Bailout to Nowhere

November 18, 2008

If you're familiar with the Sovereign Society, you know that we are blessed with experienced investment and currency experts with enviable track records in their stock and currency picks, even in these tough times. That expert advice comes from sound personal judgment and, in many cases, first hand knowledge about the the recommendations they make.

Similarly, when we recommend offshore trust and residency professional advisors or specific jurisdictions, one of the major factors we consider is local political stability, as well as the form of government and its policies towards free market economics.

Based on those important factors, I doubt that our experts would recommend investment in any number of American-based banks, financial houses or, now, selected automotive companies. And the Dooms Day list is growing.

"I'm from the government and I'm here to help you."

That's because these hitherto privately managed companies have suddenly (and dangerously) acquired a major new stock holder — the United States government.

Understand that when we say "the government" we mean bureaucrats, public employees and political appointees, who, for the most part, couldn't make it in the private sector. If you enjoy standing in line at the Department of Motor Vehicles, you'll love this new fascist business model.

Americans are being asked to pretend that these political appointees suddenly are endowed with more business acumen and wisdom than the managers of the businesses in which they have acquired influence. The massive bailouts supposedly justified by the current economic crisis have made them experts. And with the billions in taxpayers' cash come the strings, if not the chains.

Political Power Play

But the real threat to private America enterprise, (aside from the stupidity of some of its own mangers), comes from unprincipled politicians in the U.S. Congress.

As I wrote recently: "The federal government???s plans to spend trillions propping up banks large and small, along with recent bailouts, as well as guarantees, to support the auto industry, business loans, money markets and bank lending, represents the most sweeping government intrusion into the nation???s business and financial markets since the Great Depression (1928-1942) — and perhaps ever in history."

There is every proof that the antics of the likes of Senator Tom ("Sweet Heart Mortgage Deals") Dodd (D-CT) and Rep. Barney Frank (D-MA) seriously contributed to the housing mortgage collapse, as these worthies led the parade for abundant Freddie Mac and Fannie May backing for billions in shaky mortgages.

Now these pols are leading demands in Congress for micro management and restrictions on the recipients of federal bailout funds. They want to control executive pay at banks, curb meeting expenses considered to be too luxurious, and who knows what. Pleasing their labor union backers, they call for billions for auto company bail outs, but want to exact as the price the right to tell auto companies what kind of vehicles they can and cannot build.

Creative Destruction

Recently I predicted: "Very soon, with Obama in the White House and leftist Democrats controlling Congress, you'll have TSA-type bureaucrats crawling all over you and your life — dictating mortgages, steering bank lending, imposing small business rules, controlling investing, telling you who you can hire and fire, forcing currency controls, redistributing your hard earned income to Obama's hand picked welfare recipients."

In a telling column in The New York Times last week, David Brooks wrote: " Not so long ago, corporate giants with names like PanAm, ITT and Montgomery Ward roamed the earth. They faded and were replaced by new companies with names like Microsoft, Southwest Airlines and Target. The U.S. became famous for this pattern of decay and new growth. Over time, American government built a bigger safety net so workers could survive the vicissitudes of this creative destruction ??? with unemployment insurance and soon, one hopes, health care security. But the government has generally not interfered in the dynamic process itself, which is the source of the country???s prosperity."

Lame Duck's Lament

Last week lame duck President George Bush made an excellent but excruciatingly late defense of the free market, prior to the hapless G-20 meeting in Washington. That august gathering was supposed to address the steps needed to abate and eventually solve the worldwide economic slump. It turned into just another example of power hungry politicians using a crisis to advance their own, for the most part, socialistic, statist ends.

The left was in full cry over the weekend. Typical was David Rothkopf, a senior U.S. Commerce Department official during the administration of President Bill Clinton, who claimed the world is at a turning point. "This is a watershed," he said. "This is the end of 25 years of Reagan-Thatcherism, ???leave it to the market, less government is better government???. That is over ??? period."

Policies That Work

But David Brooks put his finger squarely on the crux of the matter: "But the larger principle is over the nature of America???s political system. Is this country going to slide into progressive corporatism, a merger of corporate and federal power that will inevitably stifle competition, empower corporate and federal bureaucrats and protect entrenched interests? Or is the U.S. going to stick with its historic model: Helping workers weather the storms of a dynamic economy, but preserving the dynamism that is the core of the country???s success."

Yesterday on CBS "Sixty Minutes" the president-elect said he wanted to implement policies that "work" without regard to liberal or conservative ideology. Hopefully Mr. Obama will conclude that following the path of state corporatism and fascism is indeed unworkable.

Meanwhile, I repeat, now is the time to consider moving some of your cash and assets offshore, while you still can. There still are many legal ways to bank and save taxes offshore; I tell you Where To Stash Your Cash: Click Here. And if you're interested in Switzerland, Click here for Swiss Money Secrets.

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