If there’s one thing we have in this nation – it’s an abundance of people willing to give us their opinion on what’s going wrong. It’s much easier to sit on the sidelines of a game and criticize the players – than to actually work hard, take a few risks – and make the sacrifices required to be a player in the grand game. In this post – let’s think about why each of us needs to get in the game and what needs to happen for our nation to halt our decline (judgment).
Since we’ve already discussed what’s really happening to our nation and why – let’s take some time and discuss what needs to actually change to turn our nation around. As I’ve said before, first and foremost – we must ask God for forgiveness – individually and corporately. There is no debate on this point. Without God’s guidance and blessing – whatever we choose – regardless of our intelligence, planning, etc. – we will fail. With God’s blessing – anything and everything is possible. No national repentance - and our fall will continue without ceasing. Other nations will continue to rise – and we will continue to fall. End of story.
Let’s say that at some point in the future – we, the people of the United States of America finally recognize our spiritual condition and return to God. As a result, He draws near to us and begins to heal our nation. Let’s say that we (as a nation) now see our true enemy – how he has infiltrated and corrupted our government and religion - and decide to do something about it. What is required? Above all else – faith will be required. Why? We will need leaders who will allow themselves to be strengthened by God so that they can stand against our enemies.
Courage and trust flow from faith. Do I truly believe God is watching over me? Do I truly believe that He will protect me against my enemies? Even though I face insurmountable odds – do I believe that God will allow me to overcome those odds? When enemies threaten and ridicule me – will I fear these threats or will I continue to follow God – advancing in the face of powerful adversaries? Do you understand what I’m saying to you? Without faith – we will not stand, we will give in to our enemies. Why? Because from a worldly standpoint – it will seem that our situation is untenable. If God tells us that we will succeed by following Him – what is going to be our response when the world ridicules us and pressures us? Will we join the coming world government or will we stand against it? Will we remove secret society members from our government and financial institutions or continue to cower at their worldly power and influence? Will we reject unbiblical doctrine (regardless of where it comes from) or will we accept demonic doctrines? Are we willing to endure extreme hardship in this world – to inherit the kingdom of heaven in our next life? You get the picture – we face an uphill battle all the way to the end of this evil age. I’ve had my own three year battle with our spiritual enemy to get me ready for what is coming. I haven’t always thought it was necessary and would have preferred another way – but I have come to the conclusion that every Christian eventually understands – if God is putting you through trials – He has a very good reason for doing so. Are you prepared? The bigger and more important question is – will you allow God to prepare you?
The bottom line is that if we do ask God for forgiveness and guidance – the war is just beginning for us. Our spiritual enemy will bring his followers against us – very powerful political, financial and religious people in this world. We must be prepared spiritually to do what needs to be done. If we’re the only nation on earth that refuses to join a world government and evil world religion – so be it. We can create our own monetary/economic system – independent of the world system and stay true to God’s Word. We are – after all – Americans. I think we’ve forgotten where we came from and what got us here. Our ancestors traveled to America for freedom. If we don’t stand up and fight for God – there will be no freedom in this world. Let’s be a true refuge in an evil world. I don’t know about you – but I’d rather die standing for my Creator – than lie down and accept an evil world government and evil world religion and eventually face eternal judgment. Besides, I believe it’s time we showed the world who we truly are – that the American people are honorable and fearless – unlike our current leaders.
I’m sure you’ve wondered many times about how we can turn around this current economic crisis. The world’s leaders are going to offer us a ‘solution’ – but it will only lead to more bondage. Their solution will eventually include some type of global currency and a heavily regulated financial system. At some point in the near future – you and I will be asked to swear some type of unbiblical allegiance to this world system in order to buy and sell. This path will eventually lead to the ‘mark of the beast’. Join this world system – and you gain access to money – and lose your soul for all eternity.
To truly get free, we must start by having the fortitude to do these three things:
1. Rescind the Federal Reserve Act and remove the Federal Reserve and its fractional reserve banking system. No one can be debt free if their money is created by debt. To get free – you must get free of the system that places you in bondage. Since the international cartel that controls the central banking system knows very well that their true power is derived from this system – they will fight to the very end to stop this from happening. Expect all types of slander, threats and even physical assaults against the people within the United States who are trying to remove them from power. This will become a life and death struggle. Ever wonder why no one in power ever speaks out against the Federal Reserve? Because they know that doing so – will place their life in danger. Again – you must have a strong faith to know that God is on your side in this battle. When the U.S. begins to print its own money (based on a metal standard) and removes the Federal Reserve Notes from circulation – debt will vanish. We can then institute a monetary system where money is created by value – not debt – and is sustainable. We can create a monetary system where we live within our means and are not constantly under the bondage of debt. There are many details we will need to work out – but it starts with the removal of the Federal Reserve – there is no other way out.
2. Rescind income taxes and estate taxes. Why are we taxed when we die? It’s certainly not because we’re not taxed enough while we’re alive. What is usually one of the first things that our Government does during economic downturns? Tax breaks. They obviously recognize that putting our money back in our own hands is good for the economy. The obvious question is – if this is a good idea during down times – isn’t it good all the time? Why do we think that our government can manage our money any better than we can? Have you looked at our Government’s finances lately? Local, State and Federal taxes are out of control – and all they do is lead to bloated government and waste – just look at our Federal Government or the State of California – their budgets are huge – and in complete disarray. Let’s put the money back in the hands of the people who earn it – and who will manage it effectively. Our Government should provide us with a military for protection, maintain our infrastructure and – stay out of our way. Our founding fathers made it clear – government is by the people for the people – it should never dominate the people. It should never become a buyer of securities and mortgages (Can anyone compete with something that has seemingly unlimited funds and creates our laws?), a bailout specialist (if firms fail – they fail – that’s the downside of free markets – deal with it – and besides, the government should not be in the business of deciding who survives and who fails), a provider of income (social security), a healthcare service provider (Medicare, Medicaid, prescription drug benefits), dictate how we educate our children, etc, etc. If our President proposed that the U.S. become a Socialist country next week – there would be a public outcry as we’ve never seen before - we would march on Washington D.C. and demand this be stopped. We’re definitely moving in that direction – only we’re doing it over decades – and very few people are saying anything. Socialism does not work – regardless of what our new President believes. Read the article below.
3. We must drastically reduce the size of our Government. Less taxes = less government. Imagine the savings if we didn’t need the Internal Revenue Service or the myriad of other departments within our government. Again – private business will always manage money (revenue, expenses, investment, etc.) much better than government. Why? If your livelihood depends on doing a good job – you’re going to do the best job you can. If you receive income whether or not you do a good job and are secure that you’ll be paid regardless of how well you perform – it’s not hard to see why our government is bloated and in disarray. You don’t need a psychology degree to understand how humans behave.
The end result of all of this is that we can either take the broad path that the world will take and join an evil world system – or we can choose the narrow path – and follow our Creator. It is our choice – the same choice every human being has faced. Which path will we choose?
jg – January 14, 2009
________________________
JANUARY 9, 2009
'Atlas Shrugged': From Fiction to Fact in 52 Years
By STEPHEN MOORE
Some years ago when I worked at the libertarian Cato Institute, we used to label any new hire who had not yet read "Atlas Shrugged" a "virgin." Being conversant in Ayn Rand's classic novel about the economic carnage caused by big government run amok was practically a job requirement. If only "Atlas" were required reading for every member of Congress and political appointee in the Obama administration. I'm confident that we'd get out of the current financial mess a lot faster.
Many of us who know Rand's work have noticed that with each passing week, and with each successive bailout plan and economic-stimulus scheme out of Washington, our current politicians are committing the very acts of economic lunacy that "Atlas Shrugged" parodied in 1957, when this 1,000-page novel was first published and became an instant hit.
Rand, who had come to America from Soviet Russia with striking insights into totalitarianism and the destructiveness of socialism, was already a celebrity. The left, naturally, hated her. But as recently as 1991, a survey by the Library of Congress and the Book of the Month Club found that readers rated "Atlas" as the second-most influential book in their lives, behind only the Bible.
For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises -- that in most cases they themselves created -- by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.
In the book, these relentless wealth redistributionists and their programs are disparaged as "the looters and their laws." Every new act of government futility and stupidity carries with it a benevolent-sounding title. These include the "Anti-Greed Act" to redistribute income (sounds like Charlie Rangel's promises soak-the-rich tax bill) and the "Equalization of Opportunity Act" to prevent people from starting more than one business (to give other people a chance). My personal favorite, the "Anti Dog-Eat-Dog Act," aims to restrict cut-throat competition between firms and thus slow the wave of business bankruptcies. Why didn't Hank Paulson think of that?
These acts and edicts sound farcical, yes, but no more so than the actual events in Washington, circa 2008. We already have been served up the $700 billion "Emergency Economic Stabilization Act" and the "Auto Industry Financing and Restructuring Act." Now that Barack Obama is in town, he will soon sign into law with great urgency the "American Recovery and Reinvestment Plan." This latest Hail Mary pass will increase the federal budget (which has already expanded by $1.5 trillion in eight years under George Bush) by an additional $1 trillion -- in roughly his first 100 days in office.
The current economic strategy is right out of "Atlas Shrugged": The more incompetent you are in business, the more handouts the politicians will bestow on you. That's the justification for the $2 trillion of subsidies doled out already to keep afloat distressed insurance companies, banks, Wall Street investment houses, and auto companies -- while standing next in line for their share of the booty are real-estate developers, the steel industry, chemical companies, airlines, ethanol producers, construction firms and even catfish farmers. With each successive bailout to "calm the markets," another trillion of national wealth is subsequently lost. Yet, as "Atlas" grimly foretold, we now treat the incompetent who wreck their companies as victims, while those resourceful business owners who manage to make a profit are portrayed as recipients of illegitimate "windfalls."
When Rand was writing in the 1950s, one of the pillars of American industrial might was the railroads. In her novel the railroad owner, Dagny Taggart, an enterprising industrialist, has a FedEx-like vision for expansion and first-rate service by rail. But she is continuously badgered, cajoled, taxed, ruled and regulated -- always in the public interest -- into bankruptcy. Sound far-fetched? On the day I sat down to write this ode to "Atlas," a Wall Street Journal headline blared: "Rail Shippers Ask Congress to Regulate Freight Prices."
In one chapter of the book, an entrepreneur invents a new miracle metal -- stronger but lighter than steel. The government immediately appropriates the invention in "the public good." The politicians demand that the metal inventor come to Washington and sign over ownership of his invention or lose everything.
The scene is eerily similar to an event late last year when six bank presidents were summoned by Treasury Secretary Hank Paulson to Washington, and then shuttled into a conference room and told, in effect, that they could not leave until they collectively signed a document handing over percentages of their future profits to the government. The Treasury folks insisted that this shakedown, too, was all in "the public interest."
Ultimately, "Atlas Shrugged" is a celebration of the entrepreneur, the risk taker and the cultivator of wealth through human intellect. Critics dismissed the novel as simple-minded, and even some of Rand's political admirers complained that she lacked compassion. Yet one pertinent warning resounds throughout the book: When profits and wealth and creativity are denigrated in society, they start to disappear -- leaving everyone the poorer.
One memorable moment in "Atlas" occurs near the very end, when the economy has been rendered comatose by all the great economic minds in Washington. Finally, and out of desperation, the politicians come to the heroic businessman John Galt (who has resisted their assault on capitalism) and beg him to help them get the economy back on track. The discussion sounds much like what would happen today:
Galt: "You want me to be Economic Dictator?"
Mr. Thompson: "Yes!"
"And you'll obey any order I give?"
"Implicitly!"
"Then start by abolishing all income taxes."
"Oh no!" screamed Mr. Thompson, leaping to his feet. "We couldn't do that . . . How would we pay government employees?"
"Fire your government employees."
"Oh, no!"
Abolishing the income tax. Now that really would be a genuine economic stimulus. But Mr. Obama and the Democrats in Washington want to do the opposite: to raise the income tax "for purposes of fairness" as Barack Obama puts it.
David Kelley, the president of the Atlas Society, which is dedicated to promoting Rand's ideas, explains that "the older the book gets, the more timely its message." He tells me that there are plans to make "Atlas Shrugged" into a major motion picture -- it is the only classic novel of recent decades that was never made into a movie. "We don't need to make a movie out of the book," Mr. Kelley jokes. "We are living it right now."
Mr. Moore is senior economics writer for The Wall Street Journal editorial page.
Showing posts with label Atlas Shrugged. Show all posts
Showing posts with label Atlas Shrugged. Show all posts
Saturday, September 16, 2006
Europe Basks as U.S. Style Capitalism Draws Fire
I’ll translate what a “kinder, gentler version of capitalism” means in the article below – socialism. Do we really want to move toward the “European model” where we have “universal health care, a more generous system of social security and a general principle of almost free university education”? Who will pay for all of this? You and I will eventually pay for this in the form of increased taxes – just like the Europeans. The governments of Europe do not give these services away for free – there is a price. Take a look at European tax rates if you want to see our future. Along with higher taxes comes loss of freedoms – governments don’t just provide healthcare – they control it. Do you want to wait weeks or months for healthcare and then see the physician that the ‘State’ tells you to see?
Can everyone attend a university for free? Of course not. Who gets to go to college? The government will decide for you. Take a look at the current system in Germany and you’ll get a glimpse into our future. You must take tests that determine whether or not you can attend college, technical school – etc. You might want to work a little harder and attend a university – but I’m afraid that will not be your decision. All of the rhetoric in the article below sounds good – but we’re not told the whole story – we never are. Does a system that takes from those who earn a living and then disperses your money as it chooses sound like an economic system that is good for you (I won’t go into a discussion here on our current tax system in America)? Does this sound like a system that rewards hard work and entrepreneurship? Would you be willing to take a few risks and work hard to start a business or develop a product if you knew that the government would take most of your profits from you? Does this sound like a free economic system? It’s not even close. I don’t know about you – but I don’t feel like our current leaders (government) have any clue how to manage our nation’s finances, our nation’s military, our nation’s problems – our nation’s future. We are being led by people who are only concerned about their own welfare – mere puppets in this game. Why would I feel better about giving these same people – more power and authority?
If you stop and think about it – higher taxes and loss of freedoms are the end result of the “European Model”? Do we really want government controlling everything? You and I don’t – but somebody obviously does and they’re making it happen very deceptively. If you remember – Hillary Clinton tried to implement ‘universal healthcare’ in America during the late 1990’s. The American people rejected her proposal – so what’s happening now? If you’ve really been paying attention, you’ll notice that someone is re-packaging socialism in the form of economic ‘stimulus’ packages and is trying to sell it to us as the only way to overcome the global economic recession. Governments around the world are nationalizing banks, buying assets – basically getting their tentacles into everything – all under the guise of ‘bailing out’ the financial system. If you think this doesn’t come with a loss of freedom, I’ve attached a 2nd article below relating to government ‘restrictions’ for companies who take bailout money. As I’ve mentioned before – the global elite behind all of this are very intelligent and very patient. They’ve waited hundreds of years to get to this point – they have no problem waiting a little longer until we all finally buy into the socialism plan.
Barack Obama’s task in this grand game is to move us closer to the European model – which will eventually morph into full blown socialism the world over. Don’t believe it? Get ready to see what all of the economic ‘stimulus’ packages will get us – more government ownership of assets, nationalization of industries – and all of the ‘stimulus’ in the world will not prevent our financial collapse. Imagine what’s going to happen when the next domino falls – when governments around the world finally go bankrupt. Once the people behind this system bankrupt the world – we’ll then see the true face of the beast.
I recommend you read ‘Atlas Shrugged’ (a novel by Ayn Rand) if you want to know what socialism does to a society. You might get ‘universal healthcare’ – but it will come at a very steep price.
jg – February 2, 2009
_________________________
JANUARY 30, 2009
Europe Basks as U.S. Style Capitalism Draws Fire
By JOELLEN PERRY
Wall St. Journal
DAVOS, Switzerland -- A day after Chinese and Russian leaders blamed a free-wheeling U.S. financial system as the source of the global economic crisis, Europeans here are taking comfort in what they see as their kinder, gentler version of capitalism.
José Manuel Barroso, opening European markets remotely on Thursday from Davos, said the U.S. is looking to the European model of capitalism.
"In Europe, we have a social-market economy," European Commission President José Manuel Barroso said in an interview. "We have universal health care, a more generous system of social security, a general principle of almost free university education. And we want to keep that."
For years, Europe's more-regulated model of capitalism has been maligned by many economists as a study in second-rate market economics. Now, as world leaders seek a way out of the crisis -- and aim to avoid repeating it -- U.S.-style capitalism is under siege and the European model is getting another look.
America may be stealing a glance across the Atlantic. In Washington, the Senate is gearing up for a debate next week on its version of the $819 billion economic stimulus package the House passed Wednesday.
"President Obama," Mr. Barroso said, "is moving toward a European-style model." Mr. Barroso, who runs the executive arm of the 27-nation European Union, cited the new administration's aim to boost health-care coverage, access to student loans and public-infrastructure spending as examples of the U.S's emerging European tilt.
After Wednesday's suggestions by Chinese and Russian leaders that the world might benefit from less reliance on the dollar, many here at the World Economic Forum said the crisis had dented the U.S.'s reputation. But few predicted the crisis would cost the greenback its status as the world's haven and reserve currency of choice -- largely because neither the euro nor the yen is seen as a viable alternative.
Others at the gathering spread the blame beyond U.S. borders. "Mistakes were made on both sides of the Atlantic. It's true, the crisis originated in the U.S. But it's also true that European financial markets had major exposure," Mr. Barroso said. "I don't want to get into a blame game."
Angel Gurría, secretary-general of the Organization for Economic Cooperation and Development, agreed. "There was massive regulatory failure, massive supervisory failure, and massive corporate governance failures," he said.
The World Economic Forum in Davos was full of verbal tongue-lashings for the U.S. from countries such as Russia and China. The world is calling for the U.S. to get its act together. Video courtesy of Reuters.
Some economists here say Europe's model means it will fare better than the U.S. amid the crisis. "I expect the U.S. slowdown to be longer and deeper," said Kenneth Rogoff, a Harvard University economics professor and former chief economist of the International Monetary Fund. "Europe's financial system is not as compromised and it already had heavy social insurance. So I think the U.S. has more and deeper structural adjustments to make."
Some contend the Continent's extra social padding hasn't necessarily been a drag on growth. From 1998 to 2008, gross domestic product growth in the euro currency zone averaged 2.2% -- less than the U.S.'s 2.6% and well above Japan's anemic 1.1% showing, according to a recent Goldman Sachs report. When measured on a per-capita basis, euro-zone growth outstripped the U.S. over that period, coming in at 1.8% compared with the U.S.'s 1.6%.
"The U.S. has higher highs, but it also has lower lows," said Erik Nielsen, Goldman Sachs' chief European economist in London, noting that the ups and downs of the U.S. housing market over the decade damped America's overall growth rate. "The euro zone still comes out ahead."
But Thursday's Davos discussions also brought reminders of the Continent's structural vulnerabilities. "I don't think everyone wants to take responsibility for everyone else's problems," Swedish Prime Minister Fredrik Reinfeldt said during a panel on European economic governance. "In that sense, we are still nation-states ... and I think that will not change in the short term."
—Daniel Hertzberg contributed to this article.
Write to Joellen Perry at joellen.perry@wsj.com
Printed in The Wall Street Journal, page A6
________________________________
FEBRUARY 2, 2009
Firms Receiving U.S. Aid Face Pay Curbs
By DEBORAH SOLOMON
WASHINGTON -- The Obama administration, seeking to improve public perception of the $700 billion financial rescue, is expected to announce this week tougher executive-compensation restrictions for some firms that get government aid.
Officials also are considering splitting off the Troubled Asset Relief Program from the Treasury and creating an independent entity, according to government officials. Some within the department think such a move could help improve the perception of the bailout, which has come under heavy criticism for being too secretive and not imposing enough rules and conditions on banks that get government aid.
The administration is working on a broad plan to bolster the financial sector and is expected to soon detail its efforts to help weakened financial firms. Treasury Secretary Timothy Geithner, possibly later this week, is expected to give specifics of the administration's plan, including an effort to help homeowners in danger of foreclosure.
Wall Street has been anticipating the new administration's plans, including expecting President Barack Obama to ask Congress for more money. Many economists no longer expect the second half of the $700 billion, which Congress recently approved, to be enough to fix the ailing financial sector.
Before it announces those plans, the administration is trying to lay the groundwork with politicians and the public, who have grown weary of bailing out banks. The administration, realizing the public is expecting quick action, seems poised to announce some of its efforts in stages.
Its first move appears aimed at bolstering public support for the financial bailout by applying tougher rules to banks that get a substantial amount of money. Chief executives of firms that receive "exceptional" aid will be banned from receiving any severance payments and they, along with the top 50 executives, will see their bonus pools shrink by about 40% from 2007 levels.
It won't be easy to upend a compensation system that is woven into the fabric of the U.S. financial system. Many Wall Street employees work under employment contracts that can't be unwound.
Defenders of the old system said it still is useful despite blowups that have made Wall Street look disconnected from political and financial reality. If the government imposes caps or other limits on compensation, some bankers worry that the most talented people will flee to firms that are less regulated.
The Obama administration hasn't detailed what qualifies as "exceptional" aid, but government officials say the rules will apply in cases in which the U.S. provides significant dollars, along the lines of what has been given to American International Group Inc., Citigroup Inc. and the Detroit auto makers.
Last week, Mr. Obama called it "shameful" that Wall Street firms awarded $20 billion of bonuses even as Washington was spending taxpayer dollars to help bail them out of trouble.
Still, the administration isn't expected to attach any new pay curbs to healthy banks that get money through the $250 billion Capital Purchase Program. That program, which has invested nearly $200 billion in more than 300 financial institutions, imposes some modest pay restrictions, including a ban on so-called golden-parachute severance payments for top executives.
The administration hasn't finalized its plans for the heart of the bank rescue. It is considering a series of steps that would inject money into financial firms while relieving them of their toxic assets. The administration is considering a two-pronged approach that would further help banks by having the government buy a portion of their bad assets while offering guarantees against future losses on some of the remainder.
The administration continues to wrestle with the details, including what the government should pay for the troubled assets that are hampering the balance sheets of financial institutions. Mr. Geithner has assigned teams of staff to explore alternatives and is expected to present a plan to Mr. Obama shortly.
—Aaron Lucchetti and Matthew Karnitschnig contributed to this article.
Write to Deborah Solomon at deborah.solomon@wsj.com
Can everyone attend a university for free? Of course not. Who gets to go to college? The government will decide for you. Take a look at the current system in Germany and you’ll get a glimpse into our future. You must take tests that determine whether or not you can attend college, technical school – etc. You might want to work a little harder and attend a university – but I’m afraid that will not be your decision. All of the rhetoric in the article below sounds good – but we’re not told the whole story – we never are. Does a system that takes from those who earn a living and then disperses your money as it chooses sound like an economic system that is good for you (I won’t go into a discussion here on our current tax system in America)? Does this sound like a system that rewards hard work and entrepreneurship? Would you be willing to take a few risks and work hard to start a business or develop a product if you knew that the government would take most of your profits from you? Does this sound like a free economic system? It’s not even close. I don’t know about you – but I don’t feel like our current leaders (government) have any clue how to manage our nation’s finances, our nation’s military, our nation’s problems – our nation’s future. We are being led by people who are only concerned about their own welfare – mere puppets in this game. Why would I feel better about giving these same people – more power and authority?
If you stop and think about it – higher taxes and loss of freedoms are the end result of the “European Model”? Do we really want government controlling everything? You and I don’t – but somebody obviously does and they’re making it happen very deceptively. If you remember – Hillary Clinton tried to implement ‘universal healthcare’ in America during the late 1990’s. The American people rejected her proposal – so what’s happening now? If you’ve really been paying attention, you’ll notice that someone is re-packaging socialism in the form of economic ‘stimulus’ packages and is trying to sell it to us as the only way to overcome the global economic recession. Governments around the world are nationalizing banks, buying assets – basically getting their tentacles into everything – all under the guise of ‘bailing out’ the financial system. If you think this doesn’t come with a loss of freedom, I’ve attached a 2nd article below relating to government ‘restrictions’ for companies who take bailout money. As I’ve mentioned before – the global elite behind all of this are very intelligent and very patient. They’ve waited hundreds of years to get to this point – they have no problem waiting a little longer until we all finally buy into the socialism plan.
Barack Obama’s task in this grand game is to move us closer to the European model – which will eventually morph into full blown socialism the world over. Don’t believe it? Get ready to see what all of the economic ‘stimulus’ packages will get us – more government ownership of assets, nationalization of industries – and all of the ‘stimulus’ in the world will not prevent our financial collapse. Imagine what’s going to happen when the next domino falls – when governments around the world finally go bankrupt. Once the people behind this system bankrupt the world – we’ll then see the true face of the beast.
I recommend you read ‘Atlas Shrugged’ (a novel by Ayn Rand) if you want to know what socialism does to a society. You might get ‘universal healthcare’ – but it will come at a very steep price.
jg – February 2, 2009
_________________________
JANUARY 30, 2009
Europe Basks as U.S. Style Capitalism Draws Fire
By JOELLEN PERRY
Wall St. Journal
DAVOS, Switzerland -- A day after Chinese and Russian leaders blamed a free-wheeling U.S. financial system as the source of the global economic crisis, Europeans here are taking comfort in what they see as their kinder, gentler version of capitalism.
José Manuel Barroso, opening European markets remotely on Thursday from Davos, said the U.S. is looking to the European model of capitalism.
"In Europe, we have a social-market economy," European Commission President José Manuel Barroso said in an interview. "We have universal health care, a more generous system of social security, a general principle of almost free university education. And we want to keep that."
For years, Europe's more-regulated model of capitalism has been maligned by many economists as a study in second-rate market economics. Now, as world leaders seek a way out of the crisis -- and aim to avoid repeating it -- U.S.-style capitalism is under siege and the European model is getting another look.
America may be stealing a glance across the Atlantic. In Washington, the Senate is gearing up for a debate next week on its version of the $819 billion economic stimulus package the House passed Wednesday.
"President Obama," Mr. Barroso said, "is moving toward a European-style model." Mr. Barroso, who runs the executive arm of the 27-nation European Union, cited the new administration's aim to boost health-care coverage, access to student loans and public-infrastructure spending as examples of the U.S's emerging European tilt.
After Wednesday's suggestions by Chinese and Russian leaders that the world might benefit from less reliance on the dollar, many here at the World Economic Forum said the crisis had dented the U.S.'s reputation. But few predicted the crisis would cost the greenback its status as the world's haven and reserve currency of choice -- largely because neither the euro nor the yen is seen as a viable alternative.
Others at the gathering spread the blame beyond U.S. borders. "Mistakes were made on both sides of the Atlantic. It's true, the crisis originated in the U.S. But it's also true that European financial markets had major exposure," Mr. Barroso said. "I don't want to get into a blame game."
Angel Gurría, secretary-general of the Organization for Economic Cooperation and Development, agreed. "There was massive regulatory failure, massive supervisory failure, and massive corporate governance failures," he said.
The World Economic Forum in Davos was full of verbal tongue-lashings for the U.S. from countries such as Russia and China. The world is calling for the U.S. to get its act together. Video courtesy of Reuters.
Some economists here say Europe's model means it will fare better than the U.S. amid the crisis. "I expect the U.S. slowdown to be longer and deeper," said Kenneth Rogoff, a Harvard University economics professor and former chief economist of the International Monetary Fund. "Europe's financial system is not as compromised and it already had heavy social insurance. So I think the U.S. has more and deeper structural adjustments to make."
Some contend the Continent's extra social padding hasn't necessarily been a drag on growth. From 1998 to 2008, gross domestic product growth in the euro currency zone averaged 2.2% -- less than the U.S.'s 2.6% and well above Japan's anemic 1.1% showing, according to a recent Goldman Sachs report. When measured on a per-capita basis, euro-zone growth outstripped the U.S. over that period, coming in at 1.8% compared with the U.S.'s 1.6%.
"The U.S. has higher highs, but it also has lower lows," said Erik Nielsen, Goldman Sachs' chief European economist in London, noting that the ups and downs of the U.S. housing market over the decade damped America's overall growth rate. "The euro zone still comes out ahead."
But Thursday's Davos discussions also brought reminders of the Continent's structural vulnerabilities. "I don't think everyone wants to take responsibility for everyone else's problems," Swedish Prime Minister Fredrik Reinfeldt said during a panel on European economic governance. "In that sense, we are still nation-states ... and I think that will not change in the short term."
—Daniel Hertzberg contributed to this article.
Write to Joellen Perry at joellen.perry@wsj.com
Printed in The Wall Street Journal, page A6
________________________________
FEBRUARY 2, 2009
Firms Receiving U.S. Aid Face Pay Curbs
By DEBORAH SOLOMON
WASHINGTON -- The Obama administration, seeking to improve public perception of the $700 billion financial rescue, is expected to announce this week tougher executive-compensation restrictions for some firms that get government aid.
Officials also are considering splitting off the Troubled Asset Relief Program from the Treasury and creating an independent entity, according to government officials. Some within the department think such a move could help improve the perception of the bailout, which has come under heavy criticism for being too secretive and not imposing enough rules and conditions on banks that get government aid.
The administration is working on a broad plan to bolster the financial sector and is expected to soon detail its efforts to help weakened financial firms. Treasury Secretary Timothy Geithner, possibly later this week, is expected to give specifics of the administration's plan, including an effort to help homeowners in danger of foreclosure.
Wall Street has been anticipating the new administration's plans, including expecting President Barack Obama to ask Congress for more money. Many economists no longer expect the second half of the $700 billion, which Congress recently approved, to be enough to fix the ailing financial sector.
Before it announces those plans, the administration is trying to lay the groundwork with politicians and the public, who have grown weary of bailing out banks. The administration, realizing the public is expecting quick action, seems poised to announce some of its efforts in stages.
Its first move appears aimed at bolstering public support for the financial bailout by applying tougher rules to banks that get a substantial amount of money. Chief executives of firms that receive "exceptional" aid will be banned from receiving any severance payments and they, along with the top 50 executives, will see their bonus pools shrink by about 40% from 2007 levels.
It won't be easy to upend a compensation system that is woven into the fabric of the U.S. financial system. Many Wall Street employees work under employment contracts that can't be unwound.
Defenders of the old system said it still is useful despite blowups that have made Wall Street look disconnected from political and financial reality. If the government imposes caps or other limits on compensation, some bankers worry that the most talented people will flee to firms that are less regulated.
The Obama administration hasn't detailed what qualifies as "exceptional" aid, but government officials say the rules will apply in cases in which the U.S. provides significant dollars, along the lines of what has been given to American International Group Inc., Citigroup Inc. and the Detroit auto makers.
Last week, Mr. Obama called it "shameful" that Wall Street firms awarded $20 billion of bonuses even as Washington was spending taxpayer dollars to help bail them out of trouble.
Still, the administration isn't expected to attach any new pay curbs to healthy banks that get money through the $250 billion Capital Purchase Program. That program, which has invested nearly $200 billion in more than 300 financial institutions, imposes some modest pay restrictions, including a ban on so-called golden-parachute severance payments for top executives.
The administration hasn't finalized its plans for the heart of the bank rescue. It is considering a series of steps that would inject money into financial firms while relieving them of their toxic assets. The administration is considering a two-pronged approach that would further help banks by having the government buy a portion of their bad assets while offering guarantees against future losses on some of the remainder.
The administration continues to wrestle with the details, including what the government should pay for the troubled assets that are hampering the balance sheets of financial institutions. Mr. Geithner has assigned teams of staff to explore alternatives and is expected to present a plan to Mr. Obama shortly.
—Aaron Lucchetti and Matthew Karnitschnig contributed to this article.
Write to Deborah Solomon at deborah.solomon@wsj.com
Australian Prime Minister - Time for a New World Order
The assault on free markets continues. Here we see the Australian Prime Minister issuing the same rhetoric as other world leaders – including Barack Obama. You’ll notice that the message below contains similar language as we’ve heard from other leaders:
“Kevin Rudd…….called for a new era of "social capitalism" in which government intervention and regulation feature heavily”
"The time has come, off the back of the current crisis, to proclaim that the great neo-liberal experiment of the past 30 years has failed….”
“…it now falls to social democracy to prevent liberal capitalism from cannibalising itself.”
“Mr. Rudd writes in The Monthly that just as Franklin Roosevelt rebuilt US capitalism after the Great Depression, modern-day "social democrats" such as himself and the US President, Barack Obama, must do the same again.”
“….he argues that "minor tweakings of long-established orthodoxies will not do" and advocates a new system.”
“He [Mr. Rudd] advocates tighter regulation and policing of global finances”
This quote sounds like it came straight out of Atlas Shrugged:
"[Mr. Rudd advocates] a system of open markets, unambiguously regulated by an activist state, and one in which the state intervenes to reduce the greater inequalities that competitive markets will inevitably generate.”
It’s easy to believe all of this economic rhetoric when we hear world leaders constantly telling us what the problem is and how to solve it. The rhetoric always follows the same line of reasoning and consists of some version of the following language:
1. It appears that the free market system (capitalism) is seriously flawed
2. Greed has compounded the problem (true enough)
3. The current crisis is a direct result of #1 and #2 above (let’s ignore the truth)
4. Anyone who advocates free markets is attacked (see article below)
5. At a minimum – we need more government intervention and regulation
6. #5 will probably not be good enough – so we’ll need a new, heavily regulated ‘system’.
7. The ‘system’ in #6 is usually described as a ‘New World Order’
8. The ‘State’ must be heavily involved in creating and regulating this ‘New World Order’
As we’ve learned previously, what’s really causing the problems we’re experiencing today? A monetary system that is based on exponential debt and money growth. It is the world’s monetary system (I say ‘world’ because we’re all on the same underlying system) that is causing the current economic ‘crisis’. It’s not subprime loans or subprime borrowers. It’s not ‘interest only’ or ‘option-arm’ loans. It’s not a ‘liquidity’ problem. It’s not an ‘interest rate’ problem. It’s not a ‘financial derivatives’ problem. All of these things are symptoms of an underlying disease that no one in power wants to discuss.
The hard truth that no one wants to admit to or research is this – the current economic crisis is deliberate and is being used to promote a new ‘order’ that is built on socialism. We hear it promoted from leaders all over the world almost daily now – yet we don’t want to face the truth – so we stick our heads in the sand and pretend that the ‘stimulus’ packages will somehow save us from economic oblivion. The ‘stimulus’ packages will not save us – but they will certainly contribute to the world’s bankruptcy as governments the world over eventually default under the weight of massive debt.
If you haven’t read the Bible in awhile – I recommend that you pick it up and start learning the truth. The prophecies of Revelation are now screaming at us – and very few are paying any attention.
jg – February 3, 2009
________________
Time for a New World Order: PM
Phillip Coorey Chief Political Correspondent
January 31, 2009
KEVIN RUDD has denounced the unfettered capitalism of the past three decades and called for a new era of "social capitalism" in which government intervention and regulation feature heavily.
In an essay to be published next week, the Prime Minister is scathing of the neo-liberals who began refashioning the market system in the 1970s, and ultimately brought about the global financial crisis.
"The time has come, off the back of the current crisis, to proclaim that the great neo-liberal experiment of the past 30 years has failed, that the emperor has no clothes," he writes of those who placed their faith in the corrective powers of the market.
"Neo-liberalism and the free-market fundamentalism it has produced has been revealed as little more than personal greed dressed up as an economic philosophy. And, ironically, it now falls to social democracy to prevent liberal capitalism from cannibalising itself."
Mr. Rudd writes in The Monthly that just as Franklin Roosevelt rebuilt US capitalism after the Great Depression, modern-day "social democrats" such as himself and the US President, Barack Obama, must do the same again. But he argues that "minor tweakings of long-established orthodoxies will not do" and advocates a new system that reaches beyond the 70-year-old interventionist principles of John Maynard Keynes.
"A system of open markets, unambiguously regulated by an activist state, and one in which the state intervenes to reduce the greater inequalities that competitive markets will inevitably generate," he writes.
He urges "a new contract for the future that eschews the extremism of both the left and right".
He mocks neo-liberals "who now find themselves tied in ideological knots in being forced to rely on the state they fundamentally despise to save financial markets from collapse".
He advocates tighter regulation and policing of global finances, and identifies the immediate challenge as restoring global growth by 3 per cent of gross domestic product, the amount it is expected to fall in 2009. Next week, as Parliament resumes, his Government will chip in with a second economic stimulus package.
Mr Rudd commits to keeping budgets in surplus "over the cycle", meaning deficits should be temporary. In a further sign the Government is not contemplating additional tax cuts, which would deliver a permanent hit to revenue, he stresses that stimulus measures have to be paid for when the economy recovers.
Mr Rudd singles out Thatcherism as a culprit, as well as the former Howard government. His essay implicitly attacks the Opposition Leader, Malcolm Turnbull, who this week urged the free market be allowed to dictate commercial property values as he slammed a Government measure to prop them up.
Mr Rudd's essay follows the blast Mr Obama gave Wall Street bankers yesterday for awarding themselves $28 billion in bonuses last year at the same time as they were being bailed out by taxpayers.
In a message to Mr Obama and the US Congress, Mr Rudd counselled against erecting trade barriers. "Soft or hard, protectionism is a sure-fire way of turning recession into depression as it exacerbates the collapse in global demand."
The message was reinforced in Davos yesterday when the Trade Minister, Simon Crean, described the "buy American" provisions of the new Obama stimulus package as "very worrying". "On the face of it, it looks like it contravenes commitments made to the World Trade Organisation," he said.
with Paola Totaro
Friday, September 15, 2006
Atlas is Shrugging - The Hiring Incentives to Restore Employment Act (HIRE)
Atlas is shrugging.
The ‘Hiring Incentives to Restore Employment Act’ or ‘HIRE’ – sounds like something straight out of Atlas Shrugged.
The assault on free markets continues – with little (or any) fanfare from mainstream media.
You’ll notice that it doesn’t matter which party is running our country – the same secret agenda continues to move forward.
From the article below:
“And so the noose on capital mobility tightens, as very soon the only option US citizens have when it comes to investing their money, will be in government mandated retirement annuities, which will likely be the next step in the capital control escalation, which will culminate with every single free dollar required to be reinvested into the US, likely in the form of purchasing US Treasury emissions such as Treasuries, TIPS and other worthless pieces of paper.
Congratulations bankrupt America - you are now one step closer to a thoroughly non-free market.”
Will we wake-up in time?
jg – March 28, 2010
___________________________________
It's Official - America Now Enforces Capital Controls
Submitted by Tyler Durden on 03/28/2010 14:27 -0500
www.zerohedge.com
It couldn't have happened to a nicer country. On March 18, with very little pomp and circumstance, president Obama passed the most recent stimulus act, the $17.5 billion Hiring Incentives to Restore Employment Act (H.R. 2487), brilliantly goalseeked by the administration's millionaire cronies to abbreviate as HIRE. As it was merely the latest in an endless stream of acts destined to expand the government payroll to infinity, nobody cared about it, or actually read it. Because if anyone had read it, the act would have been known as the Capital Controls Act, as one of the lesser, but infinitely more important provisions on page 27, known as Offset Provisions - Subtitle A—Foreign Account Tax Compliance, institutes just that. In brief, the Provision requires that foreign banks not only withhold 30% of all outgoing capital flows (likely remitting the collection promptly back to the US Treasury) but also disclose the full details of non-exempt account-holders to the US and the IRS. And should this provision be deemed illegal by a given foreign nation's domestic laws (think Switzerland), well the foreign financial institution is required to close the account. It's the law. If you thought you could move your capital to the non-sequestration safety of non-US financial institutions, sorry you lose - the law now says so. Capital Controls are now here and are now fully enforced by the law.
Let's parse through the just passed law, which has been mentioned by exactly zero mainstream media outlets.
Here is the default new state of capital outflows:
(a) IN GENERAL.—The Internal Revenue Code of 1986 is amended by inserting after chapter 3 the following new chapter:
‘‘CHAPTER 4—TAXES TO ENFORCE REPORTING ON CERTAIN FOREIGN ACCOUNTS
‘‘Sec. 1471. Withholdable payments to foreign financial institutions.
‘‘Sec. 1472. Withholdable payments to other foreign entities.
‘‘Sec. 1473. Definitions.
‘‘Sec. 1474. Special rules.
‘‘SEC. 1471. WITHHOLDABLE PAYMENTS TO FOREIGN FINANCIAL INSTITUTIONS.
‘‘(a) IN GENERAL.—In the case of any withholdable payment to a foreign financial institution which does not meet the requirements of subsection (b), the withholding agent with respect to such payment shall deduct and withhold from such payment a tax equal to 30 percent of the amount of such payment.
Clarifying who this law applies to:
‘‘(C) in the case of any United States account maintained by such institution, to report on an annual basis the information described in subsection (c) with respect to such account,
‘‘(D) to deduct and withhold a tax equal to 30 percent of—
‘‘(i) any passthru payment which is made by such institution to a recalcitrant account holder or another foreign financial institution which does not meet the requirements of this subsection, and
‘‘(ii) in the case of any passthru payment which is made by such institution to a foreign financial institution which has in effect an election under paragraph (3) with respect to such payment, so much of such payment as is allocable to accounts held by recalcitrant account holders or foreign financial institutions which do not meet the requirements of this subsection.
What happens if this brand new law impinges and/or is in blatant contradiction with existing foreign laws?
‘‘(F) in any case in which any foreign law would (but for a waiver described in clause (i)) prevent the reporting of any information referred to in this subsection or subsection (c) with respect to any United States account maintained by such institution—
‘‘(i) to attempt to obtain a valid and effective waiver of such law from each holder of such account, and
‘‘(ii) if a waiver described in clause (i) is not obtained from each such holder within a reasonable period of time, to close such account.
Not only are capital flows now to be overseen and controlled by the government and the IRS, but holders of foreign accounts can kiss any semblance of privacy goodbye:
‘‘(c) INFORMATION REQUIRED TO BE REPORTED ON UNITED STATES ACCOUNTS.—
‘‘(1) IN GENERAL.—The agreement described in subsection (b) shall require the foreign financial institution to report the following with respect to each United States account maintained by such institution:
‘‘(A) The name, address, and TIN of each account holder which is a specified United States person and, in the case of any account holder which is a United States owned foreign entity, the name, address, and TIN of each substantial United States owner of such entity.
‘‘(B) The account number.
‘‘(C) The account balance or value (determined at such time and in such manner as the Secretary may provide).
‘‘(D) Except to the extent provided by the Secretary, the gross receipts and gross withdrawals or payments from the account (determined for such period and in such manner as the Secretary may provide).
The only exemption to the rule? If you hold the meager sum of $50,000 or less in foreign accounts.
‘‘(B) EXCEPTION FOR CERTAIN ACCOUNTS HELD BY INDIVIDUALS.—Unless the foreign financial institution elects to not have this subparagraph apply, such term shall not include any depository account maintained by such financial institution if—
‘‘(i) each holder of such account is a natural person,and
‘‘(ii) with respect to each holder of such account, the aggregate value of all depository accounts held (in whole or in part) by such holder and maintained by the same financial institution which maintains such account does not exceed $50,000.
And, while we are on the topic of definitions, here is how "financial account" is defined by the US:
‘‘(2) FINANCIAL ACCOUNT.—Except as otherwise provided by the Secretary, the term ‘financial account’ means, with respect to any financial institution—
‘‘(A) any depository account maintained by such financial institution,
‘‘(B) any custodial account maintained by such financial institution, and
‘‘(C) any equity or debt interest in such financial institution (other than interests which are regularly traded on an established securities market). Any equity or debt interest which constitutes a financial account under subparagraph (C) with respect to any financial institution shall be treated for purposes of this section as maintained by such financial institution.
In case you find you do not like to be subject to capital controls, you are now deemed a "Recalcitrant Account Holder."
‘‘(6) RECALCITRANT ACCOUNT HOLDER.—The term ‘recalcitrant account holder’ means any account holder which—
‘‘(A) fails to comply with reasonable requests for the information referred to in subsection (b)(1)(A) or (c)(1)(A),
or ‘‘(B) fails to provide a waiver described in subsection (b)(1)(F) upon request.
But guess what - if you are a foreign Central Bank, or if the Secretary determined that you are "a low risk for tax evasion" (unlike the Secretary himself) you still can do whatever the hell you want:
‘‘(f) EXCEPTION FOR CERTAIN PAYMENTS.—Subsection (a) shall not apply to any payment to the extent that the beneficial owner
of such payment is—
‘‘(1) any foreign government, any political subdivision of a foreign government, or any wholly owned agency or instrumentality of any one or more of the foregoing,
‘‘(2) any international organization or any wholly owned agency or instrumentality thereof,
‘‘(3) any foreign central bank of issue, or
‘‘(4) any other class of persons identified by the Secretary for purposes of this subsection as posing a low risk of tax evasion.
One thing we are confused about is whether this law is a preamble, or already incorporates, the flow of non-cash assets, such as commodities, and, thus, gold. If an account transfers, via physical or paper delivery, gold from a domestic account to a foreign one, we are not sure if the language deems this a 30% taxable transaction, although preliminary discussions with lawyers indicates this is likely the case.
And so the noose on capital mobility tightens, as very soon the only option US citizens have when it comes to investing their money, will be in government mandated retirement annuities, which will likely be the next step in the capital control escalation, which will culminate with every single free dollar required to be reinvested into the US, likely in the form of purchasing US Treasury emissions such as Treasuries, TIPS and other worthless pieces of paper.
Congratulations bankrupt America - you are now one step closer to a thoroughly non-free market.
The ‘Hiring Incentives to Restore Employment Act’ or ‘HIRE’ – sounds like something straight out of Atlas Shrugged.
The assault on free markets continues – with little (or any) fanfare from mainstream media.
You’ll notice that it doesn’t matter which party is running our country – the same secret agenda continues to move forward.
From the article below:
“And so the noose on capital mobility tightens, as very soon the only option US citizens have when it comes to investing their money, will be in government mandated retirement annuities, which will likely be the next step in the capital control escalation, which will culminate with every single free dollar required to be reinvested into the US, likely in the form of purchasing US Treasury emissions such as Treasuries, TIPS and other worthless pieces of paper.
Congratulations bankrupt America - you are now one step closer to a thoroughly non-free market.”
Will we wake-up in time?
jg – March 28, 2010
___________________________________
It's Official - America Now Enforces Capital Controls
Submitted by Tyler Durden on 03/28/2010 14:27 -0500
www.zerohedge.com
It couldn't have happened to a nicer country. On March 18, with very little pomp and circumstance, president Obama passed the most recent stimulus act, the $17.5 billion Hiring Incentives to Restore Employment Act (H.R. 2487), brilliantly goalseeked by the administration's millionaire cronies to abbreviate as HIRE. As it was merely the latest in an endless stream of acts destined to expand the government payroll to infinity, nobody cared about it, or actually read it. Because if anyone had read it, the act would have been known as the Capital Controls Act, as one of the lesser, but infinitely more important provisions on page 27, known as Offset Provisions - Subtitle A—Foreign Account Tax Compliance, institutes just that. In brief, the Provision requires that foreign banks not only withhold 30% of all outgoing capital flows (likely remitting the collection promptly back to the US Treasury) but also disclose the full details of non-exempt account-holders to the US and the IRS. And should this provision be deemed illegal by a given foreign nation's domestic laws (think Switzerland), well the foreign financial institution is required to close the account. It's the law. If you thought you could move your capital to the non-sequestration safety of non-US financial institutions, sorry you lose - the law now says so. Capital Controls are now here and are now fully enforced by the law.
Let's parse through the just passed law, which has been mentioned by exactly zero mainstream media outlets.
Here is the default new state of capital outflows:
(a) IN GENERAL.—The Internal Revenue Code of 1986 is amended by inserting after chapter 3 the following new chapter:
‘‘CHAPTER 4—TAXES TO ENFORCE REPORTING ON CERTAIN FOREIGN ACCOUNTS
‘‘Sec. 1471. Withholdable payments to foreign financial institutions.
‘‘Sec. 1472. Withholdable payments to other foreign entities.
‘‘Sec. 1473. Definitions.
‘‘Sec. 1474. Special rules.
‘‘SEC. 1471. WITHHOLDABLE PAYMENTS TO FOREIGN FINANCIAL INSTITUTIONS.
‘‘(a) IN GENERAL.—In the case of any withholdable payment to a foreign financial institution which does not meet the requirements of subsection (b), the withholding agent with respect to such payment shall deduct and withhold from such payment a tax equal to 30 percent of the amount of such payment.
Clarifying who this law applies to:
‘‘(C) in the case of any United States account maintained by such institution, to report on an annual basis the information described in subsection (c) with respect to such account,
‘‘(D) to deduct and withhold a tax equal to 30 percent of—
‘‘(i) any passthru payment which is made by such institution to a recalcitrant account holder or another foreign financial institution which does not meet the requirements of this subsection, and
‘‘(ii) in the case of any passthru payment which is made by such institution to a foreign financial institution which has in effect an election under paragraph (3) with respect to such payment, so much of such payment as is allocable to accounts held by recalcitrant account holders or foreign financial institutions which do not meet the requirements of this subsection.
What happens if this brand new law impinges and/or is in blatant contradiction with existing foreign laws?
‘‘(F) in any case in which any foreign law would (but for a waiver described in clause (i)) prevent the reporting of any information referred to in this subsection or subsection (c) with respect to any United States account maintained by such institution—
‘‘(i) to attempt to obtain a valid and effective waiver of such law from each holder of such account, and
‘‘(ii) if a waiver described in clause (i) is not obtained from each such holder within a reasonable period of time, to close such account.
Not only are capital flows now to be overseen and controlled by the government and the IRS, but holders of foreign accounts can kiss any semblance of privacy goodbye:
‘‘(c) INFORMATION REQUIRED TO BE REPORTED ON UNITED STATES ACCOUNTS.—
‘‘(1) IN GENERAL.—The agreement described in subsection (b) shall require the foreign financial institution to report the following with respect to each United States account maintained by such institution:
‘‘(A) The name, address, and TIN of each account holder which is a specified United States person and, in the case of any account holder which is a United States owned foreign entity, the name, address, and TIN of each substantial United States owner of such entity.
‘‘(B) The account number.
‘‘(C) The account balance or value (determined at such time and in such manner as the Secretary may provide).
‘‘(D) Except to the extent provided by the Secretary, the gross receipts and gross withdrawals or payments from the account (determined for such period and in such manner as the Secretary may provide).
The only exemption to the rule? If you hold the meager sum of $50,000 or less in foreign accounts.
‘‘(B) EXCEPTION FOR CERTAIN ACCOUNTS HELD BY INDIVIDUALS.—Unless the foreign financial institution elects to not have this subparagraph apply, such term shall not include any depository account maintained by such financial institution if—
‘‘(i) each holder of such account is a natural person,and
‘‘(ii) with respect to each holder of such account, the aggregate value of all depository accounts held (in whole or in part) by such holder and maintained by the same financial institution which maintains such account does not exceed $50,000.
And, while we are on the topic of definitions, here is how "financial account" is defined by the US:
‘‘(2) FINANCIAL ACCOUNT.—Except as otherwise provided by the Secretary, the term ‘financial account’ means, with respect to any financial institution—
‘‘(A) any depository account maintained by such financial institution,
‘‘(B) any custodial account maintained by such financial institution, and
‘‘(C) any equity or debt interest in such financial institution (other than interests which are regularly traded on an established securities market). Any equity or debt interest which constitutes a financial account under subparagraph (C) with respect to any financial institution shall be treated for purposes of this section as maintained by such financial institution.
In case you find you do not like to be subject to capital controls, you are now deemed a "Recalcitrant Account Holder."
‘‘(6) RECALCITRANT ACCOUNT HOLDER.—The term ‘recalcitrant account holder’ means any account holder which—
‘‘(A) fails to comply with reasonable requests for the information referred to in subsection (b)(1)(A) or (c)(1)(A),
or ‘‘(B) fails to provide a waiver described in subsection (b)(1)(F) upon request.
But guess what - if you are a foreign Central Bank, or if the Secretary determined that you are "a low risk for tax evasion" (unlike the Secretary himself) you still can do whatever the hell you want:
‘‘(f) EXCEPTION FOR CERTAIN PAYMENTS.—Subsection (a) shall not apply to any payment to the extent that the beneficial owner
of such payment is—
‘‘(1) any foreign government, any political subdivision of a foreign government, or any wholly owned agency or instrumentality of any one or more of the foregoing,
‘‘(2) any international organization or any wholly owned agency or instrumentality thereof,
‘‘(3) any foreign central bank of issue, or
‘‘(4) any other class of persons identified by the Secretary for purposes of this subsection as posing a low risk of tax evasion.
One thing we are confused about is whether this law is a preamble, or already incorporates, the flow of non-cash assets, such as commodities, and, thus, gold. If an account transfers, via physical or paper delivery, gold from a domestic account to a foreign one, we are not sure if the language deems this a 30% taxable transaction, although preliminary discussions with lawyers indicates this is likely the case.
And so the noose on capital mobility tightens, as very soon the only option US citizens have when it comes to investing their money, will be in government mandated retirement annuities, which will likely be the next step in the capital control escalation, which will culminate with every single free dollar required to be reinvested into the US, likely in the form of purchasing US Treasury emissions such as Treasuries, TIPS and other worthless pieces of paper.
Congratulations bankrupt America - you are now one step closer to a thoroughly non-free market.
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