Author: Petros

My April 7 visit to the US consulate

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Today I visited the US Consulate in Toronto to inform them that I had committed an act which had caused me to relinquish my US citizenship.  They made me fill out seven pages of paperwork (which I had done in advance–DS-4079 and DS 4081), swear with my right hand raised that I had read and understood the consequences of my actions, and then I signed the paperwork in front of a consular officer, who then put the seal of the Consulate General of the United States on each signature page.

How I was treated

The main person that I dealt with Mrs. A. was very polite; she too is Canadian, and so there was zero recrimination for the act I had committed–but she did her job, and made sure that I knew what I was doing.  The consular officer, a certain Ms. J.H.F., also was polite.  At first Mrs. A. suggested that I must come in for a second visit, but when I insisted that I had already committed an expatriating act, she agreed that I was only at the consulate to inform them of that fait accompli and that there would be no need to return.  The expatriating act took place on 28th of February, and she recognized that I was no longer an American citizen according to USC 1481 .

$450 renunciation fee [UPDATE: Please note, I did in fact receive my CLN without paying $450]

I can’t yet say, as I suggested in an earlier post, that the $450 fee would not apply to someone who had committed a prior relinquishing act.  It is clear however that “renunciation” and “relinquishment” are two completely different acts in the understanding of the United States Department of the State and their US Consulates General around the world.  Mrs. A. explained that my paperwork would be sent to Washington for examination.  This could take a great deal of time.  Meanwhile, she provided me with sealed copies of all the paperwork.  She said that when the Certificate of Loss of Nationality (CLN) would be approved, she would contact me and I could pick it up after it arrives but I would have to pay any fee that might apply.  She didn’t think that the $450 fee would apply but she wasn’t sure.  So I am not in the clear.  However, the Toronto US Consulate General says that fee is applicable at the time of taking the oath of renuciation.  Singapore too.  The Hamilton Consulate General says the fee is applicable at the time of picking up the CLN, and renuciationguide.com says that fee technically applies to the processing of the necessary paperwork.  In any case, if I’ve made the relinquishing act, owning a Certificate of Loss of Citizenship may not be necessary, provided the State Department recognizes my loss of citizenship.  I’d be like Scarecrow, brains but no diploma.

My written statement

I provided a written statement which I signed in front of the consular officer and which she stamped and sealed.  The text of that statement is as follows:

I have lived in Canada most of my adult life.  I have married a Canadian.  After so many years in Canada it became clear that I have a great attachment to Canada, to my Canadian friends, to my Canadian wife and her family, and to my church community in Canada.  I felt that it was therefore necessary to become a Canadian citizen so that I may become a full member of this great and wonderful country and its people.  Therefore, I applied for Canadian citizenship in 2010, and I also had, even at that time, the intention of relinquishing my US citizenship.  For in taking my pledge to the Queen of Canada, Elizabeth II, on February 28, 2011, I realized that it would be absurd for me to be of divided loyalty.  My duty to the Queen and to the Dominion of Canada precludes me from maintaining citizenship in the United States of America, since when one country calls me to serve, dual citizenship could potentially create a conflict of interest.  To avoid all such conflicts, I have decided with my full volition and all my heart, to relinquish my United States citizenship once and for all, realizing that it is an irrevocable act.

Weimar America: I. It’s starting

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I have been flabbergasted by the lag between the price of crude oil, now at $108, and the cost of certain Canadian junior and intermediate oil companies, whose share prices have not kept up with commodity prices.  The market seems to be saying, “Hey, I’ve seen this trick before.  I buy the oil companies, thinking I can take advantage of oil prices, and then the price goes down and I am left holding a bag of money-losing companies.”  Well that could be true.  But then again, this could be the start of Weimar America.

In Weimar Germany, when hyperinflation started, people initially slowed down their buying of consumer goods because they felt that the prices weren’t normal, and that they should soon fall back to some level of sanity.  But instead, prices continued to rise.  Thus, they were forced to pay higher prices.  They soon learned that the time to buy was immediately after receiving money.  One of my professors who was a boy during Weimar Germany recounted how, the moment his parents were paid, he had to rush with their money to the market before the prices went up.

Now this is happening all around us.  I know that Ben Bernanke is saying that high prices are due to commodities, and that they will come back down.  But I doubt that you can come up with a single time that he’s ever made an accurate prediction. Here are some signs that Weimar America is now here.

(1) Car prices:  I bought a RAV4 in February because the price hadn’t changed in over a year and because Toyota Canada offered me free 36 month financing.  I felt that car prices would be going up because of commodity prices.  The earthquake in Japan has shut down parts factories and now production will cease in Toyota’s North American plants.  Similar shut downs will likely occur to other manufacturers around the world who depend on parts from Japan.  Supply will go down and this will cause car prices in the near term to increase steeply.  But don’t expect prices to go down once those Japanese factories are back online.  This is a catalyst for pushing prices steeper, where they must go.

(2) Oil prices:  The crisis in Libya and in other oil producing countries has lead to $108 WTI and $121 Brent.  The crises are not going away, because many are caused by instability due to food inflation.  Don’t expect crude to come back down in price.

(3) Precious metal prices:  Despite those who call gold a bubble, gold seems to have found support at $1400.  Silver has been experiencing unreal gains.  Investors who want to have some exposure to physical metal would do well to establish a starting position lest prices don’t come back down.

(4) Flight of capital:  Wegelin & Co., a Swiss bank that caters to wealthy clients with beaucoup bucks to invest is leaving the United States and has written up a eight page, double column, writ of divorce, entitled, “Farewell America“, explaining that the new bank regulations that the Obama led government has put into place are not worth the trouble.  Besides, they say, the USA is now in a major debt situation that it can’t get out of because (1) Foreign creditors are now decreasing their net debt to the US; (2) the US is running its entitlement programs as a ponzi scheme; and (3) Federal Reserve Bank is monetizing the Federal debt.  They are recommending that their clients completely leave the United States.  They won’t be coming back until things are fixed, if then.

Here is a salient excerpt from “Farewell America”:

The sensibilities of their own capital market: this is what the smart guys in the IRS have very probably failed to take into account. Their onesided regulatory proposals, focused on maximizing the tax take, are based on the entirely unproblematic and undisputed attractiveness of the USA as a place of investment for investors from all over the world. We believe this assumption to be utterly wrong. Why?

A glance at the USA’s debt situation suffices to show that apart from oil, there is really only one element of strategic importance that the USA will need in the coming years: capital. The (declared) public debt – national, state and community – amounted to some 70 percent of GDP in 2008. With the absorption of further debt in the wake of the financial crisis, by 2014 the level of explicit debt is likely to be significantly above 100 percent of GDP. By then the interest will have doubled from around 10 percent of total public revenue to around 20 percent, on moderate assumptions.

This is generally well known. What is generally less well known is that in the USA too, as in so many ailing European states, this explicit perspective reveals less than half the truth about what has been implicitly promised by the state in the way of future benefits. Correctly accounted – that is, as probable future payment flows discounted to present values – the picture would look a good deal bleaker. There are studies, such as the one by the Frankfurt Institute in November 2008, that reckon with a total level of debt for the USA of up to 600 percent (!) of GDP.

April 7 is my “Farewell America” date.

You keep using that word … II. Recovery

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When Bush was President the lamestream media kept talking about “recession” and yet now, with a handpicked media President in the Whitehouse, they talk about a recovery.  And yet some of the real statistics belie the idea that things are recovering–sure asset prices, except real estate, are up, but compare that to how many more people are on food stamps.

This post was inspired by this headline:
Global recovery fragile, uneven: IMF

Money in Ancient Egypt

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In my study of gold, I’ve tried to find out something about the metal in the most ancient texts.  In doing so, I googled “Gold in Egypt”, and the first hit was a aldokkan.com that made the following claims about ancient Egypt:

The Egyptian government did not maintain or needed any gold treasury, civil servants were paid in food and gifts, money did not exist until the Ptolemaic Period.

The general population did not use any gold in their daily life, and the metal had no economic importance for them.

J. T. McGee has urged  me not to believe everything I read on the Internet, and so I’d better verify the above claims.  The first text that I read that would suggest that money existed in Egypt is Genesis 47:14 (RSV):  “And Joseph gathered up all the money that was found in the land of Egypt and in the land of Canaan, for the grain which they bought; and Joseph brought the money into Pharaoh’s house.”  The term for money is keseph (כֶּסֶף), silver, and many ancient Near Eastern texts refer to the monetary use of silver, often measured in shekels–though apparently this was before the invention of coins.  So money existed in Egypt at the time of Joseph many hundreds of years before the Ptolemaic period.

For those skeptical of the historic worth of Genesis, in The Journey of Wen-Amon to Phoenicia (J. B. Pritchard, Ancient Near Eastern Texts (ANET), 25-29), a text dating to the 11th century BC, Wen-Amon travels from Egypt to Phoenicia to buy timber, but has his gold and silver stolen while harbored at Dor to buy provisions.  So clearly, silver and gold had already become money in international trade.  In The Expulsion of the Hyksos (ANET 233-234; 15th cent. BC) , a relatively common ship’s captain recounts his military exploits for which he received on seven occasions a reward of gold.  It would appear from these texts that gold was monetized in ancient Egypt, in the sense that it served as: (1) payment; (2) intermediary of trade; (3) store of value.

Jonathan Lebed and the National Inflation Association: On ending ad hominem attacks

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In my last post, “Why Warren Buffet is Wrong about Gold”, which was published first by Mich at Beating the Index, I mentioned that the National Inflation Association (NIA) had decried the massive silver short position that banks, especially J. P. Morgan, had taken. J.T. McGee, 21 year old blogger and college senior, wrote:

The National Inflation Association is a joke, and it is run by a man who has been convicted on pumping and dumping stocks. He’s back at it again, this time he just takes in fees to pump stocks to his newsletter subscribers. Do a search for “Lebed.”

I knew that NIA was using its position to pump their stock choices, mostly junior silver miners.  Whether they are guilty of pumping and dumping is nevertheless unverified and there have been no convictions.  You may as well put me, Mich, and especially Eric Nuttal–for that matter just about every financial blogger in jail because we’ve all pumped our stock choices, and we make decisions to dump–which just means to sell–based upon our target prices.  We all hope that our stocks go up and that we can sell at a huge profit, and if our promotion of the stock helps, well, ain’t that just too bad?

Nevertheless, I did some research on Jonathan Lebed and his relationship to NIA.  Lebed is famous because  at the age of fifteen he settled out of court with the SEC who accused him of a pump and dump scheme whereby he would promote stocks on his website and through Yahoo bulletin boards (pump) and sell them after the suckers who read his recommendations bought in and pushed up the price (dump).  The SEC settled with him for a $285,000 of his earnings but let him keep $500,000.  In a well-researched and balanced article about the subject, Michael Lewis brings up some serious questions about the Lebed case.  He portrays Lebed as a kind of wiz-kid investor who was trading himself to a fortune already as a teenager but whose techniques of promoting his picks drew the ire of the SEC.  The article is an entertaining and informative read.  At one point Lewis asked for a statement from Lebed about the SEC accusations and their attack on him; Lebed responded with a four-page e-mail that began:

I was going over some old press releases about different companies. The best performing stock in 1999 on the Nasdaq was Qualcomm (QCOM). QCOM was up around 2000% for the year. On December 29th of last year, even after QCOM’s run from 25 to 500, Paine Webber analyst Walter Piecky came out and issued a buy rating on QCOM with a target price of 1,000. QCOM finished the day up 156 to 662. There was nothing fundamentally that would make QCOM worth 1,000. There is no way that a company with sales under $4 billion, should be worth hundreds of billions. . . . QCOM has now fallen from 800 to under 300. It is no longer the hot play with all of the attention. Many people were able to successfully time QCOM and make a lot of money. The ones who had bad timing on QCOM, lost a lot of money.

This perceptive response from 15-year old shows remarkable insight into a problem.  The real issue is to ask the question why the SEC was going after some high school kid who used alternate media to promote his stocks, when big names on Wall Street do the same using major media outlets and made billions of dollars?  Is it just because he’s a kid and therefore is not allowed to inform others of his opinion?  We all love Eric Nuttall, but every time he goes on BNN and promotes his stock picks we notice on the next market day a serious surge in the share price of his longs and a painful plunge of his shorts.  Shouldn’t he be fined and imprisoned for expressing his opinion?  Yet by all accounts, his pump and dump has many times greater effect on the oil and gas market than anything Lebed could have done on Yahoo boards and with his pathetic little website.

There is a principle in law that goes back at least to Jesus–one should not go after minnows when there are whales to be caught–or as Jesus himself said while criticizing the Pharisees and the legal experts of his own day (Matt 23.24):  “You blind guides, straining out a gnat and swallowing a camel!”  Nowadays, there are so many laws that governments could probably throw us all in jail and throw out the key, as Stalin’s chief of police said, “You show me the man, I’ll find you the crime.” It is incumbent upon government to show self-restraint and wisdom in the application of the law, lest we all find ourselves in federal penitentiaries.  But perhaps it is time for people to rise up and to curtail this arbitrary and capricious power that governments have to whimsically go after anyone that they feel like, while leaving true crooks free to exploit and game the system.  Just a few days ago, I find out that a marathon runner, Charlie Engle, who bought a couple houses goes to federal prison while the folks at Country Wide, Freddie Mac and Fannie Mae get a pass.  And why?  Because an IRS agent saw him on a running program on TV and decided that he had reason to suspect that the man had lied on his income taxes!  Beware of fame!

The NIA writes about their association with Lebed,

Jonathan Lebed learned at a young age of 15 years old from first hand experience why Americans should never believe the propaganda that is in the mainstream media. His life experiences made him uniquely qualified to write ‘End of Liberty’ and we believe he did a very good job.

End of Liberty is well-done indeed, and it points out how Americans’ constitutional rights are being abused.  I too have become a victim of the US Federal government, which is currently being run as a criminal organization.  So I have great deal of sympathy for Lebed’s opinions.  Is Lebed a good man?  I don’t know him.  Is he guilty of pump and dump?  Probably, but then so am I, Mich, and Eric Nuttall.  Do I recommend the man?  No.  Do I recommend NIA’s videos on inflation?  Yes indeed, because they are telling a very important story about how the US is going down the tubes.

So I commented to J.T. as follows:

The National Inflation Association does promote stocks. I get their e-mails. I never buy the stocks or even look at their suggestions. I found that there is the broad accusation that they pump and dump but no proof and no convictions. So I will consider your criticism ad hominem guilt by association: The logic is basically that my view is wrong because I cited NIA, which has an association with Jonathan Lebed, and both the NIA and Lebed pump and dump and therefore their information can’t be trusted. But it doesn’t deal with the substance of the issue, i.e., how big is the short silver position of the banks.

I find that many people today feel that its ok to shoot down your position by simply associating it with some kind of nefarious or criminal activity–this is classic case of ad hominem and guilt by association.  I would simply respond that when it comes to NIA, you’re gonna hafta do better than that.  When you should be attacking their views on gold and inflation, you instead attack their character.  J.T.’s argument was not substantial on this point but even after I pointed it out, he denied the logical fallacy and continued in his line that they were fear-mongering about inflation.  Well, I happen to agree with NIA and the fear-mongering, for we all need to prepare for Weimar America.

In conclusion, Monty Pelerin writes about ad hominem: “Ad hominem attacks are not refutations of ideas, merely the refuge of scoundrels promoting a logically indefensible agenda.”  Those like NIA, who offer opinions against the mainstream media and the criminals in Washington, will be subject to character assasination.  This should not bother us if our opponents cannot refute the basic arguments.

So without further ado, here is Jonathan Lebed’s (writer) video, The End of Liberty: