort throughout North America.

Along the way, it has made some other interesting acquisitions as well: Besides the rural newspapers in Texas and Oklahoma, Macquarie bought out Giuliani Capital Advisors (GCA), which has about 105 employees in several major cities, including Chicago, New York, and Los Angeles. Created by that Giuliani in 2004, GCA specializes in bankruptcy restructuring and corporate mergers, both of which we will be seeing in abundance, if my suspicions are correct.

Macquarie was cleared by the Federal Reserve Board (.pdf) “to open representative offices in New York ... and Houston, Texas” in November 2003.

At a meeting of the Fed's Board of Governors almost exactly a year earlier, the Sith Lords discussed what the Financial Times referred to as “unconventional means” of pumping up the economy. One anonymous official – most likely current Fed Commissar Ben Bernanke – suggested that the Fed "could theoretically buy anything to pump money into the system,” including “state and local debt, real estate and gold mines--any asset.”

Hmmm.... Could “any asset” include such things as highways, bridges, airports, municipal utilities, and other publicly operated infrastructure now “owned” by debt-plagued states and cities?

Business Week opens its current cover story describing how Steve Hogan, executive director of Colorado's Northwest Parkway Public Highway Authority, was at the point of tears over a $416 construction debt when (trumpet flourishes and hosannas) he “got a letter from Morgan Stanley that promised to solve all of his problems. The bank suggested Hogan could lease the road to a private investor and raise enough money to pay off the whole chunk of debt. Now Hogan, after being inundated with proposals, is in hot-and-heavy negotiations with a team of bidders from Portugal and Brazil. `We literally got responses from all over the world,' he says.”

“With state and local leaders scrambling for cash to solve short-term fiscal problems, the conditions are ripe for an unprecedented burst of buying and selling,” continues Business Week.

Indeed: The Fed, under “Helicopter Ben” Bernanke, continues to inflate, which means it has plenty of pseudo-dollars to throw around. Bernanke earned that sobriquet for a notorious November 21, 2002 speech (delivered almost exactly a year before Macquarie was given permission to open its US offices) in which the future Fed chief hymned the praises of inflation:

“[T]he U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.... We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.”

For instance, Bernanke said, the Fed and feds could hold deflation in abeyance by printing up bales of money and dropping them randomly from helicopters. This was inspired by a sarcastic comment once made by Milton Friedman. Oddly enough, the Fed managed to do this very thing in Iraq, dispatching pallets full of shrink-wrapped “cashpaks” to the Coalition Provisional Authority; the newly minted FRNs were often handed out from helicopters, as well as the back of trucks and jeeps, to all and sundry, and probably wound up buying some of the munitions now used to make orphans and widows of US military families.

But Bernanke, his mind a freshet of depraved inspiration, saw other potential avenues inflation could take: "[T]he Fed has the authority to buy foreign government debt, as well as domestic government debt. Potentially, this class of assets offers huge scope for Fed operations, as the quantity of foreign assets eligible for purchase by the Fed is several times the stock of U.S. government debt.”

He also noted that the Fed could buy up “a wide range of private assets,” including corporate bonds, bank loans, and mortgages. In order to hold deflation at bay -- that is, to spare us the horrors of falling prices --the Fed under Bernanke was prepared to create ever-depreciating dollars in sufficient quantity to buy everything in sight.

In late 2005, Richard Daughty, during a rare moment of lucidity in which he wasn't channeling the Delphic utterances of the Mogambo Guru, explained to me how this could happen:

"There's no limit to what the Fed is prepared to do. The only tool it has is inflation--creating money out of nothing. And Bernanke has explicitly stated that the Fed has the statutory means to use the money it creates to buy anything and everything, including stocks, bonds, houses, and raw land. It's entirely possible that someday we'll see the banking cartel literally owning everything--and Americans are letting this happen."

Why couldn't the Fed carry out this buy-out by way of foreign investment conduits – like the enigmatic Macquarie, and the equally mysterious “bidders from Portugal and Brazil” who were so eager to lend the embattled Steve Hogan a hand? After all, if Daughty's suspicions are correct, the process would have to start somewhere. Why shouldn't the pioneer be the previously obscure Australian bank that now owns the Chicago Skyway, the Indiana Toll Road, a string of refractory rural newspapers in Texas and Oklahoma, and a mergers-oriented financial firm it bought from the current front-runner for the 2008 GOP presidential nomination?

Macquarie may have been the first into the pool, but plenty of others are diving in: Goldman Sachs, Morgan Stanley, the Carlyle Group, Citigroup – all of which are very tight with the Fed, and all of which are exemplars of that perverse variety of oligarchical crony capitalism known as corporatism.

In that system, the risks are subsidized, the losses are socialized, and the profits are privatized.

In the current example, these investors are buying (with capital provided through Fed inflation) infrastructure that was created and maintained with tax dollars. As Business Week observes, infrastructure investments create “captive customers,” so “the cash flows are virtually guaranteed.” If the deals still don't work out, state and municipal governments (or, more likely, Washington) will step in and buy back the infrastructure concessions – or the Fed might find other investors, which is pretty much the same thing.

Consumers will be treated to monopoly pricing – always such a joy – and taxpayers will find no relief, because the politicians who sell off infrastructure concessions have already earmarked the profits for favored constituencies.

Question: If the Fed can buy up the physical assets of embattled city and state governments, why can't it buy up their law enforcement agencies as well?

Answer: It already has, at least in principle.

At this point, the attentive reader – I can see you there, your eyebrows knitted in puzzled curiosity, your foot tapping rhythmically to dissipate your frustrated impatience – is saying: “This is all sort of interesting, but what does it have to do with RoboCop?”

When I saw that film twenty years ago, it struck me as uncannily prophetic. (I speak of the original, not the pointless sequels.) Of all the dystopian visions available in literature and on film, RoboCop (directed by Paul Verhoven, a Dutchman) created an uncannily plausible vision of American totalitarianism – not the dismal, leaden grayness of Soviet Communism, or the lurid pageantry of Nazi Germany, but rather a society run by an all-pervasive corporation that controls its subjects through a combination of synapse-killing mass entertainment and soul-chilling violence.

In that world Omni Consumer Products is the government; it is the military, the police, and the media.

We're not in RoboCop world yet, but we can see its suburbs from here.

Program Notes

To those eagerly awaiting a long-delayed installment of Pro Libertate: the e-journal, I say: Nil desperandum -- it will be available shortly.

I have been invited to address the upcoming Spring Convention of the United Republicans of California (UROC) on May 19 in Arcadia, California.

The website of the Christian Liberty Party has an audio recording of my April 21 address to the National Committee Meeting of the Constitution Party in Boise, Idaho. I wish to thank Keith Humphrey for making that speech available, for maintaining an amazingly information-dense website, and for his incredible generosity toward my family.

And I'm still working on final edits to the manuscript for my new book, tentatively entitled From Republic to Reich: How the Imperial Executive Devoured the Bill of Rights. I'll let you know as soon as it's available.

The Right Source offers in-depth articles, both in its current news and archives, dealing with this and other important stories. Please check it out.

The Bubble Collapses, The Police State Expands (Quick Update)

I want to thank Jerri Lynn Ward for inviting me on her program "I Object! Justice Examined" to discuss (along with Dr. Herb Titus) the right to keep and bear arms. Those interested in listening can hear the program on Right Talk radio; click on Miss Ward's icon at the bottom of the page. The program will re-start at five past the hour for the next day, and will be available as a podcast after 7:00 PM this evening. As you listen, please bear in mind that I am, once again, battling a bad chest cold -- so I hope the coughing and sniffling aren't an insuperable distraction!



Evicted: Abandoned personal effects were piled on the lawn of this foreclosed home in Colorado's Adams County. The Sheriff's Department emptied the house and changed the locks.

With the Dow peaking above 13,000, the most observers direct their gaze skyward as they wonder how much higher the market can climb. Few are taking the time to examine the market's decayed and crumbling foundation, as they wonder how soon the structure will collapse.

The market is not built on rock or even on sand, but rather perched precariously atop the housing/mortgage/refinancing bubble the Federal Reserve so diligently inflated during the first half of the decade. Wall Street's necromancers have transmuted debt into “wealth” by creating exotic financing mechanisms to encourage mortgage lending to dubiously qualified – or entirely unqualified – home buyers, and then securitizing those loans for investors. This scam – like many others -- works fine as long as the housing bubble continues to expand.

Now that the bubble has burst, defaults and foreclosures on “sub-prime” mortgages are mounting. Hundreds of thousands of families have lost their homes; neighborhoods and communities are being ravaged; and municipal governments face what could be called “gentrification in reverse” -- the creation of vacant, deteriorating urban areas that become magnets for crime.

The last to suffer will be those who most richly deserve to – the Fed-allied financial interests who have facilitated the entire scam by luring people into unmanageable debt.

In Cleveland, reported the New York Times on March 23, “Hundreds of houses are vacant because they are caught in legal limbo, have been abandoned by distant banks or the owners cannot find buyers.” In suburban Euclid “more than 600 houses have gone through foreclosure or started the process, many of them the homes of elderly people who refinanced with low two-year teaser rates, then saw their payments grow by 50 percent or more.”

Euclid's city government, which claims an annual property tax shortfall of $750,000 from the vacant houses, has hired new building inspectors and has taken out a $1 million loan to pay for “rehabilitation, demolition, and lawn care at the foreclosed houses.” The city anticipates recovering those costs through tax assessments when the renovated buildings are sold.

What if, in an ever-softening real estate market, they don't sell?

Well ... the one constant here, from the municipal government's perspective, is the need for more revenue. So homeowners who have kept up with their mortgages, or own their homes outright (as opposed to renting them from the bank, which is what a mortgage amounts to), will see their taxes go up – dramatically, I'll bet.

I suspect this process is behind yesterday's (April 25) USA Today headline: “Property taxes up as house prices fall.” The story explains that despite the housing downturn, “the market value of millions of homes still exceeds their assessed value used for tax purposes.” Many homeowners are caught in an interesting predicament: The value of their homes hasn't declined quickly and steeply enough to help them avoid a tax increase, or an abatement in their taxes corresponding to the reduction in their equity.

“To get a tax cut,” comments Dan Goodwin, a tax assessor for California's Ventura County, “you have to buy a home at the peak and have it lose value quickly. You can't enjoy double-digit increases in you home value and then expect a tax cut when the market dips.”

Well, why not? With household budgets already under stress from increases in non-discretionary spending – food, energy, and housing – why can't county governments bite the bullet and take in a little less?

There are countless ways to answer that question, but they can all be easily digested into this simple proposition: County governments have constituencies to feed, and they have Sheriff's Departments to command.

So you pay what they tell you to pay, or wind up like the Sundsmos.

A rising tide lifts all boats, and (to alter the metaphor) a collapsing nation-wide real estate bubble is likely to drag everybody down – beginning with those who are trying to get out of mortgages they can't afford to pay.

As an earlier USA Today story pointed out, foreclosures on sub-prime mortgages depress housing values in entire neighborhoods. “Why pay full price for my house when you can pick up a foreclosure for $30,000 or $40,000 less?” asks Dannice Clark, a postal worker from Atlanta who is trying to sell her home.

Among those who are seeing their equity evaporate, warns Dan Immergluck of the Georgia Institute of Technology, are homeowners who qualified for interest-only mortgages, which are poised to re-set. “I'm concerned that could really tip some of these middle- and upper-income neighborhoods, in terms of high foreclosure rates,” Immergluck warns.

In Georgia' Gwinett County, as in Ohio, Michigan, and elsewhere, many abandoned homes have been neglected by the banks or other lending institutions that own them. Some of them quickly fall prey to vandalism, or attract squatters. This, in turn, leads to an increased police presence, often carried out by “Quality Of Life” (QOL) units, who are tasked to enforce building codes and ordinances dealing with graffiti and vagrancy.

The creation of QOL patrols was inspired by the “broken window” premise -- that is, a broken window, littered sidewalk, or unattended home "sends a signal" that a neighborhood is fair game for reprobates. One commentator summarizes that theory thus: "[T]he smallest symptoms of antisocial behavior will, left to fester, breed greater and greater crimes, all the way down to murder."

While there may be some merit to that theory, in practice -- as in New York City under the reign of Il Duce Giuliani -- "quality of life" policing has sometimes led to replacing the anarchic violence of street criminals (or merely the unsightly spectacle of street beggars) with state-sanctioned violence -- such as the unpunished murder of private security guard Patrick Dorismond by undercover New York narcotics officers.


(Dorismond, the father of two, was accosted by the officers, who asked where they could buy drugs. He took offense, and a scuffle ensued in which Dorismond was fatally shot in the chest. As public outrage mounted over this needless death, Giuliani illegally unsealed Dorismond's juvenile delinquency record, and released a toxicology report showing that the victim had smoked marijuana shortly before he was killed -- none of which has anything to do with his summary execution at the hands of police who, according to eyewitnesses, provoked the fight and then spat profane invective at the young father as his life bled away.)


Taken in the abstract, QOL-oriented policing seems like a good idea, if only because it addresses the age-old complaint that there's never a policeman around when you need one. The problem, once again, is found in the practice, rather than the principle. In practice, QOL policing means the ever-increasing presence of armed government agents in the employ of revenue-starved governments, there to enforce often obscure ordinances regulating how you cut your grass, care for your lawn, paint your house, maintain your car, and even feed your dog. And intrusions of this sort can now be justified as a way of helping to keep property values up in your neighborhood -- as if anything you can do would have a bigger impact than the Fed's manipulation of the money supply.

In prosperous and stable times, this is a formula for trouble. What happens when the prosperity (or at least the illusion of the same) is gone?

Think of it this way: Quality of Life policing is a creative way of weaving armed agents of the state into the fabric of a community, just as the unwinding of the housing/mortgage/refinancing market causes that social fabric to become undone.

Video extra:

In this clip from Boston Legal, Alan Shore -- the high-viscosity uber-lawyer played by James Spader -- peels the skin off an attorney representing the credit card industry. Shore's soliloquy is filed under "Things I Wish I Had Written," and, in fact, it does remind me a great deal of at least one essay I did write.

Make sure to visit The Right Source.