We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are

Life, Liberty and the pursuit of Happiness.

That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,

Wednesday, February 21, 2007

Capitalization ... Nationalization ... or Confiscation: Take Your Pick

Today's comment is by Mike Burnick, The Sovereign Society's new Senior Editor and Global Markets Analyst.

With the first month of 2007 now in the rearview mirror, it's worth reflecting on some of the blossoming trends emerging in global investment markets. These are trends that could create some interesting buying opportunities for the attentive investor throughout the year.

In particular, there's one emerging market investment strategy that looks to me like a sure thing. Emerging market leaders (dictators) are using an innovative strategy to capitalize on (exploit) profitable business interests, by nationalizing privately owned companies, and entire industries.

Think of this as the mirror image of the booming private equity investment trend.

In Venezuela, President Hugo Chavez is engaging in some creative asset allocation. He just announced plans to nationalize Venezuela's telephone, energy and electric utility sectors.

Venezuelan Investors Follow the "Chavez Plan"

It seems that President Chavez is a deep-value investor at heart. He's determined to fetch these assets for his countrymen at a bargain-basement price -by saying publicly that he intends to "pay" shareholders well-below market prices for the assets.

Just last week in fact, Chavez upped the ante in his "hostile" takeover bid for the nation's energy sector. He indicated that the Venezuelan government was prepared to seize the assets of four major foreign-owned oil units by May 1st. And he would use force if necessary - just in case negotiations should bog down over price.

Private companies including ChevronTexaco, ExxonMobil and ConocoPhillips of the U.S., plus Statoil of Norway, Total of France and BP of the U.K. have collectively invested about US$17 billion in Venezuela's energy sector. No word yet on counter-offers from any of these firms, but (one-sided) negotiations are continuing.

Chavez must certainly be commended for the broad nature of his nationalization scheme. It's a smart idea. He's building a well-diversified portfolio of assets across different industries in one fell swoop. This should help reduce risk in the people's portfolio. Perhaps Chavez is planning to launch his own Exchange Traded Fund (ETF).

Investors React Poorly to the Chavez "Social Revolution" Privatization Plan - But Give Them Time To Come Around

You may ask, "What about the market's reaction to Venezuela's new nationalization plan?" After soaring in 2006, the Caracas Stock Exchange has pulled-back "slightly" on this news, plunging about 30% in January. Apparently global investors just can't appreciate the finer points of the Chavez investment strategy yet. But we all have faith they'll come around.

While certainly ambitious, the Chavez strategy isn't all that original. Venezuela is simply jumping aboard a well-established, but still growing trend.

Bolivia's leftist leader, President Evo Morales, announced a "hostile takeover" of the country's energy industry last year. The President even sent the army to seize control of Bolivia's gas fields in order to obtain "more favorable terms" from French energy giant Total, and Occidental Petroleum Corp. for development of these assets.

Shrewd negotiating tactic - Warren Buffett take note!

But you can hardly blame these Latin American Nations for beginning the trend toward trampling shareholder rights (not to mention, setting capitalist ideals back several decades) by shamelessly confiscating private assets. After all, they're just following the lead of their "former" socialist comrades in Russia.

You may recall just a few years ago, that the Russian government essentially nationalized its energy sector.

Russia dismantled the nation's largest privately held energy company (at the time) Yukos, and jailed the firm's former CEO on (questionable) charges of corruption and tax evasion. The Yukos affair cost private investors an estimated US$45 billion in lost (confiscated) market value. But the Kremlin prefers to think of it more as a socially-justified wealth transfer.

More recently Russia threatened to cut off supplies of natural gas to Europe, unless they agree to "renegotiate" existing contract prices. And in an attempt to repeat its successful Yukos "restructuring," Russian authorities recently made an offer (ultimatum) to Royal Dutch Shell. They asked the Anglo-Dutch energy firm to sell its controlling interest in the huge Sakhalin energy project to Gazprom -- the Russian state-run natural-gas monopoly.

While profitable for the state (at least in the short run), these growing trends toward socialization, nationalization or outright confiscation of privately held and financed assets should serve as a cautionary tale for international investors.

Choose the Happy Resource-Rich Nations!

It would seem that developing markets, rich in natural resources, can be divided into two rather broad categories. The first category includes the many nations which get a taste of newfound resource-based wealth and are eager to embrace free-market based rules of law - and play by those rules. These nations are happy to attract more foreign investment in hopes of gaining the expertise, and the investment dollars, necessary to continue the virtuous cycle of growth and prosperity.

But there is a second group of nations, including those practicing politics that are less well-grounded in democratic principles. These nations get their first taste of resource-based riches -- and are instantly intoxicated. And all too often, the government responds with hostility and belligerence toward the very sources of private capital investment that are needed to fuel the wealth creation dynamic in the first place.

Talk about biting the hand that feeds you. As a global investor, I would much rather put my capital to work in those free-enterprise nurturing nations that are members of the first group, rather than the socialist wealth-confiscators found in the second group.

MIKE BURNICK, Senior Editor

The perils of democracy

From Stansberry & Associates Digest

Assuring future shortages, India has banned the export of wheat in an effort to fight inflation. Never mind the central bank's money printing... it's those greedy farmers trying to get the best price for their crops that are the real problem. We are always amazed at how many crimes against their economies politicians are willing to commit... and how willingly the crowd goes along with them.

We wonder if this is a good idea... Aflac will become the first leading U.S. company to allow shareholders to vote on executive compensation. Shareholders will be given a vote on annual compensation starting in 2009. Our bet is that compensation abuse by corporate executives gets worse under these arrangements.

India and Aflac raise a philosophical question… Why people think democracy is a good idea is one of life's real mysteries. Have you been to the driver's license office lately? Next time you go, look around. That's a real cross-section, a true sample of the American people.

Are those the folks you want voting on the laws that you'll have to obey? Are those the folks you want voting on the future of your investments? The people I see at the DMV have to get lucky to tie their shoes correctly.

Manipulating them to vote for whatever's popular at the moment or what some political group in Washington needs isn't half as difficult as getting them to buy cigarettes, which are addictive, dangerous, and smelly. I am aware that criticizing democracy is seen as slightly more evil than beating baby seals. That's ironic because the things we all cherish about America – our liberty, our security, our wealth, our technological dominance - have nothing to do with democracy.

Most people don't even know that our founding fathers feared democracy. They deliberated and settled on a republican government with very limited suffrage and indirect elections.

Vestiges of the Republic remain – like the Electoral College – and they sometimes still influence modern elections. But the architecture of the Republic was rendered a shadow of its former self in 1913, when two of the most important constitutional tenets of the Republic (the indirect election of Senators and the prohibition of income taxes) were torn down by democratic amendments.

Since then, the power of the state has been in ascendance, along with the inflation, militarism, and statism that typically grow along side democracy. Ironcially, despite these problems, democracy – glorified mob rule – is seen as the solution to every governance problem in the world, from Iraq to American's board rooms.

About Those New Taxes...

From the Stansberry & Associates Digest

From the front page of today's WSJ: "The new democratic-controlled Congress is looking to rein in looming tax increases on the middle class... by raising taxes on the upper-income households... Bush administration officials have signaled they may not oppose a likely method of covering those costs: Raising taxes on the nation's wealthiest citizens."

This kind of politicking is exactly what democracy brings.

The mob (the single-largest voting bloc) is, by definition, "middle-class." It will always demand more government services than it is willing to pay for. Thus, it will vote in favor of higher taxes – as long as someone else has to pay for them. None of this is surprising... but the big lie here is that these taxes will impact the wealthy. They will not. Wealthy people don't work, or at least they don't depend on wages for their lifestyle. Warren Buffett, for example, reports his $100,000 salary to the IRS... and pays next to nothing in income taxes compared to the amount his wealth increases each year.

Wealthy people, like Buffett, don't report "income." They report tax-sheltered returns, like muni-bonds, and they report dividend income. This kind of income doesn't trigger W-2 income taxes. That's why the elite powers behind the Democratic party are always in favor of higher income taxes: They won't be paying them. High taxes on income also reduce social mobility, making it very difficult for anyone to become wealthy from the income they get at work.

So, who will pay these new income taxes? Anyone who makes a high income at his job. Right now, high-income earners are paying about 46% of their incomes in taxes, when you measure federal, state, local, and sales taxes. The question the mob might want to consider is, at what point do these people – who make up the horsepower of our economic engine – simply quit? Would you go to work, and work to your full potential, if the government took more than half of what you earned?

Clearly, this kind of tax policy violates the ideal of being "equal before the law." But the worst damage it will cause will be economic. It provides people with a real incentive not to be an employee, which will make it more expensive to build efficient companies.

That's just what America needs...

Murtha in Command

By Robert D. Novak

WASHINGTON - After 16 undistinguished terms in Congress,
Rep. John P. Murtha at long last felt his moment had
arrived. He could not keep quiet the secret Democratic
strategy that he had forged for the promised "second step"
against President Bush's Iraq policy (after the "first
step" non-binding resolution of disapproval). In an
interview last Thursday with the anti-war website
MoveCongress.org, he revealed plans to put conditions
on funding of U.S. troops. His message: I am running this

Indeed, he is. Murtha and his ally, House Speaker Nancy
Pelosi, were humiliated last Nov. 16 when the Democratic
Caucus overwhelmingly voted against Murtha as majority
leader. Three months later, Murtha has shaped party policy
that would cripple Bush's Iraq troop surge by placing
conditions on funding. That represents the most daring
congressional attempt to micromanage ongoing armed
hostilities in nearly two centuries, since the Joint
Committee on the Conduct of the War challenged President
Abraham Lincoln. Murtha's plan did not surprise
Republicans. They were poised to contend that his proposed
amendment to the supplemental appropriations bill would
effectively cut off funding for the war, confronting
moderate Democrats elected after promising voters to
support troops. But the Senate rule requiring 60 votes
to end debate, which prevented final passage of the non-
binding resolution rejecting the troop surge, would not
affect Murtha's plan because appropriations have to be
passed and cannot be filibustered.

Thus, unless there is an unexpected retreat of Democrats,
Murtha will be driving U.S. policy. That is an improbable
elevation for a congressman best known until now as a
purveyor of pork. An ideological moderate (75 percent
liberal and 40 percent conservative, according to recent
ratings), he became a hero to the left by advocating
"redeployment" of troops from Iraq.

That prompted Murtha to announce his candidacy for majority
leader, which appalled Democrats who knew him well. Two
prominent Democrats reminded me that Murtha was an
unindicted co-conspirator in the 1980 Abscam investigation.
He embarrassed himself on NBC's "Meet the Press" last June
by suggesting a redeployment of troops from Iraq to
Okinawa. A year earlier, the Los Angeles Times reported
firms represented by his lobbyist brother received funds
approved by Murtha's appropriations subcommittee.

None of this prevented Pelosi from endorsing Murtha for
majority leader against heavily favored Rep. Steny Hoyer.
When Hoyer won, 149 to 86, in the Democratic Caucus, Pelosi
and Murtha were seemingly repudiated. But since then, Hoyer
has appeared the odd man out in the Democratic caucus.
Murtha and Pelosi are setting party strategy in close
collaboration with Rep. George Miller, Pelosi's close
associate and consigliere. Murtha has made clear that
the non-binding resolution, whose merely symbolic nature
infuriates anti-war activists, was only the "first step."
Murtha, chairman of the Appropriations Subcommittee on
Defense, did not hide the purpose of setting standards for
training, equipping and resting troops: "They won't have
the equipment, they don't have the training, and they won't
be able to do the work."

When Murtha revealed the strategy, the House Republican
staff quickly dispatched e-mails to GOP members that list
Democrats who had campaigned last year against restricting
support for troops in the field. The messages asked: "Will
they side with Jack Murtha and their leadership in
Washington, or with the promises they made to their

But only eight such Democrats, including six newcomers,
were listed. Rep. Nick Lampson, who returned to Congress
from Tom DeLay's conservative Texas district, had said
(according to the Associated Press) that "he opposes
withdrawing until the Iraqi army is capable of controlling
the country." Lampson declined to talk to me when I said I
wanted to ask him about Iraq. Freshman Rep. Brad Ellsworth
won election to a swing district in Indiana by saying
(according to the Evansville Courier & Press) that "he
would not support any measures that would cut funding
for forces in Iraq." Ellsworth said he was "too busy" to
talk to me after I said the subject was Iraq.

It seems all but certain that Democrats will pass what
Murtha frankly calls an attempt to prevent funding of the
surge. Improbable though it may seem, blunt and brassy Jack
Murtha is moving close to command over U.S. policy on Iraq.

Latin American Crisis: Neo-Com Debacle Brewing in Venezuela

By J. Christoph Amberger
Venezuela President Hugo Chavez, who has just helped himself to the privilege of ruling by decree -- has come up with an innovative plan to curb inflation in Venezuela. (The annual inflation rate, fired up by the petro-dollars Chavez has been pumping into the poverty-ridden Venezuelan population to grease his reelection, just rose to 18.4% in January from 10.4% in May and is the highest in Latin America.)

He intends to simply lose three zeros from the currency exchange rate by February 2008. Because, of course, if you decree that a currency should buy more, that’s what will happen.

Economics by decree is, of course, a trademark of communist regimes… even if Chavez himself likes to use the euphemism “Bolivar” instead of the C-word. But what quacks like a duck frequently turns out to be a duck: After nationalizing strategic industries like energy, telecommunications and the free press, he is already using the time-honored clichés of Marxism-Leninism to prepare the ground for the next stage.

He has threatened to clamp down hard on the traditional communist bogeymen, “speculators” -- whose moniker applies to anyone selling food for more than government-mandated prices, to halt last month's 4 percent% increase in the cost of food.

Bloomberg summarized, “Price regulations and other controls, including a crackdown on businesses buying currencies outside official government channels, have helped to make food production unprofitable, leading to a decline in supply and spurring inflation.”

According to media reports, visa applications of middle class Venezuelans to emigrate (to Spain, Argentina, and the United States) are already on the rise, making a crackdown on free travel and the mobility of capital probable for the next couple of months.

We consider this rogue regime an economic catastrophe waiting to happen: In the February edition of Taipan, we told you what stocks to sell in the region. I now believe that any portfolio exposure to Latin America is extremely dangerous, as the mismanagement of the Venezuelan economy will have massive fallout on the entire continent.

How to Destroy America From Within

With the 17th Amendment, the US Government began the slow destruction of America as a Republic. What you are about to read is a continuation of this process. Being a Democracy does not assure freedom and liberty, just ask the people of Venezuala who elected a marxist dictator using a democratic process.


We know Dick Lamm as the former Governor of Colorado. In that context his thoughts are particularly poignant. Last week there was an immigration overpopulation conference in Washington, DC, filled to capacity by many of America's finest minds and leaders A brilliant college professor by the name of Victor Hansen Davis talked about his latest book, "Mexifornia," explaining how immigration - both legal and illegal was destroying the entire state of California. He said it would march across the country until it destroyed all vestiges of The American Dream. Moments later, former Colorado Governor Richard D. Lamm stood up and gave a stunning speech on how to destroy America. The audience sat spellbound as he described eight methods for the destruction of the United States. He said, "If you believe that America is too smug, too self-satisfied, too rich, then let's destroy America? It is not that hard to do. No nation in history has survived the ravages of time.? Arnold Toynbee observed that all great civilizations rise and fall a ND that 'An autopsy of history would show that all great nations commit suicide.'"

"Here is how they do it," Lamm said:? "First, to destroy America , turn America into a bilingual or multi-lingual and bicultural country." History shows that no nation can survive the tension, conflict, and antagonism of two or more competing languages and cultures. It is a blessing for an individual to be bilingual; however, it is a curse for a society to be bilingual. The historical scholar, Seymour Lipset, put it this way: "The histories of bilingual and bi-cultural societies that do not assimilate are histories of turmoil, tension, and tragedy." Canada, Belgium, Malaysia, and Lebanon all face crises of national existence in which minorities press for autonomy, if not independence. Pakistan and Cyprus have divided. Nigeria suppressed an ethnic rebellion. France faces difficulties with Basques, Bretons, and Corsicans.". Lamm went on: Second, to destroy America , "Invent 'multiculturalism' and encourage immigrants to maintain their culture. I would make it an article of belief that all cultures are equal. That there are no cultural differences. I would make it an article of faith that the Black and Hispanic dropout rates are due solely to prejudice and discrimination by the majority. Every other explanation is out of bounds.

Third, "We could make the United States an 'Hispanic Quebec' without much effort. The key is to celebrate diversity rather than unity. As Benjamin Schwarz said in the Atlantic Monthly recently: "The apparent success of our own multiethnic and multicultural experiment might have been achieved not by tolerance but by hegemony. Without the dominance that once dictated ethnocentricity and what it meant to be an American, we are left with only tolerance and pluralism to hold us together." Lamm said, "I would encourage all immigrants to keep their own language and culture. I would replace the melting pot metaphor with the salad bowl metaphor. It is important to ensure that we have various cultural subgroups living in America enforcing their differences rather than as Americans, emphasizing their similarities."

"Fourth, I would make our fastest growing demographic group the least educated. I would add a second underclass, unassimilated, undereducated, and antagonistic to our population. I would have this second underclass have a 50% dropout rate from high school."

"My fifth point for destroying America would be to get big foundations and business to give these efforts lots of money. I would invest in ethnic identity, and I would establish the cult of 'Victimology.' I would get all minorities to think that their lack of success was the fault of the majority. I would start a grievance industry blaming all minority failure on the majority population."

"My sixth plan for America's downfall would include dual citizenship, and promote divided loyalties. I would celebrate diversity over unity. I would stress differences rather than similarities. Diverse people worldwide! Are mostly engaged in hating each other - that is, when they are not killing each other. A diverse, peaceful, or stable society is against most historical precedent. People undervalue the unity it takes to keep a nation together. Look at the ancient Greeks. The Greeks believed that they belonged to the same race; they possessed a common language and literature; and they worshipped the same gods. All Greece took part in the Olympic games. A common enemy, Persia , threatened their liberty. Yet all these bonds were not strong enough to overcome two factors: local patriotism and geographical conditions that nurtured political divisions. Greece fell. "E. Pluribus Unum" -- From many, one. In that historical reality, if we put the emphasis on the 'Pluribus' instead of the 'Unum,' we will balkanize America as surely as Kosovo."

"Next to last, I would place all subjects off limits; make it taboo to talk about anything against the cult of 'diversity.' I would find a word similar to 'heretic' in the 16th century - that stopped discussion and paralyzed thinking. Words like 'racist' or 'xenophobe' halt discussion and debate. Having made America a bilingual/bicultural country, having established multi-culturism, having the large foundations fund the doctrine of 'Victimology,' I would next make it impossible to enforce our immigration laws. I would develop a mantra: That because immigration has been good for America , it must always be good. I would make every individual immigrant symmetric and ignore the cumulative impact of millions of them."

In the last minute of his speech, Governor Lamm wiped his brow. Profound silence followed. Finally he said, "Lastly, I would censor Victor Hanson Davis's book "Mexifornia." His book is dangerous. It exposes the plan to destroy America . If you feel America deserves to be destroyed, don't read that book." There was no applause. A chilling fear quietly rose like an ominous cloud above every attendee at the conference. Every American in that room knew that everything Lamm enumerated was proceeding methodically, quietly, darkly, yet pervasively across the United States today. Discussion is being suppressed. Over 100 languages are ripping the foundation of our educational system and national cohesiveness. Even barbaric cultures that practice female genital mutilation are growing as we celebrate 'diversity.'

American jobs are vanishing into the Third World as corporations create a Third World in America - take note of California and other states - to date, ten million illegal aliens and growing fast. It is reminiscent of George Orwell's book "1984." In that story, three slogans are engraved in the Ministry of Truth building: "War is peace," "Freedom is slavery," and "Ignorance is strength."

Governor Lamm walked back to his seat. It dawned on everyone at the conference that our nation and the future of this great democracy is deeply in trouble and worsening fast. If we don't get this immigration monster stopped within three years, it will rage like a California wildfire and destroy everything in its path, especially.

The American Dream.
If you care for and love our country as I do, take the time to pass
this on just as I did for you.

Wednesday, February 14, 2007

Speaker Of The House Hires A George Soros Activist

By Rev. Louis P. SheldonChairman, Traditional Values Coalition

February 13, 2007 - Speaker of the House Nancy Pelosi has recently hired Joseph Onek to be her Senior Counsel. Most people have never heard of Onek before, but he was an operative in both the Carter and Clinton White House. While in the Carter Adminstration, Onek served as Deputy Counsel to Jimmy Carter. In the Clinton Administration, Onek was a deputy Associate Attorney General and was the Rule of Law Coordinator with the State Department.

Onek also served as a law clerk for Supreme Court Justice William Brennan and served as an Assistant Counsel on the Senate Judiciary Committee.

But his more recent work as a Senior Policy Analyst with the Open Society Institute (OSI) should be of deep concern to all Americans. The Open Society Institute is a creation of billionaire atheist George Soros. This virulently anti-Christian man operates what some have called a “shadow government” in America – a network of groups and radical individuals who wish to control America’s social and national security policies.
Discoverthenetworks.org monitors the web of leftist organizations that seek to rule our nation. It describes this shadow government as being “conceived and organized principally by George Soros, Hillary Clinton and Harold McEwan Ickes -- all identified with the Democratic Party left.”

The OSI funnels millions of dollars into various leftist causes, including euthanasia, open borders, abortion, homosexual activism, marijuana legalization, the undermining of our nation’s war on terrorism and other neo-Marxist visions of social justice. A list of OSI’s grantees (posted on the
“discoverthenetworks.org” web site) reads like a phone book of every anti-American, pro-abortion, pro-homosexual group in America.

Soros has a warped vision for America, and he’s pouring millions of dollars into public policy organizations that will push his agendas. He is also pouring money into elections. He spent $26 million to defeat Bush in 2004. Today, Soros has decided that Senator Barack Obama should be our next president and has anointed him for that purpose. He will provide Obama with funding plus whatever publicity he can generate for the senator through his various front groups.

Soros either funds or operates a whole range of such organizations, but the Open Society Institute is his flagship organization.

The current president of OSI is Aryeh Neier, who as director of the socialist League for Industrial Democracy, founded the radical Students for a Democratic Society (SDS) back in 1959. OSI’s Director of U.S. Advocacy is Morton Halperin, a man who has devoted his entire life to subverting America’s intelligence efforts to fight domestic and international threats. Halperin is a former Carter and Clinton official who has consistently attacked the work of the CIA.

George Soros must be pleased to have one of his operatives a heartbeat away from Speaker of the House Pelosi. Did Onek get his job with Pelosi through the influence of Soros? Was Onek placed in her office to direct policy decisions? What role does Onek play in Soros’ shadow government?

But, more to the point: What role does Speaker of the House Nancy Pelosi play in George Soros’ shadow government? Americans deserve answers to these questions.

Union leaders...the devil's salesmen

By Andrew Snyder, Volume Spike Alert

In case you have not noticed by now, I am not a fan of unions. In fact, I think they are responsible for the demise of this country’s great industrial age. Yes, organized labor groups had their place in history and were once quite valuable. But now, union leaders are the devil’s salesmen.

I think I have the right to discuss this subject. Just look at my hometown of York, Pennsylvania. At one time, this area was the heart of blue-collar, middle-class living. Bustling factories were all over the place.

Then the workers got greedy. First, the line workers at the local Caterpillar (CAT:NYSE) plant went on strike. Their cushy benefits and high hourly wages were not enough. Corporate executives and labor representatives could not come remotely close to a “fair” contract.

Unfortunately, Mexican workers could. Fed up with our high-priced workers, the company locked the plant’s gates and moved the operation to Mexico. Last time I drove by the factory, a team of yellow tractors was tearing chunks out of the enormous building. Ironic, don’t you think?

Since Caterpillar packed its bags and hit the road, a host of other large companies have followed suit. Almost all of them left in search of cheaper labor.

Now, as if to spit in the face of history, hourly wage earners at the county’s last large factory are braving the cold and marching on the picket line. All production at Harley-Davidson’s (HOG:NYSE) York facility has come to a halt.

According to the local media, I am not the only person who believes the strike is a bunch of hogwash (pun intended). Not only are these workers earning some of the best hourly wages in the state, there are also throngs of lower-paid workers ready to step in and take their jobs. Harley is the county’s go-to employer.

But the problems surrounding the strike don’t end in York. No, no. They stretch across the country. Thanks to our local union’s greed (it is fighting not to pay a small share of health insurance costs), folks who work for the supplier’s that feed the York factory are facing layoffs.

Well over 1,000 workers will be laid off if the strike does not end immediately. After all, if the York assembly plant is not producing bikes, the motors, paint, aluminum, steel, leather, tires, and thousands of other parts they consist of are no longer needed. Thanks to the York plants adoption of just-in-time manufacturing technique, there is no warehouse to store surplus parts.

Further down the stakeholder line, Harley investors are being hurt by the strike. In fact, analysts estimate the strike will dock quarterly earnings per share by a penny per day. Before the strike, expectations were for 98 cents per share. Now, all bets are off.

Just today, Harley officials announced the company will no longer be able to meet its goal of shipping 82,000 bikes this quarter.

If you are a Harley shareholder, tighten your seatbelt. It is going to be a long ride. If you aren’t a shareholder, keep an eye on the action. We may see a good buying opportunity soon.

The union employees do have one thing on their side. Nobody will buy a Mexican-made Harley. The union-made label, however, can be painted over.

Joe Kennedy's 'Shameless Support' of Hugo Chavez

Breaking from NewsMax.com

One of Congress's most outspoken critics of Venezuela President Hugo Chavez Monday called on former Massachusetts lawmaker Joe Kennedy to stop airing television advertisements that give "shameless support" to "the most dangerous man in the Western Hemisphere."

Calling Chavez "a sworn enemy of the United States," Rep. Connie Mack, R-Fla., wrote in a letter to Kennedy that "there is absolutely no excuse for you to be praising him in television commercials and media interviews for any reason whatsoever."

"More than 40 years ago, your uncle - President John F. Kennedy — spoke about the perils of communism in the Western Hemisphere and the threats posed by Fidel Castro, saying: 'We and our Latin friends will have to face the fact that we cannot postpone any longer the real issue of survival of freedom in this hemisphere itself,'" Mack noted.

"Those words still ring true today," he added.

Cuba: Investing in Regime Change

by J. Christoph Amberger

This past January marked the 17th anniversary of a prediction I made as a young assistant editor at Taipan... that Castro would join the big Party Congress in the Sky sometime during the 1990s. And that prosperity would once again move into Cuba. In the decade and a half that has passed, I’ve had opportunity to temper my optimism: Not only does Fidel seem to be as tough as shoe leather, I’m also not at all convinced that the transition from totalitarianism to a free society would be smooth at all.

After all, we’ve had plenty of not-so-encouraging examples recently. And not just in Iraq. In Germany, even those conservative nationalists who had ardently advocated reunification since 1949, now can be heard muttering about the good ol’ days when West Germans were sending care packages with bananas, powdered milk and chocolate to their poor eastern relations, who otherwise left them alone. East Germans engage in “Eastalgia,” an irrational longing for the time when the price of a static and modestly comfortable socialist life was the occasional neighbor or relative who disappeared at four o’clock in the morning in the company of men wearing leather jackets.

Russians associate the collapse of communism with the traumatic hunger years of the early 1990s -- and the wave of organized crime, the forerunner of any good capitalist economy. Many of them still aren’t convinced that they are better off; we’ll see exactly how many when president Putin’s term in office is over. Will the 11.4 million Cubans on the island be better prepared?

I doubt it. You see, communism and its pale, domesticated cousin, socialism, wreak havoc not just on the economy, infrastructure and building substance of a country. After 49 years, its influence on the spirit and mentality of a people is like mercury poisoning. Communism conditions and habituates people to poverty. It purposefully reduces expectations at life, stifles ambition and creativity, instills passivity and reinforces bad habits.

In Cuba, it may take a generation or two to overcome its long-term symptoms.

But if the fall of communism in Eastern Europe is any indicator, Cuba is in for a rough ride. Any power vacuum that may arise after the demise of the Castro brothers and the lifting of the American embargo will be quickly taken advantage of by the corrupt layers of officials and apparatchiks who managed to prosper even in communism... and by U.S., Latin American and Caribbean organized crime -- drug cartels and arms runners, prostitution rings and assorted shady businesses.

Let’s not forget that now we also have a freshly anointed dictator in Venezuela... who hates America, loves Castro -- and would love nothing better than having a battery of Russian-made medium range ballistic missiles pointing right at downtown Miami.

Why North Korea Is Lying Through Its Teeth

By Steven Lord,

North Korea’s agreement to nuclear disarmament is a smokescreen for the biggest missile buildup in the region.

You see, North Korea agreed to a similar nuke deal with the Clinton administration in 1994. It lied. Because in late 2002, the quirky Kim Jong-il told Washington to stuff it -- and North Korea resumed production of weapons grade uranium.

Japan certainly doesn’t believe the latest deal will stick.

As Japanese Foreign Minister Taro Aso told U.S. Secretary of State Condoleezza Rice, “Whether it actually goes ahead remains to be seen. We do not know whether it will go ahead just because it has been signed.”
Even if North Korea does comply, the Feb. 13 treaty ignores a more deadly threat from the radical, isolated country. North Korea has 10,000 conventional missiles pointed at Japan and South Korea, which are not covered in the pact. And the chance of those missiles being dismantled is nil.

The pint-size Kim in his platform shoes, bouffant hair (to make him appear taller) and Elvis sunglasses is simply too paranoid and bizarre to scrap his missile arsenal. And so the conventional missile buildup goes unabated in the region.

That’s why one American missile maker will continue to prosper under the flimsy accord. In fact, the morning that the media broke the “groundbreaking” story, the company’s stock took a minor hit -- then rebounded like a bungee jumper to set a new 52-week high.

Nobody knows a lie better than Wall Street.

Insidious New Exit Tax

Tuesday, February 13, 2007

Today's comment is by Mark Nestmann, The Sovereign Society's Wealth Preservation and Tax Consultant and President of The Nestmann Group.

Congress is on the verge of passing an outrageous law that would impose the first-ever "exit tax" on expatriates (former U.S. citizens or long-term residents).

Like many outrageous laws, this ridiculous bill is cleverly hidden within another Act. In this case, it's buried in the "Small Business and Work Opportunity Act." Sounds innocent enough right?

The Small Business and Work Opportunity Act includes an increase in the minimum wage along with tax breaks for small businesses. That means once this bill emerges from the conference committee, and both houses of Congress approve the bill, it would be political hari-kari for President Bush not to sign it.

Right now, this bill is stuck in a conference committee in Congress. If it passes, it could include a little-known provision, which demands that expatriates pay a tax on all unrealized gains of their worldwide estate. The gains will be assessed based on the fair market value of the expatriate's assets and the tax due within 90 days of expatriation.

Legislative Overkill!

This exit tax applies to assets held in retirement plans and trusts, both domestic and foreign. The only thing it doesn't apply to is U.S. real estate investments, which remain subject to U.S. tax under existing law.

Presumably, the phantom gain would be taxed as ordinary income (at rates as high as 35%) or capital gains (at either a 15% or 25% rate), as provided under current law. When the assets are actually sold, no further U.S. tax will be due (although the gain might be taxed again by the country in which the expatriate resides, leading to double taxation on the same income).

The section of the bill that applies to retirement plans is particularly unfair. First, these gains are generally taxed at the expatriate's top marginal tax rate - up to 35% - and usually aren't eligible for the more favorable 15% long-term capital gains rate. Also, expatriates who must withdraw assets from retirement plan to pay this tax, and are under 59-1/2 years old, will be hit with a 10% penalty tax on top of the exit tax. And finally, when distributions are actually made, the country where the expat resides could tax those distributions a second time. Talk about legislative overkill!

In all cases, the first US$600,000 of gains will excluded from the exit tax (US$1.2 million in the case of married individuals filing a joint return, both of whom relinquish citizenship or terminate long-term residence). That exclusion will increase each year as the cost of living adjusts.

There are two exemptions to this horrific bill. Unfortunately, neither of these exceptions applies to most "covered expatriates:"

An individual born with citizenship both in the United States and in another country. They are exempt provided that

(a) as of the expatriation date, the individual continues to be a citizen of, and is taxed as a resident of another country, and

(b) the individual was not a resident of the United States for the five taxable years ending with the year of expatriation.

A U.S. citizen who relinquishes U.S. citizenship before reaching age 18 1/2, provided that the individual was a resident of the United States for no more than five taxable years before he or she expatriated.

Plugging the "Billionaire's Loophole"

The uproar over expatriation wouldn't even exist if there weren't an existing quirk in the U.S. Tax Code. U.S. citizens, unlike citizens of almost every other country in the world, are taxed on the basis of their citizenship, not their residence.

Individuals living in the United Kingdom, Japan, Australia, or almost every other country merely need to leave those countries and become non-resident for an extended period to stop paying taxes in their home country. But not the United States: it taxes all the earnings of all its citizens, whether they live in Miami, Montreal, Moscow, or Mumbai.

Since the publication of an article in Forbes magazine in 1994 describing how a handful of billionaires had given up their U.S. citizenship to escape the clutches of the IRS, the image of former U.S. citizens living tax-free in some tropical paradise has been an irresistible populist target.

Sam Gibbons, a now-retired Florida Democrat, referring to expatriates, spoke of "the despicable act of renouncing allegiance to the United States." Former Congressman Rep. Martin Frost, a Texas Democrat, supported an exit tax on the basis of "basic patriotism and basic fairness."

Given attitudes like these, it's not surprising that our political solons have decided to enact an exit tax on "rich" expatriates. However, the tax will affect many more than just a handful of wealthy Americans who become tax exiles by giving up their U.S citizenship. It will also affect hundreds of thousands of wealthy long-term green card holders (many of whom no longer reside in the United States) who are not U.S. citizens.

If anything, it's very likely that this new exit tax will inspire these wealthy non-citizen residents to leave the U.S., if they haven't already lived here for eight years. Not to mention, it will discourage successful foreigners from taking up residence in the U.S. at all.

How Are You Supposed to Pay This Exit Tax?

But if you're affected by the exit tax, there are much greater practical problems to consider. The most obvious one is how do you come up with the cash to pay the tax without selling the underlying assets? For illiquid, highly appreciated assets, such as a closely held business, it may be impossible to come up with the necessary cash to pay the tax.

For such situations, there are provisions in the law to permit deferral of the exit tax, but they come with a stiff price.

First, interest is charged for the period the tax is deferred at a rate two percentage points higher than the rate normally applied to individual underpayments

Second, deferral is possible only if the expat invests in a U.S. Treasury bond that matches the amount of the deferred tax. For owners of illiquid property that can't easily be sold or borrowed against, the only way they will be able to post the necessary bond will be to pledge the property itself to the U.S. government.

There's also a stinger to consider for those who might be tempted not to comply. This new law states that anyone who does not comply with the new U.S. Tax Code will be denied entry to the United States.

By enacting an exit tax, the United States joins the ranks of Nazi Germany and the former Soviet Union, which confiscated part (and sometimes all) of the assets of wealthy emigrants. Apartheid South Africa imposed a similar levy on emigrating whites.

And for what? The exit tax is estimated to raise only US$250 million over the next five years. That's a drop in a bucket compared to the annual US$250 billion federal deficit. Of course, these estimates don't include the losses in revenue from highly talented individuals who may not ever establish U.S. residence or citizenship because they want to avoid such harsh tax consequences.

A Glimmer of Hope - Buried in Our Constitution

One possible glimmer of hope is that U.S. courts may declare the exit tax unconstitutional. The right to expatriate is fundamental in American law. Indeed, the Declaration of Independence cited it as a "law of nature." The U.S. Constitution guarantees the right to end U.S. citizenship, to live and travel abroad freely, and to acquire citizenship from other nations. All of these rights have been affirmed by the U.S. Supreme Court.

Will America's highest court have the courage to defend what populists scornfully refer to as the "billionaire's loophole?" I'm not holding my breath-and neither should you.

MARK NESTMANN, Wealth Preservation & Tax Consultant & President of the Nestmann Group

Wacko environmentalists invade Wall Street

By Andrew Snyder, Volume Spike Alert

Don’t you just love it when you run into one of those folks who talks just to hear themselves make noise? If they would close their mouth and listen to the other side for once, maybe we wouldn’t have all of this global warming we hear so much about.

Actually, global warming is exactly what I want to talk about. The liberal environmentalists are starting to have an impact on investors. That means it is time to pay attention to all of the scientists, conservationists, and all the others who contribute their share of hot air. When there is money on the line, stuff starts to happen.

Earlier today, Ceres, an environmental awareness organization, released its “climate watch list.” It contains a list of 10 companies that the feel-good group believes are least responsive to the pressures of global warming and cleaning the environment. The group’s goal is to force CEOs to care about Mother Nature by creating pressure at the shareholder level.

Of course companies like Exxon Mobil (XOM:NYSE) and coal super excavator Massey Energy (MEE:NYSE) are on the list. But there are some rather surprising names making the top 10.

Companies like Wells Fargo (WFC:NYSE) and Bed Bath & Beyond (BBBY:NASDAQ) are portrayed as evil polluters. Even an insurance giant like Ace Ltd (ACE:NYSE) made the list. What gives?

It turns out the environmentalists are simply belching more hot air and propaganda. Sure, oil and coal companies are at the heart of a dirty industry that tampers with nature, but a finance company, an insurer, and a home furnishings retailer? Come on. Stop wasting valuable oxygen.

The environmentalists are not upset with the traditional nonpolluters above because they are blowing up mountains or tainting thousands of miles of pristine wilderness with accidental oil spills. Instead, they are moaning about the firms’ lack of a formal plan to reduce their energy consumption. Ooohhh… it’s the end of the world as we know it.

Come on, corporate executives at multi-billion companies have better things to do than make a detailed list of which light bulbs they will change and what type of insulation they will implement in their new office space. Things like soaring healthcare costs, disappearing pension funds, and a slowing economy are likely to be a bit higher on their to-do list. At least, I would hope so.

Unfortunately, there are companies dumb enough to waste their time compiling reams of reports detailing just how their environmental initiatives are going to save the whales. Don’t fall for this garbage. It is nothing more than a marketing ploy. I know because I’ve talked with the folks who help create it. They are making money hand over fist and buying big, gas-guzzling boats with it.

If you believe a document outlining pollution reductions will ultimately lead to an increase in share price, you are gravely mistaken. Plus, I’ve got a few bridges I am willing to sell to you, real cheap.

A company’s number-one goal is to maximize profits, not massage Mother Nature after a tough day. It is the job of the democrats to take those profits and save the world.

Yes, we need to fight global warming (Blogger note - if it is actually real and caused by man) and all forms of pollution. And I will be the first one to do it. But propaganda and skewed facts are not the best way to do it. Education and intelligent choices are the only way we will make progress.

Friday, February 02, 2007

Bernard Lewis: Muslims to Take Over Europe

From the NewsMax.com Staff
For the story behind the story... Thursday, Feb. 1, 2007 11:22 a.m. EST

Muslims "seem to be about to take over Europe,” which has "given up” efforts to maintain its culture, said world-renowned Middle Eastern and Islamic scholar Bernard Lewis.
Lewis, a professor of Near Eastern Studies at Princeton, told the Jerusalem Post that soon the only important question regarding Europe’s future would be, "Will it be an Islamized Europe or Europeanized Islam?"

Lewis, whose many books include the recent "What Went Wrong?: The Clash Between Islam and Modernity in the Middle East,” said the Islamic takeover of Europe would be assisted by "immigration and democracy." Instead of fighting the threat, he added, Europeans had given up.
"Europeans are losing their own loyalties and their own self-confidence," he said. "They have no respect for their own culture." Europeans had "surrendered" on every issue with regard to Islam in a mood of "self-abasement, political correctness and multi-culturalism.”

Turning to the threat of a nuclear-armed Iran, Lewis said the Cold War philosophy of Mutual Assured Destruction, which prevented the former Soviet Union and the United States from using nuclear weapons, would not apply to President Mahmoud Ahmadinejad's regime.

"For him, Mutual Assured Destruction is not a deterrent, it is an inducement. If [Iran's ruling ayatollahs] kill large numbers of their own people, they are doing them a favor. They are giving them a quick, free pass to heaven. I find all that very alarming.”

Lewis said Israel and the West should work to strengthen moderate forces within Iran via an aggressive propaganda campaign.

"All the evidence is that the regime is extremely unpopular with their own people," he told the Post. "I am told that the Israeli daily [radio] program in Persian is widely listened to all over Iran with rapt attention."