Fed Secretive Accounting Practices a Mystery to Government Auditors

I know it has been a long time since I have written a blog post, but today I had the opportunity to attend a committee hearing of the Domestic Monetary Policy and Technology Committee, chaired by libertarian icon and presidential candidate Ron Paul of Texas. It was a very interesting experience for me, being the first committee hearing I have attended.

 

The hearing, entitled “Investigating the Gold: H.R. 1495, the Gold Reserve Transparency Act of 2011 and the Oversight of the United States Gold Holdings”, detailed the current state of U.S. gold holdings and regulations surrounding the auditing of those holdings.

 

The U.S. Treasury Department stores its reserves in three locations: Fort Knox, Denver, and West Point. The gold held at these locations accounts for 95% of all U.S. gold bullion reserves; the other 5% is held by the New York Fed.

According to the witnesses, the GAO’s Gary Engel and Inspector General of the Treasury Eric Thorson, aside from the bullion held at the New York Fed, the holdings have been assayed to a 95% statistical certainty. Neither witness was able to comment on the auditing procedures of the New York Fed. The witnesses further swore that “not one troy ounce is encumbered,” meaning that there are no claims on the gold.  The total value of U.S. gold holdings is around $320 billion and each gold bar is worth $500,000.

 

The hearing began to get interesting when Representative Leutkemeyer began a line of questioning regarding the gold pledged by the U.S. to the IMF. Upon asking if the golf pledged to the IMF, 17% of the IMF’s total holdings, is physically present in one of the Treasury Department’s facilities, or if it had been physically deposited at the IMF, and should therefore be listed among the assets of the United States Government. The witnesses, surprisingly considering that they are government auditors and ostensibly experts on these matters, were unable to answer and promised to submit written testimony after researching the issue.

So it seems that there is a possibility that the gold pledged to the IMF is being double counted, though the witnesses assured the committee that, if a claim on the gold holdings were submitted, the claimant would be paid in currency, not in specie. Also of note is that there is some lack of information regarding the New York Fed’s auditing practices. This should concern everyone considering the secretive deals the Fed has entered into with foreign banks in the very recent past, and is a matter likely to be taken up by the Domestic Monetary Policy and Technology Subcommittee.

Stay tuned for more on these and other issues.

An Update on the State of the EU and the Euro

On July 12th, I wrote about some of the difficulties being faced by the European Union, and I predicted the inevitable collapse of the Euro unless drastic reforms were undertaken. The reforms that are necessary to save the Euro are far-reaching and less than palatable for all but the staunchest supporters of austerity.

Recently, the next phase of the collapse of the Euro Zone has been reached with Ireland requesting and receiving a bailout of $113 Billion. What this means is that, while Greece was bailed out and confidence was restored in the immediate term, contagion has not been eliminated and now threatens to spread to the other members of the PIIGS group, likely in the following order: Portugal, Spain, and Italy.

Germany has taken a tough stance, both at home and abroad. Having cut back domestic welfare and ushered in an era of austerity at home, German contributions to the EU bailout mechanism funds have not come with no strings attached. If Merkel would promise German funds to bailout Germany’s more irresponsible neighbors without ensuring some fundamental changes occur to prevent similar situations from arising in the future, she would likely be savaged by an already skeptical and agitated German public.

Reasonable German demands, however, have been met by foreign accusations of neo-colonialism, and predictable characterizations of Germans as ugly and aggressive. Irish politician Michael Noonan stated: “Can I ask whether this is what the men of 1916 died for: a bailout from the German chancellor with a few shillings of sympathy from the British chancellor on the side?” Germany has also been criticized by high-ranking EU officials for basically thinking in terms of its own best interest. Luxembourg Prime Minister Jean-Claude Junker, president of the Euro Group, expressed his concerns thusly: “That German federal and local authorities are slowly losing sight of European public good, that does worry me.”

What European politicians, particularly French politicians, did not count on when they forced Germany to agree to a common currency as a condition of its reunification, was that while the then future European currency would have strength attributable to the inclusion of stability minded Germany into the currency bloc, the German economic powerhouse would be able to essentially hold the Euro ransom and in times of crisis, which were almost inevitable considering how the currency union was organized, and demand concessions. What the European powers did not realize at the time is that in terms of the balance of power in Europe, forcing Germany into a currency union was more of a benefit to Germany than to its neighbors because the neighbors would eventually seek handouts, and at that time (read now), Germany has been able to extract concessions.

If the Euro, and indeed the EU, does not collapse, which I do expect, Germany will have been able to achieve what the Kaiser was unable to with guns, all without firing a shot: economic hegemony over Europe.

What is more likely is that contagion will spread to Portugal and then to Spain, though on the subject of a planned Portuguese bailout, European Commission President José Manuel Barroso had this to say: “It’s absolutely, completely false. It has neither been asked for and neither have we suggested it.” What Germany must consider if the threatened EU members would decide to accept its harsh terms is that borrowing money to bail out irresponsible neighbors is itself irresponsible and will ultimately affect the creditworthiness of Germany, and in the immediate term could drive up the cost of its credit default swaps. Professor Wilhelm Hankel, of Frankfurt University commented that: “Germany cannot keep paying for bailouts without going bankrupt itself”, and Germany finance minister Wolfgang Schäuble also recently commented that: “We’re not swimming in money, we’re drowning in debts.”

Ultimately both Germany and Europe have very difficult times ahead of them, as does the United States. Germany has the right idea, that austerity is the key to emerging from this crisis. What Austrian Economics teaches us is that austerity should not be a government policy in times of crisis, it should always be government policy: the more that can be cut the sooner it can be cut, the better, because market outcomes are superior to coerced outcomes, and people have a natural right to their property and to the fruits of their labor. In closing I will leave you with a speech from November 24th, 2010 from Eurosceptic MEP Nigel Farage on the arrogance of European leaders and how they have been plotting against member states to increase the central power of the EU.

Sources:

http://online.wsj.com/article/SB10001424052748704693104575638132375883318.html?mod=WSJ_hp_LEFTTopStories

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8160999/EU-rescue-costs-start-to-threaten-Germany-itself.html

http://apnews.myway.com/article/20101126/D9JNQ4880.html

http://www.bloomberg.com/news/2010-11-26/ireland-s-relief-proves-fleeting-as-day-of-reckoning-nears-euro-credit.html

http://www.cnbc.com/id/40378597

http://www.spiegel.de/international/germany/0,1518,731350,00.html

The Ground Zero Mosque

Over the past month there has been much discussion in the American media about a mosque that is to be built several blocks away from the Ground Zero site. On one side, Republicans claim that Ground Zero is “hallowed ground” and that Muslims are seeking to build a so called victory mosque on the site of their conquest. On the other side, many, but not all, Democrats have voiced support for the mosque project on the grounds that Freedom of Religion is a right shared by all Americans, and that the mosque is something the community needs. Interestingly absent from the discussion is the issue of property rights. Namely, who owns the property where the proposed mosque will be built? Very often we lose track of the property rights issue, however, it is a very useful tool for determining what is just. Without question the owner of the property can decide what to do with it, and if a mosque is what has been decided upon by the owner, this should be the end of the discussion. Nobody has to agree with the wisdom of building a mosque so close to Ground Zero, and avenues do exist to protest.

Worth noting is that Republicans, those wrongly considered to be the defenders of property rights, are mostly against the building of the mosque, with the notable exception of Ron Paul, while Democrats are in the interesting position of supporting the construction of the mosque, perhaps for political correctness reasons, but are so morally and ideologically bankrupt that they would not dare to refer to a property rights argument in order to make their case. Also worth noting is that most Americans and New Yorkers are against the construction of the mosque.

To conclude this admittedly brief post, it is a sad day when the question of property rights is not reflexively asked in the first instance. Property rights can be very appropriately used to avoid conflict and ensure justice, while politics will ensure conflict and, in most cases, prevent justice.

Charity and the State

A few day ago Der Spiegel ran a feature about the activities of Bill gates and Warren Buffet and their initiative to convince wealthy people across the world to donate massive amounts of money to various charities and foundations. This ostensibly is a good thing, but enter the mind of the statist. In Germany this ideas has not only been unpopular, but has been strongly criticized. Take this exchange between Der Spiegel and Peter Krämer:

SPIEGEL: Forty super wealthy Americans have just announced that they would donate half of their assets, at the very latest after their deaths. As a person who often likes to say that rich people should be asked to contribute more to society, what were your first thoughts?

Krämer: I find the US initiative highly problematic. You can write donations off in your taxes to a large degree in the USA. So the rich make a choice: Would I rather donate or pay taxes? The donors are taking the place of the state. That’s unacceptable.

SPIEGEL: But doesn’t the money that is donated serve the common good?

Krämer: It is all just a bad transfer of power from the state to billionaires. So it’s not the state that determines what is good for the people, but rather the rich want to decide. That’s a development that I find really bad. What legitimacy do these people have to decide where massive sums of money will flow?

SPIEGEL: It is their money at the end of the day.

Krämer: In this case, 40 super-wealthy people want to decide what their money will be used for. That runs counter to the democratically legitimate state. In the end the billionaires are indulging in hobbies that might be in the common good, but are very personal.

SPIEGEL: Do the donations also have to do with the fact that the idea of state and society is such different one in the United States?

Krämer: Yes, one cannot forget that the US has a desolate social system and that alone is reason enough that donations are already a part of everyday life there. But it would have been a greater deed on the part of Mr. Gates or Mr. Buffet if they had given the money to small communities in the US so that they can fulfill public duties.

SPIEGEL: Should wealthy Germans also give up some of their money?

Krämer: No, not in this form. It would make more sense, for example, to work with and donate to established organizations.

This mindset is completely foreign to most Americans. People with this mindset, and I would venture to say a higher proportion of Germans than Americans, are so thoroughly indoctrinated by the statist propaganda that they even criticize private individuals donating their own hard-earned cash, apparently because “society” has not democratically agreed upon how this money is to be spent. Herr Krämer explicitly stated, “40 super-wealthy people want to decide what their money will be used for. That runs counter to the democratically legitimate state.”

Democracy’s supporters are awash in the language of legitimacy, and this is precisely where they need to be attacked; at the foundation of their contradictory and dangerous ideology. Lets address the present topic. What Herr Krämer is really saying is that self-reliance is undemocratic and lacks legitimacy, and therefore, these wealthy individuals need to give their money to the state, which will then decide how the money will be spent. This is democratic and legitimate, that soulless bureaucrats get more money to allegedly spend for our benefit.

Certainly there are many problems in America, and elsewhere. Some of these problems can and should be addressed by civil society. What Herr Krämer is suggesting is that civil society itself is illegitimate because of a lack of democratic processes, and the alleged legitimacy they confer. After all, if the actions of the rich are illegitimate because they have chosen to donate their money to causes they find important, then the actions of middle class and poor people must also be illegitimate when they donate to charities, or otherwise interface with civil society. Newly formed civil society organizations must be illegitimate as well because their money comes from the private sector, and this has not been “agreed” upon by society, as indicated by government funding.  Herr Krämer does not clarify why one should give money to organizations that are “established”, a term he declines to define.

But what makes democracy legitimate? Allegedly the consent conferred upon the government by “the people” is what legitimizes the democratic system. This is a very malleable concept that could theoretically be used to argue that various horrible activities are legitimate. Also, if the statement is not qualified by reference to size of territory or population it seems to be insufficient. For example, the US federal government resides in Washington and claims sovereignty over a vast stretch of land and over 300 million citizens. In the case of a closely contested election, which many are, a little less than half of that number end up with a president the don’t like, and didn’t vote for. In the case of local government, an average city with a population of perhaps 100,000 could elect a mayor with a slight majority and a little less than half of the people would have to live with leadership they did not vote for. That being the case, would supporters of the democratic system be willing to admit that the local election’s results are more legitimate than the national results because less people are forced to live with a result that they did not choose? It is additionally important to note that what we are really talking about with any form of government is the distribution, or redistribution of violence.

Governments purport to protect rights, they used to even suggest that they protect our natural rights, but time and time again they violate those very rights. This democracy obsession that many people have is based on a lie, that what 50.001% of the population decides is somehow legitimate when we have preexisting traditions and norms that are much better at facilitating justice.  Our masters like democracy because it gives them almost unlimited power over their subjects without alerting the subjects to the fact that they are slaves.  It allows them to institute reform after reform deliberately designed to make us more dependent on government and less free.This is what Herr Krämer finds so distasteful, that one might become wealthy enough to approximate the freedom that used to be our birthright.

Wikileaks: Public Enemy #1 or Harbinger of a New Era of Radical Transparency?

Wikileaks is at it again having released over 92,000 classified documents related to the war in Afghanistan last night, an action that has drawn criticism from all the expected places.  US National Security Advisor James Jones had characterized the leaks, which are dated between 2004 – 2009, as irresponsible, and has suggested that the leaks will not have an effect on US strategy, or lack thereof, in the region.  Jones stated further, “The United States strongly condemns the disclosure of classified information by individuals and organizations which could put the lives of Americans and our partners at risk, and threaten our national security,” and he further complained that Wikileaks “made no effort to contact” the administration about the documents.  Why Wikileaks would contact the administration, which considers Wikileaks founder Julian Assange to be a “person of interest”, regarding the documents remains somehow elusive.  Wikileaks released the reports weeks in advance to several news organizations on the condition that they not report on the topic until 25 July 2010; these organizations are the Guardian, der Spiegel, and the New York Times.

Apparently the documents suggest that Pakistani security forces have been giving aid to the Taliban in opposition to their stated policy, and the interests of the United States.  One piece of information uncovered by the leaks is that the Taliban have heat-seeking rockets that they use against American aircraft, a fact which up until now has remained unreported.  According to the Guardian, “Taliban attacks have soared and NATO commanders fear neighboring Pakistan and Iran are fueling the insurgency,” a situation which, if true, would seem to be in their own interests considering the record of American behavior in the region.  In fact, the propaganda and utter lack of context presented in the American media regarding the Iranian question would be laughable if it weren’t so dangerous.  This country, which I have no love for, has not committed an aggressive act since the 1979 Iranian revolution, a period of time during which the United states has attacked Lebanon, Iraq, Somalia, Iraq, Serbia, Afghanistan, and again, Iraq.  And those are just the attacks we know about.  All of this from the same group of bloodthirsty Neocon savages that instigated the war against Iraq under false pretenses.  In fact:

A former CIA director says military action against Iran now seems more likely because no matter what the U.S. does diplomatically, Tehran keeps pushing ahead with its suspected nuclear program.

Michael Hayden, a CIA chief under President George W. Bush, says that during his tenure a strike was “way down the list” of options. But he tells CNN’s “State of the Union” that such action now “seems inexorable.”

He predicts Iran will build its program to the point where it’s just below having an actual weapon. Hayden says that would be as destabilizing to the region as the real thing.

Never do they analyze what kind of destabilizing effects US interference in the region has, or the effect a nuclear Israel has for that matter.  Maybe the Iranians look in the direction of Afghanistan, but through it and see Pakistan, a nuclear country that is heavily subsidized with US taxpayer money, a favor, which according to the leaked documents, gets paid back with heat-seeking rockets.

Another administration official commented that, “[I]t’s worth noting that WikiLeaks is not an objective news outlet but rather an organization that opposes U.S. policy in Afghanistan.”  This would seem to suggest that there is such a thing as an objective source.  In 19th century America, journalists did not even pretend they were fair and balanced; they had agendas and everybody knew it, and thought it was obvious.  Moreover, this statement from the administration official does nothing to convince one that the documents in question are false or inaccurate.

All this is happening at what seems like it might be a turning point in the war considering the recent increase in violence; even the Chairman of the Joint Chiefs of Staff has stated that he thinks the war will get worse before it gets better.  According to Breitbart.com:

 

The general described a fierce battle two weeks ago in Kunar province, in which 200 US troops and about 400 Afghan forces moved against insurgent positions.

In Kabul, Mullen repeated his view that the war effort — the US and NATO have almost 150,000 troops in Afghanistan — was at a make-or-break stage.

Describing his talks with the new commander in Afghanistan, General David Petraeus, Mullen said the two agreed that the strategy was clear and that now it was a matter of carrying out the war plan.

But he acknowledged that the international force was under pressure to deliver quickly, amid growing impatience on both sides of the Atlantic with a conflict widely seen as a costly stalemate.

“We don’t have a lot of time,” Mullen told staff members at the US embassy inKabul.

“The clocks are working against us.”

 

As pointed out by Justin Raimondo of Antiwar.com, we must not forget that at least a portion of this has been made possible by Bradley Manning, the young intelligence officer who released the helicopter video called Collateral Murder, and who is in custody and most likely being tortured for what the powers that be consider torture, and what normal people consider heroic.  It is conceivable that Wikileaks has more up its sleeve, namely the 250,000 diplomatic messages that Mr. Manning foolishly bragged about on the internet.  Wikileaks seems to be realigning the journalistic paradigm toward a dispersed model with no national allegiance; one that will not choose not to publish only because of the national interest.  This could prove disruptive for those that control the levers of power.

Much more needs to be covered on this topic, and undoubtedly much more analysis will be done in the following days. For now I will wrap up by providing some random related links and information.

This neat tool allows you to interactively see where the IED attacks on soldiers and civilians were, on what date, and how severe the damage was in terms of casualties.

Here is an interview with Wikileaks founder and administrator Julian Assange explaining in his own words why he has released the documents and what he hopes to accomplish through this action:



A further interview conducted by der Spiegel can be found here.

Read here for one of the more interesting analyses of Wikileaks I have read so far.

 

 

Too Much Tea for the Powers that Be – a Summer of Racial Discontent

Race relations is always an interesting and important issue, if not a tired one. Race-baiting is a frequent occurrence in America, but normally the president and his immediate family remain above the fray and attempt to maintain the alleged dignity of the the office. Not so with this presidency. Yesterday, first lady Michelle Obama spoke before the National Association for the Advancement of Colored People (NAACP) where she decried the stubborn inequality that remains in America.

Today the organization is expected to condemn “racist” elements within the Tea Party. In fact, in the proposed language of the NAACP‘s resolution, they state that “Tea Party members have used “racial epithets,” have verbally abused black members of Congress and threatened them, and protestors have engaged in “explicitly racist behavior” and “displayed signs and posters intended to degrade people of color generally and President Barack Obama specifically.”



Just what “historic” racist elements Ms. McDowell could be talking about remain unclear; the American Tea Party phenomenon is not yet 3 years old.

Indisputably, the Tea Party movement is having a big effect on the American political landscape. Anti-incumbent sentiment is running at what might be an all-time high, and Republicans are likely to take the House, if not the Senate. While this would be good because it would lead to divided power in Washington, and hopefully gridlock, it remains to be seen what the ultimate result of the emergence of the Tea Party movement will be. Some have suggested that the movement represents nothing more than an extension of the Republican Party, but I do not believe that that description is accurate. In fact, I believe the Tea Party is a very diverse group that contains everything from the typical neoconservative civilian mass-execution supporter, to staunch libertarians of the Ron Paul variety.

What is clear is that there is an interesting power struggle going on within the group; on the one side Sarah Palin actively seeks to assume leadership of the movement, on the other side is Ron Paul, whose supporters began the movement in Boston in December of 2007 as Dr. Paul was running for president. Even more curious is that Dr. Paul is not actively seeking control of the Tea Party; a fact that, combined with his apparent ambivalence towards seeking the Tea Party’s mantle of leadership, would seem to indicate a very strong libertarian orientation of the Tea Party. Whoever ends with the control of the Tea Party has a good chance of being the Republican Nominee for the presidency in 2012.

It is precisely because of the political momentum of the Tea Party, and because of the political implosion of the Obama administration, that groups like the NAACP are attempting to marginalize the group by using the tried and true tactic of race baiting perfected by the NAACP, the Southern Poverty Law Center, and the Anti-Defamation League. The problem is that it does not seem to be working this time; the momentum of the Tea Party movement has remained unaffected. Certainly nobody can prove it one way or the other, but it would not surprise me in the slightest if the people the NAACP refers to in its draft resolution were left-wing political operatives attempting to substantiate the characterization of the movement as racist or extremist.

Meanwhile some other race related issues are currently in the news.  The first has to do with the Arizona illegal immigration law.  Attorney General Eric Holder, who just days ago filed a federal lawsuit against the law, has stated that he has not ruled out filing an additional challenge on racial profiling grounds.  Meanwhile the civil rights division of the Justice Department recently dropped a voter intimidation case that it had been pursuing against the Black Panther Party based on election day shenanigans.  It would appear that the administration is fine with discrimination so long as it’s discrimination being directed towards caucasians, especially men.



Ultimately we will have to wait and see what the results of both the NAACP’s nonsense and the Tea Party moment are.  I am guardedly hopeful that at the very least taxes won’t rise quite as fast, and hopefully B. Hussein Obama can be sent back to the windy city where he belongs in 2012.  Maybe he and Carter can go on vacation together.

Germany Plans to Save Eurozone, Take Over Europe

After abandoning its previous unwillingness to intervene in the case of Greece, an irresponsible and juvenile country facing bankruptcy due to its spendthrift ways, the German government acquiesced and supported the european bailout package. The eurozone has not yet been secured, however, as the other members of the PIIGS group (Portugal, Italy, Ireland, Greece, Spain) still teeter on the brink of national bankruptcy.

One thing is certain, the eurozone will fail unless there is further centralization and consolidation within the eurozone, and across Europe in general. Previously, the Stability and Growth Pact, was adopted in order to prevent excess debt accumulation from threatening the stability of the common currency by instituting common maximum annual borrowing limitations, 3% of GDP and a national debt lower than 60% of GDP. In addition, another rule was adopted that prohibited countries from coming to the financial aid of other eurozone members that were in financial danger. The problem is that the rules governing debt were largely ignored during the boom time, and during the crisis the magnitude of the disregard for basic fiscal prudence became apparent. Considering that fact, and the potential impact the national bankruptcy would have on the Euro, and the EU itself, the EU decided to ignore its own rules, and the democratic rules that the bureaucracy allegedly stands for, to bail out the irresponsible at the expense of the prudent. Nowhere was this less popular than in Germany, which has traditionally been one of the most fiscally conservative nations in Europe due to its past experience with hyperinflation that occurred twice within the last 90 years.

Meanwhile, the German economy has significantly improved based on dramatically increased exports, especially to the far east. This has lead some countries, like the US and Germany’s European neighbors to argue that Germany’s export oriented economy is preventing the creation of jobs in their domestic markets, and that Germany needs to adopt policies that will stimulate domestic demand in a country where the average citizen is quite careful with his money. On top of this, the German government has also sensed not only the change in political wind, but also has gotten a whiff of common sense as it has stressed the importance of debt reduction and has tried to build international support for something that everybody except the Keynesian economic witchdoctors knows is correct.

However, being true supporters of the European project, the German government wants to take action on the European level to change incentives and to prevent a crisis like this from emerging in the future. One part of the German plan would lead to a loss of private capital, or an incomplete bailout, in the case of national financial trouble. According to the German Minister of Finance, Wolfgang Schäuble, “Whenever a company files for bankruptcy, the creditors must relinquish a portion of their claims. The same should apply in cases of national bankruptcy.” This would allegedly deter banks from lending excessively by reducing Moral Hazard.

According to der Spiegel,

In a situation in which a euro-zone country can no longer service its debts, the government experts propose a “tailored combination of maturity extension and a suitable reduction of the face value or interest rate” of the bonds in question. In other words, creditors receive less money than they are entitled to, and they have to wait longer for it, a process experts refer to as a “haircut.”

The debtor country derives most of the benefit. Its financial burden declines, so that the government no longer has to incur new debts to pay off the old ones. This reduces the burden on government budgets, because the country can only borrow new funds by offering its lenders a higher risk premium. Because it blasts new holes into the government budget, this crisis surcharge can also aggravate the crisis.

This change would realign incentives so that banks become more cautious in their lending, and in an emergency, countries are able to, in essence, refinance their loans at a more favorable rate.

Here is where it gets interesting.  The German government also hope to establish what it has referred to as “the Berlin Club”, which would act as a kind of debt guarantor of last resort.  In the event of last resort debt restructuring, the “Berlin Club” would “… require restrictions on sovereign discretionary powers.” In the common tongue, this means that the country would loose full sovereignty over the domestic budget.  The “Berlin Club” would further seek to appoint people who allegedly have knowledge about the country to safeguard the financial interests of that country.

One could summarize the proposal by stating that it would be tough on both profligate banks and national governments because it would ostensibly eliminate the prospect of complete bailout, while placing grossly irresponsible countries under a sort of financial guardianship.  One could liken this plan to an attempted German economic coup over the EU, or a German plan to assert its economic hegemony over its smaller, weaker, and vastly more irresponsible neighbors.  Unfortunately for the Merkel government, it is also likely to be viewed thusly by the countries that would be likely to be placed under this economic custodianship, which probably makes the plan a non-starter in the EU.

What does this mean?  Well, German voters were very dissatisfied by German participation in the €110 billion bailout of Greece and the establishment of the €750 billion Euro Rescue Package.  As is typical in socialist Europe, it has become commonplace for politicians to harangue both banks and speculators, especially currency speculators.  This represents an attempt by Germany to save the EU, though the offer will prove unpalatable to other EU members.  The question is what will happen next, after this plan is rejected, and more money is required, but nothing has been done to address any of the underlying problems?  Will Germany be willing to keep rewarding its neighbors irresponsibility?  How can the EU deepen integration and cede more sovereignty if the only plans that are acceptable to the majority of members are plans that involve a German payout with no strings attached?  The simple answer is that there is no way, and that the Euro is doomed.

Nine Robed Men Do Good and Evil All at Once

The US Supreme Court today ruled that Americans have an inherent right to own firearms for self-defense wherever they live.  This will eliminate blanket bans on guns in places like Chicago, and will finally allow people there to protect themselves after 30 years of firearm prohibition in that city.  Chicago has one of the worst records in the nation regarding firearms violence, so law abiding citizens will certainly relish the ability to finally be able to shoot back and not live in fear of armed criminal thugs in the city, with the exception of government thugs that is.

 

What is certainly worrisome, however, is the logic of the Supreme Court and how this ruling, while ostensibly good from a gun rights perspective, further expands the power and illegitimate authority of the central government.  Firstly, the 5-4 vote, broken down along the usual “conservative / liberal” lines, qualified its ruling, written by Justice Samuel Alito, by signaling that some restrictions on the right to keep and bear arms could survive legal scrutiny.  The majority opinion clearly states that, “a right to keep and carry any weapon whatsoever in any manner whatsoever and for whatever purpose,” is not the right granted by the Second Amendment ignoring the plain meaning of english words.  The Second Amendment reads,

A well regulated militia being necessary to the security of a free State, the right of the People to keep and bear arms shall not be infringed.

What the Supreme Court has argued in its decision today is that the Fourteenth Amendment’s “due process clause” incorporates the right to bear arms, which is said to limit the State’s authority as it limits the authority of the Federal Government.  This is nonsense.  While it may be the commonly accepted view today, the idea that the states are bound by the Bill of Rights is nonsense.  While the powers afforded the Federal Government are specific and enumerated, the powers retained by the individual states are essentially limitless by design.  This is because the states created, through the Constitution, a Federal Government to perform specific tasks, while, according to the Tenth Amendment:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

This means that the individual states, at least as concerns the US Constitution, are only limited by the specific, enumerated powers granted to the Federal government.  To conclude, the Supreme Court may have made a decision today that allows more people to exercise their inherent rights, but the Supreme Court plays a crucial role in the continued centralization of Leviathan.  We can breath a brief sigh of relief, but we should not conclude that the court is a force for liberty in the US, or that it truly concerns itself with citizen’s rights.

Wikileaks Redux

Much has happened since I posted on the release by Wikileaks of the Collateral Murder video 2 months ago. Apparantly the leaker of the video, a 22 year old private stationed in Iraq named Bradley Manning, had boasted on the internet of having leaked the video and further alluded to the fact that he had uploaded “hundreds of thousands of classified State Department records”, perhaps like this one. There are many very strange aspects of this story, which an be read about in complete datail here. For the scope of this post it is sufficient to say that, like many of the strange things that happen, it is possible that the US government is behind it all.  After all, why would they want to be embarrased like when Ethan McCord, one of the soldiers seen in the Collateral Murder video apologized for his actions and allowed himeself to be interviewed.  Here is a bit of what he said:

We had a pretty gung-ho commander, who decided that because we were getting hit by IEDs a lot, there would be a new battalion SOP [standard operating procedure].He goes, “If someone in your line gets hit with an IED, 360 rotational fire. You kill every motherf*cker on the street.” Myself and Josh and a lot of other soldiers were just sitting there looking at each other like, “Are you kidding me? You want us to kill women and children on the street?” And you couldn’t just disobey orders to shoot, because they could just make your life hell in Iraq. So like with myself, I would shoot up into the roof of a building instead of down on the ground toward civilians. But I’ve seen it many times, where people are just walking down the street and an IED goes off and the troops open fire and kill them.

As I mentioned in my April post on the subject, in 2008 the US government had already determined (PDF) that Wikileaks represented a threat.  One of the strategies of dealing with Wikileaks discussed in the document was described as follows “Successful identification, prosecution, termination of employment, and exposure of persons leaking … would damage and potentially destroy the center of gravity and deter others from taking similar actions.”  Interestingly this is exactly the kind of thing that just happened, and people have begun to ask themselves: is Wikileaks secure?

As I become increasingly more skeptical about the official government and party lines, perhaps the most prescient question I would like to ask is “Cui bono?”  As the answer to that question is clear, that the US government benefits from a very public capture of an alleged Wikileaks leaker, and it also benefits from the media parroting the official line.  Besides Glenn Greewald, I an not yet aware of anyone even cosidering to ask why exactly a 22 year old private stationed in Iraq would have access to highly classified state department documents.  Further, the US media has now characterized Wikileaks as a major national security threat, and has characterized the US authorities search for Wikileaks founder, Julian Assange, as a manhunt.

Some things we do know are that Wikileaks is preparing for the release of another video, the subject of which this time is a bombing in Afghanistan with civilian casualties.  Iceland recently passed the Icelandic Modern Media Initiative, which provides the strongest journalistic protections in the world, especially for whistleblowers; this initiative was developed with the support of Julian Assange.  Meanwhile, in Mordor on the Potomac, Senator Lieberman and Homeland Security Secretary Janet Napolitano have begun to attack the internet itself, arguing that as the internet is a “national asset”, it needs to be protected from cybercrime by the government.  The bill proposed by Lieberman would grant the president the power to disconnet parts of the internet at will if it were deemed a threat as part of the “kill switch” power in the legislation.  I wonder if the president would consider Wikileaks to be a threat?  The administration is also cracking down on whistleblowers in general as covered here:

On Obama’s watch, national security whistleblowers find themselves exempt from the Whistleblower Protection Act, crippled by the inaptly-named “Intelligence Community Whistleblower Protection Act” (which provides zero real protections for employees) and now, thanks to Obama’s recent crackdown on “leakers”, whistleblowers–fearing criminal prosecution should they turn to the media (often the only real check on government abuse of power)–can only go to Wikileaks.

Wikileaks may be the only option left for employees who see waste, fraud, abuse or illegality in the national security realm. This is certainly not ideal, as Wikileaks lacks the fact-checking and at-least-pretense-of-balance of journalism.

So far this has been very entertaining, albeit serious.  I am very interested to find out what will happen.  I am a fan of Wikileaks, and I think that it plays a vital role today in shining the disinfecting light of day onto the misdeads of our alleged representatives.  I for one am looking forward to their next release.

Selective Service, the Draft, and Freedom

SInce the announcement on January 27, 1973 of the creation of an “All Volunteer” military force because of the draft force’s ineffectiveness during the Viet Nam War, there has been no draft in the United States. Since 1917, American males have been forced to register themselves so that, in the event of war, they would already be organized for a draft. This has been uninterrupted, with the exception of the period between March 29, 1975 to July 2, 1980. President For had eliminated the selective service registration requirement with the Proclamation 4771, Registration Under the Military Selective Service Act.

Penalties for a failure to register can be quite severe, and include imprisonment, fines up to $250,000, loss of student aid, disqualification for Federal and some State jobs, and possible future job discrimination. There are some serious moral and legal questions regarding both the draft, and registration for the draft in the selective service. The first is the paradox of requiring registration or conscription, or the enslavement of free men, in order to “preserve freedom”. While this is not a logically consistent policy, it is how the state often refers to the draft or selective service registration; that it may be required to preserve our freedom.

There are social inequalities associated with conscription as well. The first of which is that women are precluded from participating in the selective service registration process, even if they wan to. Another way of looking at the process is that men are forced to register due to something they are unable to control; their gender. In other areas, assigning roles based on features like gender is usually frowned upon, though when men are unfairly targeted the social outcry is far less severe if it could even be said to exist at all.

The next two problems are separate, but should logically be discussed concurrently:  they could be characterized as “old vs young” and “moral hazard“. Because the political apparatus is controlled by older people and because soldiers are young, a problem exists. The problem exists because the politicians and people in their age group are not required to fight the wars that they start/support, while the young, who are generally less politically active, are the so called “boots on the ground”. So because the decision makers do not have to realize the full costs of their actions and decisions, a moral hazard problem exists, which leads to increasingly risky decision making. This is true regardless of whether the military contains conscripts or if it is all volunteer.

It may be interesting to note how two European countries take different approaches. Germany has a two tier system where some male citizens choose a career in the military and receive advance training, etc., and other males are conscripted into the military to receive basic training and basic service for a year. This system requires less conscripts than the total number that is available if all males were conscripted for basic training. The remainder must do some sort of equivalent social service for a year. It would be remiss to omit the fact that the German soldiers fighting in Afghanistan have volunteered for the duty; therefore, no conscripts are fighting in a war zone at the moment. I think that on a fundamental level, both conscription and mandatory social service are enslavement and should be abolished.

The next country that deserves discussion is Switzerland. In Switzerland, all males must receive military training, and receive regular supplementary training to maintain their defensive capability. Normally when “defense” is discussed in a military context it means everything but defense, but in the case of Switzerland it is actually true. They have a history neutrality that they strengthen with the ability to fully mobilize within 48 hours. While I am against conscription in any form, I must say that if the United States changed its foreign policy to that of Switzerland with a full draft for defensive training only, I would prefer it to the voluntary force with the bullying foreign policy that the US has now.

Ideally, in a free society, matters of defense would be organized by the people themselves, who would certainly have basic means to protect themselves. Even today in the US, there are many millions of private arms in the hands of citizens who would gladly die to protect their families. It is difficult to believe that in the face of an invasion they would just allow themselves to be destroyed without a fight. In the face of every kind of threat, with the exception of an enemy that simply wanted to destroy everyone and everything in the country, widespread possession of small arms would be a difficulty not easily overcome by an occupying force. Americans would be much safer if they simply learned how to shoot rifles well, both from foreign and domestic threats to liberty.