Offshore News Digest for Week of January 12, 2004

GLOBAL BUSINESS & POLITICS

MINIMIZING POLITICAL RISK -- OFFSHORE

The ideal investment portfolio is designed around a careful evaluation of the economy and interest rates. However, there is another factor you must keep in mind -- one that receives almost no attention in the mainstream media, but which is nevertheless a determinative influence in the investment world: political risk. Nowhere is political risk more pronounced, and less acknowledged, than in the U.S., where investors must consider: (1) Legal risks -- laws such as the USA Patriot Act give the government power to secretly confiscate property without a hearing. (2) Regulatory risks -- government regulations can devastate an industry or adversely affect property rights. (3) Tax risks -- changing the tax treatment of an investment can dramatically affect its value. (4) Monetary risks -- U.S. monetary policy overshadows all investments. We believe monetary risks will have the most immediate impact on investors in 2004.

The most obvious way to minimize political risk to your investments is to diversify your portfolio internationally -- particularly through offshore investment options. Yet many investors are uncertain how to choose offshore investments. Part of the problem is confusion about what it means to invest offshore. A second and greater part comes from a failure to understand how to structure a rational financial plan.

TYCO TO REMAIN IN BERMUDA AFTER BOARD REJECTS REINCORPORATION

Tyco International is to remain headquartered in Bermuda, after the firm’s board rejected a proposal to reincorporate in the United States as too costly.

ELEVATING BAHAMIANS -- A POLITICIAN TELLS THEM WHAT’S GOOD FOR THEM

Ultimately, the economy needs to grow constantly and generate profits, which means that the job of the state or society must be to redistribute wealth for the common good. Taxation reform is one of the means of equitable redistribution of wealth but that is not automatic. Efficiency has to be the backbone of that task. Most importantly however, we need a new Bahamian, one who understands the necessity of self-reliance, and self confidence and who prepares to compete and to win based on knowledge, skills and superior performance.

SENATE FINANCE COMMITTEE PROBES ENRON EXECUTIVES’ OFFSHORE ACCOUNTS

The Senate Finance Committee requested last week that the IRS reveal its findings resulting from investigations into alleged concealment of (personal) income by former Enron executives through offshore bank accounts.

NEW MAP PLOTS SWISS POLITICAL LANDSCAPE

In their Atlas of the Political Landscape, Michael Hermann and Heiri Leuthold skilfully use a metaphor of cartography to give a picture of the political positions and attitudes of the Swiss people. The points of the compass which emerge from the study conducted by these two researchers from the Department of Geography at the University of Zurich are somewhat unconventional: West represents the political Left, East the Right; North corresponds to liberalism, South to conservatism.

In defining the political geography of Switzerland, Hermann and Leuthold based their work on data derived from the 184 federal referenda held between 1982 and 2002. The two academics say the results of these referenda should not be seen merely as political decisions, but as valuable surveys of public opinion: an average of two million people vote on the issues concerned, providing a broad-based, anonymous and representative sample.

SWISS PREPARE TO RETURN SADDAM’S LOOT

Switzerland expects to hand over to the Iraqi authorities within the next few months assets linked to the former dictator, Saddam Hussein. The funds were frozen last year after the United Nations imposed further sanctions on the Iraqi government. Among the assets frozen in July were those belonging to the 55 most-wanted members of Saddam’s regime and their families.

In November the Swiss authorities also blocked bank accounts belonging to the Iraqi Central Bank, Iraq Airways, the Iraqi Reinsurance Company and two other banking institutions. Othmar Wyss, head of export and sanction control at the State Secretariat for Economic Affairs, said that only a few million Swiss francs had been blocked, mostly belonging to Iraqi banks.

Swiss banks see rising profits despite regulation.

Despite the cost of new rules to combat money-laundering, Swiss private bankers said they expect rising financial markets to buoy profits by 15-20% in 2004 after a flat 2003. The sector expected net new money inflows of 3-4% this year that would, when coupled with rising market values, boost the sector’s assets under management by around 10 percent. Profits in the sector could grow 15-20%, Ivan Pictet, partner at Pictet & Cie, said. ictet expected consolidation in the sector to continue at the same pace as in the rest of the banking world.

Swiss banks say new dirty money rules will not work.

New Swiss rules to fight money-laundering will prove costly and ineffective at preventing corporate fraud and making it harder to fund terrorism, Swiss private bankers said. “Soon it should become clear that the current strategy to combat terrorism is not working. The crisis, which hopefully won’t become a catastrophe, is coming soon,” said Konrad Hummler, managing director and partner at Wegelin & Co. “Under the banner, War on Terror, huge data banks will soon hold files labelled ‘terror suspect’ on every single prankster who ever put a firecracker in a letter box,” Hummler said. “The question is whether the world becomes a safer place by using more control mechanisms. I think not.”

PARMALAT SCANDAL HAS GLOBAL TENTACLES

Official Swiss documents indicate Switzerland’s secret banking laws may have been used to hide debt for the bankrupt global dairy company, Parmalat. Italian magistrates probing Parmalat have identified eight offshore companies linked to the Tanzi family. Calisto Tanzi, the founder of Parmalat who is under arrest in a Milan jail, has admitted siphoning off more than €500 million into companies controlled by his private family interests.

Although small in relation to the alleged multibillion-euro fraud at Parmalat, transfers among Tanzi-controlled companies could help prosecutors figure out who within the Parmalat empire may have enriched themselves at the publicly traded company’s expense. This money trail also provides insight into the web of holdings set up by the Tanzi family. Yet sorting through the myriad transactions in places such as Luxembourg, Malta and the Cayman Islands poses yet another difficulty for investigators trying to understand Parmalat’s labyrinthine financial structure.

A Cayman Islands government spokeswoman announced that an investigation into local subsidiaries of fallen Italian food group Parmalat was continuing, and had so far uncovered no evidence of crimes committed in the Caribbean tax haven.

U.S. PASSPORT RULES THREATEN TRADE WITH U.K.

THE CBI in Washington has warned that new passport requirements for entering the US and other travel restrictions may harm trade between the two countries, with British travelers facing disruption for at least two years. The travel hurdles stem from Washington’s demand that, from 26 October, all visitors must have biometric passports or lose visa waiver privileges. But Whitehall insiders say the British Government is years away from providing the passports.

“A few years ago, doing business in the US was a no-brainer for the British. Now, they are having to weigh up the options to see if they really want to do business here,” said a CBI spokesman.

For Britons, trip to U.S. will get tougher.

Many Britons, when thinking of the United States, now conjure images not only of the neon of New York or the majesty of the Statue of Liberty or the marvel of the Golden Gate Bridge, but also of a country armed to the teeth against large, undefined threats. America, to them, is the land where freedoms have been curtailed as never before, a country with people once generalized as affable but hard-working, but now considered almost reclusive because of the security measures -- people who spend an inordinate amount of energy on their idea of self-preservation. It is not hard to understand why Britons feel this way.

Travelers from Britain, the closest ally of the United States, soon will no longer be the welcome far-away neighbors invited to drop by as they wish. Beginning in October, thousands of Britons will be required to travel to the U.S. Embassy in London, submit to an interview about their plans and background and then pay more than $100 for a visa, if one is granted. That has not set well with the British news media, and the trans-Atlantic tourism industry fears it could take a beating.

WORRYING ABOUT CHINA

China is the world’s most dynamic economy, and hopes for vigorous global growth in the coming year hinge in part on a continued expansion there. By one estimate, China, while it represents just 3% of world gross domestic product, will account for 10% to 15% of any expansion the global economy will see this year. But China is still a developing country, fraught with social instability and a financial and industrial infrastructure that is often rickety at best.

Can China cope with the challenges? Some analysts see reasons for concern. Recent electrical brownouts raise new questions as to whether China’s energy-hungry manufacturing industries are taxing the ability of China’s power sector to feed them. The government preaches the need for economic reform, but actual reform, especially in the financial system, is slow to materialize. How much should Western governments and investors worry? Here are some key questions and answers.

Foreign investors express concerns over new Chinese antitrust agency.

The creation of a new antitrust agency in China after more than 10 years of discussion has raised concerns amongst existing and potential foreign investors. “For companies that want to merge or acquire Chinese companies, you could have competitors getting nervous and putting pressure on the government to hold antitrust hearings,” said a Shanghai lawyer.

TAXES

IRS WILL TRACK FREE FILE TAXPAYERS

The IRS last year launched Free File as a groundbreaking effort by government and software companies to deliver free preparation and e-filing to millions of taxpayers. The IRS this year will flag taxpayers who use its free electronic filing program, a change that has touched off a privacy firestorm. Industry leader Intuit says it simply will not comply with an IRS directive to identify by electronic code free e-filers who use its TurboTax software. And TaxBrain, which last year offered free e-filing to taxpayers older than 50, will withdraw from the IRS program. “Taxpayers should not have their records flagged and segregated simply because they choose to use the IRS Free File program,” said Leroy Petz, whose company publishes the TaxBrain software.

The IRS insists it is seeking routine information that will help it expand electronic filing. Petz and others in the tax software industry view it as unnecessary government intrusion that could lead to selective tax enforcement. The disagreement threatens to impede the IRS’ effort to wean taxpayers from cumbersome paper tax returns. The agency is working under a congressional mandate to achieve 80% e-filing in 2007.

CANADIAN PM’S HAVEN IN BARBADOS LEGAL BUT STILL QUESTIONABLE

Prime Minister Paul Martin remains more politically vulnerable north of the border than most people realize. That is because he has paid dramatically lower taxes for years than have other Canadians. In fact, the PM should be called the “two-per-cent man” because his sizeable steamship company pays only 2% corporate income taxes, thanks to a tax privilege he perpetuated as finance minister. Meanwhile, large domestic Canadian corporations pay 24% federal corporate income taxes plus between 12.5% and 17% in provincial taxes for a total of between 36.5% and 41%, according to government documents. Until laws change, Canadians and their family empires have every right to go offshore to avoid income taxes. However, running for, much less holding, political office is another question.

BAHAMAS MINISTRY OF FINANCE SAYS TIEA NOT ENFORCEABLE

The recently passed Tax Information Exchange Agreement legislation has been described as “another nail in the coffin of The Bahamas” as an offshore financial center for Americans, by one offshore newsletter. “It makes one wonder if The Bahamas are still a sovereign nation. Or are they just an offshore territory of the United States IRS colonial division.”

According to Rowena Bethel, legal advisor in the Ministry of Finance, although people tend to use the word agreement and treaty interchangeably when referring to the TIEA, “It definitely isn’t a treaty.” She said that the TIEA would fall under the classification of executive agreements that the United States government at times enters into for the purpose of cooperation in certain matters between themselves and other countries. “These agreements are not enforceable as treaties. Treaties are enforceable under the rules of international law... The executive agreement, which is what the TIEA is, is not enforceable under international law.” The misunderstanding underscores the need for the country to implement consistent public relations as a financial jurisdiction.

GIBRALTAR GOVERNMENT PROPOSES TAX INCREASE FOR THE WEALTHY

The government of Gibraltar has revealed that it is proposing to increase the amount of taxation paid by high net worth and “qualifying” individuals. The government has pointed out that it is ten years since the HNWI rules were first introduced and over four years since the qualifying rules were brought in, during which time the minimum levels of taxation have remained unchanged. It believes the infrastructural and regulatory improvements that have taken place since have improved the jurisdiction’s competitiveness, thus justifying the proposed tax increase.

AUSTRALIAN WEALTHY TO FACE TAX HAVEN PROBE

The offshore finances of about 1000 of Australia’s wealthiest citizens are under renewed scrutiny from a reinvigorated Tax Office. It wants to identify assets stashed in tax havens, trusts and foreign bank accounts, particularly in the US. Letters seeking information on offshore assets and accounts were sent to people and their tax agents last month in the first wave of a renewed crackdown.

A 40-strong Tax Office taskforce has access to an unprecedented level of intelligence about offshore movements thanks to closer co-operation with Austrac, the financial intelligence agency, and increased co-operation with domestic and foreign regulators since the September 11 and Bali terrorist attacks. Using new intelligence and improved policing techniques, it hopes to identify how much of the officially estimated $5 billion -- but possibly much more -- that goes overseas each year into tax evasion schemes, tax havens, blind trusts and untraceable foreign accounts.

Australian taxman cashes in on “dobbing”.

Dobbing in your mates for tax evasion might not be the Australian way, but according to the Australian Taxation Office it is proving remarkably popular. Despite new hi-tech weapons deployed to blitz the black economy, the tax office has revealed anonymous tip-offs are contributing to millions of dollars in fines and convictions for tax evaders. Employees, competitors, clients, business advisers and ex-spouses are dobbing in the suspected tax cheats, triggering 28,000 investigations in the tax year 2002-03.

NEW BELGIAN FOREIGN TAX DODGE LAW IS EFFECTIVE, ALONG WITH TEMPORARY AMNESTY

A new law designed to crack down on people who ferret their money away in foreign bank accounts in order to avoid paying tax on it is now effective. Under the new legislation taxpayers registered in Belgium, including expats who pay their taxes in the country, will have a year to declare any money or investments they have in foreign countries.

To do this they will have to fill in a form called a ‘Declaration Liberatoire Unique’ (DLU), which will grant them immunity from prosecution and from fines the tax or social security services could normally impose on them for not declaring earnings. But this amnesty is being accompanied by a stern warning from the Belgian authorities that they will come down very hard indeed on anyone who does not fill in a DLU and is subsequently found to have a foreign stash of money.

“TAX HAVEN” NATIVE AMERICAN TRIBE UNDER INVESTIGATION BY THE FEDS

Federal authorities have been investigating for months why Leon Bear and his tiny Skull Valley Goshutes Indian Band ventured into the international commodities market a few years ago to trade in future prices of Japanese yen. Under a federal court order, IRS lawyers will have an opportunity in February to put the question directly to Bear and others behind Starlike Properties, an LLC owned by the Goshutes and operated by the proprietor of a New York business that devises and sells tax shelters.

A Swiss bank, a shadow company based in Jersey, a Florida financier and a Wyoming lawyer credited with helping the Goshutes leverage their sovereign-nation status into a mainland tax haven all have been ordered to appear in court on February 12 and explain why they ignored a December 2002 IRS summons for documents related to Starlike.

CANADA WILL NOT RAISE TAXES DESPITE SPENDING COMMITTMENTS

Canada’s Finance Minster Ralph Goodale has ruled out the possibility of tax hikes in the near term despite increasing demands on public finances. Although the Canadian government’s finances remain in surplus, the level has been in decline in recent months, and reports suggest that the surplus will narrow to C$300 million this year. Indeed, Prime Minster Paul Martin has pledged to reduce taxes, by promising to retain a $4.4 billion corporate tax cut in spite of his government’s emphasis on increasing public spending to fund improvements in public services.

PARLIAMENT HITS AT INLAND REVENUE MEASURES TO COUNTER TAX FRAUD

The Inland Revenue is doing too little to recover the billions of pounds lost in tax fraud, Parliament’s public spending watchdog said. The Public Accounts Committee also said those contemplating fraud might calculate that the chance of getting caught are minimal. Only 400 serious fraud investigations and 60 prosecutions a year are carried out.

The Revenue is also facing “a growing threat from fraud involving offshore accounts and structure”, the committee said. A new statutory duty might be needed to ensure financial institutions disclose the identity of offshore account holders. Research in the US showed that more than two million US citizens had an offshore account, but only 170,000 had declared them.

8 SURE WAYS TO TEMPT FATE AND THE IRS

Do not be tempted by hucksters claiming they can help vastly reduce your tax burden or show you how to pay no taxes at all. The IRS has cracked down on some of the scams, and, prodded by Congress, it has been getting tougher. Among the recommendations of what to avoid: 1.) Not reporting income from offshore financial accounts; 2.) Using domestic trust schemes to conceal income; and 3.) Claiming personal expenses as business expenses.

5 reasons you really do have to pay the IRS.

When you pull your pen out a couple months from now to pay your federal income taxes, stop and consider this question: Just who says you have to pay income taxes? You are by no means the first one to offer up that query, as the issue has spawned a fair amount of debate in recent years. If you do not think so, check out any of the hundreds of Web sites that question the legality of income tax. Just last year the House of Representatives approved a resolution to outlaw the income tax, but the measure died when the Senate refused to consider it. But, since you asked, here are five good reasons paying your federal income taxes is pretty much a must.

US GOVERNMENT LAUNCHES LARGE SCALE TAX INITIATIVE

The United States Treasury Department announced a raft of legislative proposals to be included in President Bush’s 2005 budget aimed at closing tax loopholes, nullifying tax shelters, and simplifying the taxation system. Meanwhile, IRS Commissioner Mark W. Everson hopes that a new policy of tougher penalties will help to drive home the administration’s zero-tolerance message, which it intends to send out with the glut of new proposals. Included among the listed proposals is a law that would permit private collection agencies to support the IRS’s collection efforts.

Bandits and Loopholes

The Bush administration is not raising taxes, they say, and they point to the tax rates to prove it. Instead, they are merely closing loopholes. The effect is the same, however. Taxes that people did not pay in the past, they will be paying in the future. Call it what you want, but in the history of political economy, this is usually called a tax increase.

The Bush administration came to town impressed that they had the whole of a nation’s wealth at their disposal, and went on a mad spending spree: war, welfare, yippee! Reality caught up to these bandits when the debt and deficit figures began to explode. But rather than blame themselves, they have taken aim at the taxpayers, who they claim are not forking over enough. Loopholes are the cause of the budget calamity, they say. We will know we have a president who cares for the public interest when loopholes are praised and expanded.

FOREIGN TAX CLAIMS IN U.S. ARE DISMISSED

The legislative history of the USA Patriot Act does not show clear intent by Congress to abrogate a rule barring suits in the United States to enforce foreign tax judgments, the 2nd U.S. Circuit Court of Appeals ruled Wednesday. In a case brought by several foreign nations charging major tobacco companies with smuggling or abetting the smuggling of cigarettes, the court upheld the bulk of the rulings made by an Eastern District of New York judge. The 2nd Circuit in 2001 had reaffirmed the validity of the “revenue rule”, the common law principle that the courts of one sovereign will not enforce the final tax judgments or unadjudicated tax claims of other sovereigns.

PRIVACY

FEDS TO DEMAND AIRLINE RECORDS, SCORE RISK FROM EACH PASSENGER

Despite stiff resistance from airlines and privacy advocates, the U.S. government plans to push ahead this year with a vast computerized system to probe the backgrounds of all passengers boarding flights in the United States. After failing to win cooperation in the program’s testing phase, the government will compel airlines and airline reservations companies to hand over all passenger records for scrutiny by U.S. officials. The order could be issued as soon as next month. Under the system, all travelers passing through a U.S. airport will be scored with a number and a color that ranks their perceived threat to the aircraft. Another program will be introduced this year that seeks to speed frequent fliers through security lines in exchange for volunteering personal information to the government.

The new system will involve collecting a traveler’s full name, home address and telephone number, date of birth and travel itinerary. The information will be fed into large databases, such as Lexis-Nexis and Acxiom, that tap public records and commercial computer banks to verify that passengers are who they say they are. Once a passenger is identified, the CAPPS II system will compare that traveler against wanted criminals and suspected terrorists.

A Homeland Security official denied that a proposed airline security system designed to color-code domestic passengers based on their risk of committing acts of terrorism will be merged with another program that fingerprints and photographs visitors to the United States.

US using EU airline data to “test” CAPPS II snoop system.

Airline data on EU citizens is being used by the US Transport Security Administration for “testing” of the controversial CAPPS II (Computer Assisted Passenger Pre-Screening System). This is quite handy for the TSA, given that Congress will not let it use CAPPS II on US citizens yet, but is not quite what we understood from the deal the EU struck with the US last month.

In his list of hard-wrung “concessions” EU Commissioner Frits Bolkestein said that the deal did not cover CAPPS II, but the US at the time said that Brussels had committed to “rapid negotiations” for the inclusion of CAPPS II, and as we noted at the time, “this concession only counts as a concession if the Commission has stopped the US experimenting on foreigners.” Which it turns out it hasn’t.

CANADIANS’ TAX DATA WILL BE AVAILABLE TO U.S. BORDER AGENTS

U.S. officials said an impending merger of Canadian and U.S. immigration and customs databases will help them intercept illegal aliens, criminals and fugitives as well as terrorists. Officials said the measure will give U.S. front-line agents the power to check Canadian residents -- citizens, immigrants, refugees or visitors -- driving into the U.S. at land crossings. They said U.S. officers will have access to Revenue Canada files, which contain tax information on Canadians, including their work records, property owned and investments. That information may lead to unemployed people being refused entry into the U.S., officers said.

SOME RENTAL CARS ARE KEEPING TABS ON THE DRIVERS

Penalties for taking a rental vehicle beyond state lines or national borders are not new. But the way in which a recent rentor’s surcharge was applied was somewhat novel. The rental company presented him with a map showing his exact route outside California as relayed by a tracking device in his car. Car rental companies have come to rely on an emerging technology called telematics -- which combines satellite-based Global Positioning System tracking, wireless communications and vehicle monitoring systems -- to keep tabs on their vehicles. About a quarter of the rental cars in the United States are equipped with tracking technology, analysts estimate. The industry views telematics as a way to enforce its contracts, but some customers regard it, at best, as a means to make more money and, at worst, as an invasion of privacy.

Neil Abrams, an auto rental consultant, said early uses of G.P.S. technology in rental cars, like the Hertz NeverLost system, were intended to help motorists find their way. But recent efforts have quietly focused on catching renters who drive out of state or break speed laws. The car rental industry already has a reputation for high gasoline-refill charges and airport use fees, among other items, and business travelers are concerned that telematics will offer yet another opportunity for companies to impose additional charges. Mr. Abrams says it is not always easy to tell if a car is being monitored, although the fine print of a rental contract should disclose the fact. “It could be anything from an antenna on your rental car to something that’s internal and can’t be seen,” he said.

Donna Williams, a former investment banker, is worried about another potential drawback. “You don’t always want your car rental company knowing where you’re going,” said Ms. Williams, the author of The Business Travel Almanac. “What if you’re doing your due diligence on a transaction, and you’ve rented a car with a tracking device? If your rental company knows who you are, which company you work for, and where you are, it could threaten the whole deal. It could even be used as insider trading information.”

ARE INTERNET FLIGHT BOOKINGS THE NEXT TERROR CASUALTY?

LONDON: Analysts predict a crackdown on Internet air bookings. Changes are already under way and travelers may eventually need to provide fingerprints before buying tickets online, they predict. “I think we are going to be seeing more ID required generally than your simple password for a whole lot of transactions,” said Graham Titterington, analyst for UK-based consultancy Ovum. The Internet has revolutionized the airline business, helping low-fare carriers cut costs and turning travelers into do-it-yourself travel agents. Online booking revenue is forecast to rise to over 11% of the total in Europe by 2008 from just over four percent last year, according to a technology consultant.

WANNA GO WHERE EVERYBODY KNOWS YOUR NAME? HOW ABOUT EVERYTHING ELSE ABOUT YOU?

When I first wrote about CAPPS II just around six months ago in my story about John Gilmore’s lawsuit fighting for his right to travel anonymously, CAPPS II was, while obviously in motion, still just one of those many on-the-horizon future threats to privacy. Such threats are approaching much faster these days. When I first started researching that story, for example, I had never heard of radio frequency identification devices (RFIDs), though I certainly had gotten an earful by the time I was done. They still had the aura of something surprising and science fictional. Most people not professionally involved in legal fights about privacy had never heard of them, I found when asking around. But a few weeks ago, USA Today was warning its readers about the devices, (which can be loaded with information about products, price, location, when and where purchased and the like and read by radio scanners yards away) and the potential threat to privacy they pose.

Devices like RFIDs have plenty of benign and helpful uses in inventory management and the like (though it is hard to imagine that CAPPS II will). So do such privacy-dissolving technologies as the credit card, supermarket club card, and the telephone. But at least we chose to take on those burdens. With things like RFIDs and CAPPS II, we are not making the choice. We can now look forward to many more problems from mistaken identity like the ones that grounded the famous Christmas Air France flights to Los Angeles. And I suspect very few serious criminal plots against airlines will be foiled.

More and more it seems inarguable that David Brin is right about privacy as we have come to understand it in bourgeois modernity: It is gone, and we will just have to learn to see that a fully transparent society where everyone can know everything about everyone else -- provided citizens can know as much about the state as the state knows about them -- might be for the best. Any solution other than a technological war -- in which new technologies to stymie the privacy-invading ones are brought to the fore (and there is hope along these lines -- apparently the much-maligned tinfoil hat or equivalent might stymie RFIDs) -- is beginning to seem more hopeless with each news cycle.

LAW

NEW LIFE FOR LEGISLATION TO LIMIT CLASS-ACTION LAWSUITS

Congress is inching closer to passing a bill that would limit class-action lawsuits and large damage awards against corporations, something big business has sought for years. The Senate has been the stumbling block, but a deal struck just before lawmakers left for the holidays could garner enough Democratic support to approve the measure, which already has passed the House and is backed by President Bush.

The legislation would move more class-action lawsuits -- where one person or a small group represents the interests of an entire class of people in court -- out of state courts and into federal courts. Opponents of the legislation say federal judges will either throw many of the cases out or be less likely to issue multimillion-dollar judgments against corporations. Senate Republicans and the corporate community, for whom curbing class-action lawsuits is a major priority, say the legislation is needed because businesses are drowning in lawsuits, many of them frivolous, while trial lawyers profit handsomely by sometimes just threatening legal action.

HIGH COURT WILL NOT HEAR ARREST SECRECY CASE

The Supreme Court yesterday turned down an appeal challenging the secrecy surrounding the arrest and detention of hundreds of people, nearly all Muslim men, in the weeks after the Sept. 11 attacks. Without comment, the court let stand a ruling by a federal appeals court that accepted the Bush administration’s rationale for refusing to disclose either the identities of those it arrested, most of whom have since been deported for immigration violations unrelated to terrorism, or the circumstances of the arrests.

A complete list of the names “would give terrorist organizations a composite picture of the government investigation,” a panel of the District of Columbia U.S. Circuit Court of Appeals said in a 2-1 ruling last June. The dissenting judge, David Tatel, said the majority had “converted deference into acquiescence” by accepting a categorical secrecy policy without requiring the government to show why the names of those who had been cleared of terrorist connections could not be made public.

“The Justice Department is keeping the names secret to cover up its misconduct -- holding people incommunicado and without charges,” said Kate Martin, director of the Center for National Security Studies, one of the groups that brought the lawsuit. “The cover-up maintains the fiction that the government was going after terrorists when it instead was rounding up hundreds of innocent Arabs and Muslims,” she said in a statement.

Supreme Court rules that police may set up roadblocks to collect tips about crimes.

The Supreme Court ruled that police may set up roadblocks to collect tips about crimes, rejecting concerns that authorities might use the checkpoints to fish for unrelated suspicious activity. The 6-3 decision allows officers to block traffic and ask motorists for help in solving crimes. Critics have complained that authorities might misuse the power, disguising dragnets as “informational checkpoints”.

Justice Stephen Breyer said that short stops, “a very few minutes at most,” are not too intrusive on motorists, considering the value in crime-solving. Police may hand out fliers or ask drivers to volunteer information, he said. In a partial dissent, Justices John Paul Stevens, David H. Souter and Ruth Bader Ginsburg questioned whether random roadblocks yield any useful tips. The delays “may seem relatively innocuous to some, but annoying to others ... still other drivers may find an unpublicized roadblock at midnight on a Saturday somewhat alarming,” Stevens wrote for the three.

TAKING LIBERTIES ... AND PROPERTIES

It has happened again. A local government is condemning a group of homes so the land can be turned over to the developer of a shopping center. Why? The shopping center will rake in more tax revenue than the homes do. The use of eminent domain to raise money for government is catching on. We have seen it from Connecticut to California. The courts, the so-called bulwark of our liberties, permit this to take place. (Citizens Fighting Eminent Domain Abuse has an informative website.)

Now it is going on in Alabaster, Alabama, near Birmingham. In the eyes of the city’s leaders, property rights cannot be allowed to stand in the way of the city politicians’ idea of progress. In other words, the homeowners have no rights. The government does not put it that way, but it amounts to the same thing. The city councilmen talk about sacrifice. One said that in our society “there is give and take.” Yes, the owners give and non-owners take. That used to be called theft. Another councilman said, “Sometimes the good of the many has to outweigh the greed [!] of the few.” As radio talk-show host Neal Boortz pointed out, Hitler couldn’t have put it better.

OPINION & ANALYSIS

NAMELESS DREAD: THE FUNCTION OF FEAR IN A CONTROLLED SOCIETY

Turn on the TV news: hate crimes, hurricanes, and homicides. Open the paper and you are buried in an avalanche of despair: disaster, terrorist plottings, political playpen squabbles, famine and far-off genocide. Leaf through Time and Newsweek and you are subjected to the same message: The world is a place of extreme danger and you are helpless to make a difference.

What is the real message behind this? Be afraid -- you are helpless. Only Big Daddy or Big Mommy can keep you from harm’s way. But you must submit yourself to infantalization order to be safe. Even coffee cups now carry dire warnings, as though McDonalds’ customers were not told “hot, hot!” by their mothers when they touched the stove at age two. Another requirement for “personal safety” is ever increasing depersonalization. It is hard to believe now, when bureaucracies do not even ask for your name, just your Social Security number, but the only way the federal government could get America to originally accept the numbers was to promise that they would never, absolutely never, be used for identification. In order to be safe you must also submit to humiliation such as surveillance cameras in public bathrooms. The message is constant: You must submit and you must obey. You are a little child, dependent on the goodness of the Big People for your very survival. It was not always that way.

I’M OK, YOU’RE DESPICABLE

This is an article about arrogance. In a great many cases that I have observed, a person’s support for this or that government control seems to stem from the belief that the great majority of people are, in one way or another, utterly depraved. However, the advocate of the control will always, without exception, refrain from including himself among those who need the law to be forced into decency. Though the masses are invariably swine who need a boot kept on their collective neck, the advocate of government control is just as invariably an exception, one of the noble few.

NEO-CONSERVATISM, HARD CORE

In what they call a “manual for victory”, Richard Perle and David Frum, in An End to Evil: How to Win the War on Terror, describe an extremely dangerous world in which the greatest current evil, “militant Islam”, can be found everywhere -- from “Indonesia to Indiana” (not to mention “in some remoter areas of Venezuela”, Paraguay, Brazil and northern Nigeria). The stakes could not be higher. Militant Islam “seeks to overthrow our civilization and remake the nations of the West into Islamic societies imposing on the whole world its religion and law,” they write. Nor do such ambitions represent only a tiny minority of Muslims, as George W. Bush himself has contended.

“There is no middle way for Americans,” they warn. “It is victory or holocaust.” If all this sounds a little terrifying, it is because Perle and Frum are deeply concerned that the administration's determination -- and that of the country as a whole -- to wage the war on terror to its bitter end is flagging. “We can feel the will to win ebbing in Washington; we sense the reversion to the bad old habits of complacency and denial.”

This book, then, is designed to re-energize the effort, and must be taken seriously because it no doubt echoes arguments that are currently being made at the highest levels of the Bush administration.

Appetite for Destruction: Neoconservatives have more in common with French revolutionaries than American traditionalists.

During his recent visit to England, President Bush enunciated a “forward strategy of freedom in the Middle East.” He pledged, “We will consistently challenge the enemies of reform and confront the allies of terror.” The speech was yet another sign that a new and hugely ambitious foreign policy, conceived by intellectuals many years ago, is being implemented.

Though centering at present on the Middle East, this agenda is global. It existed in broad outline even before the end of the Cold War. With the implosion of the Soviet empire, some of the most ardent Cold Warriors saw an opportunity: America should assert its power throughout the world in behalf of democracy and capitalism. It should remove questionable regimes and other obstacles to a better world. These Cold Warriors were mostly liberals of a special, ideologically zealous variety: many of them had come from the extreme Left. They had opposed communism because they had universalistic objectives of their own and did not want any competition. These proponents of a single model for all societies were able to form an alliance with putative conservatives. Oddly, this coalition to remake the world became known as neoconservatism.

According to proponents of this ideology, the United States is based on universal principles and has a higher mission than all other countries. America is unique, the hope of all humanity. It should bring its principles to the rest of the world -- a belief that gave rise to an ideology of American empire. In the Bush II administration, they have wholly dominated foreign policy-making.

This kind of thinking bears a strong resemblance to that of the Jacobins, who inspired and led the French Revolution of 1789. Their ideology was summed up in the slogan “liberty, equality, and fraternity.” Equally universalistic and monopolistic, they demanded that other countries change their ways. What the new Jacobins defend is America as they choose to understand it: a fresh start for humanity, an enlightened “idea” rather than a nation with a past. The America of which they approve is an instrument for enacting their cherished universally applicable principles. The new Jacobins are, as it were, nationalists without a nation.

WARNING SIGNS

I have long been exasperated and frustrated by many of the things the government says and does. But I am now, and for the first time, becoming truly afraid of what the government is becoming. In recent weeks, Supreme Court decisions have curtailed our rights under the First, Fourth, and Fifth Amendments. The Department of Justice is continuing to make its own inroads into the Bill of Rights. More and more Americans are being labeled as subversives or worse because they dare to publicly criticize one government policy or another. And me? God help me, I own six almanacs.

SCARED NEW WORLD

The U.K. security forces are being given dramatic new powers to fight terrorism. The Government is testing biometric ID cards and building a huge database that will reveal our lives at the touch of a button. An Independent reporter looks into the future and finds it is already here.

Luckily most of us never experience anything like a police state (unless we happen to be the wrong color in the wrong place, or our name sounds vaguely like an entry on a list of suspects as was the case for several innocent airline passengers recently). Opponents of the creeping restrictions on our freedom and privacy are worried about how easily our happy state could change. It was Lord Justice Judge, the second most senior judge in England, who responded to the first version of the Civil Contingencies Bill last year with a warning: “There are nasty people out there and there is no guarantee that because we are Great Britain none of them will ever, ever come to power.”

A HYPOTHETICAL DEBATE BETWEEN ASHCROFT AND A LIBERTARIAN

To bust the winter blahs, Hardyville has at least one fancy civic-betterment “do” every year. One time, the mysterious Tom Spooner taught us all how to make and use thermite -- and I can tell you that did brighten up our winter more than a bit. Some folks might wonder how such things qualify as “civic betterment”. But trust me, they definitely make Hardyville a better place than most to live.

This year we got more uppity and la-de-dah. Attorney General John Ashcroft and James Bovard, who wrote Terrorism and Tyranny: Trampling Freedom, Justice and Peace to Rid the World of Evil, came to Hardyville to debate the Patriot Act. The whole town jammed into the Hardyville One-Plex to see the show.

GEORGE W. BUSH, AN AMERICAN THEODOSIUS

There is an old saying that “the only thing new in the world is the history that you don’t know. Included in President Bush’s proposal to drastically change America’s immigration laws were suggestions to “legalize” the status of upwards of 13 million immigrants currently in the USA illegally and to increase the annual legal immigration quotas.

Theodosius was thrust into power at one of the most crucial moments in the history of Rome. After the annihilation of the Roman Legions at the battle of Adrianople in 378, Rome found itself with multitudes of Germanic tribesmen inside their borders who were dispersing and settling throughout central Europe and the Balkans. After several half-hearted attempts to resolve the situation militarily, Theodosius made a fateful decision. The emperor agreed to terms with the Visigoths that set the standard for barbarian settlement in the Empire for the next hundred years, until the fall of Rome in the West. This agreement to legalize the massive demographic change in the Empire by foreigners who had illegally breeched the borders was immensely controversial. But some argued that violence was impractical and that the German presence would ultimately be of benefit to Rome.

Each of the arguments for legalization made then is being heard again today in roughly the same form. For Rome, they all proved wrong. Theodosius’ policy set in motion a chain of events that led to the ultimate demise of the Western Roman Empire. One hopes that history does not repeat itself, because the stakes may be nothing short of the long-term viability of our nation. And President Bush would do well to brush up on the lessons of the past.

Remora Nation!

“The only realistic way to alter the negative effect of Mexican influence on California, then, is to change the nature of its origin by legalizing immigration and giving foreigners the right to vote in state and local elections.” ~~ Mexican Foreign Secretary Jorge G. Castañeda

Why is the current neocon cabal so intent on opening the floodgates for third world immigration? The short-term goals are raw vote totals, a willful self-destruction of Western ideals and a ratcheting of the destruction of liberty and freedom in the Republic. The long-term goal is a manifestation of the preference for evil found among the political and chattering classes.

Bush ran on a compassionate conservative program which has turned out to be National Socialism with a happy face. His chief political advisor, Karl Rove, views ideology as a transparent front for power aggrandizement and sees islands of political voting blocs and they have adopted the Pacific island-hopping campaign strategy from WWII to lead to total victory, sometimes passing strongholds with the intention of mopping up later. The goal is not victory over the Democrats who are clearly in league with the Republicans but the abolition of the individual in American life.

One could point to the Patriot Acts or the bloody campaigns overseas as the means by which America is being dashed against the shoals but the true gutting of America is and will be the immigration debacle Bush the Younger is presently exacerbating. You can always leave it to politicians to have no sense of second and third order effects of their behavior and actions. Rome on the Potomac hopes to capture a larger slice of the Hispanic vote but will instead usher in the final death throes of the Republic.