El Conquistqdor Francisco de Orellana

El Conquistqdor Francisco de Orellana
The Conquistador who put the Amazaon baisn "on the map"....Francisco Orellana

Monday, January 30, 2012

Market Meltdown Warning: Institutional Investors Are Offloading Stocks to Retail Buyers (That’s Us)

As the Dow Jones appoaches 13,000 and continues to break through multi-year highs, reports over the last several months suggest that the smart money, including major trading houses and hedge funds, is heading for the exits. The latest report comes to us from none other than government bailout darling Goldman Sachs:
Earlier today we got our first clue that the smart money has stopped “distribution” and is now offloading to retail after we saw the first equity fund inflow, however tiny, in months, and only the second one out of 37 outflows since April, as reported by ICI. The second and far more important one comes from today’s Goldman sales roundup, which confirmed that following today’s latest borderline ridiculous meltup, retail investors looking for the sucker at the poker table, wouldn’t be able to find one. Here’s why. Quote Goldman: “As has been the recent trend, our cash flow remains better to sell, both from long-only and hedge funds.” And there you have it: smart money (well, relatively so) has “recently” been using every melt up chance it gets to dump the bags with the E*Trade baby. Third and final proof: “ETF flow however skewed toward better buying.” At this point retail investors may want to ask themselves: what do they know that the others, who are actively selling to them, don’t.
Source: Zero Hedge
In late November 2011, it was reported that a silent run on the banks in Europe had already begun:
As is generally the case in the financial community, the big investors which include large sovereign wealth funds and behemoth financial institutions, are one upping the public by getting out while the gettin’ is good. While mainstream media makes it seem like we are moving in a positive direction with respect to Europe, one thing should be clear: it’s a sham. This the same thing we were being told two years ago, a year ago, a month ago, a week ago. Nothing could be further from the truth.

Business Inside reports that a run on Europe has begun, and large institutional players are liquidating their exposure to European bonds and other assets:
Until recently, the concern about Europe has been mostly theoretical–a potential train-wreck that would occur if/when the world’s lenders decided that the continent’s problems extended beyond the basket case known as Greece and cut lending to Europe’s “core.”
Well, that concern is no longer theoretical.
It’s happening.
The world’s lenders are increasingly deciding that it’s better to be safe than sorry, and they’re pulling their money out of Europe.
Source: The Daily Sheeple

Best Places in the World to Retire

By the staff of International Living
If you had $20,000 a month to retire on — you could live lavishly pretty much anywhere on the planet. But we’re interested in the places where you can live that lifestyle on one-tenth the budget...

Places where you can have a maid clean for you...hire a gardener... wake up to a view...have great health care, eat well, enjoy the finer things in life — for less than $2,000 a month. You may be surprised how many there are...

Months ago, our far-flung editors and in-country advisers began collecting all the data and details that inform our annual Retirement Index.

To compile it, we evaluate and rank countries around the world according to eight crucial categories: real estate, special retirement benefits, cost of living, ease of integration, entertainment and amenities, health care, retirement infrastructure and climate.

This is a qualitative assessment, based on real-world data gathered on the ground. For each category in our Index, we looked closely at what matters most to you when you’re considering an overseas retirement spot — everything from the price of bread to how easy it is to make friends or stay in touch with family.

We considered a vast range of data points, from the average humidity to the cost of a taxi. And with costs in mind, we examined prices for real estate, rentals, and utilities like water, electricity, and cable TV. We looked at costs for groceries, eating out, even specific medical procedures. We took into account what kind of discounts retirees can get on travel, taxes and entertainment. And we considered whether there were direct flights back home...how many and how long they are, too.

And we asked: What is the Internet like? Do you need a car? Can you catch a movie in English? Are the people friendly? Does it rain? In effect, we asked all the questions you should ask when you’re considering a retirement overseas. This year’s Top 19 foreign locations are listed below:

The Top 19 Retirement Destinations

Numbers and rankings don’t tell the whole story, of course. When it comes to relocating overseas, there is no such thing as “one size fits all.” So the staff and global correspondents of International Living also recorded a wide range of boots-on-the-ground testimonials from folks who have retired to these various foreign locales.

Take Daphne Newman, who lives in Caribbean Honduras. She’s spending just $1,400 a month to live yards from a white-sand beach on the island of Roatan. Only a three-hour flight from the US, English- speaking Roatan with its world-class reef just offshore, is an easy place to make friends and fit in. It lands mid-table in this year’s Index.

Jack Griffin and his wife Margaret have opted, by contrast, for city life in Nicaragua. When the stock market crashed and the value of their home in the States plummeted by 30%, they began to worry about how to fund their retirement. The final straw came with a 37% hike in their annual health-insurance premium. At age 60, they felt they deserved the retirement they had worked for all their lives, so they found a new home in Managua, the country’s capital.

Today their international medical insurance costs them 62% less than their policy did back home (yet their local hospital is internationally accredited and the doctors speak English). Retired now without money worries, they spend their days exploring, horseback riding, going to the beach or gym, and doing yoga. They have a full-time maid and a gardener and, says Jack, “We do it all for less than half the cost of a moderate lifestyle back home in Atlanta, Georgia.”

Chuck and Jamie Bilbe, ready to retire in Florida, found themselves in a situation similar to the Griffins’. “We were concerned that our retirement savings wouldn’t see us through, so we began looking overseas for a place where our ever-shrinking nest egg might last longer,” says Chuck. Now they live in Corozal, Belize, their cost of living is much lower than it was in the States, but that’s not the greatest appeal. What they say they like most is the Old-World lifestyle. “Like Florida in the 1950’s,” they say. “We’re eating better, sleeping better and enjoying social activity much more now than we did before.”

It’s not just destinations south of the States that appeal. Pam Griner Leavy and her husband Jim are just two of the more than 100,000 American expats living in France. They’re retired in Paris on a reasonable $3,149 a month. “There are so many things for free here, or reasonably priced...big-city life is good,” says Pam.

In Asia you can live comfortably for less than $1,000 a month on a powder-sand beach in Thailand. Up the budget just a bit and you can afford First-World comforts and conveniences in colonial Penang Island, Malaysia. Keith Hockton and his wife Lisa live there, where they rent a sea-view apartment for $1,000 a month — it comes with a shared pool and gym — and they eat out five nights a week, keep a small sailboat, enjoy cycling through the botanic gardens. Their total budget is $1,719 a month.

In Brazil, expats with $2,150 a month can live a block from the country’s best beaches in Fortaleza. In Boquete, Panama, Karl and Liz Parker need just $2,000 a month to fund their life in a place that provides lavish highland views in a near-perfect climate. Panama’s retiree-benefit program provides them discounts on nearly everything, too, which helps keep their costs down.

In Cuenca, Ecuador, Douglas Willis, his wife and two children live on just $1,000 a month. In Costa Rica’s Central Valley, Sharon and Lee Harris bought a townhouse in Heredia for $75,000, and pay only $40 a month for healthcare coverage as members of the Caja, the country’s excellent national healthcare system.

Wherever the locale they’ve chosen — beach, city, highland, valley — these expats all have one thing in common: They’re living the lives they’ve always wanted for much less than they ever dreamt they could.

This 2012 Retirement Index covers all the bases, revealing a wealth of choices when it comes to comfortable retirement living abroad. Choices you don’t have to be wealthy to take advantage of.


The International Living Team
for The Daily Reckoning

Bill Bonner on "Christians" and politics......

** “Hey Bill,” writes a Dear Reader, “How can you say America is going to Hell? We’re the most Christian country in the world.”

The trouble with Christians is that from time to time they render unto Caesar far more than he deserves...and lose sight of their own faith. Hardly had the martyrdoms stopped under Emperor Constantine than early Christians began pointing the figure, calling one another heretics...and then murdering each other. 

Christian crusaders sacked the Christian city of Constantinople on their way to the Holy Land ...where they did even worse mischief. In the 15th century, Lutherans under Charles V gave Rome a worse sack than the barbarians had a thousand years before. They raped nuns, murdered priests, and stole whatever they could carry off. 

And now, once again, Christian mobs are calling for blood. Jon Utley, who we met Tuesday night, explains why America’s evangelical Christians are an ungodly bunch. Logically, they should support Ron Paul. He opposes abortion, gay marriage and promiscuity. He’s never been divorced. Two of his brothers are ministers. And he’s a Baptist. What more could they want?

What they want, Utley explains, is to live by the sword:

Why...are evangelical leaders now opting for Santorum, and before him Gingrich? The one big area of disagreement with Ron Paul is war; foreign wars and the domestic one against drugs. For this they oppose him. Santorum supports unending war in Afghanistan, backing Israel without limit and a new war against Iran.

Earlier there was a major far leftist candidate who supported all the issues that evangelicals oppose, and was a vocal proponent for expanding Israeli settlements on the West Bank and promoting the war on Iraq. He was overjoyed when open homosexuality became allowed in the military, he supports abortion, gay marriage and the leftist agenda for big, intrusive government; power to labor unions as well as expanded, unconstitutional police powers within the US. Evangelicals adore him and went all out to support him 2006, when he lost his primary race and ran as an independent for the Senate. He is Senator Joseph Lieberman of Connecticut.

All this shows how evangelical leaders put support for wars ahead of their social values. Their support includes every new law giving Washington ever greater police powers over American citizens, such as the Patriot Act, Military Commissions Act and the recent National Defense Authorization Act which tear asunder much of the Bill of Rights. Most also supported torture of prisoners of war (with the notable exception of Chuck Colson of Prison Fellowship). All this comes with their “social values.”

They loved George Bush. They were major supporters of the two wars against Iraq and the occupation of Afghanistan. Fear and ignorance of the outside world joins together with a belief that God uniquely favors America. Mostly poorer Southerners they also have strong affinity for the American military and its industrial complex. In addition, author Chris Hedges has written about how they are joined by many Northern blue collar families hurting from new technology, globalization, and poor schools in seeing government as out to undermine their communities and social values. Their solace is to hope for Armageddon.

Evangelicals like to quote a biblical text that God favors those who favor the Jews. However, for them they mean only Jews who make wars and contribute to chaos in the Middle East. Jewish peacemakers are cursed in their view. No tears were shed for Yitzak Rabin who negotiated peace with the Arabs until Israeli fanatics killed him. Indeed Pat Robertson said that Rabin was killed because he was trying to thwart God’s plans.

Herein lies their antipathy to Ron Paul, who in all other respects is a family values conservative. Indeed, most of them are Baptists who used to look upon Catholics with suspicion. Today they would prefer Senator Santorum or Newt Gingrich, both Catholics, to Ron Paul, who is Baptist. Santorum is no libertarian believer in limited government (he would use government to enforce his social values) and urges absolute support for Israel and the military industrial complex. These evangelicals don’t want peace because it would mean postponing Armageddon. That’s why their leaders oppose Ron Paul.

Jon Basil Utley is Associate Publisher of The American Conservative.

Bill Bonner
for The Daily Reckoning

Tax Laws, Corruption and Other Reasons to Expatriate

Reporting from Buenos Aires, Argentina...

Quote of the day "Only to say that, as a general rule, people find themselves treated much better as guests in one country than slaves in another."

ere’s a meaningless abstraction for you, Fellow Reckoner. You ready? 

US GDP grew at an annualized rate of 1.7% for 2011.
Now, what does that sentence actually tell us? What does it reveal about life or the quality of it; about the long arc of history and where we are along it; about the Heavens above us, the Hells below and our place in the present somewhere in between? What useful piece of information does this arrangement of letters and numbers divulge that has this morning’s news wires so abuzz with excitement? 

What, if anything, does it really say? 

Nothing. Well, nothing important anyway. It simply tells us that a measurement with no meaningful connection to reality has, in an attempt to quantify the size of something that does not exist, moved in a direction that does not matter. 

Frank Shostak, an adjunct scholar at the Mises Institute, sums the GDP fraud up nicely:

“The GDP framework gives the impression that it is not the activities of individuals that produce goods and services, but something else outside these activities called the ‘economy.’ However, at no stage does the so-called ‘economy’ have a life of its own independent of individuals. The so-called economy is a metaphor — it doesn’t exist.”
But let us imagine for a moment that there was such thing as an economyindependent of the individuals who comprise it. The GDP metric still provides, at best, a shoddy way to measure “it.” There is no accounting, for example, for the immense time, effort and natural resources that go into building a good/providing a service that nobody actually wants. Consider the infamous Cash for Clunkers disaster that goosed 2009’s GDP reading...or the payroll numbers of Census employees that pumped up 2010’s read.

According to the first example, the more goods that get destroyed prematurely...the higher GDP goes up! Likewise, in the second example, the more people are employed to perform meaningless tasks...the higher GDP does soar! Following this twisted logic, why not simply bulldoze every house in America and put the population to work rebuilding them from scratch?

Sure, nobody would have a roof...but everybody would have a job fixing one! Plus, GDP would be sky-high. Welcome to your workers’ paradise, comrade! 

But we’ve been down this rabbit hole before. And it’s Friday. The sun is shining here in Argentina’s capital city and the pretty people have already taken to the plazas for their afternoon cafés and cervezas. We’re not in the mood for tussling with statist newspeak jargon, for disentangling the government’s web of misleading euphemisms and dysphemisms, for straightening out crooked statistics and setting right wrongheaded theories. 

We’re in the mood for some good news today...something to welcome the weekend along a bit. Thankfully, this world is rich with uplifting stories. Ah, why here’s a piece of news that brought a smile to our dial earlier in the week: 

According to National Taxpayer Advocate Nina E. Olson, approximately 4,000 people gave up their [US] citizenship from fiscal year 2005 to FY 2010. Numbers were up sharply since the Great Correction began in 2008, “from 146 in FY 2008 to 1,534 in FY 2010” said the article we read. The rate quickened further last year, with 1,024 Americans ditching their citizenship during the first two quarters of FY 2011 alone. 

To be sure, the number of Americans “making the chicken run” is, in absolute terms, still very small. But the trend is still young...and, in our opinion, likely to continue to gather pace as the empire crumbles. Not that we have anything against one or the other government in particular. They’re all comprised of thugs and phonies. Only to say that, as a general rule, people find themselves treated much better as guests in one country than slaves in another. Besides, freedom takes small victories when and where she can find them these days. 

The study cites the “confusing complexity” of the US tax code and “bait and switch” tactics used by the IRS to lure in victims behind on “payments” as the primary two reasons for the uptick in permanent expatriation. 

As to the first reason, we harbor no doubts. Last year’s US tax code weighed in at 71,684 pages in length. According to the website, Political Calculations, that’s up from roughly 500 pages too many (read: 500 in total) in 1940. We have no idea if those numbers are correct...but they seem sufficiently absurd to be at least approaching the truth. Which causes us to wonder, as it did a Fellow Reckoner earlier in the week... If something that takes the equivalent of 55 War and Peaces to explain does not satisfy the qualifications of void for vagueness, we’re not sure what does.

“As a business owner who has survived 2 IRS audits,” writes our tortured reader, “I can personally attest that no one person alive on this earth understands the entirety of the IRS code; no lawyer, tax advisor, IRS agent or justice of the court. Literally thousands of terms and conditions in the code are so convoluted and confusing to the point that 5 accountants (or agents, or judges) considering the same point in question come to 5 differing conclusions proves my point.

“After both of my audits I received a nominal refund from Uncle Sam, and wrote a larger check to my CPA. The US tax code is completely corrupt, and certainly should be ruled ‘Void for Vagueness’.”
Nor do we doubt, for a moment, the second reason cited for the increase in citizenship renunciations. Apparently, reads the article, the naughty boys and girls at the IRS have been “telling Americans they can resolve their unpaid taxes under...‘older voluntary disclosure programs with the promise of reduced penalties, only to find themselves subjected to steeper penalties.’”

Well, what did you expect, Fellow Reckoner? It’s called honor among thieves, not honorable thieves. These are people who would turn in their own grandmothers if they found a dotless “i” or a crossless “t” on the ol’ dear’s tax return. You have to beamong them if you don’t want your own pockets picked. 

But then, what kind of horrible fate is that...where one becomes the very evil they despise in order to protect themselves from it? 

Hmmm...we don’t know. Try writing your congressman. He surely will.

Joel Bowman
Daily Reckoning

Saturday, January 28, 2012

Getting your hands around Quito

Publicado el 27/Enero/2012 | 14:54

Quito, Ecuador's capital city, conquered 476 years ago by the Spanish, is considered to be the best preserved Spanish colonial city in the Americas.  Designated more than thirty years ago as one of the first World Heritage sites by UNESCO - the United Nations cultural branch - its invaluable architectural and cultural symbols in old town form a labyrinth of tangible and intangible treasures.

Explore "El Centro" and then get to know many of the other attractions throughout the city, from  spacious parks to countless churches and museums.

La Ronda – A Must Visit For Everyone

One hundred years ago when Ecuadorian poet Hugo Aleman wrote: "Undoubtedly Calle de la Ronda symbolizes the absolute bustle of disoriented humanity," Quito  was a nest for bohemian activity and a gathering of all walks of life.  But today the  bustle is more of a a calmer spontaneity that can include serenades, street artists, and a host of great flavors and aromas.

A diverse mix of people can be found roaming La Ronda in the 21st century.  They are the tourists who are drawn to this emblematic, colonial street.

Though officially known as  "Calle Morales" (Morales Street),  the name La Ronda derives from the Spanish verb "rondar," which means to patrol.  When Quito was settled by the Spanish, La Ronda  was the southernmost boundary of the city and, as such,  was part of the patrolled perimeter.

Today, La Ronda is part of the city center, offering a melancholy stroll in the afternoon along a narrow, cobblestone street filled with colonial style architecture.  At night, it is by far the happening place in the central historical district, especially on weekends.

La Ronda  offers more than 40 different restaurants, bars, and coffee shops and is a bit of a cultural center, with artisan craft workshops like Hojalateria Silva, which makes  handmade, galvanized tin  miniatures, and Humacatama, a maker of custom hats, some of whose designs spirit you  back to the livliness of a different era.

Quito Information

Principal Museums

1. City Museum,   Garcia Moreno 572 & Rocafuerte, open Tuesday-Sunday, 9:30am-5:30pm, Admission $3 adults, 228-3882

2. Miguel de Santiago Museum (San Agustin),   Chile 924 & Guayaquil Streets, 295-5525. Monday-Friday, 9:00am-12:00pm & 2:00pm-5:00pm.  Saturday 9am-1pm, Admission $2. www.migueldesantiago.com

3. Metropolitan Cultural Center,   home to the Alberto Mena Caamano Museum.   9:00am-5:00pm, $1.50 adults, 295-0762.

4. Casa Del Alabado Museum of Pre-Colombian Art,   Cuenca 335 between Bolivar & Rocafuerte, Tuesday-Saturday 9:30am-5:30pm, Sunday 10am-4pm, Admission $4, www.precolombino.com miamiherald@hoy.com.ec

5. Capilla del Hombre (Chapel of Man),   Lorenzo Chavez Ea18-143 & Mariano Calvache (Bellavista-El Batan sector), Tuesday-Sunday 10:00am-5:30pm, Admission  $4, 244-8492,  www.capilladelhombre.com

6. Mindalae Museum.   Reina Victoria & La Niña,  252-7240  Monday-Saturday, 9:00am-6:00pm. Admission $3

For Kids
7. Ecuadorian Natural Science Museum,  Carolina Park, Monday-Friday 8:00am-1:00pm, 2:00pm-4:30pm,

Admission  $2,


8. Yaku Museum of Water,   El Placer Street Oe 11-271, Tuesday-Sunday, 9:00am-5:00pm, Admission $3, 251-1100, www.yakumuseoagua.com.

Other Attractions
9. La Ronda Street,  Historical Center, liveliest Thursday-Sunday after 6pm.

10. Junin Street,   Home to 3 more museums: Architectural Museum, Manuela Saenz Museum, and National Watercolor Museum.

11. Panecillo Monument,   Pancillo Hillside, Monday-Thursday, 9:00am-5:00pm, Friday-Sunday 9:00am-9:00pm, Admission $1.

12. Artisan Marketplace,   Jorge Washington Street between Reina Victoria & Juan Leon Mera, Open everyday 10:00am-7:00pm.

13. Botanical Garden,  Carolina Park, Monday-Friday, 246-3197. 8:00am-5:00pm, Admission $3.50. www.jardinbotanicoquito.com.

14. Cable Car - TeleferiQo of Quito & Volcano Park,   Cruz Loma – Slopes of Pichincha Volcano, Everyday. 222-1996.  8:00am-8:00pm, $8.50.

More Ways To See Quito

Quito Eterno (Historical Tours),

Historical Walking Tours

Flores N40-21 & Junin

228-9506, www.quitoeterno.org

Sunday Bicycling

Fundación Ciclópolis (Bike rentals available, call to reserve)

322-6502 / 223-4475, www.ciclopolis.ec


Every Sunday from 8:00 a.m. to 2:00 p.m. along 29 km of streets from North Quito to South Quito. More than 50 volunteers provide hydration stations and bike rentals.


Information Points

Main office (Historic Centre)  Palacio Municipal, Plaza de la Independencia, Venezuela & Espejo.Monday - Friday from 9:00am to 6:00pm, Saturdays 9:00 to 5:00pm.  257-2445.

Galería Ecuador Gourmet

Reina Victoria N24-263 & Lizardo García  Tuesday to Sunday:

10:00 to 8:00pm,

255-8440 / 223-9469

Ministry of Tourism of Ecuador

Monday to Friday from 8:30 to 5:00pm Eloy Alfaro N32-300 & Carlos Tobar, 399-333 ext. 1007

Tourist Safety Service

Main office in La Mariscal  Corner of Roca y Reina Victoria, Edif. Relaciones Exteriores 24/7, 254-3983.

Historic Center  Plaza Grande

North side of the square on Chile, between Venezuela and García Morenom Edif. Casa de los Alcaldes, 24/7. 295-5785

Helpful Numbers
Information, 104

International Long Distance, 116

Airport, 244-0080

Post Office, 256-1940


Mass Transit:

Trolebus, Ecovia, and Metrobus.

In the north, the routes run along the arterial avenues, 10 de Agosto, 6 de Diciembre and América.

For visitors staying in La Mariscal or in the north, the Trolebus and the Ecovía are the lines you are most likely to use, particularly when getting to and from the Historic Centre. Free transfers at the  northern terminals of 'Río Coca' and 'La Y,' respectively.

To travel to the valley of Cumbaya or Tumbaco, head to 'La Y' on the Ecovía, then change to take the "RC17 Cumbaya" bus. Cost: $0.25, $0.12 for concessions.  From there, numerous bus lines cover various routes amd are  divided into 'populares' which are blue and 'selectivo/ejecutivo' which are red.


Taxis are plentiful in Quito and are very useful for getting around. All should be yellow, licensed and have a taximeter. Fares begin at $.35 and min. charge is $1.

Most trips of 10-20 minutes within the city cost about $2-4. A ride from La Mariscal to the Old Town costs no more than $3, depending on traffic.


Emergency Numbers:

National Police, 101

Emergencia, 911


Hospital Metropolitano Av. Mariana de Jesús & Occidental, 243-1520.

Hospital Militar Queseras del Medio & Av. Occidental, 256-8152

Voz Andes Villalengua 267 & 10 de Agosto, 224-1540.

Clinica Pichincha Veintimilla E3-30 & Páez, 256-2408

Women's Clinics  (Clínica de la Mujer) Av. Amazonas 482 & Gaspar de Villaroel, 245-800

Thursday, January 26, 2012

Getting out of Dodge

An Interview with Doug Casey
(Conducted by Louis James, Editor, International Speculator)

Louis: Doug, a lot of readers have been asking for guidance on how to know when it’s time to exit center stage and hunker down in some safe place. Few people want to hide from the world in a cabin in the woods while life goes on in the mainstream, but nobody wants to get caught once the gates clang shut on the police state the US is becoming. How do you know when it’s time to go?

Doug: Well, the first thing to keep in mind is that it’s better to be a year too early than a minute too late. David Galland recently read They Thought They Were Free: The Germans, 1933-45, by Milton Mayer. He quoted a passage in his column of last Friday. It goes a long way in explaining why Americans appear to be such whipped dogs today. They’re no different from the Germans of recent memory. For those who missed it, let me quote it:

“You see,” my colleague went on, “one doesn’t see exactly where or how to move. Believe me, this is true. Each act, each occasion, is worse than the last, but only a little worse. You wait for the next and the next. You wait for one great shocking occasion, thinking that others, when such a shock comes, will join with you in resisting somehow. You don’t want to act, or even talk, alone; you don’t want to ‘go out of your way to make trouble.’ ... In the university community, in your own community, you speak privately to your colleagues, some of whom certainly feel as you do; but what do they say? They say, ‘It’s not so bad’ or ‘You’re seeing things’ or ‘You’re an alarmist.’

“These are the beginnings, yes; but how do you know for sure when you don’t know the end, and how do you know, or even surmise, the end? On the one hand, your enemies, the law, the regime, the Party, intimidate you. On the other, your colleagues pooh-pooh you as pessimistic or even neurotic... the one great shocking occasion, when tens or hundreds or thousands will join with you, never comes. That’s the difficulty. If the last and worst act of the whole regime had come immediately after the first and smallest, thousands, yes, millions would have been sufficiently shocked... But of course this isn’t the way it happens. In between come all the hundreds of little steps, some of them imperceptible, each of them preparing you not to be shocked by the next. Step C is not so much worse than Step B, and, if you did not make a stand at Step B, why should you at Step C?”
The fact is that the US has been on a slippery slope for decades, and it’s about to go over a cliff. However, our standard of living, while declining, is still very high, both relatively and absolutely. But an American can enjoy a much higher standard of living abroad.

On the other hand, if I were some poor guy in a poverty-wracked country with few opportunities, I’d want to go where the action is, where the money is, now. Today, that means trying to get into the United States. The US is headed the wrong direction, but it’s still a land of opportunity and a whole lot better than some flea-bitten village in Niger.

L: By the time things get worse than some Third-World dictatorship in the US, such a person could have remitted a whole lot of cash back home.

Doug: And you’d have a whole lot of experiences that would give you a competitive edge back where you came from, or in the next place you go to. The one-eyed man is king in the valley of the blind. People have to lose that backward, peasant mentality that ties them to the land of their birth. Sad to say, although the average American has somewhat more knowledge of the world — mainly due to television — his psychology is just as constrained as that of some serf from central Asia or some primitive villager in Africa. It’s all a matter of psychology.

But if you’re not poor, you want to go someplace that is safe, nice — whatever that means to you — and with a lower cost of living. As most readers know, for me that’s Cafayate, Argentina, but one size does not fit all. It needs to be a place you actually enjoy spending some time, with people whose company you enjoy.

L: Fair enough. But our readers want to know if your guru-sense is tingling yet, or how close you think we are to it being too late to leave — or at least too late to leave with any meaningful assets.

Doug: I’m a trend observer. This is one of the advantages of studying history, because it shows you that things like this rarely happen overnight. They are usually the result of trends that build over years and years, sometimes over generations. In the case of the US, I think the trend has been downhill, in many ways, for many years. Pick a time. You could make an argument, from a moral point of view, that things started heading downhill at the time of the Spanish-American War. That was when a previously peaceful and open country first started conquering overseas lands and staking colonies. America was still in the ascent towards its peak economically, but the seeds of its own demise were already sewn, and a libertarian watching the scene might have concluded that it was time to get out of Dodge —

L: [Laughs] That would have been a bit early...

Doug: [Chuckles] Yes, that would have been way too soon...So, when did the slide — politically, economically, and socially — really start for the US? When were there no more trends going up?

L: FDR? The New Deal was really a moral, economic, and political turning point.

Doug: You could make that argument, but the US still grew economically, despite the roadblocks FDR threw in its path. US military power and global prestige continued growing from that point, although, paradoxically, the accelerating growth of the US military was directly responsible for the decline of the US economically and in terms of personal freedom. One reason for the ascendancy of the US after World War II was that we were the only major country in the world not physically devastated by the war.

L: Ah. Right.

Doug: So it seems to me that the peak of American civilization was in the 1960s. As for evidence, well, I like to put my finger on the 1959 Cadillac. Those twin bullet taillights, the opulence of it... In terms of then-current technology, things couldn’t get much better. That was the peak, in my mind. Though things continued getting better for a while, the US started to live out of capital.

L: Had to pay for guns and butter.

Doug: That’s right. The Johnson administration’s so-called Great Society created vast new federal bureaucracies that promised Americans free food, shelter, medical care, education, and what- have-you. Americans became true wards of the state. But the real, final nail in the coffin for America was in 1971 —

L: Nixon taking the US off the gold standard.

Doug: Nixon taking the US off the gold standard — open devaluation of the dollar, combined with wage and price controls for some months. And that was not long after the so-called Bank Secrecy Act, which abolished bank secrecy, and required the reporting of all foreign financial accounts...Since 1971, some things have improved largely due to technological advances, but the America That Was has been fading into the past. It was a decisive turning point. You can see that in the accelerated proliferation of undeclared wars we’ve had since then. I don’t just mean the penny-ante invasions of Granada and Panama — the US has always lorded it over Caribbean and Central American banana republics; those are just sport wars. But Iraq and Afghanistan are alien cultures on the other side of the world — apart from never posing any threat to the US. Now it looks like Iran and Pakistan are on the dance card, and they’re big game. The War Against Islam has started in earnest, and it’s going to end badly for the US. I explained all this at great length in the white paper, Learn to Make Terror Your Friend, that I wrote for The Casey Report last month.

To be continued...

Getting out of Dodge, Part II

An Interview with Doug Casey
Editor, International Speculator
 Doug: Stating that the US is turning into a police state when you started this conversation was quite accurate. You can see more and more videos spreading over the Internet, not just of police brutality, but demonstrating the militarization and federalization of police, who are being inculcated with both disdain for and paranoia about ordinary citizens.

In the old days, if you were stopped for speeding, the peace officer was polite — you could get out of your car, meet the cop on neutral ground, and chat with him. You didn’t have a serious problem unless you were obviously drunk or combative. Now, you don’t dare make a move. You better keep your hands in plain sight on the steering wheel and be ready for a Breathalyzer test without probable cause. The law enforcement officer will stand behind you with his hand on his gun. And you’re the one who’d better be polite.

L: There has been a polar reversal. The cops used to address citizens as “sir” or “ma’am.” Now, the correct response in a traffic stop is: “Yes, sir! I would love to inspect the bottom of your boot, sir!”

Doug: [Laughs] That’s right. My friend Marc Victor gives out magnetized business cards. People ask, “Why?” He answers that it’s so clients can put them on the bottom of their cars or refrigerators, so they can see it when the cops throw them to the ground.

L: Marc’s a good man. There’s a handy video on Marc’s website, offering advice on what to do if you’re pulled over by the police in a traffic stop.

Doug: A good public service announcement. At any rate, I think there’s no question that the US has turned the corner on every basis: politically, socially, morally, and now, economically...

L: Okay, but, Doug, you said that in 1979 too. The question is, how do we know when the door is going to close?

Doug: [Laughs.] Well, sometimes I feel a little like the boy who cried wolf. But Roman writers like Tacitus and Sallust saw where Rome was going before it got completely out of control. Should they have said nothing, for fear of being too early? Here in the US, it should have gone over the edge back in the 1980s, but we got lucky. There was still a lot of forward momentum, which can last for decades when you’re speaking of civilizations. There was the computer productivity boom. The Soviet Union collapsed, China liberalized, and Communism was discredited everywhere except on US college campuses. The end of the Cold War opened up vast areas of the world to the global market. And most surprising of all, Volcker tightened up the money supply and interest rates went high, causing people to save money and stop borrowing to consume.

L: That’s not happening this time.

Doug: No. We got lucky back then. Since the ’90s we’ve had a long and totally phony, debt-driven boom that’s now come to an end. I feel very confident that there’s no way out this time. There are huge distortions and misallocations of capital that have been cranked into the system for two decades. And not just in the US this time, but in Europe, China, Japan, and elsewhere.

The US is very clearly on the decline. The fact that in spite of bankrupting military expenditures to no gain for the American people, those in power are talking overtly and aggressively about attacking more countries — Iran and Pakistan in particular — is extremely grave. The fact that they attacked Libya — which, incidentally, is going to turn into a total disaster, a civil war that will last for years — shows it’s not stopping. Sure, Obama brought troops home from Iraq — another disaster that’s going to remain a disaster for years to come — but at the same time he put a company of combat troops in Uganda, of all places and Marines in Australia, to provoke the Chinese.

Back home, I’ve read reports that people are being stopped for carrying gold coins out of the US, in Houston in particular. Now we have authorization of the military to detain US citizens, on US soil, with no trail, and indefinitely, on the verge of becoming law. And Predator Drones have been used to hunt down farmers on their own ranches.

I could go on and on. This is not like spotting early signs of decay in America’s expansionist wars of the 19th century or things getting worse with FDR. Most people can’t see it with all the noise and confusion, but we’ve reached the edge of the precipice.

L: Don’t worry about exactly where the edge is, just assume it’s there and take appropriate action?

Doug: Yes. It really is there. It’s a clear and present danger. But most Americans are as oblivious as most Germans were in the ’30s. In fact, most of them support what’s going on, just as most Germans supported their government in the ’30s and ’40s.

L: So... don’t worry about figuring out exactly when the gates will shut. Assume they are shutting now?

Doug: That’s right. One should be actively and vigorously looking to expatriate assets, cash, and even one’s self. A prudent person will always be diversified politically and internationally.

L: What about people who have jobs they can’t continue doing from abroad and who need the income?

Doug: They should still prepare, as best they can, to be ready to go on a vacation when things get hot — a vacation from which they might not return for a long time. All that needs happen, with the hysteria that’s building in the US, is for a major terrorist incident — real or imagined — to occur. Homeland Security will lock the country down.

Look, I know it sounds extreme, and the comparison to pre-WWII Germany has been made many times, but it bears repeating. Germany was the most literate, civilized, and even mellow, in some ways, country in Europe. It was much admired all around the world — a nation of shopkeepers, small farmers, and scholars. But the whole character of the place started changing in 1933, and it just got worse and worse. By the end of 1939, if you weren’t out, you were done.

L: [Pauses] Well, not a cheerful thought. Actions to take?

Doug: Things we’ve said before: Set up foreign bank accounts in places you like to travel, while you can. Set up vault arrangements for physical precious metals outside the US. Buy foreign real estate that you’d like to own, because it can’t be forcibly repatriated. Offshore asset protection trusts are a good idea too. Become an International Man. Let me emphasize that US taxpayers should stay within all US laws, because the consequences of breaking them are unbelievably draconian.

Generally, one simply must internationalize one’s assets. The biggest danger investors face, by far, is not market risk — huge as that will be — but political risk. The only way to insulate yourself from such risk is to diversify yourself politically and geographically.

L: Right then... words to the wise. Thanks for your insight.

Doug: You’re welcome.

Wednesday, January 18, 2012

Currency Play to Defeat Iran

By Sean Hyman, Editor, Currency Cross Trader
Tensions are heating up in Iran and it could affect your portfolio ... especially if war breaks out between Iran and the U.S.-Israel.
Israel and the U.S. are decidedly uncomfortable with Iran “going nuclear.”
But when the U.S. told Iran to halt its nuclear program, the Iranians basically told us to “stick it.”
Then, on the Christmas Eve, Iran began 10 days of naval drills in the Strait of Hormuz - the point through which 20% of the world’s oil passes.
Now Iran has threatened to close the strait, which would stop the daily flow of around 17 million barrels crude oil from the region.
So, the beating of the chests has begun!
This is serious business, because parting from its control over the Strait of Hormuz, Iran is the second-largest OPEC oil producer behind Saudi Arabia.
In response, President Obama signed into law on December 31st a bill that would place sanctions on Iran and any financial institutions which did business with Iran’s central bank.
Meanwhile, the Saudis have now pledged to boost the kingdom’s oil production by as much as 2.7 million barrels a day, more than Iran exports, should be a market demand for more oil.
In response, Iran has warned Saudi Arabia that it should “reflect on and consider” that pledge.
At the same time, the West is ratcheting up pressure on the Islamic Republic and tensions continue to builds as each side ups the ante.
Whatever the outcome, the price of oil is going up - and as investors, we should act upon this important trend.

The Geopolitical Complication

The geopolitical oil web is complicated.
China imports about 22% of Iran’s oil while Japan imports 14% and the European Union imports 18%.
The U.S. needs these countries to boycott Iranian oil to enforce a proper clamp down. Japan and Europe will likely be up for that, but China won’t be so willing - and that will certainly be a problem for Obama.
Of course, another complication is that someone just bumped off another Iranian nuclear scientist - the third one recently, but the fifth over the past few years. I’m sure that chaps Iran’s rear-end and just makes them even more determined to close the Strait of Hormuz.
Now Iran has announced its next round of “naval war games”, which will be conducted by the Iranian Revolutionary Guard Corps next month.
Meanwhile, the U.S. has moved its next chess piece too by moving its second aircraft carrier into the Arabian Sea, where Israel and the U.S. will continue their “war game” operation called “The Great Prophet”.
At the same time, the U.S. has given Iran a “final warning,” signaling that if it closed the strait, such a move would be regarded as declaration of war.
So what’s an investor supposed to do?  A war would undoubtedly rattle portfolios. A number of positions could nosedive.
However, in a tense geopolitical crisis like this, there are few certainties - and one is that oil will go through the roof.
We all know that if oil goes higher, gas prices will also rise. We also know higher oil prices act like a broadly dispersed tax on consumers.
Think of the wholesaler who has to get his products to the retail outlets so consumers can buy them. If transport costs rise, it’s easy to see why either the consumer has to pay more or retailers profit margins are squeezed - or both.
Most likely, it will be you and I who pay the price - through the fuel we use to get to work, church, home, etc, and also in the rising cost of the goods we buy in stores. So, we’re getting hit twice.
Higher oil prices also act like a weight upon corporations. When profit margins are squeezed, companies often cut costs, which can then translate into layoffs.
Any way you look at it, trouble in the Strait of Hormuz will be tough for everyone... well, almost everyone, with the exception of oil exporters and smart investors.

How to Benefit if Oil Goes Through the Roof

If the Strait of Hormuz gets plugged, more demand will be placed on supplies of oil from other, more peaceful places like Canada.
And that’s where investor opportunities can really be found.
High crude prices are great for oil-exporting nations, because it means they get more money for their chief product and their profit margins have also widened.
I’ll have my Currency Cross Trader subscribers prepared if war breaks out. In the meantime, I’ve got them in a Canadian dollar trade right now as these tensions of war rise. Make sure that you, too, defend your portfolio.
You can do this by buying the Canadian dollar ETF (FXC) through your stock brokerage account... or you can also do it in the Forex market, like many of my subscribers are doing, to grab even greater profit.
Either way, it’s important to be proactive. Don’t just sit around scratching your head when war breaks out and the price of oil surges. My subscribers and I are snapping up the Canadian dollar.
Neither you nor I make the call on whether war will break out, but be prepared to take action if it does.
Have a Nice day!

Sean Hyman
Editor, Currency Cross TraderJanuary 2012

Blackout Wednesday: The Time Has Come

Wikipedia, that ever-evolving monument to human collaboration in the cause of global enlightenment, goes completely black today, Wednesday, Jan. 18. The blackout is a choice, and a brilliant one, made by founder Jimmy Wales in consultation with the whole Wikipedia community. It is a protest, a statement, a symbolic warning to the world of what can happen if governments attack the free flow of information.

The online protest is directed, in particular, against two bills roiling around Congress right now, called SOPA in the House and PIPA in the Senate. Early versions have been tabled. The Obama administration has said that it opposes the current versions, but the opposition was weak and suspiciously nuanced.

People who are digitally aware and politically savvy know that this is only round one. The attempt by governments to block information flows on the Web will continue in new and different bills and regulations. No new laws are even necessary; government possesses the power now to crush the information age on a bureaucratic whim.

In fact, this goes on every day. That’s because governments everywhere, in all times and places, want to control information and will use all their power to do it. It is also because the legal framework that rules how information is produced and distributed is fundamentally corrupted by the fraudulent notion of “intellectual property,” which, if consistently enforced, would put an end to the Internet as we know it...

  • Just this past week, a judge ruled that a 23-year-old British college student can be extradited to the US for a 10-year prison sentence, all for linking to other servers that illicitly host copyrighted content;

  • Late last year, US officials shut down 150 domains without hearings or trials on grounds that they were suspected of selling goods that violate trademark law. It was done on “Cyber Monday” for a reason: It was an announcement to the digital world that government is in charge;

  • In the spring of last year, the FBI arbitrarily shut down every online poker domain they could find and seized the bank accounts of some of the largest and smartest people who play online poker — and all of this happened before the recent announcement that online poker is being re-legalized;

  • Earlier in the year, the Department of Homeland Security seized 84,000 domains and put up an announcement that each was trafficking in child porn. Problem: It was all a mistake. Not one was actually guilty. To date, there has been no explanation of how this could have happened;

  • In 2010, the feds seized some 73,000 domains for the crime of linking to content that was said to be distributed illegally in violation of copyright.
Already, the damage of this sort of thing is enormous. Ten years ago, the Internet represented liberation, a new frontier of innovation, commerce, opinion sharing and spontaneous organizing. Today, more and more people are consumed by fear. Bloggers are unclear about what existing law does or does not allow. No one knows for sure how to define “fair use.” The deepest pockets are winning case after case. Faced with this uncertainty, many are choosing less over more content — which is exactly what the government and private monopolists want.

The Wikipedia protest is a way of saying: If this kind of thing continues and ends up institutionalized in new legislation, there will be no more Wikipedia, which is the No. 1 content-rich site on the Web and the main way people learn today (how far we’ve come from the debunking that was common only five years ago).

And this is just one example. Individual blogs would only contain government-approved content. Search engines would only produce only government-approved sites. Digital entrepreneurship would be suffocated by fears of threats, confiscations and jails. It is hard to see how even Facebook and Twitter could survive.

It is just marvelous that Wikipedia has taken this bold direction, and it is only possible because of the unique nature of the media in question. Many large businesses during the 1930s tried their best to protest New Deal price controls. But they could hardly shut down their giant stores. The revenue loss would have been devastating, and the victims would have been the employees. So in the end, the private sector was forced to submit to the controls. It was the same in the 1970s with wage and price controls. How could the merchants resist?

But digital enterprises are in a different position entirely. They can vanish with a few clicks, giving the world a conjectural look at what happens when the state attacks the lifeblood of innovation and progress. Small changes in the law can have a gigantic effect. Just as one click can shut down this site, one law can do the same.

It is not only Wikipedia. Others are doing the same. WordPress, the open-source platform that powers nearly a quarter of new websites and has the most-popular content management system on the Web, has also stepped out in front with a call for action: “Normally, we stay away from... politics here at the official WordPress project...Today, I’m breaking our no-politics rule...How would you feel if the Web stopped being so free and independent? I’m concerned — freaked right the heck out about the bills that threaten to do this, and as a participant in one of the biggest changes in modern history, you should be, too.”

There are many such examples. And even if successful, it is not enough. With or without SOPA, digital freedom is under attack. For example, ICANN, the gateway for all domain registration, is now requiring a verified official identity, supplied by government, for domain ownership. This change sets the stage for continuing shutdowns and strangulation.

The struggle is intensifying, and the sides are very clear: It is the government and old-line media companies that depend on the state’s laws versus everyone else. Everyone else consists of the independently active, privately owned global society that lives and thrives in the digital age. The astonishing innovations of this age have taught an entire generation about the miraculous power of information generation and delivery, about the capabilities embedded in the spontaneous actions of individuals, about the capacity of people around the world to generate order and progress through cooperation and exchange.

The notable thing is that the Web as we know it has been built by private hands working together, not by bureaucrats and politicians. This is the great lesson that our Jetsons world has taught us, and it points to a truth that all governments want to suppress: namely, that order is the daughter of liberty. How dare the bureaucrats and politicians presume to be the lords of what they had nothing to do with creating!

If government gets its way with this legislation and these overall trends, the costs will be immense and tragically unseen. Digital media and information freedom is directly and indirectly responsible for most of the economic growth we’ve experienced over the last 20 years. Without it, government controls, taxes, regulations and wars would have instituted a new dark age by now.

For government to attack Internet freedom today would be akin to burning the seventh-century manuscripts of St. Isidore of Seville, who produced, in the hardest times, the book that summarized all the knowledge of the ancient world (a Wikipedia of his time) and remains a primary source today.

It would be like murdering Venerable Bede in the eighth century, so that he could not have written his history of England that passed on knowledge and wisdom in the darkest of times.

It would be like smashing the 15th-century Gutenberg presses so that printing could have never gotten off the ground.

Historians constantly remind us that all great leaps in human history are inspired by the sharing and spreading of information. This is the precondition. When the first crusaders returned with new manuscripts from the ancient world, we began to see the first signs of the birth of modernity in the West. When populations moved to cities where they could leave behind their isolation and collaborate with others, economic growth followed. And when the Internet blasted down the barriers around the world and allowed anyone to discover new ideas, we saw a new dawn of technology and efficiency.

Information is the most-valuable commodity, and one that so happens to be infinitely reproducible. But today, governments have rallied around this notion of “intellectual property” and used it as an excuse to set up monopolies and censor ideas. We’ll never be safe from this kind of legislation and arbitrary dictate until this fallacy is pulled up from its very roots and we are better able to distinguish between real and fake property rights.

The two dominant trends of our time are, on the one hand, the darkening of the physical world ruled by governments and, on the other hand, the re-enlightening of the world thanks to the spontaneous order of digital media controlled by everyone else. Governments are seeking to drag it down and shut off the lights. The protests against these proposed controls constitute a mighty statement that we will not let the raiders, the barbarians, the vandals, have their way.


Jeffrey Tucker
for The Daily Reckoning

Pissing in the wind.......

And more thoughts...

It is amazing what you find in the newspapers. In Johannesburg was the story — if you can believe it — of a man who threatened three men with a pistol and forced them to rape and mutilate his wife. Then, he shot and killed his son. 

He then fled into the bush...only to reappear when he ran out of food and water a few days later. 

In Sydney, Australia, the “Elvis Express” left the station last week, without a single unsold seat. The train takes Elvis fans to the 5-day Parkes Elvis Festival, held once a year for the last 6 years.

And all over the world, the press is howling for the heads of the marines seen urinating on the bodies of dead Taliban soldiers on YouTube. Everyone is appalled. Defense industry chief Leon Panetta says he disapproves. And Al Qaida is said to be using the video already and getting a terrific response to its recruiting efforts.

Here at The Daily Reckoning we rise to defend the downtrodden, the diehards...and those too dumb to speak for themselves. Of course, the marines did something disgusting. They should be court- martialed. And put before a firing squad...along with their commanders...right up the chain of command to the commander-in- chief. They all sabotaged America’s war effort. 

But we have mixed feelings about the marines. They were sent to fight a savage war. Is it any surprise they act like savages?

A friend of a friend...a doctor in the Army Reserves, just returned from Afghanistan, offers this perspective:

“It was such a waste. It was so expensive, keeping us all there. Most of the time, we did nothing. Then, we would go on patrol. The Afghanis would try to kill us; we’d try to kill them. And they were just drug dealers and goatherds; what was the point?

“I’d get two kinds of patients...those who had just stepped on a landmine and lost a leg...and those who had injured themselves playing football in our camp. Both were a waste...”

Part of the reason the press is so disgusted by the marines is that they show America’s war in Afghanistan is a fraud. Far from cuddly nation-building, the marines act like soldiers always act when they are put to such nasty tasks. They are not fighting a heroes’ war. They are not defending the country. Instead, they are fighting a mean, dirty war — like the French in Algeria...or like the Russians in Afghanistan before them.

It is not an honorable war, in our opinion. It is not a decent war; not a war good men should not be sent to fight. It is a zombie war. It is the sort of war America’s two most celebrated generals — Washington and Eisenhower — warned against. Its only purpose is to enhance the power, wealth, and status of the military industry. In his farewell address, General Washington warned against getting entangled in foreign military adventures. General Eisenhower made the same point: beware the “military industrial complex,” he said.

And yet, here we are. Entangled...for the benefit of the military industrial complex. 

The marines were pissing on the wrong people. 


Bill Bonner
for The Daily Reckoning

10 reasons the US is no longer the land of the free

The Washington Post, Jonathan Turley

Every year, the State Department issues reports on individual rights in other countries, monitoring the passage of restrictive laws and regulations around the world. Iran, for example, has been criticized for denying fair public trials and limiting privacy, while Russia has been taken to task for undermining due process. Other countries have been condemned for the use of secret evidence and torture.

Even as we pass judgment on countries we consider unfree, Americans remain confident that any definition of a free nation must include their own — the land of free. Yet, the laws and practices of the land should shake that confidence. In the decade since Sept. 11, 2001, this country has comprehensively reduced civil liberties in the name of an expanded security state. The most recent example of this was the National Defense Authorization Act, signed Dec. 31, which allows for the indefinite detention of citizens. At what point does the reduction of individual rights in our country change how we define ourselves?

The list of powers acquired by the US government since 9/11 puts us in rather troubling company.

Assassination of US citizens

President Obama has claimed, as President George W. Bush did before him, the right to order the killing of any citizen considered a terrorist or an abettor of terrorism. Last year, he approved the killing of US citizen Anwar al-Awlaqi and another citizen under this claimed inherent authority. Last month, administration officials affirmed that power, stating that the president can order the assassination of any citizen whom he considers allied with terrorists. (Nations such as Nigeria, Iran and Syria have been routinely criticized for extrajudicial killings of enemies of the state.)

Indefinite detention

Under the law signed last month, terrorism suspects are to be held by the military; the president also has the authority to indefinitely detain citizens accused of terrorism. While the administration claims that this provision only codified existing law, experts widely contest this view, and the administration has opposed efforts to challenge such authority in federal courts. The government continues to claim the right to strip citizens of legal protections based on its sole discretion. (China recently codified a more limited detention law for its citizens, while countries such as Cambodia have been singled out by the United States for “prolonged detention.”)

Arbitrary justice

The president now decides whether a person will receive a trial in the federal courts or in a military tribunal, a system that has been ridiculed around the world for lacking basic due process protections. Bush claimed this authority in 2001, and Obama has continued the practice. (Egypt and China have been denounced for maintaining separate military justice systems for selected defendants, including civilians.)

Warrantless searches

The president may now order warrantless surveillance, including a new capability to force companies and organizations to turn over information on citizens’ finances, communications and associations. Bush acquired this sweeping power under the Patriot Act in 2001, and in 2011, Obama extended the power, including searches of everything from business documents to library records. The government can use “national security letters” to demand, without probable cause, that organizations turn over information on citizens — and order them not to reveal the disclosure to the affected party. (Saudi Arabia and Pakistan operate under laws that allow the government to engage in widespread discretionary surveillance.)

Secret evidence

The government now routinely uses secret evidence to detain individuals and employs secret evidence in federal and military courts. It also forces the dismissal of cases against the United States by simply filing declarations that the cases would make the government reveal classified information that would harm national security — a claim made in a variety of privacy lawsuits and largely accepted by federal judges without question. Even legal opinions, cited as the basis for the government’s actions under the Bush and Obama administrations, have been classified. This allows the government to claim secret legal arguments to support secret proceedings using secret evidence. In addition, some cases never make it to court at all. The federal courts routinely deny constitutional challenges to policies and programs under a narrow definition of standing to bring a case.

War crimes

The world clamored for prosecutions of those responsible for waterboarding terrorism suspects during the Bush administration, but the Obama administration said in 2009 that it would not allow CIA employees to be investigated or prosecuted for such actions. This gutted not just treaty obligations but the Nuremberg principles of international law. When courts in countries such as Spain moved to investigate Bush officials for war crimes, the Obama administration reportedly urged foreign officials not to allow such cases to proceed, despite the fact that the United States has long claimed the same authority with regard to alleged war criminals in other countries. (Various nations have resisted investigations of officials accused of war crimes and torture. Some, such as Serbia and Chile, eventually relented to comply with international law; countries that have denied independent investigations include Iran, Syria and China.)

Secret court

The government has increased its use of the secret Foreign Intelligence Surveillance Court, which has expanded its secret warrants to include individuals deemed to be aiding or abetting hostile foreign governments or organizations. In 2011, Obama renewed these powers, including allowing secret searches of individuals who are not part of an identifiable terrorist group. The administration has asserted the right to ignore congressional limits on such surveillance. (Pakistan places national security surveillance under the unchecked powers of the military or intelligence services.)

Immunity from judicial review

Like the Bush administration, the Obama administration has successfully pushed for immunity for companies that assist in warrantless surveillance of citizens, blocking the ability of citizens to challenge the violation of privacy. (Similarly, China has maintained sweeping immunity claims both inside and outside the country and routinely blocks lawsuits against private companies.)

Continual monitoring of citizens

The Obama administration has successfully defended its claim that it can use GPS devices to monitor every move of targeted citizens without securing any court order or review. (Saudi Arabia has installed massive public surveillance systems, while Cuba is notorious for active monitoring of selected citizens.)

Extraordinary renditions

The government now has the ability to transfer both citizens and noncitizens to another country under a system known as extraordinary rendition, which has been denounced as using other countries, such as Syria, Saudi Arabia, Egypt and Pakistan, to torture suspects. The Obama administration says it is not continuing the abuses of this practice under Bush, but it insists on the unfettered right to order such transfers — including the possible transfer of US citizens.

These new laws have come with an infusion of money into an expanded security system on the state and federal levels, including more public surveillance cameras, tens of thousands of security personnel and a massive expansion of a terrorist-chasing bureaucracy.

The framers lived under autocratic rule and understood this danger better than we do. James Madison famously warned that we needed a system that did not depend on the good intentions or motivations of our rulers: “If men were angels, no government would be necessary.”

Benjamin Franklin was more direct. In 1787, a Mrs. Powel confronted Franklin after the signing of the Constitution and asked, “Well, Doctor, what have we got — a republic or a monarchy?” His response was a bit chilling: “A republic, Madam, if you can keep it.”

Since 9/11, we have created the very government the framers feared: a government with sweeping and largely unchecked powers resting on the hope that they will be used wisely.