US designates two latvia banks as money laundering concerns

www.chinaview.cn 2005-04-22 04:28:01

WASHINGTON, April 21 (Xinhuanet) -- The US Treasury Department designated two Latvian banks on
Thursday as "primary money laundering concerns," and prohibited US financial institutions from any
transactions with the two financial institutions.

"The Treasury has judiciously and strategically utilized the power of Section 311 (of the USA
PATRIOT Act) to isolate rogue actors that present money laundering concerns and risks to the US
financial sector," Treasury Secretary John W. Snow said in a statement.

With the action taken on Thursday, US financial institutions will be prohibited from establishing,
maintaining, administering or managing any correspondent account in the United States for or on
behalf of the two banks - Multibanka and VEF Bank.

Daniel Glaser, the department's deputy assistant secretary for terrorist financing and financial
crimes, said the two Latvian banks "represent a danger to the international community because they
facilitate the placement and movement of dirty money in the global financial system."

The Treasury Department cited several reasons for designating the two banks, both headquartered in
Riga, Latvia's capital, as "primary money laundering concerns," which included confidential banking
services for non-Latvian customers, certain criminals using accounts at one of the banks to
facilitate financial fraud schemes, and lacking adequate controls and procedures to detect and
combat money laundering.

Previously, the department has identified several foreign financial institutions as "primary money
laundering concerns," including Belarus's Infobank, the Commercial Bank of Syria, Myanmar Mayflower
Bank and Asia Wealth Bank.

Copyright ©2003 Xinhua News Agency. All rights reserved.
http://news.xinhuanet.com/english/2005-04/22/content_2862204.htm

Equifax extends online anti-money laundering service to cover Individuals

With money laundering prevention and detection continuing to stay high on the agenda for both the UK
government and the financial services industry, Equifax Plc has responded with additional
enhancements to its range of electronic anti-money laundering solutions. Equifax AML Online now
provides an extensive range of checks on individuals, as well as businesses, for instant customer
validation.

The addition of consumer data to Equifax AML Online means that it provides an immediate solution to
address the latest Anti-Money Laundering regulations to confirm the identity of all new customers,
giving instant access to an unrivalled combination of business and consumer data. Encompassing proof
of residency checks, proof of identity checks and alert notifications, it can be accessed easily and
conveniently through a single search, using rapid address matching technology. It also includes an
innovative AML Profile, which summarises the number of validated checks on an individual.

"Designed to protect organisations that are dealing with individuals as well as businesses, Equifax
AML Online gives organisations all-important protection from the threat of fines, and the adverse
publicity associated with such action, if they do not adhere to the latest Anti-Money Laundering
regulations", confirmed Sue Woods, Head of Equifax ID Services.

"It also provides the UK financial services sector with an unrivalled capability to help tackle the
threats presented by money launderers and terrorist financiers. This is especially important since
the introduction of the Proceeds of Crime Act, because money laundering is now seen as an integral
part of all crime that is spreading across all areas of the UK economy - and being perpetrated by
both businesses and individuals."

The new enhancements to AML Online include Forwarding Address flags, screening against Senior
Political Figures and Sanctions lists along with Halo (Deceased) screening, all of which are vital
for businesses to effectively confirm the identity of new customers.

The Equifax databases are updated daily with information from a wide range of data sources,
including local councils, the courts, the UK credit industry, the Bank of England and the CIA,
making the information the most accurate and up-to-date available.

"Businesses are under increasing pressure to operate with best practices through compliance with the
latest Anti-Money Laundering Regulations and the Proceeds of Crime Act" concluded Sue Woods. "With
the addition of consumer data, AML Online tackle these issues completely, providing an extensive
range of checks on registered companies, directors and individuals, all easily and conveniently
available through an online report.

"AML Online is a highly flexible solution, demonstrating Equifax's ongoing commitment to helping our
customers protect themselves against money laundering and comply with regulations, securing the
future of their business."

http://www.creditman.biz/uk/members/news-view.asp?newsviewid=4694&id=1&
mylocation=news&chksrc=nnow4251

Peak of Oil Production next year?

There's a lot of doom n gloom about the end of oil, and I'm not sure if
I believe it myself. There are a lot of reports around the net that
conclude the 'end' is a very long way away indeed. This article is
referring to the peak of production capacity not the end of the reserves
themselves - an interesting angle in the debate.

Oil production could peak next year, reports John Vidal. Just kiss your lifestyle goodbye

Thursday April 21, 2005
The Guardian

The one thing that international bankers don't want to hear is that the second Great Depression may
be round the corner. But last week, a group of ultra-conservative Swiss financiers asked a retired
English petroleum geologist living in Ireland to tell them about the beginning of the end of the oil
age.

They called Colin Campbell, who helped to found the London-based Oil Depletion Analysis Centre
because he is an industry man through and through, has no financial agenda and has spent most of a
lifetime on the front line of oil exploration on three continents. He was chief geologist for Amoco,
a vice-president of Fina, and has worked for BP, Texaco, Shell, ChevronTexaco and Exxon in a dozen
different countries.

"Don't worry about oil running out; it won't for very many years," the Oxford PhD told the bankers
in a message that he will repeat to businessmen, academics and investment analysts at a conference
in Edinburgh next week. "The issue is the long downward slope that opens on the other side of peak
production. Oil and gas dominate our lives, and their decline will change the world in radical and
unpredictable ways," he says.

Campbell reckons global peak production of conventional oil - the kind associated with gushing oil
wells - is approaching fast, perhaps even next year. His calculations are based on historical and
present production data, published reserves and discoveries of companies and governments, estimates
of reserves lodged with the US Securities and Exchange Commission, speeches by oil chiefs and a deep
knowledge of how the industry works.

"About 944bn barrels of oil has so far been extracted, some 764bn remains extractable in known
fields, or reserves, and a further 142bn of reserves are classed as 'yet-to-find', meaning what oil
is expected to be discovered. If this is so, then the overall oil peak arrives next year," he says.

If he is correct, then global oil production can be expected to decline steadily at about 2-3% a
year, the cost of everything from travel, heating, agriculture, trade, and anything made of plastic
rises. And the scramble to control oil resources intensifies. As one US analyst said this week:
"Just kiss your lifestyle goodbye."

But the Campbell analysis is way off the much more optimistic official figures. The US Geological
Survey (USGS) states that reserves in 2000 (its latest figures) of recoverable oil were about three
trillion barrels and that peak production will not come for about 30 years. The International Energy
Agency (IEA) believes that oil will peak between "2013 and 2037" and Saudi Arabia, Kuwait, Iraq and
Iran, four countries with much of the world's known reserves, report little if any depletion of
reserves. Meanwhile, the oil companies - which do not make public estimates of their own "peak
oil" - say there is no shortage of oil and gas for the long term. "The world holds enough proved
reserves for 40 years of supply and at least 60 years of gas supply at current consumption rates,"
said BP this week.

Indeed, almost every year for 150 years, the oil industry has produced more than it did the year
before, and predictions of oil running out or peaking have always been proved wrong. Today, the
industry is producing about 83m barrels a day, with big new fields in Azerbaijan, Angola, Algeria,
the deep waters of the Gulf of Mexico and elsewhere soon expected on stream.

But the business of estimating oil reserves is contentious and political. According to Campbell,
companies seldom report their true findings for commercial reasons, and governments - which own 90%
of the reserves - often lie. Most official figures, he says, are grossly unreliable: "Estimating
reserves is a scientific business. There is a range of uncertainty but it is not impossible to get a
good idea of what a field contains. Reporting [reserves], however, is a political act."

According to Campbell and other oil industry sources, the two most widely used estimates of world
oil reserves, drawn up by the Oil and Gas Journal and the BP Statistical Review, both rely on
reserve estimates provided to them by governments and industry and do not question their accuracy.

Companies, says Campbell, "under-report their new discoveries to comply with strict US stock
exchange rules, but then revise them upwards over time", partly to boost their share prices with
"good news" results. "I do not think that I ever told the truth about the size of a prospect. That
was not the game we were in," he says. "As we were competing for funds with other subsidiaries
around the world, we had to exaggerate."

Most serious of all, he and other oil depletion analysts and petroleum geologists, most of whom have
been in the industry for years, accuse the US of using questionable statistical probability models
to calculate global reserves and Opec countries of drastically revising upwards their reserves in
the 1980s.

"The estimates for the Opec countries were systematically exaggerated in the late 1980s to win a
greater slice of the allocation cake. Middle East official reserves jumped 43% in just three years
despite no new major finds," he says.

The study of "peak oil" - the point at which half the total oil known to have existed in a field or
a country has been consumed, beyond which extraction goes into irreversible decline - used to be
back-of-the envelope guesswork. It was not taken seriously by business or governments, mainly
because oil has always been cheap and plentiful.

In the wake of the Iraq war, the rapid economic rise of China, global warming and recent record oil
prices, the debate has shifted from "if" there is a global peak to "when".

The US government knows that conventional oil is running out fast. According to a report on oil
shales and unconventional oil supplies prepared by the US office of petroleum reserves last year,
"world oil reserves are being depleted three times as fast as they are being discovered. Oil is
being produced from past discoveries, but the re-serves are not being fully replaced. Remaining oil
reserves of individual oil companies must continue to shrink. The disparity between increasing
production and declining discoveries can only have one outcome: a practical supply limit will be
reached and future supply to meet conventional oil demand will not be available."

It continues: "Although there is no agreement about the date that world oil production will peak,
forecasts presented by USGS geologist Les Magoon, the Oil and Gas Journal, and others expect the
peak will occur between 2003 and 2020. What is notable ... is that none extend beyond the year 2020,
suggesting that the world may be facing shortfalls much sooner than expected."

According to Bill Powers, editor of the Canadian Energy Viewpoint investment journal, there is a
growing belief among geologists who study world oil supply that production "is soon headed into an
irreversible decline ... The US government does not want to admit the reality of the situation. Dr
Campbell's thesis, and those of others like him, are becoming the mainstream."

In the absence of reliable official figures, geologists and analysts are turning to the grandfather
of oil depletion analysis, M King Hubbert, a Shell geologist who in 1956 showed mathematically that
exploitation of any oilfield follows a predictable "bell curve" trend, which is slow to take off,
rises steeply, flattens and then descends again steeply. The biggest and easiest exploited oilfields
were always found early in the history of exploration, while smaller ones were developed as
production from the big fields declined. He accurately predicted that US domestic oil production
would peak around 1970, 40 years after the period of peak discovery around 1930.

Many oil analysts now take the "Hubbert peak" model seriously, and the USGS, national and oil
company figures with a large dose of salt. Similar patterns of peak discovery and production have
been found throughout all the world's main oilfields. The first North Sea discovery was in 1969,
discoveries peaked in 1973 and the UK passed its production peak in 1999. The British portion of the
basin is now in serious decline and the Norwegian sector has levelled off.

Other analysts are also questioning afresh the oil companies' data. US Wall street energy group
Herold last month compared the stated reserves of the world's leading oil companies with their
quoted discoveries, and production levels. Herold predicts that the seven largest will all begin
seeing production declines within four years. Deutsche Bank analysts report that global oil
production will peak in 2014.

According to Chris Skrebowski, editor of Petroleum Review, a monthly magazine published by the
Energy Institute in London, conventional oil reserves are now declining about 4-6% a year worldwide.
He says 18 large oil-producing countries, including Britain, and 32 smaller ones, have declining
production; and he expects Denmark, Malaysia, Brunei, China, Mexico and India all to reach their
peak in the next few years.

"We should be worried. Time is short and we are not even at the point where we admit we have a
problem," Skrebowski says. "Governments are always excessively optimistic. The problem is that the
peak, which I think is 2008, is tomorrow in planning terms."

On the other hand, Equatorial Guinea, Sao Tome, Chad and Angola are are all expected to grow
strongly.

What is agreed is that world oil demand is surging. The International Energy Agency, which collates
national figures and predicts demand, says developing countries could push demand up 47% to 121m
barrels a day by 2030, and that oil companies and oil-producing nations must spend about $100bn a
year to develop new supplies to keep pace.

According to the IEA, demand rose faster in 2004 than in any year since 1976. China's oil
consumption, which accounted for a third of extra global demand last year, grew 17% and is expected
to double over 15 years to more than 10m barrels a day - half the US's present demand. India's
consumption is expected to rise by nearly 30% in the next five years. If world demand continues to
grow at 2% a year, then almost 160m barrels a day will need to be extracted in 2035, twice as much
as today.

That, say most geologists is almost inconceivable. According to industry consultants IHS Energy, 90%
of all known reserves are now in production, suggesting that few major discoveries remain to be
made. Shell says its reserves fell last year because it only found enough oil to replace 15-25 % of
what the company produced. BP told the US stock exchange that it replaced only 89% of its production
in 2004.

Moreover, oil supply is increasingly limited to a few giant fields, with 10% of all production
coming from just four fields and 80% from fields discovered before 1970. Even finding a field the
size of Ghawar in Saudi Arabia, by far the world's largest and said to have another 125bn barrels,
would only meet world demand for about 10 years.

"All the major discoveries were in the 1960s, since when they have been declining gradually over
time, give or take the occasional spike and trough," says Campbell. "The whole world has now been
seismically searched and picked over. Geological knowledge has improved enormously in the past 30
years and it is almost inconceivable now that major fields remain to be found."

He accepts there may be a big field or two left in Russia, and more in Africa, but these would have
little bearing on world supplies. Unconventional deposits like tar sands and shale may only slow the
production decline.

"The first half of the oil age now closes," says Campbell. "It lasted 150 years and saw the rapid
expansion of industry, transport, trade, agriculture and financial capital, allowing the population
to expand six-fold. The second half now dawns, and will be marked by the decline of oil and all that
depends on it, including financial capital."

So did the Swiss bankers comprehend the seriousness of the situation when he talked to them? "There
is no company on the stock exchange that doesn't make a tacit assumption about the availability of
energy," says Campbell. "It is almost impossible for bankers to accept it. It is so out of their
mindset."

Crude alternatives

"Unconventional" petroleum reserves, which are not included in some totals of reserves, include:

Heavy oils

These can be pumped just like conventional petroleum except that they are much thicker, more
polluting, and require more extensive refining. They are found in more than 30 countries, but about
90% of estimated reserves are in the Orinoco "heavy oil belt" of Venezuela, which has an estimated
1.2 trillion barrels. About one third of the oil is potentially recoverable using current
technology.

Tar sands

These are found in sedimentary rocks and must be dug out and crushed in giant opencast mines. But it
takes five to 10 times the energy, area and water to mine, process and upgrade the tars that it does
to process conventional oil. The Athabasca deposits in Alberta, Canada are the world's largest
resource, with estimated reserves of 1.8 trillion barrels, of which about 280-300bn barrels may be
recoverable. Production now accounts for about 20% of Canada's oil supply.

Oil shales

These are seen as the US government's energy stopgap. They exist in large quantities in ecologically
sensitive parts of Colorado, Wyoming and Utah at varying depths, but the industrial process needed
to extract the oil demands hot water, making it much more expensive and less energy-efficient than
conventional oil. The mining operation is extremely damaging to the environment. Shell, Exxon,
ChevronTexaco and other oil companies are investing billions of dollars in this expensive oil
production method.

Guardian Unlimited © Guardian Newspapers Limited 2005
http://www.guardian.co.uk/life/feature/story/0,13026,1464050,00.html

Militarism threatens to bankrupt US economically and morally

Posted on Thu, Apr. 21, 2005

Militarism threatens to bankrupt U.S. economically and morally
By Reed M. Smith

Michael Parenti, eminent author and historian, recently told an audience of almost 300 people in
Penn State's Schwab Auditorium that what empires do is much different from how they are represented
in history by their leaders.

This has been true since Greece and Rome, for Persians in biblical times, Turks, Spanish,
Portuguese, British, French, Belgians and others up to the present time.

We were always told that the United States does not do such things. America, "the land of the free
and the home of the brave," is, as President Bush declared, bringing liberty, democracy, justice,
peace, progress and stability to the poor and troubled nations.

A person can always look at the goodness and blessings of our country, or can look at its faults and
abuses.

We now hear about our responsibility as the world's only superpower to liberate and democratize the
Middle East and to oppose tyranny everywhere. So why aren't we intervening in Darfur, where more
than 2 million innocents have been uprooted or slaughtered in a brutal, racist civil war?

In Iraq, the most prosperous country in the Middle East before our first Gulf War, we helped Saddam
Hussein to gain ascendancy, and even supplied chemicals for his chemical warfare, when current
Defense Secretary Donald Rumsfeld was there in the 1980s.

With an estimated 700 military bases, and American troops worldwide, the U.S. is the greatest empire
in history, whether we recognize it or not. Why then are we so universally hated and resented, not
just by a new breed of terrorists, but are seen abroad as an arrogant superpower, guilty of an
illegal Iraq war, massive arrests, brutal raids and continuing torture?

Members of our rather phony coalition seem to be dropping like flies.

In two years, 1,547 U.S. soldiers have been killed and more than 11,664 wounded, 92 percent of them
since the fall of Baghdad.

By April 9, there were 2,005 Iraqi police and guardsman deaths, and more than 100,000 Iraqi
civilians were killed.

Total coalition losses are 1,724 soldiers, about 90 percent from the U.S.

Congress has been largely supine. It has never officially declared any of our wars since December
1941.

As Parenti noted, the U.S. media has generally legitimized the system, as have many veterans groups,
the dominant Republican Party, the right wing and many churches. A new breed of flag waving
nationalists or superpatriots has been justifying if not propagandizing the war, often with lots of
profitable contracts to clinch the deal.

Competent observers have said that Iraq has never been a direct threat to U.S. security, but it is
now a breeding ground for terrorists as a result of the war and occupation, much of which has been
shielded from American eyes.

We devastated Fallujah, a city of about 200,000, with orders, as in Vietnam, to "shoot anything that
moves." The whole world, particularly the Muslim nations, was shocked.

Informed people who are not swayed by our warhawks agree that Iraq is now a mess, not a budding
democracy, but another grab for oil and lucrative U.S. contracts, a la Halliburton, Boeing and
others. The best thing is to get out before we kill thousands more Americans, Iraqis and others, and
before we turn the Middle East into a smoking cauldron.

As in the case of Vietnam we must face facts, accept defeat -- or as Knight Ridder columnist Joseph
Galloway wrote recently, just declare victory and go home.

Even Rumsfeld was almost promising that to the troops last week.

As Parenti predicted, the very next day things will start to improve.

It is up to the American people to demand that our representatives stop the warhawks' world-girdling
military appetite in the Middle East and elsewhere, restore our own democracy, and devote our tax
resources to urgent human needs at home and abroad.

Rampant American militarism is bankrupting our country morally and economically. The sooner we
recognize that and rejoin the human race, the better.

Reed M. Smith, of State College, is a retired political science professor who taught at Penn State
as a graduate assistant and later at the University of Pennsylvania, Bradley University and
elsewhere.

http://www.centredaily.com/mld/centredaily/news/opinion/11447212.htm

Calibre to tackle money laundering for US Treasury

Calibre to tackle money laundering for US Dept of Treasury

Calibre, a management and technology services company, has been awarded a contract with a total
potential value of $13.7 million by the US Department of the Treasury in an attempt to combat money
laundering.

1 Apr 2005, 15:12 GMT -
The contract has a six-month period of performance with five option years, and has a base period
worth $1.6 million.

Calibre is to provide support for the development of IT and information resource management
strategies of the Bureau of the Public Debt for the Financial Crimes Enforcement Network (FinCEN).
It will also assist in the management of IT programs and capital asset management and offer training
on information resource management and technology issues.

It is hoped the deal will enable FinCEN's Office of Information Technology to efficiently combat
money laundering, both domestically and internationally, across the network of law enforcement and
intelligence communities it serves and the financial industry it regulates.

© 2005 Computer Business Review Online
http://www.cbronline.com/article_news.asp?guid=743d0af5-8dd4-4bc3-ad4c-60b8c91e9db1

Expat brits missing out on offshore opportunities

Nine out of ten expatriate Brits are not taking advantage of offshore savings opportunities, according to research published today.

A survey by Alliance & Leicester International of UK expatriates living in Europe found that 82 per cent held savings in their host country, and over half held savings in the UK.

But only 10 per cent hold savings offshore, where they could be benefitting from higher interest rates and paying less tax.

"The research shows that there are many expatriates who have not considered whether they would benefit from holding their savings in an offshore account. Given the competitive rates available from offshore banks such as Alliance & Leicester International, they could increase their interest earnings significantly," said Alliance & Leicester International managing director Simon Hull.

Alliance & Leicester points out that offshore banking no longer means tying up savings in postal accounts, with internet facilities now allowing clients to view their accounts securely and send messages to the bank 24 hours a day.

Mr Hull added: "Offshore accounts can provide expatriates with a great rate, coupled with the same easy access to money that saving accounts in the host country allow. The opportunities for offshore savers do exist but 90 per cent of the market isn't using them."
myfinances.co.uk

Barclays to set up Hong Kong offshore banking arm

HONG KONG (Reuters) - Barclays said on Thursday it has set up a new banking unit in Hong Kong to help manage the accounts of international trading firms as China becomes an increasingly important global player.

Hong Kong's imports and exports totalled more than US$400 billion last year, while China's trade with the rest of the world hit a record $1.1 trillion, prompting Barclays to set up the business, which it said is the first of its kind in the city.

"Professional service firms and international trading companies in Hong Kong are experiencing a surge in business and they need a high level of banking expertise and service to help them manage their affairs," said Katherine Morgan, head of international banking for Asia Pacific.

Barclays International Corporate, which manages about 10 billion pounds of offshore assets, will run the business and focus on professional service firms like trust companies and law and accounting firms.

The service firms can use Barclays Internet platform to access market information and treasury dealing and complete forward contract transactions online on behalf of their clients.

reuters.co.uk

The bursting asset bubbles

The recent implosion of the global equity markets in 1999-2002 - from Hong Kong to New York - engendered yet another round of the semipternal debate: should central banks contemplate abrupt adjustments in the prices of assets - such as stocks or real estate - as they do changes in the consumer price indices? Are asset bubbles indeed inflationary and their bursting deflationary?

Central bankers counter that it is hard to tell a bubble until it bursts and that market intervention bring about that which it is intended to prevent. There is insufficient historical data, they reprimand errant scholars who insist otherwise. This is disingenuous. Ponzi and pyramid schemes have been a fixture of Western civilization at least since the middle Renaissance.

Assets tend to accumulate in "asset stocks". Residences built in the 19th century still serve their purpose today. The quantity of new assets created at any given period is, inevitably, negligible compared to the stock of the same class of assets accumulated over decades and, sometimes, centuries. This is why the prices of assets are not anchored - they are only loosely connected to their production costs or even to their replacement value.

Asset bubbles are not the exclusive domain of stock exchanges and shares. "Real" assets include land and the property built on it, machinery, and other tangibles. "Financial" assets include anything that stores value and can serve as means of exchange - from cash to securities. Even tulip bulbs will do.

In 1634, in what later came o be known as "tulipmania", tulip bulbs were traded in a special marketplace in Amsterdam, the scene of a rabid speculative frenzy. Some rare black tulip bulbs changed hands for the price of a big mansion house. For four feverish years it seemed like the craze would last forever. But the bubble burst in 1637. In a matter of a few days, the price of tulip bulbs was slashed by 96%!

Uniquely, tulipmania was not an organized scam with an identifiable group of movers and shakers, which controlled and directed it. Nor has anyone made explicit promises to investors regarding guaranteed future profits. The hysteria was evenly distributed and fed on itself. Subsequent investment fiddles were different, though.

Modern dodges entangle a large number of victims. Their size and all-pervasiveness sometimes threaten the national economy and the very fabric of society and incur grave political and social costs.

There are two types of bubbles.

Asset bubbles of the first type are run or fanned by financial intermediaries such as banks or brokerage houses. They consist of "pumping" the price of an asset or an asset class. The assets concerned can be shares, currencies, other securities and financial instruments - or even savings accounts. To promise unearthly yields on one's savings is to artificially inflate the "price", or the "value" of one's savings account.

More than one fifth of the population of 1983 Israel were involved in a banking scandal of Albanian proportions. It was a classic pyramid scheme. All the banks, bar one, promised to gullible investors ever increasing returns on the banks' own publicly-traded shares.

These explicit and incredible promises were included in prospectuses of the banks' public offerings and won the implicit acquiescence and collaboration of successive Israeli governments. The banks used deposits, their capital, retained earnings and funds illegally borrowed through shady offshore subsidiaries to try to keep their impossible and unhealthy promises. Everyone knew what was going on and everyone was involved. It lasted 7 years. The prices of some shares increased by 1-2 percent daily.

On October 6, 1983, the entire banking sector of Israel crumbled. Faced with ominously mounting civil unrest, the government was forced to compensate shareholders. It offered them an elaborate share buyback plan over 9 years. The cost of this plan was pegged at $6 billion - almost 15 percent of Israel's annual GDP. The indirect damage remains unknown.

Avaricious and susceptible investors are lured into investment swindles by the promise of impossibly high profits or interest payments. The organizers use the money entrusted to them by new investors to pay off the old ones and thus establish a credible reputation. Charles Ponzi perpetrated many such schemes in 1919-1925 in Boston and later the Florida real estate market in the USA. Hence a "Ponzi scheme".

In Macedonia, a savings bank named TAT collapsed in 1997, erasing the economy of an entire major city, Bitola. After much wrangling and recriminations - many politicians seem to have benefited from the scam - the government, faced with elections in September, has recently decided, in defiance of IMF diktats, to offer meager compensation to the afflicted savers. TAT was only one of a few similar cases. Similar scandals took place in Russia and Bulgaria in the 1990's.

One third of the impoverished population of Albania was cast into destitution by the collapse of a series of nation-wide leveraged investment plans in 1997. Inept political and financial crisis management led Albania to the verge of disintegration and a civil war. Rioters invaded police stations and army barracks and expropriated hundreds of thousands of weapons.

Islam forbids its adherents to charge interest on money lent - as does Judaism. To circumvent this onerous decree, entrepreneurs and religious figures in Egypt and in Pakistan established "Islamic banks". These institutions pay no interest on deposits, nor do they demand interest from borrowers. Instead, depositors are made partners in the banks' - largely fictitious - profits. Clients are charged for - no less fictitious - losses. A few Islamic banks were in the habit of offering vertiginously high "profits". They went the way of other, less pious, pyramid schemes. They melted down and dragged economies and political establishments with them.

By definition, pyramid schemes are doomed to failure. The number of new "investors" - and the new money they make available to the pyramid's organizers - is limited. When the funds run out and the old investors can no longer be paid, panic ensues. In a classic "run on the bank", everyone attempts to draw his money simultaneously. Even healthy banks - a distant relative of pyramid schemes - cannot cope with such stampedes. Some of the money is invested long-term, or lent. Few financial institutions keep more than 10 percent of their deposits in liquid on-call reserves.

Studies repeatedly demonstrated that investors in pyramid schemes realize their dubious nature and stand forewarned by the collapse of other contemporaneous scams. But they are swayed by recurrent promises that they could draw their money at will ("liquidity") and, in the meantime, receive alluring returns on it ("capital gains", "interest payments", "profits").

People know that they are likelier to lose all or part of their money as time passes. But they convince themselves that they can outwit the organizers of the pyramid, that their withdrawals of profits or interest payments prior to the inevitable collapse will more than amply compensate them for the loss of their money. Many believe that they will succeed to accurately time the extraction of their original investment based on - mostly useless and superstitious - "warning signs".

While the speculative rash lasts, a host of pundits, analysts, and scholars aim to justify it. The "new economy" is exempt from "old rules and archaic modes of thinking". Productivity has surged and established a steeper, but sustainable, trend line. Information technology is as revolutionary as electricity. No, more than electricity. Stock valuations are reasonable. The Dow is on its way to 33,000. People want to believe these "objective, disinterested analyses" from "experts".

Investments by households are only one of the engines of this first kind of asset bubbles. A lot of the money that pours into pyramid schemes and stock exchange booms is laundered, the fruits of illicit pursuits. The laundering of tax-evaded money or the proceeds of criminal activities, mainly drugs, is effected through regular banking channels. The money changes ownership a few times to obscure its trail and the identities of the true owners.

Many offshore banks manage shady investment ploys. They maintain two sets of books. The "public" or "cooked" set is made available to the authorities - the tax administration, bank supervision, deposit insurance, law enforcement agencies, and securities and exchange commission. The true record is kept in the second, inaccessible, set of files.

This second set of accounts reflects reality: who deposited how much, when and subject to which conditions - and who borrowed what, when and subject to what terms. These arrangements are so stealthy and convoluted that sometimes even the shareholders of the bank lose track of its activities and misapprehend its real situation. Unscrupulous management and staff sometimes take advantage of the situation. Embezzlement, abuse of authority, mysterious trades, misuse of funds are more widespread than acknowledged.

The thunderous disintegration of the Bank for Credit and Commerce International (BCCI) in London in 1991 revealed that, for the better part of a decade, the executives and employees of this penumbral institution were busy stealing and misappropriating $10 billion. The Bank of England's supervision department failed to spot the rot on time. Depositors were - partially - compensated by the main shareholder of the bank, an Arab sheikh. The story repeated itself with Nick Leeson and his unauthorized disastrous trades which brought down the venerable and veteran Barings Bank in 1995.

The combination of black money, shoddy financial controls, shady bank accounts and shredded documents renders a true account of the cash flows and damages in such cases all but impossible. There is no telling what were the contributions of drug barons, American off-shore corporations, or European and Japanese tax-evaders - channeled precisely through such institutions - to the stratospheric rise in Wall-Street in the last few years.

But there is another - potentially the most pernicious - type of asset bubble. When financial institutions lend to the unworthy but the politically well-connected, to cronies, and family members of influential politicians - they often end up fostering a bubble. South Korean chaebols, Japanese keiretsu, as well as American conglomerates frequently used these cheap funds to prop up their stock or to invest in real estate, driving prices up in both markets artificially.

Moreover, despite decades of bitter experiences - from Mexico in 1982 to Asia in 1997 and Russia in 1998 - financial institutions still bow to fads and fashions. They act herd-like in conformity with "lending trends". They shift assets to garner the highest yields in the shortest possible period of time. In this respect, they are not very different from investors in pyramid investment schemes. Sam Vaknin, Ph.D. is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. He served as a columnist for Central Europe Review, PopMatters, Bellaonline, and eBookWeb, a United Press International (UPI) Senior Business Correspondent, and the editor of mental health and Central East Europe categories in The Open Directory and Suite101.

Until recently, he served as the Economic Advisor to the Government of Macedonia. Sam Vaknin's Web site is at http://samvak.tripod.com

St Lucia PM proposes new budget

St. Lucia's prime minister has proposed a new budget for his tiny Caribbean nation, saying its vulnerable economy has fully recovered from the slump in tourism caused by the Sept. 11 attacks in the United States.

Prime Minister Kenny Anthony presented the Eastern Caribbean $954.1 million (US$353.3 million or euro270.3 million) budget to Parliament Tuesday. It will cover fiscal 2005, which began April 1 and ends March 31, 2006.

St. Lucia's economy has been growing steadily since 2002, when its growth rate slumped to -5.4 percent after the attacks. It shot back to 3.7 percent in 2003. In 2004, it was 3.6 percent.

"This is the second consecutive year of accelerated growth and, in the context of the recessionary conditions which saw contraction in 2001, the performance in 2004 indicates that our economy has fully recovered," Anthony said.

For the first time in the island's history, there were more than EC$1 billion (US$374.5 million or euro286.5 million) in St. Lucia bank accounts, he said.

Tourist arrivals increased a record 15.8 percent in 2004, with tourism revenues increasing 17.1 percent. More than 107,000 visitors came from the United States - a 9.2 percent jump.

Offshore banking and tourism are the major sources of foreign exchange for the former British colony of 162,000 residents, whose manufacturing sector is the most diverse in the eastern Caribbean.

Banana exports increased 24.6 percent, and manufactured goods 6 percent, Anthony said.

The prime minister predicted continued growth. The International Monetary Fund, however, warned in November that the island's roughly 17 percent unemployment rate and US$444 million (euro340 million) debt could slow it down.

Debate on the 2005 budget, which is 24.1 percent more than last year's, begins Thursday. Parliament is expected to approve it, since Anthony's St. Lucia Labor Party has 14 of 17 lower-house seats and in the 11-seat upper house, where it has five seats and the opposition only has three.

forbes.com

RFID establishes positive ID in government

By John Moore, Federal Computer Week

Radio frequency identification (RFID) has been around for a while - some would argue 50 years - but
has only now entered the mainstream.
The technology uses radio frequency waves to transmit information about objects. RFID tags, tiny
silicon-based devices, fundamentally act like bar codes. But the similarities end there.

RFID tags generate much more information than bar codes do. RFID readers, which are equivalent to
bar code scanners, can simultaneously pull information from many tags, while bar code scanners
process items one at a time. In addition, RFID technology breaks through bar codes' line-of-sight
limitation.

RFID's advantages have attracted the likes of retail giant Wal-Mart and the Defense Department.
Wal-Mart officials require their top suppliers to use RFID tags. DOD officials have a mandate to use
the tags as they try to better handle the vast quantities of materiel they ship worldwide.

Such high-visibility customers have put RFID on the map and piqued the interest of numerous
organizations. In the government market, RFID is rapidly moving beyond DOD.

The Energy Department, Homeland Security Department, NASA and the Social Security Administration are
among the civilian agencies pursuing RFID. And applications of the technology vary. At least one
agency uses RFID to manage hazardous materials, while others deploy it to track animals.

Whatever the use, RFID deployments must be handled with care, experts say. Agency officials will not
find a one-size-fits-all solution. RFID tags differ in type, capabilities and cost. Officials may
need to tailor a buffer layer between RFID data and back-office applications.

But the benefits can be considerable for those who thoughtfully plan deployments.

"RFID represents, conservatively, an incremental improvement over bar code [technology], which
represents an incremental improvement over the hand recording of information," said J. Rollins,
manager of the civilian sector at Manugistics Group, a supply-chain solutions provider. "Each
represents a tremendous breakthrough in the reliability and accuracy of information."

A slow buildup

RFID dates back to at least 1948 and a report by Harry Stockman titled "Communication by Means of
Reflected Power." The buildup to widespread adoption of RFID technology has been gradual, however.

In government, animal tracking emerged as an early use of RFID. Officials at Energy's Bonneville
Power Administration (BPA) began using the technology in 1986 to monitor the movement of fish
through the administration's network of dams, said Scott Bettin, a fish biologist at the agency.

RFID tags also have been placed on railcars and affixed to motor vehicles to electronically pay
tolls. But cost and lack of standardization hindered broader deployment. The maturation of
standards, however, has paved the road to greater acceptance.

In the latest round of RFID deployment, DOD officials are using the technology to better track goods
along the supply chain. "DOD has a very specific business problem," Rollins said. "They are
deploying large amounts of assets overseas, thousands of containers. They have to understand the
contents of those containers."

Not to be left behind, civilian agencies have also begun to embrace RFID.

As with DOD, logistics and inventory management rank among the most frequent civilian-sector
applications of RFID technology. SSA officials are expected to initiate an upgraded warehouse system
this month, which will include an RFID component. They will use the technology to track inventory
and process orders for pamphlets and forms.

An SSA printing vendor delivered three large shipments of RFID tags in March to the agency's backup
warehouse. "The tag information included the inventory control number, quantity and Serialized
Shipping Container Code," said Gary Orem, an SSA information technology specialist.

The tagged products will be moved to another SSA warehouse where orders are prepared. Starting this
month, agency employees will read the tag information and update the warehouse system in real time,
Orem said. SSA officials believe the RFID solution will improve the accuracy of order fulfillment
and reduce costly errors.

Beyond logistics

In addition to inventory management, animal tracking remains an important application. BPA officials
plan to use 1.1 million implantable RFID tags this year to monitor fish in the Columbia River and
its tributaries in the Northwest, Bettin said. They can track fish at 200 sites around the basin.

The Agriculture Department's National Animal Identification System uses RFID to track cattle and
other animals. The system's goal is to rapidly identify animals and facilities that have come in
contact with diseases of concern, according to USDA officials.

Bovine spongiform encephalopathy, better known as mad cow disease, tops the list of those diseases.
Another is chronic wasting disease, a related ailment that affects deer and elk. USDA officials have
shipped 26,000 RFID tags this year to states to help prevent the spread of the disease to
domesticated herds, a USDA spokeswoman said.

Civilian agencies also use RFID technology for security and safety issues. For example, DHS
officials will begin testing RFID in July for the U.S. Visitor and Immigrant Status Indicator
Technology program. The tests will occur in Arizona, New York state and Washington state. Officials
will issue automatic identifiers to foreign visitors to record their arrivals and departures,
according to DHS officials.

Officials at NASA's Dryden Flight Research Center are examining the possibility of using RFID to
monitor the location and movement of chemicals. The test project, called ChemSecure, relays
information about the shipment and storage of chemicals to the center's hazardous materials
management system. Officials at the base have used bar codes on chemical containers since 1995.

Ralph Anton, chemical program manager at Dryden Flight Research Center, said center officials
started considering RFID as a way to manage chemicals because the technology requires fewer people
and resources.

The center's test project involves not only RFID but also other sensor networks that take
temperature readings and provide access control. An Oracle 10g application integrates the sensor
networks, Anton said.

How it works

Although uses of RFID vary, the basic components of the technology are microchip-based tags that
emit radio signals and readers that capture those signals.

Tags can be active, passive or semi-passive. Active tags include batteries that enable them to send
a signal to a reader. The signal can be transmitted up to 1,500 feet, said Mohsen Moazami, vice
president of the Internet Business Solutions Group at Cisco Systems.

Passive tags lack batteries and tap readers for power instead. The signal range is generally less
than 30 feet, but the tags are cheaper than their active counterparts. Passive RFID tags can cost as
little as 20 cents each when purchased in bulk.

Active tags range from $3 to $15 on average, said Vijay Sarathy, director of RFID product marketing
and strategy at Sun Microsystems.

Semi-passive tags offer a compromise. A battery runs the microchip's circuitry, but it still needs
to tap power from a reader to communicate. The battery boost, however, extends the range of
semi-passive tags to 300 feet, Moazami said. He said prices range from $2 to $20 per tag.

Organizations may use a mix of active and passive tags. Typically, active tags are used with
high-value assets, while passive ones are used with higher-volume, lower-value items.

Reader devices, meanwhile, come in fixed-location and portable forms. The fixed stations can be set
up in a warehouse or along a river basin, as in BPA's case. The portable devices resemble handheld
bar code readers, and some of the same vendors, such as Intermec Technologies and Symbol
Technologies, manufacture the readers.

Most people associate RFID with tags and readers, but those are only part of a solution. RFID
deployments need a buffer to absorb and understand the vast amounts of data, some industry
executives say.

"What we do with the data is really more important than anything else," said William Mancuso, a
Science Applications International Corp. employee who serves as chief enterprise architect for DOD
Logistics and Materiel Readiness.

DOD's passive RFID implementation uses webMethods' business integration software as a middleware
layer. RFID data doesn't directly hit DOD's back-office applications.

Instead, the webMethods solution receives the data and makes it available for enterprise resource
planning and other applications as needed, Mancuso said.

"It doesn't make sense to take all of the data from the readers and send it back directly to
corporate systems," Sarathy said. "You need some kind of filtering done at the edge."

Eric Hermelee, vice president of marketing at Wavelink, said middleware can be positioned at the
edge, with software residing on a server at a warehouse or other remote location. Wavelink makes
middleware that sends RFID data to host systems.

Alternatively, middleware can run in a central data center, although most executives favor
distributed models.

The need for middleware underscores a warning about RFID deployment: More data doesn't necessarily
mean valuable data.

"We are going to collect more data," Moazami said. "But my proposition is [that] if we don't do the
right thing - turn that data into actionable insights - it won't add value."

John Moore is a freelance writer based in Syracuse, N.Y.

© Copyright 2005 USA TODAY, a division of Gannett Co. Inc.
http://www.usatoday.com/tech/news/2005-04-20-rfid-feds_x.htm

Researchware watches every click

Is it spyware? Company says no; critics aren't so sure
By Bob Sullivan
Technology correspondent, MSNBC

Updated: 3:13 p.m. ET April 20, 2005

It's just a small download, promoted as a free antivirus program. But the software is really
designed to sit silently on consumers' computers, watch everything they do online, and send the
critical data back to the program's creator. The program has swept the Internet in the last year,
with millions of people downloading it.

The newest spyware? Nope. Welcome to the Internet's newest marketing tool, "researchware."

Consider it spyware's above-board, distant relative. Unlike spyware, researchware makes its purpose
clear when downloaded by consumers. Its intent is not to trick people into receiving annoying pop-up
advertisements, but rather, to gather legitimate market research data. And it's easy to uninstall,
unlike spyware, which is as hard to shake as a bad cold in winter.

Still, not everyone is comfortable with researchware. Privacy advocates wonder if consumers really
know what they are doing when they consent to use it. And security-conscious firms say
re-transmitting all that Internet traffic - which can include personal financial information - poses
a big risk.

Company: It's not spyware

The term "researchware" was invented by the field's pioneer, comScore Networks, to distinguish its
Marketscore program from spyware software, to which it had been compared. Marketscore is available
as a free download directly from a comScore Web site and from Internet affiliates.

MarketScore entices volunteers by offering protection from computer viruses. In the past, using the
name Netsetter, comScore software promised faster Internet connections. In both cases, by
downloading the software consumers grant comScore permission to redirect all their Internet traffic
through the company's servers. ComScore then studies the traffic to develop powerful market research
the firm later sells.

Marketscore has about 1 million U.S. users and another 1 million users overseas, the company said.

"There are responsible ways for companies to gather information about your online preferences," said
Chris Lin, chief privacy officer of ComScore. She compared MarketScore to the television audience
research firm Nielsen, which watches the viewing habits of volunteers.

Nielsen, Forrester Research, and Compete Inc. all collect information from Internet users that
voluntarily join a panel for research purposes - though none of those firms use the term
"researchware" to describe their work. (Nielsen//NetRatings provides user data to MSNBC.com.)

"This is no different than what a lot of other market research companies are doing," Lin said.

Banks cut off researchware users

Not everyone agrees. Security professionals say ComScore dangerously slurps up all manner of
personal information, including passwords for online banking services. Several financial
institutions have complained about the service, and last month, major banks in New Zealand announced
they would no longer do business with consumers who have installed Marketscore.

A fraud official for one of Canada's largest banks who asked not to be identified told MSNBC.com
that his firm had recently begun to reject all traffic flowing through Marketscore servers.

"I think people who download the software don't fully understand how much information is going to be
collected," said Larry Ponemon, director of the research firm The Ponemon Institute.

"They tell you it's a value for value exchange.  But as a rational human being, how much would you
have to be compensated to take this risk? Their data is incredibly valuable. And there are risks
that haven't really been thought about."

ComScore carefully controls those risks, Lin said. The company's research data has never been
stolen, she said, and the firm regularly submits to outside audits of its privacy and other
procedures.

ComScore also goes to great pains to avoid storing critical, personal data, she said. "If
identifying information exists, we either ignore it or scrub it," Lin said.  "We destroy pieces of
key numbers and data elements that we think are highly sensitive and that possession of would create
a potential vulnerability."

Detected by anti-spyware software

ComScore's explanations haven't satisfied everyone.  Along with bank offering online services,
several universities have also cried foul at Marketscore. The University of Toronto issued a warning
to students earlier this year about the service, claiming it can actually peek inside secure
transactions, creating a risk that sensitive data can be stolen, even if the user believes the data
is being transmitted in encrypted form.

"They have unencrypted access to their users' secure transaction information. If your computer has
Marketscore software installed, all your SSL secured transactions - banking, purchasing, passwords
or personal record access information is available unencrypted to the Marketscore organization," the
university says on its Web site .

The firm must decrypt the information to find what's there and conduct its research, the school
claims.

ComScore officials said the sensitive data is never at risk.

"We establish two secure communications. One with you, and one with the bank," Lin said.

Anti-spyware firms confused

Antivirus firms and other companies that sell anti-spyware products don't quite know how to treat
researchware. Symantec, for example, designates the program as spyware on its Web site
.

Symantec spokesman David Cole refused to comment on Marketscore. He did say the antivirus industry
was considering a new designation for researchware products. Computer Associates already has done
so -- it calls Marketscore "trackware." 

"The landscape is changing very quickly. We're talking to other vendors about this," Symantec's Cole
said. "It's a really challenging environment right now."

That's why ComScore created the term researchware, Lin said.  She believes one critical distinction
between malicious spyware and honest researchware is the ease of removal.

"There is a dramatic difference between software that obtains your consent and software that doesn'
t. We wanted to create a distinction between software that is out there tracking you, popping up ads
without your knowledge, and software that conscientiously obtains consent," she said.

The marketing industry doesn't know what to make of researchware yet, either.  Dwayne Berlin,
general counsel of The Council of American Survey Research Organizations, said his organization has
yet to take a position on the software.

"There's no official meaning to the term. ... It's really something we're in the process of learning
about ourselves," he said. "Observational research is extremely legitimate. But we need to make sure
industry codes fit the new methods."

Powerful research tool

Not only is observational research legitimate, it is powerful, all sides agree.  Thanks to
MarketScore, ComScore can provide incredibly detailed consumer research to its clients, which
ironically include online banks. In traditional surveys, filled out by consumers on their own,
people tend to distort and mis-report their behavior and preferences. MarketScore allows researchers
to watch consumers in their native environments, making real-life choices.

The firm isn't interested in the personal data, Lin said.  Instead, it wants to observe usage
trends.

"The fact that you are online banking, for example," she said, "And are you interested in mortgages
or are you interested in bill pay? Which services do you find useful? Are you going to just take a
look at the account or are you really going to do something active?"

But even absent security issues, privacy advocates wonder if it's possible for consumers to make an
informed choice when they elect to trade so much information for a small benefit like faster
Internet service or virus protection.

"I would claim that even the most interested and informed individual cannot forecast the
implications of this deal," said Alessandro Acquisti, a professor at Carnegie Mellon University who
studies the economics of privacy.

"This is why: Customers are entering a contract in which they are selling away their future behavior
and information without knowing in advance what that behavior and that information will be ... They
cannot predict what kind of information will be gathered, how it will be used, and therefore how
valuable it may be, or how damaging it could be to the customer."

© 2005 MSNBC Interactive
© 2005 MSNBC.com
© 2005 Microsoft Corporation. All rights reserved.
http://msnbc.msn.com/id/7546554/

Terrorist visa loopholes

Press Release Date 2005-04-17

Terrorist Visa Loopholes vs U. S. Patriot Act?

This program covers the crossroads battle developing between the powerful international
education lobby and the U. S government over the renewal of provisions in the U. S. Patriot Act
pertaining to the security regulations on foreign student visas.

i-Newswire, 2005-04-17 - Los Angeles, CA-Full Disclosure NetworkT cable and Internet television has
launched a first-ever Video Blog from the website at http://www.fulldisclosure.net to publicize "the
news behind the news" impacting current public policies.  The Disclosure Video Blog atwill start
streaming 24/7 beginning Friday, April 15, 2005.

The Disclosure Video Blog premiere entitled "Terrorist Visa Loopholes vs U. S. Patriot Act" covers
the crossroads battle developing between the powerful international education lobby and the U. S
government over the renewal of provisions in the U. S. Patriot Act pertaining to the security
regulations on foreign student visas.

In 2001 there were 547,687 foreign students listed with J-1 Visas in U. S. colleges and
universities. The U. S Department of Homeland Security is estimated that 220,000 new foreign
students and exchange visitors are expected to enroll in the fall of 2005.

The Disclosure Video Blog features exclusive clips from Full Disclosure television interviews and
footage, never before seen on broadcast television. Visitors to the website are encouraged to add
their comments with additional information to the Disclosure Video Blog in order to encourage and
heighten public awareness on hot topics

* * * * * * *
Full Disclosure Network
Marina del Rey, CA
310-822-4449

If you have questions regarding information in these press release contact the company listed below.
Please do not contact us as we are unable to assist you with your inquiry. We disclaim any content
contained in this press release.

More Information
http://www.fulldisclosure.net

http://i-newswire.com/pr15423.html

Bush's voodoo economics

America's trade deficit is rising and the dollar is falling. So what do George Bush's
economic policies portend for America's future?

By Scott D. O'Reilly

"Deficits don't matter" according to one highly placed administration who spends much of his time in
a secure location. Perhaps if you live in a reinforced bunker that's true, but the for the rest of
us deficits do matter; over the past three years the dollar has fallen 50 percent against the euro
and by 25 against the yen.

This is a direct result of America's twin deficits -- the federal account deficit and the trade
deficit. Simply put, Americans are buying more in goods and services than they produce, and more
than they can afford. The government under Bush has done the same, slashing taxes while dramatically
increasing spending at the same time.

The Bush administration can get away with this, of course, because our credit is still good -- the
Chinese, Japanese, and Europeans are only too happy to lend us money to buy their products. So it
was more than a little curious, last week, when the president of the United States stood outside the
Bureau of Public Debt in Parkersburg, W.Va. and implied that the more than $1.7 trillion in U.S.
Treasury notes that make up the Social Security trust fund aren't really worth the paper they are
printed on.

The president, as usual, was being both truthful and misleading at the same time. It is certainly
correct, as Bush claimed, that the Social Security trust fund does not consist of "real assets" --
like gold or greenbacks. Instead, in a rather neat alchemical trick, real money -- the kind you can
spend -- is withheld in the form of a highly regressive Social Security tax from each wage earners'
paycheck where it is promptly diverted to pay for Federal spending unrelated to Social Security
after being replaced by a Federal I.O.U.

All those I.O.U.'s, in case you were wondering, will be paid for by you -- John or Joan Q. Public --
in the form of higher taxes needed to pay back the interest and the principal on the U.S. Treasury
bonds 'guaranteeing' your Social Security benefits. No, this idea didn't originate with Bush
administration. But if you think about it long enough borrowing money to pay for Bush's tax cut was
the perfect way to turn gold into lead for wage earners.

Of course, if you earned your money the old fashioned way -- you inherited it in the form of a
private trust fund (and you don't have to rely on a risky scheme like Social Security, which might
not be there when you retire anyway) -- having the government borrow money to give you a tax cut
here and now is the equivalent of getting money for nothing.

There's nothing inherently wrong with borrowing money, of course, provided one spends it wisely and
has a reasonable plan for paying it back. But this is why Bush's remark that, "There is no trust
fund. Just i.o.u.'s that I saw firsthand," is so disconcerting. The Chinese and others are likely to
keep lending us money so that the United States can continue its spendthrift was, only so long as
they believe we'll pay them back. The falling dollar is an indication that foreign investors are
losing confidence in America's fiscal responsibility. If America's trade imbalance continues to grow
foreign investors will insist on a risk premium in the form of higher interest rates.

Of course, the U.S. taxpayer will bear the burden of financing the increasing yields of U.S.
treasury notes even as rising interest rates will mean higher monthly mortgage payments, effectively
functioning as a stealth tax on ordinary Americans. Increasingly, wealth will be transferred out of
the United States at an ever-accelerating rate.

If all this wasn't bad enough, an increasing number of Americans will soon be hit with what is known
as the Alternative Minimum Tax. Enacted by Congress years ago the A.M.T. was designed to ensure that
wealth taxpayers could not avoid paying taxes altogether through deductions and loopholes. The
problem, however, is that the A.M.T. was never indexed for inflation and as a result an increasing
segment of middle class Americans will soon find themselves facing a huge tax hike.

The cost of reforming the A.M.T., which nearly everyone agrees will unfairly punish ordinary
taxpayers, is estimated at $1.3 trillion dollars, or about the same cost as the first round of Bush'
s tax cuts. And, as if to heap further irony upon injury, the Bush administration has already
counted the increased revenue expected from the A.M.T. as offsetting the costs of its previous tax
cuts. In other words, without A.M.T. revenue the Bush budget projections would be even direr. It
doesn't more cynical than counting on revenue from a tax that for political reason the
administration will have to find someway to get rid of.

Billionaire John Paul Getty once said, "If you owe the bank a hundred dollars, you've got a problem.
If you owe the bank three trillion dollars, the bank has a problem." The Bush administration is
clearly counting on such logic, assuming our foreign lenders will have so much at stake in the U.S
that they can't possibly let America fail. For now this arrangement has something for everyone:
foreign lenders loan us money to buy their products and they send us I-Pods while we send them I.O.U
's. As long as the I.O.U's go out and the money comes in the Bush administration can afford to cut
taxes and raise spending, just as ordinary Americans can use one credit card to pay off another (ad
infinitum if necessary).

Several years ago a financial crisis in Russia was precipitated when the Russian government
realized, too late as it happens, that they [Russian government] had actually bought back, in a
complex financial transaction, the very same Russian treasury bonds that had been issued on their
behalf to raise investment capital. (Well, if you believe that the Russian government was ever going
to pay itself back, have I got a submarine for you). The lesson there is that the minute someone
realizes they've been had they'll pull the plug and the entire financial house of cards will come
tumbling down. But if Bush's voodoo economics helps precipitate a fiscal meltdown don't say George
didn't give you a heads up. After all, as Bush said about his tax cuts, "It's your money, you paid
for it."

Scott D. O'Reilly is an independent writer with degrees in Philosophy and Psychology who has been
published in The Humanist, Philosophy Now, Think, and The Philosopher's Magazine. You can e-mail
Scott at neuroscott@aol.com.

Posted Friday, April 15, 2005

Copyright © 2002 - 2004 Intervention Magazine
http://www.interventionmag.com/cms/modules.php?op=modload&name=news&file=article&sid=1057

WTO slates US offshore credit card only stance on gambling

Apr 14th 2005
>From The Economist print edition

Who was really the winner from the WTO's gambling decision?

GAMBLING is not prohibited by the Ten Commandments, nor is it one of the seven deadly sins. Still,
America bans almost all forms of wagering when it happens by phone or internet, on the grounds of
protecting "public morals". That ban violates free-trade rules for services, complained the islands
state of Antigua and Barbuda to the World Trade Organisation (WTO). On April 7th, a WTO appeals
panel reached a decision that both sides have claimed as a victory.

The WTO agreed with most of Antigua's claims that America's practices are inconsistent and
discriminate against foreign operators (because America allows online horse-race betting, but only
for operators authorised by American states). However, the WTO also concluded that America's "public
morals" exception is allowed, as long as America resolves the horse-racing inconsistency. As a
result, America intends to tweak the law, yet continue to ban online gaming generally.

The ruling will not change much for the online gambling industry, which has estimated revenues of
$10 billion annually, half from Americans. Although America outlaws both supply (websites) and,
occasionally, demand (users)-and even threw one website owner in prison-enforcement remains almost
impossible. Credit-card firms and PayPal, an online payment service, refuse to process transactions
between Americans and online betting operators-but other financial intermediaries are more obliging.

This is the first time that the WTO has considered the "public morals" defence and accepted it. It
may in future be used in other ways: for example, to justify a country banning on ethical grounds
goods made by child workers, says Andrew Guzman, a law professor at Berkeley.

The issue of online gambling may yet find its way back to the WTO. Several American states, which
have authority over gambling, are vying to legalise statewide online gaming. In the long run,
America's prohibition is unsustainable, reckons William Eadington of the University of Nevada,
because regulating, taxing and letting American firms compete against offshore rivals makes far more
sense. Australia allows online gambling, but regulates it and collects tax revenues. Britain plans
to do likewise, to encourage high-street betting shops that host internet sites offshore to return
home.

The Economist

Russian hackers best in the world

The Russian mathematical school is known as one of the best in the whole world

Spokesmen for the RF Interior Ministry officially admit that Russian hackers are the world's
best ones. It has become a popular tradition for Russian hackers to form transnational groups with
their foreign colleagues for stealing information, blackmailing and extortion.

The issue of Russian hackers was touched upon at the recent e-Crimes Congress in London. Head
of the RF Interior Ministry's department for special technical activities Lieutenant-general Boris
Miroshnikov spoke at the congress. He said, the police provided reliable data proving that Russian
hackers are better than their foreign "colleagues." This is quite understandable, he says, because
the Russian mathematics school is known as one of the world's best schools; today programmers from
Russia successfully work all over the world. This is the reason why Russian hackers perform so
wonderfully.

The Interior Ministry is anxious over the increasing number of hackers in this country. In the
mid-1990s, hackers were just mere net hooligans who cracked websites of banks or informational
systems of governmental structures just for fun. But today, hackers form virtual gangs and earn much
money cracking important websites.

In 2000, hackers committed 584 crimes classified as illegal access to computer data. Next
year, the number of cracking increased three times to 1567. And every year, the number of such
crimes is increasing even more (eight thousand of e-crimes were registered in 2004). The same
statistics is typical of making computer viruses and dangerous programs. In 2000, the police
instituted just 170 criminal cases on the basis of the RF Penal Code clause #273 (production and
usage of dangerous computer programs), while in 2004, the number of such criminal cases made up over
one thousand. Unfortunately, today makers of computer viruses and dangerous programs manage to evade
responsibility.

At the same time, Russian programmers are currently holding weaker positions. On the one hand,
Russian IT-experts are welcome all over the world. Israel, now one of the world leaders in computer
technologies, has become the home for many talented programmers from Russia. On the other side, at
the recent students programming championship, students of the Moscow State University and the
St.Petersburg Fine Mechanics and Optics Institute yielded the palm to the Chinese team for the first
time over the past years. Experts state this failure means IT-education urgently needs governmental
support. However, governmental support is not always an effective measure, as talented graduates
often go abroad.

The Russian Union of Businessmen and Industrialists reports that over 150 thousand of
programmers emigrated from Russia over the past years. Unfortunately, today Russia cannot offer
enough vacancies to IT specialists. This is another reason why talented programmers get involved
into illegal cracking of websites.

Read the original in Russian: http://news.pravda.ru/soft_hard/2005/04/13/74678.html
(Translated by: Maria Gousseva)

Pravda.Ru

NYSE specialists in trouble

Apr 14th 2005
>From The Economist print edition

Charges against its middlemen roil the Big Board

LOTS of money can be made in the tiny gaps between the buying and selling prices of shares. But the "specialists" on the New York Stock Exchange (NYSE), who match buy and sell orders, walk a fine line between their duty to their customers and that to their employers. Too fine, it seems. This week federal prosecutors in America charged 15 specialists with making $19m for their firms from improper trading. At the same time the Securities and Exchange Commission (SEC) settled civil charges against the NYSE for poor oversight of its floor, where most trades are still done.

The SEC also brought civil charges against 20 specialists (including those criminally charged) for
"pervasive" fraudulent trading between 1999 and 2003. The reason, says the commission, was that the
specialists traded for their own accounts when they should have been filling customers' orders
first. (Specialists are allowed under certain circumstances to buy and sell stocks for their firm;
this helps keep the market moving if liquidity is low.) For example, when a buy order comes in at a
higher price than a sell order, the specialist's duty is to match the customers rather than profit
from the spread. The SEC says that some such practices went awry-and also that the specialists
sometimes abused their positions by trading in advance of customer orders.

The specialist firms-which include elite names such as Bear Wagner and Spear, Leeds & Kellogg (a
Goldman Sachs subsidiary)-have been braced for this blow. Last year the companies settled with the
SEC for over $240m. One of them, a Dutch firm called Van der Moolen, has seven ex-traders facing
charges this week.

For the NYSE, it is another black mark for its efforts at self-regulation, though its standards have
been toughened since 2003. The exchange got into trouble with the SEC in 1999, when it was charged
with failing to stop illegal trading schemes perpetrated by groups of floor brokers. As part of this
week's settlement, in which the Big Board, as in 1999, neither admitted nor denied charges, the NYSE
is due to pay $20m to buttress supervision of its regulatory system. It must also begin pilot video
and audio surveillance of floor trading of certain highly liquid stocks.

This week's charges may hasten the exchange's switch away from the floor. "Electronic trading
systems are much less scandal-prone," says Benn Steil of the Council on Foreign Relations. The NYSE
already plans to become more electronic-and, says Mr Steil, if John Thain, the chief executive, and
Marshall Carter, just appointed as chairman, want to get serious about an initial public offering,
the trading floor might just have to go altogether. Specialists would rue that day, but would have
only themselves to blame.

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>From The Economist
Trouble over a trading rule Apr 7th 2005
http://www.economist.com/finance/displayStory.cfm?Story_id=3846773

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http://www.economist.com/cities/citiesmain.cfm?city_id=NY

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http://www.economist.com/research/articlesBySubject/display.cfm?id=348936
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Web sites
The New York Stock Exchange issued a press release
 about charges against the specialists. See also the SEC's announcement  of the charges.

Consequences of economic crime

CONSEQUENCES OF ECONOMIC CRIMES AFFECT PEOPLE'S SENSE OF SOCIETY'S
FAIRNESS, CRIME CONGRESS' COMMITTEE 1 TOLD

Activities such as drug trafficking, exploitation of natural resources, corruption and
misappropriation of funds from banks affected the economic well-being of the people, the
representative of Thailand, the Host Country to the Eleventh United Nations Congress on Crime
Prevention and Criminal Justice, told the Congress' Committee I today.

i-Newswire, 2005-04-20 - The consequences of such activities, he said, went well beyond financial
loss and the economic well-being of society. It was important that people felt they were living in
a fair and just society and, if economic and financial crimes were not checked, people would begin
to feel increasingly resentful.

He said people who were behind financial crimes were usually smart and sophisticated, making use of
financial resources to build extensive connections with law enforcement officials. Authorities had
to fight interference from influential powers, and that was often more difficult than the
investigation itself. Strong political will and government commitment was needed to fight such
crime. If the perpetrators were members of the government, decisive and swift action would restore
society's confidence in government policy on the issue.

During consideration of today's topic: "Economic and financial crimes: challenges to sustainable
development", delegates deliberated on the need for a new convention on money-laundering and the
need to share national experiences and cooperate internationally in combating the scourge.

Implementation was the one theme he would like to see emerging from the discussion, the
representative of the United Kingdom said, referring to the fact that four United Nations
conventions -- the Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances,
the Convention against Transnational Organized Crime, the Convention against Corruption and the
Convention for the Suppression of the Financing of Terrorism -- all included provisions to combat
money-laundering, but had a poor record in implementation.

On the other hand, Brazil's representative said the main obstacle in the fight against international
crime was the lack of international cooperation. International cooperation in the fight against
international crime seemed to be a kind of taboo. Although his country had received help from
Nigeria in solving an important case, there were lots of cases where it could not get cooperation
from other countries because of a lack of a "culture of cooperation".

The representative of the United States drew attention to the fact that apart from the four United
Nations Conventions, which more countries should ratify, there were also the 40 recommendations of
the Financial Action Task Force. They had been endorsed and recognized as the single international
standard by the International Monetary Fund and World Bank and embraced by the twentieth special
session of the General Assembly as the international standard. "We should not risk creating
conflicting guidance and obligations in this area", she said, opposing elaboration of a new
convention.

Turkey's representative, however, supported the High-Level Panel's recommendation to draft an
international convention on money-laundering. Such a convention, he said, could make non-mandatory
provisions of other United Nations conventions mandatory and adherence to the Financial Action Task
Force recommendations universal.

Nigeria's representative said that corruption, as well as economic and financial crimes, had
distorted the image and reputation of his country. He stressed that Nigeria would tolerate the
problem no more. It had charged five of the largest banks for allowing the flourishing of
corruption in his country, the biggest problem facing African countries. Nigeria had brought
several highly placed people to justice, including the President of the Senate, for embezzlement.
"There is a revolution taking place in Nigeria today, and we are proud of it", he said. Today,
Nigeria was the number one country in fighting corruption and was becoming a sort of model on how to
combat economic and financial crimes.

The representative of Argentina addressed the problem of conceptualization of and defining economic
and financial crimes. He said that conceptualization could be an interesting but difficult subject,
since under the terms of economic and financial crime a whole series of crimes could be included
that was already covered by the criminal code. Tax evasion, for example, was in many countries not
an offence, and there were many obstacles in international legal cooperation in dealing with that
crime.

Also speaking today were the representatives of the Republic of Korea, Italy, Morocco, Luxembourg
( on behalf of the European Union ), Australia, Mauritania, Cameroon, Norway, Denmark, Venezuela,
Ukraine, Switzerland, Finland, Philippines, Germany, France, Sri Lanka, Spain and Peru.

Representatives of the Council of Europe and the Asia Pacific Group on Money-Laundering addressed
the Committee as well, as did the representatives of two non-governmental Organizations: Japan
Federation of Bar Associations and Asia Crime Prevention Foundation.

With today's discussion, the Committee I concluded its consideration of economic and financial
crimes: challenges to sustainable development.

Background

Committee I of the Eleventh United Nations Congress on Crime Prevention and Criminal Justice had
before it a working paper prepared by the Secretariat on Economic and financial crimes: challenges
to sustainable development ( document A/Conf.203/7 ), defining "economic and financial crime"
broadly as any non-violent crime that results in a financial loss. A list of economic crimes
includes cartel offences, fraudulent practices, computer crime, violation by a company of standards
of security and health concerning employees, fraud to the detriment of creditors, unfair competition
and fiscal offences. Technical change has had a significant impact on overall levels of economic
and financial crime.

According to the working paper, understanding the impact of economic and financial crime in the
current global context, and on developing countries in particular, is complicated by the difficulty
of determining an all-encompassing definition of the concept and by the fact that both the extent
and costs of such crimes are difficult to measure. There is growing evidence, however, that
economic and financial crimes are increasing, mostly in sectors affected by rapid advances in
technology.

One area requiring particular attention is money-laundering, given its links not only to other areas
of illicit activity in the financial sector, but also because of its use by organized criminal
groups involved in a variety of illegal activities. The High-Level Panel on Threats, Challenges and
Change suggests that a global legal instrument is required on money-laundering. That provides a
renewed focus on the effectiveness of current arrangements and the viability of possible future
arrangements to counter the laundering of criminal proceeds.

Available evidence also suggests that the costs of economic and financial crime, while often eluding
exact measurement in the short term, are severe for many societies seeking to achieve sustainable
levels of development. Such practices undermine, in the medium and long term, effective economic
management, transparent practices and the rule of law. They also benefit only a few people in
society, leaving the majority poorer and with fewer resources.

The working paper recommends that the Congress consider:

-- Establishment of mechanisms at the national, regional and international level to improve data
collection on economic and financial crimes;

-- Ways to improve the global legal framework to counter economic and financial crimes;

-- Provision of effective technical assistance to developing countries to improve their capacity to
confront the problem;

-- Agreement on measures to improve cooperation between government and the private sector in
preventing such crimes; and

-- Identification of effective measures to curb money-laundering in countries where participation in
the "formal" financial system is low, including in the areas of research, training, skills
development, technical assistance programmes and regional and international cooperation.

Statements

PRIDIYATHORN DEVAKULA, Governor, Bank of Thailand, said it was well known that activities such as
drug trafficking, exploitation of natural resources, corruption and misappropriation of funds from
banks affected the economic well-being of the people. The consequences of undesirable activities
went well beyond financial loss and the economic well-being of society. More important was the
feeling among the people that they were living in a fair and just society. When economic financial
crimes were committed, prompt action against the perpetrators was needed. If left unchecked, people
's feelings of resentment would accumulate. They would feel alienated and resent their governments.
The feeling that one lived in a fair society was even more important than economic well-being. The
question was how to prevent feelings of resentment from deepening.

The harmful consequences of normal crime were easily felt and observed, he said. Common crimes were
also less likely to be compromised in the law enforcement process. Economic crimes did not have
direct and immediate impact due to their non-violent nature. Hence, such crimes did not receive
public attention. People who were behind financial crimes were usually smart and sophisticated,
making use of financial resources to build extensive connections with law enforcement officials.
Authorities had to fight interference from influential powers, and that was often more difficult
than the investigation itself. Strong political will and government commitment was needed to fight
such crime. Economic and financial crimes were destructive enemies of nations. Governments needed
to fight against financial crimes in every shape and form. Stock price manipulation, insider
trading, while not directly harming people's lives, made people feel slighted. If the perpetrators
were members of the government, decisive and swift action would restore society's confidence in
government policy on the issue.

Cross-border economic crime was more difficult to combat, he added. The Congress was a good example
of collaboration at the international level. Modern forms of such crimes could be seen in cases of
individual businessmen from big countries moving into small countries under the pretext of
technological advancement. There were cases of certain medicines banned in more developed markets
which could be found on the shelves on less developed markets. In such cases, it was clear that the
small nations were being exploited by bigger nations with greater economic clout. He did not have a
solution to the problem, but only hoped that an internationally neutral body such as the United
Nations would look at the issue of economic exploitation of smaller nations and set appropriate
rules of the game. Protecting the interests of smaller nations would help those in developing
nations think they were living in a fair world.

MARY LEE WARREN ( United States ) concurred with the assessment of the discussion paper regarding
the seriousness of transnational economic crime and the harm it caused to the well-being of many
people. Her country had updated existing laws on money-laundering after 11 September. She did not,
however, join in the suggestion that there was a compelling need for a new convention on
money-laundering. She disagreed that existing mechanisms were inadequate. Four United Nations
Conventions currently addressed that matter, including the Convention against Illicit Traffic in
Narcotic Drugs and Psychotropic Substances, the Convention against Transnational Organized Crime,
the Convention against Corruption and the Convention on the Suppression of the Financing of
Terrorism. Those instruments covered the spectrum of serious crime, and statistics showed that 163
countries had criminalized money-laundering beyond drugs, and 113 countries had criminalized
terrorist financing.

There was still much work to be done with the existing conventions before determining that there was
need for yet another convention, she said. That would be premature. Rather, all countries should
be encouraged to ratify the existing treaties, implement them and provide the basis for
international cooperation. In addition, the 40 recommendations of the Financial Action Task Force
( FATF ) were the universally recognized international standards for anti-money-laundering efforts.
"We should not risk creating conflicting guidance and obligations in this area", she said.

She said the Tasks Force's 40 recommendations had been endorsed and recognized as the single
international standard by the International Monetary Fund and World Bank. At its twentieth special
session, the General Assembly had, in resolution S-20/4 embraced the recommendations as the
international standard. Another concern was that the Secretariat had suggested that a
money-laundering convention might be too difficult to undertake and that a more limited approach
should be taken, one that focused on the Internet. Her country opposed such a piecemeal approach
since the focus would be solely on the instrument or conduit used to commit the crime, rather than
the type of particular offences.

NAM-GEUN YOON ( Republic of Korea ) said technology was being used exponentially in economic
financial crime, adding sophistication to traditional crime. It was timely that the Congress would
focus on high-tech crime under the broader rubric of economic and financial crime. National borders
were becoming irrelevant as world financial systems became increasingly integrated. Over the last
10 years, the Republic of Korea had had many high-profile cases. The country had made sacrifices to
deal with financial debt in the wake of fraudulent lending schemes. The Government had initiated a
series of measures in that regard. Unfortunately, the number of financial crimes was on the rise.
While about 33,000 cases had been reported in 2001, in 2004, the number had increased to about
68,000. What was even more alarming was the number of minors involved in cyber crime.

In the Republic of Korea, new crimes were exploiting high-tech advances both at home and abroad, he
said. Law enforcement agencies needed a system that facilitated information sharing to address the
global threat of e-crime. Identity theft was usually associated with other crimes and, as such,
needed to be criminalized. In 2001, the Republic of Korea had enacted a law that prohibited public
associations from providing information to third parties. Money-laundering was also a problem, and
the proceeds of such crime were often used to commit other crimes. Money-laundering, however, was
not a punishable crime in itself, and legislation was needed to outlaw that form of financial crime.
With advanced information technology, national boundaries were no longer the obstacles they once
were in carrying out financial and economic crime. To stem the tide of financial and economic
crime, advanced nations needed to provide developing countries with financial, educational and
technical assistance. The Republic of Korea was poised to provide its expertise in that regard.

NUHU RIBADU ( Nigeria ) said that, in his country, addressing economic and financial crimes had been
problematic for a long time. However, those crimes had now been identified as the biggest problem
facing the country, and the battle against corruption and economic and financial crimes was on. The
Government had established a high-powered commission in 2003 to address the problem. Tragically,
economic and financial crimes and corruption had distorted the image and reputation of Nigeria. His
country was one of the largest oil producers in the world, but had a big problem of theft of crude
oil, mainly by foreigners. The Commission also addressed that problem.

He stressed that Nigeria would tolerate the problem no more. It had charged five of the largest
banks for allowing the flourishing of corruption in his country, the biggest problem facing African
countries. Nigeria had brought several highly placed people to justice, including the President of
the Senate, for embezzlement. "There is a revolution taking place in Nigeria today, and we are
proud of it", he said. The problem had to be solved to regain the respect of the international
community.

He said his country had also developed strong international working relations, among others with the
Interpol and the Europol, the United States, South Africa and the United Arab Emirates, because most
of the crimes were transnational, and money was being brought out of the country. Moreover, his
country was working with the Financial Action Task Force. Today, Nigeria was the number one country
in fighting corruption and was becoming a sort of model on how to combat economic and financial
crimes.

BRUNO BURATTI ( Italy ) noted that, for some time, the fight against organized crime had focused on
the economic context. The acknowledgement of the presence of illegal financial flows and their
effects on the economic system as a whole had created a growing awareness of the need to fight
economic crimes. The fight against economic crime, in particular money-laundering, must be carried
out with both a repressive approach and a preventive approach. In that regard, Italy had seen
significant innovation in terms of broadening the range of illegal activities. Regarding
prevention, it was important to, among other things, report suspicious transactions. Re