Category: simonblack

August 29, 2014
En route to the United States

Pop quiz: What do actor Jet Li, opera singer Maria Callas, writer T.S. Eliot, financier John Templeton, actress Elizabeth Taylor, and Queen Noor of Jordan all have in common?

They are all former US citizens who went through the formal process of relinquishing or renouncing their citizenships. (Liz Taylor actually restored her US citizenship in the late 1970s)

Until a couple of years ago, there wasn't much of a fuss about this. It was a rare occurrence for someone to renounce his/her citizenship.

Fast forward a few decades. The US government is now flat broke (actually in the red to the tune of $17 trillion) and resorting to chasing people to the ends of the earth to get their fair share of your lifetime earnings.

I have many friends overseas who are 'accidental Americans'. A Panamanian, for example, who by accident of birth ended up a US citizen because her father was born in the Panama Canal Zone. 

She lives her entire life in Panama... studying, working, building a business. Then one day she receives a note from the IRS demanding money.

They inform her that, as a US citizen, she is required to pay taxes on her worldwide income to Uncle Sam even though she has barely set foot on US soil. Then they command her to settle up.

Even for folks born and raised in the US, tax compliance has become epically aggressive.

The US tax code is among the most complicated on the planet. Yet the Land of the Free is one of the only 'civilized' countries in the world where even a simple misunderstanding can win you a new career turning big rocks into little rocks whilst wearing a Day-Glo orange jumpsuit. 

In matters of taxation, you are presumed guilty unless you can prove your innocence. 

They have threatened senior citizens with imprisonment and confiscated peoples' entire life savings merely for failing to file a form. 

For example, Anton Ginzburg was fined $1.5 million by the US Department of Justice in 2011. And frankly he got off easy. He faced up to five years in prison.

What was Mr. Ginzburg's heinous crime? What nefarious deeds had this criminal mastermind perpetrated against a peaceful society?

He didn't file a disclosure form to report his Swiss bank account. 

Note-- Mr. Ginzburg wasn't accused of tax evasion. He was fully compliant in paying his fair share to the US government. He simply didn't file a form. 

This isn't how a free society should function. 

If a government has to collect taxes by terrorizing its people or sniffing out accidental citizens, something is obviously wrong with the tax policy. AND they way they spend it.

After all, who in good conscience wants to go their entire working lives supporting a government that wastes tax dollars on bombs, drones, spying on citizens, and bankrupting unborn generations?

It's no wonder why the number of Americans renouncing their citizenship is increasing exponentially... and will likely continue to do so.

Back when Elizabeth Taylor and T.S. Eliot did it, it was so rare there was really no process. And no fee.

In fact, renouncing US citizenship was free of charge until a couple of years ago. Then, overnight, the State Department imposed a $450 fee.

Yesterday they increased it once again-- to $2,350. That's a 422% increase.

In its explanation, the State Department whined that the costs of processing renunciations had simply become too high. 

It's curious that a government which denies inflation even exists would complain about the consequences of it.

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August 28, 2014
Bangkok, Thailand

For many people, where we are born has a tremendous impact on our lives.

For example, being born in certain countries might mean that we are obliged to serve in the military, or go fight and die in some foreign war.

In others, it might mean that we are required to pay taxes on our worldwide income, even if we don’t even set foot in that country.

These are obligations that people don’t sign up for. We are born into them, by pure accident. No one has control over where he/she was born.

But if you’re a soon-to-be parent, you do have total control over this decision.

And it’s an important one, because your child will go his/her entire lives affected by the costs and benefits of it.

For the 100+ million babies born each year, I expect most parents don’t give a single thought to –where- their children should be born.

But just imagine—if you pick the right country, you could set your child up for an entire lifetime of benefit.

In certain countries, being born there entitles your child to citizenship (and a second passport), something that will give him/her tremendous options, freedom, and flexibility for his/her entire life.

Here are a few examples to consider:

Brazil

If a child is born in Brazil, that child is a Brazilian citizen. And a Brazilian passport one of the best travel documents in the world, with visa-free or visa-on-arrival access to 146 countries.

Brazil is a huge melting pot and one of the few places in the world where anybody—all races and ethnicities—can blend in and look local.

One of the nice benefits of Brazil is that it is a natural ‘get out of jail free’ card.

Brazil does not extradite its citizens to foreign countries. So just imagine how much easier Edward Snowden’s life would be if he had Brazilian citizenship as well.

Obviously this is a benefit that no one hopes their child will ever need. But if they should, it could be the ultimate insurance policy.

Chile

Chile is another place where children born within the country, in most cases, are citizens. And it’s a great option.

Chile already is a major economic force in South America and I’m certain that its future is only going to get brighter over the long-term.

In terms of passport quality, Chileans are already entitled to travel all over the world visa-free, including to the United States.

In addition, since Chile is a member of the Asia Pacific Economic Cooperation and associate MERCOSUR nation, Chilean nationals receive a lot of additional travel, residency, and business benefits around the world.

Canada

Canada, like the US, provides unconditional birthright citizenship to any child born within its borders. And it’s a great option, especially for an American who wants to give birth in an English-speaking country close to home.

There are several unique benefits to Canadian citizenship, including the vast visa-free travel network, access to public medical care (for those who are so inclined), and a tax system that doesn’t chase non-resident citizens to the ends of the earth.

Panama

Like Brazil, Panama is a tremendous melting pot of various races and ethnicities. Anyone can pass as Panamanian.

Article 9 of Panama’s Constitution clearly outlines that anyone born on Panamanian soil is a citizen of the country. Parents of Panamanian citizens can apply for naturalization after three years of residency.

Among the great benefits of Panama is its tax system—it’s strictly territorial. So the only income ever taxed in Panama is money that is earned directly on Panamanian soil from Panamanian sources.

It’s also comforting to know that Panama has some of the best hospitals in Latin America—internationally accredited, and some even operating in partnership with famed US hospitals… all at prices far lower than one would pay in the US.

Barbados

This former British colony currently stands as an option for parents seeking birthright citizenship for their children (for now).

With visa-free or visa-on-arrival access to 138 countries a Barbadian passport is actually just shy of the Brazilian one in terms of travel quality.

It’s also interesting to note that as a citizen of Barbados, your child would also be eligible for special access and privileges with the United Kingdom, and may even be eligible to apply for a British passport if there’s British ancestry in your family tree.

All of this may sound like a daunting, radical step to many people. But it needn’t be.

I’d encourage anyone to consider the prospect of spending several months abroad as an opportunity for growth and personal development.

Plus with a bit of planning and research, this could be something that your children, their children, and so on, could benefit from.

It’s rare that we get the chance in life to have such a profound positive impact on our future descendents with a single decision.

Photo credit to: “The Baby and the Sea” by Maria Rosario Sannino, CC BY 2.0

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High quality, low cost, no hassle medical care in Thailand

August 27, 2014
Bangkok, Thailand

I’m still a little bit stunned by what just happened.

30 minutes and $73 later, I just walked out of what was -technically- a hospital, but was much closer to an upscale business lounge at a modern airport.

I had a quick procedure done to fix up a nagging issue sustained in my military days (seemingly a lifetime ago). I was dreading it, but it was over in minutes, and I already feel great.

Back where I come from, the same procedure would go for ten times that. I would have wasted away in a waiting room filling out endless paperwork, then spent countless hours arguing with an insurance company.

Here at Bumrungrad Hospital in Bangkok, I barely had time to sit down before they called me in to meet with the doctor.

As my hands were full with my turkey club sandwich and drink from Au Bon Pain, the nurse anticipated me fumbling with the door and rushed over to open it for me with a traditional Thai bow (the one that rhymes with wow, not whoa), smiling the whole way. I almost felt guilty.

Then the doctor. Educated in the US at a tier 1 school for both undergraduate degree and medical school. Perfect English. Kind, attentive demeanor. Funny. Thorough. Oh yeah… and she’s gorgeous.

The nurse came in and offered some refreshment– a kind of healthy fruit and vegetable juice that was surprisingly tasty.

And then we got down to the actual procedure, which was over in minutes. We made a few jokes and exchanged goodbyes, then I went downstairs with the single piece of paper they gave me and handed it to the cashier.

They told me ahead of time that it would cost 2,500 Thai baht. She rang up a total slightly less than that figure– 2,350 baht, about $73.

‘Hmmm…’ I thought to myself. ‘They underpromised and overdelivered… How rare in any industry, especially medical care.’

I glanced at my phone– it was 30 minutes from the time I arrived. I didn’t wait around for a single minute. I didn’t fill out any forms. I signed just one piece of paper acknowledging the risks of my procedure.

And the price I paid was a tiny fraction of what it would have cost in my home country; this one procedure alone was nearly worth the flight out here.

I’m grateful that places like this exist. Bumrungrad is far from perfect. But the quality of the treatment is excellent, as is the value for price.

And boy does it beat having to sell a kidney in order to pay for medical treatment at a hospital built by some soulless designer with a penchant for whitewashed walls and linoleum tile floors.

Every time I’m here I’m always amazed… that the United States, with all of its intellectual and financial capital, cannot match Thailand.

US industry can provide so many other high quality products and services to vast consumer markets for a reasonable price. Why not something as important as medical care?

The US government has asked the same question. And its answer is, predictably, more regulation and central planning.

Giving people access to affordable, high quality medical care may be a nice idea in theory. In practice, every ‘solution’ they’ve centrally planned, from food safety to education to energy policy, has been disastrous.

Can we really expect the government’s increased involvement and regulations over medical care to be any better?

If you’re bothered by the idea of any government lording over your private health matters, consider looking abroad.

We talk a lot in this column about the concept of international diversification. Where you hold you savings. Where you invest. Where you earn money. Where you store digital assets. Etc.

It’s 2014. There’s no reason to live, work, bank, invest, operate a business, etc. in the same place. You can pick and choose the best places for each of these facets of your life, custom-tailored to your situation, wherever it is treated best.

Why hold savings at an insolvent bank earning interest at rates that don’t come close to keeping up with inflation, when you can shift some funds overseas at a strong, stable bank abroad earning 6% with no currency risk?

Medical care is no different. Just as your capital should go where it is treated best, your health should go where it is cared for best.

Don’t feel like you have to resign yourself to a system whose incentives are stacked against you. There are options. This is one of them. It just takes opening one’s mind to a global perspective.

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August 26, 2014
Shanghai, China

A few days ago I had a conversation with the Chief Operating Officer for our agricultural fund in Chile.

We were discussing water, and he told me that roughly 60% of California right now is suffering “extreme drought” conditions. 30% of the state is in “severe drought”. And 10% of the state is only under “drought”.

In other words, roughly the entire state– the 8th largest economy in the world– is facing a severe shortage of water.

But if you think that’s bad, China is about to take over the spotlight yet again.

A study by China’s Ministry of Water Resources found that approximately 55% of China’s 50,000 rivers that existed in the 1990s have disappeared.

Moreover, China is over-exploiting its groundwater by 22 billion cubic meters per year; yet its per-capita water consumption is less than one third of the global average.

This is astounding data.

More than 400 major cities in China are short of water, with some 110 facing “serious scarcity”.

Beijing and other northern cities get most of their water from underground aquifers. Over the last five decades, China has had to drill increasingly deeper to gain access to water.

Another challenge China faces is logistics. More than 60% of China’s water is in the southern part of the country, but most of the usage is in the north and along the coastlines.

When you consider that this is a country that has almost one fifth of the world’s population and is soon to become the world’s biggest economy, this is rapidly becoming a global problem.

The Chinese are of course well aware of this and are trying to mitigate the consequences by diversifying internationally, or as I call, planting multiple flags.

In China’s case, it’s a ‘water flag’.

Since the most efficient way to save water is not to use it, a sensible strategy is to import water-intensive goods and commodities. Corn and wheat are great examples.

China has been acquiring land across Africa and South America; last week when I was in Ethiopia, the place was crawling with Chinese delegates in the ag business.

The goal is to increase China’s food supply, reduce its dependence on the US for grain imports, and reduce its domestic water demand.

China has the economic capacity to do this. Most nations don’t.

Globally, some two billion people face a water deficit, and dozens of countries have to import water.

Throughout history, water has been the most important resource in the world and a major cause for conflict.

As far back as the ancient Sumerians, wars would break out over control of water supplies in Mesopotamia.

Today, 47% of the world’s non-polar land mass is supplied by rivers shared by two or more states simultaneously. This is an always present but latent source of potential conflict.

We can see that in South East Asia where the Mekong countries bicker over who has the right to build dams and otherwise exploit the river.

All of those countries, plus Bangladesh, India and Myanmar are furious with China’s plans to commandeer more of upstream river sources for itself.

In Ethiopia, where I was just a few days ago, the Grand Ethiopian Renaissance Dam project on the Blue Nile is causing a major diplomatic row with Egypt.

The Egyptians see themselves as the historical “rightful owners” of the Nile River, and they’re in desperate need of the water.

Water availability has enormous political, military, economic, and social implications. And it’s foolish to simply sweep this reality under the rug.

My guess is that tens of thousands of our readers may live in a city experiencing severe water shortages. It’s easy to ignore the problem and trust politicians to fix it. But this is a dangerous course of action.

First of all, stock up. Water keeps, so you won’t be worse off for having a little extra in case there’s a small disruption.

Bigger picture, it may make sense to consider a small bolt hole in a country with abundant per-capita water resources (Georgia, Uruguay, parts of Chile, etc.)

And for investors, owning productive agricultural property in these locations will likely prove to be an excellent investment as farmland in many parts of the world dries up.

More on that another time.

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August 26, 2014
London, England

[Editor’s note: This missive was penned by Tim Price of PFP Wealth Management in the UK, a frequent contributor to Sovereign Man]

Few films have managed to convey the feeling of approaching menace more effectively than Jeff Nichols’ 2011 drama, ‘Take Shelter’.

Its blue collar protagonist, Curtis LaForche, played by the lantern-jawed Michael Shannon – whose sepulchral bass tones make his every utterance sound like someone slowly dragging a coffin over a cello – begins to suffer terrifying dreams and visions.

He responds by building a storm shelter in his back yard. It transpires that his mother was diagnosed with schizophrenia at a similar stage in her own life.

Are these simply hallucinations ? Or are they portents of darker things to come ?

Nichols, the film’s writer and director, has gone on record as stating that at least part of the film owes something to the financial crisis:

“I think I was a bit ahead of the curve, since I wrote it in 2008, which was also an anxious time, for sure, but, yeah, now it feels even more so. This film deals with two kinds of anxiety. There’s this free-floating anxiety that we generally experience: you wake in bed and maybe worry about what’s happening to the planet, to the state of the economy, to things you have no control over. In 2008, I was particularly struck with this during the beginning of the financial meltdown. Then there’s a personal anxiety. You need to keep your life on track—your health, your finances, your family..”

There’s a degree of pretention in claiming to have a reliable read on the psychology of the marketplace – too many participants, too much intangibility, too much subjectivity.

But taking market price index levels at face value, especially in stock markets, there seems to be a general sense that since the near-collapse of the financial system six years ago, the worst has passed.

The S&P 500 stock index, for example, has just reached a new all-time high, leaving plenty of financial media commentators to breathlessly anticipate its goal of 2,000 index points.

But look at it from an objective perspective, rather than one of simple-minded cheerleading: the market is more expensive than ever – the only people who should be celebrating are those considering selling.

There are at least two other storm clouds massing on the horizon (we ignore the worsening geopolitical outlook altogether).

One is the ‘health’ of the bond markets. Bloomberg’s Mark Gilbert points out that Germany has just issued €4 billion of two year notes that pay no interest whatsoever until they mature in 2016.

The second is the explicitly declining health of the euro zone economy, which is threatening to slide into recession (again), and to which zero interest rates in Germany broadly allude.

The reality, which is not a hallucination, is that years of Zero Interest Rate Policy everywhere, and trillions of dollars, pounds, euros and yen pumped into a moribund banking system, have created a ‘Potemkin village’ market offering the illusion of stability.

In their June 2014 letter, Elliott Management wrote as follows:

“..Stock markets around the world are at or near all-time nominal highs, while global interest rates hover near record lows. A flood of newly-printed money has combined with zero percent interest rates to keep all the balls suspended in the air.

“Nonetheless, growth in the developed world (US, Europe and Japan) has been significantly subpar for the 5 1⁄2 years following the financial crisis. Businesses have been reluctant to invest and hire. The consumer is still “tapped out,” and there are significant suppressive forces from poor policy, including taxes and increased regulation.

“Governments (which are actually responsible for the feeble growth) are blaming the shortfall on “secular stagnation,” purportedly a long-term trend, which enables them to deny responsibility..

“The orchestra conductors for this remarkable epoch are the central bankers in the US, UK, Europe and Japan.

“The cost of debt of all maturities issued by every country, corporation and individual in the world (except outliers like Argentina) is in the process of converging at remarkably low rates.

“In Greece (for goodness sake), long-term government debt is trading with a yield just north of 5%. In France, 10 year bonds are trading at a yield of 1.67%.

“..Sadly, financial market conditions are not the result of the advancement of human knowledge in these matters. Rather, they are the result of policymaker groupthink and a mass delusion.

“By reducing interest rates to zero and having central banks purchase most of the debt issued by their governments, they think that inflation can be encouraged (but without any risk that it will spin out of control) and that economic activity consequently can be supported and enhanced.

“We are 5 1⁄2 years into this global experiment, which has never been tried in its current breadth and scope at any other time in history.. the bald fact is that the entire developed world is growing at a sluggish pace, if at all.

“But governments, media, politicians, central bankers and academics are unwilling to state the obvious conclusion that their policies have failed and need to be revised. Instead, they uniformly state, with the kind of confidence only present among the truly clueless, that in the absence of their current policies, things would be much worse.”

Regardless of the context, stock markets at or near all-time highs are things to be skeptical of, rather than to be embraced with both hands.

Value investors prefer to buy at the low than at the high. The same holds for bonds, especially when they offer the certainty of a loss in real terms if held to maturity.

But as Elliott point out, the job of asset managers is to manage money, and not to “hold up our arms and order the tide to roll back”.

So by a process of logic, selectivity and elimination, we believe the only things remotely worth buying today are high quality stocks trading at levels well below their intrinsic value.

We recently wrote about the sort of metrics to assess stocks that can be reliably used over the long run to generate superior returns.

Among them, low price / book is a stand-out characteristic of value stocks that has generated impressive, market-beating returns over any medium term time frame. So which markets currently enjoy some of the most attractive price / book ratios ?

Consider the relative attractiveness of the Japanese, US, Vietnamese and UK markets, as expressed by the distributions of their price / book ratios.

Over 40% of the Japanese market trades on a price / book of between 0.5 and 1. We would humbly submit that this makes the Japanese market objectively cheap. The comparative percentage for the US market is around 15%.

Even more strikingly, nearly 60% of the Vietnamese stock market trades on a price / book of between 0.5 and 1. The comparative figure for the UK market is approximately 20%.

Conversely, nearly 60% of the US market trades on a price / book of above 2 times. We would humbly submit that this makes the US market look expensive.

There is clearly a world of difference between a frontier market like Vietnam which is limited by way of capital controls, and a developed market like that of the US which isn’t.

But the price / book ratio is a comparison of apples with apples, and US stock market apples simply cost more than those in Japan or Vietnam. We’d rather buy cheap apples.

On any objective analysis, we think the merits of genuine value stocks are now compelling when set against any other type of investment, both on a relative and absolute basis.

Increasingly desperate central banks have destroyed the concept of safe havens. There is now only relative safety by way of financial assets.

The mood music of the markets is becoming increasingly discordant as investors (outside the euro zone at least) start to prepare for a turn in the interest rate cycle.

There is a stark choice when it comes to investment aesthetics. Those favoring value and deep value investments are, we believe, more likely to end up wearing diamonds.

Those favoring growth and momentum investments are, we believe, more likely to end up wearing the Emperor’s new clothes.

We do not intend to end up as fashion victims as and when the storm finally hits.

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August 25, 2014
Shanghai, China

I was sitting on the plane waiting for take off when the captain came on and uttered words you never want to hear in aviation:

“Ladies and Gentlemen, I have some bad news.”

It turned out that a German construction crew had dug up some WWII-era unexploded ordinance, and since it was so close to the Frankfurt airport, they were going to have to shut down all air operations until a EOD crew could take care of it.

With such a tight layover, there was no chance I would make my connecting flight to Ethiopia. And that was a major bummer, because I had a lot of meetings to catch in the morning as soon as I landed.

But it got me thinking– World War II ended nearly 70 years ago. Yet the ramifications of this event… and the consequences of a single person’s decisions from decades past… still affect people’s lives to this day.

Sure, the macro picture is clear. Because of World War II, the US became the world’s largest superpower. The dollar became the world’s reserve currency. US banks came to dominate the global financial system.

But even little, simple things were affected.

There we were– a plane full of people trying to get from point A to point B. And we couldn’t. All because, decades ago, Hitler decided to invade his neighbors and dare the world to stop him.

Of course, this wouldn’t have happened if Germany hadn’t been bankrupted after World War I… an obscene, terrible war waged by fatcat politicians who thought it would be a quick, glorious war.

Sitting there for the 90 minute delay, I had all the time in the world to think about this.

These people in charge– the central bankers and politicians– make decisions that have long-lasting implications, both big picture and small.

Even where you’d least expect it… something as simple and innocuous as a routine passenger flight decades later… gets disrupted because of idiotic decisions made today.

And that’s just the small stuff.

The big picture is far worse. Like World War II, the decisions made today have the power to change our way of life forever. It’s already happening.

Because of so many poor decisions made today by US politicians and central bankers, the rest of the world is rapidly starting to drop the dollar as the preferred reserve currency and adopt alternatives.

This is no longer theory or conjecture. It’s happening. And the implications will last through the next century.

Moreover, the decisions that political leaders are making today are turning ‘rich’ western nations into highly extractive economies… exactly the sort of system I see on the ground in Africa.

These are places where a tiny elite takes most of the wealth and privilege for themselves at the expense of everyone else.

In Africa it’s often done at the point of a gun. In the West, the corruption is far more sophisticated. But the theft is there, plain as day for anyone paying attention.

I invite you to explore this with me more in today’s podcast; in addition, I’ll give you my boots on the ground take from Ethiopia and explain how that country is a stark proxy for what’s happening in the West.

Today’s Podcast: http://ift.tt/1mIblxV

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August 23, 2014
En route to Shanghai

Only hours ago the US government announced that a Chinese fighter jet had intercepted an American military patrol plane over international waters east of China’s Hainan Island.

A Pentagon spokesman called China’s actions “unsafe and unprofessional”, and blasted such unprovoked aggression.

There was no mention as to why a US surveillance plane was just off the Chinese coast to begin with. They’re just playing the victim… and rather loudly at that.

Needless to say, the Chinese government has a slightly different story. I asked one of our Sovereign Man team members in mainland China to translate the following article from Sina News.

The first part of the article praises the pilot’s skill and boldness, as well as the efficiency and superiority of Chinese aviation technology.

The Jian-11B fighter, in fact, is 100% Chinese. There is no foreign engine or major component.

As for the rest of the article– I present it below with only one comment– it should be obvious to anyone paying attention that the US is no longer the world’s dominant superpower. It’s certainly obvious to the Chinese.

——–

Stop thief: China rejects the U.S. government calling our aircraft “dangerously close”
(Source: Sina News, http://ift.tt/1pTsGbW)

Sure enough, it is the American government who stamps its foot first after a similar event.

First the famous anti-China military scholar Bill Gertz played his “danger close” speech for the Washington Free Beacon.

And then the Pentagon also followed and said that it was a “dangerous intercept”. The White House called it “deeply worrying provocation”.

Adm. John Kirby, the Defense Department spokesman, said Washington protested to the Chinese military through diplomatic channels, and called the maneuvers “unsafe and unprofessional.”

Deputy National Security Adviser Ben Rhodes said it was “obviously a deeply concerning provocation and we have communicated directly to the Chinese government our objection to this type of action.”

Such remarks are laughable. As we all know, the United States is the world’s largest hegemonic force and biggest rogue country.

Their various reconnaissance aircraft have been wandering around foreign airspace for decades and watching the military secrets of other countries like a disgusting thief spying over his neighbor’s fence.

However, when the neighbor comes back with a big stick, the thief will turn tail and run away, blaming the neighbor.

When you show people weakness, they will bully you. When you show people strength, they will respect you.

We [the newspaper] believe the Chinese Air Force and Naval aviation should maintain a high level of vigilence and morale in southeast coastal region to prevent the further US action.

America has lost face and does not want to show the world they are sick. They have been lording over other countries for so long, and they will never let it go after they eat this loss.

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August 22, 2014
Addis Ababa, Ethiopia

This one is almost too sensational to be real. Almost.

I’ve written to you before about the Financial Crimes Enforcement Network (FinCEN), an agency of the US Treasury Department that chases around people they suspect of committing financial crimes.

Unfortunately, their definition of ‘financial crime’ is not the same as our definition of ‘financial crime’.

FinCEN is completely unconcerned, for example, with the likes of Jon Corzine, who was at the helm of MF Global as it committed some of the worst financial fraud in history.

FinCEN has also not investigated any major US bank executives for their part in manipulating commodity prices or selling out customers to high frequency traders.

Nor have they raised an eyebrow at ratings agencies for gross negligence in slapping AAA ratings on toxic debt securities (which played a key role in destabilizing the banking system.)

Nay. To FinCEN, these are all trivial issues. Instead, the agency has an unhealthy obsession with rooting out little guys they think might have committed victimless crimes.

One of their favorite victimless crimes is failure to file ‘suspicious activity reports (SARs)’; this is a form that the US government demands of essentially any business that deals with paper money.

Banks. Brokers. Payday loan dealers. Remittance businesses (like Western Union). Even casinos.

In other words, the government demands all these organizations to be its unpaid spies. They all have quotas. And if any should fail to file a SAR, they’ll receive a visit from FinCEN.

Let me put this more clearly: even if a banker doesn’t feel like anything suspicious has happened, s/he is still required to file a minimum quota of SARs.

If you walk into a bank and say or do anything that’s slightly out of the ordinary, or simply different than the rest of the bank’s customers, chances are they’ll file a SAR.

FinCEN’s statistics show, in fact, that there has been a surge of SARs filed on bank customers who have conducted any Bitcoin-related transaction (i.e. transferring funds from a bank account to CoinDesk).

I used to know a broker who thought this requirement absurd and immoral. And in order to save his clients’ privacy, he would file all the SARs against himself.

But such values are unfortunately rare. Most bankers, brokers, etc. simply accept the duty of being an unpaid government spy. They’ll smile to your face and then file a SAR because you had the audacity to do something different.

I remember one FinCEN case in which they went after a remittance business in Chicago; the proprietor had been in business for decades and knew each of his customers personally.

He knew their circumstances, what they were doing, who they were sending the money to, etc. Many had even become personal friends. So he didn’t file any of the reports. FinCEN threw the book at him and ran the poor chap out of business. Totally disgusting.

But now comes a new case that takes the cake.

A few days ago, FinCEN enthusiastically announced that they had been working on a CRIMINAL investigation against a casino based in the Western Pacific… thousands of miles from US shores.

FinCEN had apparently sent some of its agents undercover to the Tinian Dynasty Hotel & Casino posing as hard-gambling, wealthy Russian businessmen.

These undercover agents indicated that they wanted to bring in large amounts of cash to gamble at the casino, and expressly requested that the casino not report the currency transactions.

The casino agreed. After all, why would an offshore casino bother reporting anything about Russian nationals to the US government anyhow?

Why indeed?

But such logic does not factor into FinCEN’s motivation. So they slammed the casino’s VIP Services Manager (a guy who’s not even a US person) for not filing any SARs.

There’s so many things wrong with this it’s hard to know where to begin.

Jon Corzine (of MF Global) walks the streets a free man.

Yet FinCEN is wasting taxpayer resources sending undercover agents to entrap some offshore casino, and they act as if they’ve infiltrated a major terrorist organization.

This is practically secret police stuff… all because a non-US person working overseas didn’t file a meaningless report on Russian businessmen.

Amid all the debt, graft, and incompetence that’s so prevalent today in government, this is another sad testament to the direction that things are headed.

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August 21, 2014
Addis Ababa, Ethiopia

By the late 1920s, Joseph Stalin became the unchallenged leader of the Soviet Union after having eliminated his opposition.

He topped it off in 1929 by serving a decisive blow to anyone that would dare to oppose him by outlawing private gun ownership in the country.

From that year on until 1953 when Stalin died, it’s estimated that more than 20 million Soviet citizens that were seen as a threat to the country’s leadership.

People were rounded up and either murdered outright, or sent to infamous gulag labor camps.

Stalin is an extreme case. But history is ripe with examples of governments which disarm their citizens, only to engage in serious oppression afterwards.

Communist China. Nazi Germany. Cambodia. Guatemala. Uganda. The list goes on and on. Pacification of the citizens is almost always a prerequisite to totalitarianism.

There have been a lot of attempts to disarm, or at least partially disarm, people in the US throughout history as well.

Each time there’s a major shooting somewhere, the chant to ban firearms grows louder.

But the latest proposal is especially telling.

H.R. 5344 is a bill currently going through Congress that would ban the purchase of body armor.

Violation would carry CRIMINAL penalties, including up to ten years in prison.

Many bullet-resistant items on the market now, such as bulletproof backpacks for school children, would be banned by this legislation.

This is incredible given that the legislation is all about banning something that is purely defensive.

Whatever your stance on firearms, I hope we can agree that it’s pretty damn difficult to hurt another human being with body armor.

People buy body armor for protection. That’s the point. Duh.

So why in the world would they want to ban it?

The government claims that “criminals and rampaging madmen” can “wreck havoc” while wearing body armor, and it’s important to shield police from these nefarious individuals.

Uh, wait a sec– you mean the same police that go around terrorizing ordinary citizens who aren’t breaking any laws whatsoever?

The same police who beat homeless people to death?

The same police who shoot and kill innocent animals in broad daylight in the middle of the street?

The same police who scream “I will f***ing kill you!” with their weapons trained on crowds of protestors exercising their constitutional rights?

Right. Those guys.

This is such a disgusting, yet unfortunately predictable, turn of events in the Land of the Free.

It’s enraging. It’s infuriating. And it’s so obvious: the country has become a giant police state. And the trend is not getting any better.

It’s time to set aside emotion. It’s time to set aside a lifetime of propaganda and programming telling you that you live in a free country.

It’s time to look at the objective evidence all around you.

They spy. They steal. They wage illegal wars. They authorize military detention of civilians. They assassinate citizens.

They intimidate. They terrorize. They torture. They suspend due process when it suits. They destroy anyone who challenges them.

And now they want to take away a non-violent means of protecting yourself.

This is our reality. And at a minimum, it’s time for rational, thinking people to come up with a Plan B. What’s yours?

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