FAREWELL AMERICA Part I

FAREWELL AMERICA by Weigelun & Co)Burningplatform.com 9.3.09

The reader may click on the above link for the full text of the article from which the following is redacted regarding the agreement between Switzerland and the USA.

The agreement has been hearlded by both sides and would claim the high moral ground of catching cheaters.

Sometimes it takes the eyes of an outsider to see ourselves clearly and to praise or condemn us. Sometimes it hurts.

". . . “ . . It is astounding, and this is the second interesting observation, how completely

naturally those who claim the moral high-ground rush to join forces with the authorities and their financial requirements. At the risk of once again winding up certain specialists in business ethics, let us briefly recall the sort of tax authorities we are dealing with, and the sort of state they serve: a country that, over the last 60 years, has unquestionably

been one of the most aggressive nations in the world. The USA has fought by far the largest

number of wars, sometimes with, but mostly without a UN mandate. It has broken the international laws of war, maintained secret prisons, and fought an absurd war against drugs, with serious consequences both abroad (Columbia, Afghanistan) and at home (according to reliable sources, the tentacles of the narcotics mafia now reach well into political circles). With breathtaking moral duplicity, the USA maintains enormous offshore havens in Florida, Delaware and others of its states. The moralizers have joined sides with a nation that still makes extensive use of the death penalty, and that has a legal system under which lawyers can get rich on the misfortunes of their clients. Liability cases often end in verdicts with exorbitant damages, which makes business activity extremely risky, for medium-sized enterprises in particular. The moralizers provide intellectual support for a country that allows its infrastructure to collapse, and then stuffs convicts into hopelessly overfilled jails, after what are not infrequently dubious proceedings. They fund a nation that tolerates – or rather, causes – regular crises in the global financial system that it manages. A country whose underclass enjoys neither the benefits of an adequate education, nor a halfway functional healthcare system; a country whose economic system is increasingly inclined over consumption, and in which saving and investing have increasingly become alien concepts, a situation that has undoubtedly been one of the driving forces behind the current recession, with all its catastrophic consequences for the whole world.

With the new Obama administration and even before, new tax regulations have been formulated to tighten the bonds on things like inheritance and 'found income'

The USA’s Achilles’ heel

The sensibilities of their own capital market: this is what the smart guys in the IRS have very

probably failed to take into account. Their one sided regulatory proposals, focused on maximizing the tax take, are based on the entirely unproblematic and undisputed attractiveness of the USA as a place of investment for investors from all over the world. We believe this assumption to be utterly wrong. Why? A glance at the USA’s debt situation suffices to show that apart from oil, there is really only one element of strategic importance that the USA will need in the coming years: capital. The (declared) public debt – national, state and community –amounted to some 70 percent of GDP in 2008.

What is generally less well known is that in the USA too, as in so many ailing European states, this explicit perspective reveals less than half the truth about what has been implicitly promised by the state in the way of future benefits. Correctly accounted – that is, as probable future payment flows discounted to present values – the picture would look a gooddeal bleaker. There are studies, such as the one by the Frankfurt Institute in November 2008, that

reckon with a total level of debt for the USA of up to 600 percent (!) of GDP.

But that too is only part of the truth. A look at who are the most important creditors of America’s highly indebted public finances reveals something truly remarkable. It is the public authorities themselves! A study by Sprott Asset Management, a Canadian asset management firm distinguished for its intelligent macroeconomic analyses, showed that in 2008 over 4 trillion of the total outstanding public debt of some 10 trillion, or around 40 percent, was in the hands of so called “intragovernmental holdings”. These holdings include social welfare institutions, whose assets, accumulated in order to be (halfway) able to meet future liabilities, are invested in special Treasury debt instruments, known as “intragovernmental bonds”. In other words, the paying recipient of, say, Medicare, the American health service, is an indirect source of finance for the Treasury. Unusual, remarkable, or rather, alarming?

Debtors are now simultaneously creditors.

An unusual form of self-financing.

With Love and Kindness,

THE HATMAN