Council on Foreign Relations Predicting Major Market Upheaval

Energy Crisis Bares Libertarian Myth of Deregulation

Expert Refutes Flawed Tax Arguments Being Sold to Honest Patriots, Anti-Tax
Community

Council on Foreign Relations Predicting Major Market Upheaval

CFR and Bilderbergers are making preparations for a likely stock market crash.

Exclusive to The SPOTLIGHT

By George Nicholas

If you hocked your house to bet on the stock exchange, you should be aware
that in their soundproof conference rooms, the money magnates who style

themselves “masters of the universe”—the elders of the Council on Foreign
Relations (CFR) and Bilderberg—have started holding rehearsals for an
anticipated breakdown of the U.S. financial markets.

The CFR’s trial-run “simulation” scenario for such a financial apocalypse,
developed by Dr. Roger Kubarych, an econo mist and senior fellow of the CFR,
is based on the assumption that a concatenation of bad news—a sudden spurt
in inflation figures, plunging computer and software sales, reports of sharp
increases in loan defaults, and a simultaneous sell-off of mutual
funds—might well trigger an avalanche of stock-market losses, leading to a
generalized panic.

Kubarych has presented his financial “doomsday” game theory both to leading
CFR and Bilderberg business barons. Their consensus: In such a crisis, the
Federal Reserve must ride to the rescue, by providing “whatever liquidity
[cash] may be needed to save the U.S. payments system,” Wall Street sources say.

But under the law, the Fed is authorized to manage the money supply only by
buying or selling bonds.

The Kubarych scenario, and the unanimity with which some of the world’s top
financiers reacted to it, gives new life to a question that has been
haunting Wall Street for years: Is Fed Chairman Alan Greenspan, whose
indifference to legal niceties is well known, keeping the money supply
brimming over with secretly—and illegally—generated billions in U.S. currency?

The question is timely, because a number of the “crisis signals” postulated
by the Kubarych scenario are already looming on the horizon. So-called “core
inflation” figures are up, and the high-tech markets are in a slump, leading
to sharp losses in stockholder assets.

CRISIS SIGNALS

Most importantly, a number of major banks are reporting a rising tide of
loan defaults.

First Union Corp., the sixth largest U.S. money-center, revealed in
regulatory filings that it had over $700 million of “impaired” (i.e.
non-performing) loans on its books at the end of the third quarter, a
whopping 11 percent increase over the previous year.

First Union, long regarded as one of nation’s fastest-growing and most
prosperous banks, reacted to the crisis by closing 90 branches, firing 2,350
employees, shutting its Money Store subsidiary, and watching helplessly as
its stock fell by 50 percent.

Other banks report similar problems.

Not since the recession of 1990 has Wall Street seen such a rapid
deterioration in credit quality, veteran brokers say.

The credit ratings of a record 470 corporations were sharply downgraded in
the year 2000, as the number of “noncurrent” (i.e. unpaid) commercial and
industrial loans rose by a whopping 38.7 percent over the preceding year,
according to data released by the Federal Deposit Insurance Corporation.

“If you still think stocks will make you rich, go buy some,” said Demeter
“Dim my” LaRoque, a retired New York Stock Exchange floor trader. “But take
my advice, don’t bet the farm on them.”

Energy Crisis Bares Libertarian Myth of Deregulation

The Libertarian belief in the benefits of deregulation that borders on the
religious has been exposed as a myth in California’s first free market
experiment in the energy industry.

Exclusive to The SPOTLIGHT

By Christopher Bollyn

The California utility disaster offers an object lesson in the consequences
of “libertarian deregulation,” which opposes any government regulation of
business. If the trend to deregulate utilities is not reversed the
consequences will be catastrophic for America.

While the traditional Christian beliefs of President George W. Bush’s
nominee for attorney general, John Ashcroft, have drawn a great deal of
media attention, a more threatening dogma to which the new administration is
wholeheartedly devoted is accepted without question by the mainstream media:
the libertarian doctrine of deregulation.

The baneful effects of the libertarians’ bad religion have devastated
California utilities and looted the state’s economy of billions of dollars.
Many of the energy suppliers behind the on-going utility crisis in the
Golden State are senior sponsors and advisors of the new administration.

The new president is an acolyte in the church of laissez faire economic
theology, but he is well supported and coached by the high priests of free
market orthodoxy.

Top executives of several of the energy-generating companies, including
Enron, Dynegy and Duke Power, participated in closed-door negotiations to
resolve the California utility crisis in which they were expected to
strongly defend their pricing practices and reject charges of price gouging.

One participant in the intense negotiations is natural gas executive Kenneth
Lay, a long-time friend, donor and adviser to Bush.

Lay, a possible Bush nominee for energy secretary, is chairman of the
Houston-based natural gas pipeline company Enron Corp., the energy company
that has been Bush’s biggest financial backer throughout his political
career. Lay was part of a large group of outside advisers involved in
shaping Bush’s energy policy and is serving on an energy policy advisory
committee that Bush assembled for the transition.

California Gov. Gray Davis (D) called the energy suppliers “pirates,
marauders, gougers and greedy profiteers,” according to The Los Angeles Times.

The governor’s harsh criticism raises a valid question: Have the electricity
suppliers who own California’s power plants colluded to increase profits in
the state’s deregulated market?

The generators, almost all of which are headquartered in the South and South
west, say they have adhered strictly to the law and have not manipulated the
market, either individually or in concert.

“Those charges have clouded the issue for the better part of the year 2000;
they continue to cloud the issue,” said Richard N. Wheatley, director of
communications for Houston-based Reliant Energy. “It’s the buyers who drive
up the price. . . . It’s like a buying frenzy.”

Government and private researchers, however, have concluded that
California’s deregulated energy market has been manipulated to keep energy
prices substantially higher than the cost of production to increase
corporate profits.

Researchers with the Federal Energy Regulatory Commission found that “the
market was artificially distorted” by the power suppliers who decreased the
power supply in order to maximize profits when demand increased.

Wholesale power sold on California’s spot market briefly soared above $1,000
per megawatt hour but has come down to around $320 per megawatt hour—still
expensive compared to $34 per megawatt hour one year ago.

One of the reasons for soaring prices is the critical shortage of power
plants in California while the state’s energy needs are growing.

Under the 1996 state law that deregulated the sale of electricity in
California, the utilities were encouraged to sell off their power plants and
begin buying electricity on the “free market”— including from the companies
that now own their old plants.

However, when California desperately needed power last summer, federal
investigators found generators exporting power by selling electricity to
marketers elsewhere in the country. Those buyers could then sell it back to
California when the prices climbed due to dwindling supply.

In fact, more power was exported to other states from generation plants in
California last year than in 1999.

Power plant operators usually shut down many of the generators for
maintenance between January and April so they can run full throttle during
the hot summer months. This upkeep is especially important in California,
where 82 percent of the generators are more than 30 years old. But last
year, for reasons federal officials have yet to determine, preventive
maintenance plunged nearly 40 percent.

SUDDEN SHUTDOWNS

Many researchers cite a sharp increase in unscheduled plant shutdowns and
unusual production cutbacks that dried up California’s energy supply and
helped push prices skyward—as much as fivefold, draining cash from the
state’s big utility companies.

As the demand for power increased due to the need for air conditioning
during the heat of summer, plants unexpectedly began shutting down. Lost
wattage virtually quintupled in August compared to the year before.

Researchers for the Federal Energy Regulatory Commission said in a Novem ber
report that the cuts could have been caused by equipment breakdowns in aging
facilities, but they hinted that the shutdowns were calculated to reduce the
supply of power available in order to drive the prices higher. The federal
re searchers noted that when prices climbed to more lucrative levels, the
outages suddenly ended and the plants sprang back to life.

Last week, the major California utility companies announced job cuts.

Pacific Gas & Electric (PG&E) officials said they would have to immediately
cut 325 jobs, and possibly 675 employees over the next few months, to save
money.

Southern California Edison (SCE) announced even bigger cutbacks. On Jan. 5,
SCE said it planned to lay off 1,850 employees—or 13 percent of its workforce.

FREE TRADER ON A MISSION

Bush, a devout free-trader who campaigned on the promise of expanding NAFTA
from Alaska to Argentina, made good on his promise by nominating Robert B.
Zoellick to be U.S. trade representative.

Zoellick “is a free-trader on a mission,” according to The Washington Post,
who had “a direct hand in negotiating free-trade agreements with Canada and
Mexico and clearing the final negotiating hurtle to the creation of the
World Trade Organization. Now he wants to negotiate free trade with Europe
and the rest of Latin and South America.”

Zoellick might have a hard time convincing Californians that “free trade” in
the energy markets has made them stronger or is any improvement over regulation.

Expert Refutes Flawed Tax Arguments Being Sold to Honest Patriots, Anti-Tax
Community

In the interest of minimizing harm to patriots who sincerely want to fight
unjust taxes, The SPOTLIGHT lists the most common mistakes made by tax
fighters as researched meticulously by a successful nontaxpayer.

Exclusive to The SPOTLIGHT

By Tony Blizzard

In his many years of tax research, Otto Skinner has done all American
patriots a tremendous service. For instance, an entire chapter of his third
book, The Biggest Tax Loophole of All, is dedicated to exposing 18 flawed
tax arguments that result in fines and/or prison time for good, but misled,
patriots.

Following is a listing of those arguments with very abbreviated, incomplete
refutations.

For easier understanding, it must first be mentioned that taxation law
begins with an obligation on the government to prove that a person is a
taxpayer lawfully subject to (liable for) a tax. It is generally a mistake
for the citizen to take it upon himself to attempt to prove to the
government that he is not liable. A nontaxpayer has no standing in court to
argue tax law.

Argument: Submitting the W-4 exempt form.

Refutation: This is a form for taxpayers, not nontaxpayers.

Argument: Stating that the tax is an unconstitutional, direct tax.

Refutation: The protester presents himself as being liable for the tax by
arguing from the standing of a taxpayer. Moreover, the tax is neither
unconstitutional nor direct.

Argument: Stating that the 16th Amendment was not properly ratified.

Refutation: The amendment created no new tax anyway. The protester again
presents himself as being liable for the tax as a taxpayer.

Argument: Filing a 5th Amendment claim.

Refutation: Implies that the individual has committed a crime and is a taxpayer.

Argument: Stating that wages are not income.

Refutation: Wrongly assumes that pro perty (wages) is the subject of the tax.

Argument: Stating that “shall” means “may” in case law relied upon.

Refutation: That particular case, and the statement used from it, have no
bearing on the tax.

Argument: Stating that the tax is voluntary.

Refutation: No tax is voluntary al though self-assessment may be.

Argument: Stating that the individual is not an employee.

Refutation: This argument is based on an erroneous definition of the term
“includes” in the tax code.

Argument: Stating that the secretary must complete a tax return.

Refutation: Falsely mixes criminal and civil cases.

Argument: Stating that the individual is a nonresident alien, not a citizen,
etc.

Refutation: Also stems from a flawed definition of the term “includes.”

Argument: Stating that the tax is only on government employees.

Refutation: Argument is based on an act of Congress which established no tax.

Argument: Files zero tax returns (and often states that only corporations
have income).

Refutation: Relies on three cases which do not back up the theory. Two of
the cases resulted in convictions of those who used them. The other is
misused in support of the definition of income.

Argument: Stating that lack of an OMB number on the 1040 instruction book
nullifies the tax.

Refutation: OMB numbers apply to regulations but the taxpayer is obligated
by statute.

Argument: Stating that zip codes are a federal geographic gimmick.

Refutation: Has nothing to do with who is subject to the tax as the tax is
not territorial.

Argument: Stating that Title 26 is not positive law.

Refutation: Whether the code is “positive” or not, it is prima facie
evidence of some act of Congress passed into law—it is immaterial to the
legitimacy of the tax.

Argument: Stating that tax levies can only be placed on the property of
public servants.

Refutation: Argument ignores part of the code as well as who is subject to
the tax.

Argument: Stating that the tax is the direct Victory Tax of 1942 and
therefore can only be imposed for two years.

Refutation: The “Victory Tax” did not differ from the ordinary “income tax”
thus nullifying the theory.

Argument: Stating that we have no lawful money, so what we use as money
can’t be taxed.

Refutation: Money (property) is not the subject of the tax, income amount is
only the measure of the tax.

Skinner sums up the chapter with a few handy hints to help discern flawed
arguments:

If the argument considered applies the tax to someone else instead of
yourself, don’t use it. You want the government to acknowledge that you are
a nontaxpayer, not that someone else is a taxpayer.

If the argument has you filling out a form, it’s false. Only taxpayers are
obligated to fill out forms.

Finally, see what the argument gives as the subject of the tax and try to
verify that subject in the tax code.
SPOTLIGHT January 29, 2001
Always study the case law that has been used in tax cases appropriate to
yours. Never take for granted that it actually supports your argument just
because some “expert” says so.

Skinner’s ability to cut through and understand legalese and his common
sense approach to law are a godsend to the patriot anti-tax movement.

His books and bulletins are valuable tools which take the mystery out of tax
law.