“America Has Become a Piñata…”

“America’s national government has moved way beyond a political spoils system,” wrote Charles Goyette in his book The Dollar Meltdown. “A spoils system leaves the host alive so that a politician’s occasional ne’er-do-well brother-in-law can be put on the payroll.”

In contrast, Goyette suggested, “America has become a piñata: Everybody gets a crack at it. Presidents and other elected officials pass the big stick around as a reward to those who help keep them in charge of the piñata party.”

Goyette’s book came out in 2009. Since then, we have learned that the party is even more debauched, nay demented, than he ever imagined. And you, dear reader, were not invited…

• It turns out Federal Reserve officials hold regular meetings with well-connected insiders, tipping them off to future Fed moves. On Aug. 15, 2011, Chairman Ben Bernanke clued in an economist named Nancy Lazar about “Operation Twist” — the Fed’s attempt to bring down long-term interest rates.

Ms. Lazar’s clients, according to The Wall Street Journal, pulled down double-digit returns on 10-year Treasuries between the time of that meeting and the time Operation Twist was unveiled to the public on Sept. 21. Sorry you missed out.

• Treasury Secretary Hank Paulson sat down for lunch with hedge fund managers on July 21, 2008, and informed them a federal takeover of Fannie Mae and Freddie Mac was imminent. Ten days earlier, he swore up and down to Congress no such takeover was in the works.

The takeover, in fact, occurred on Sept. 6 — giving the hedge fund managers their own handsome payday in a six-week span. Again, you were excluded.

Before you object too loudly, we daresay you might wish to consider the consequences.

The Repeal of Habeas Corpus? When Free Speech No Longer Matters

On December 31, 2011, President Obama signed the Department of Defense Authorization Act into law. This is normally the routine annual budget for the Pentagon. But inserted into this year’s bill is language giving the president the authority to use the military to imprison terrorism suspects — including US citizens — indefinitely, and without charges.

In other words, the “great writ” of habeas corpus is in danger of repeal. No longer would the government have to justify to a judge why it holds someone in custody.

“Take away this great writ,” writes The Future of Freedom Foundation’s Jacob Hornberger, “and all other rights — such as freedom of speech, freedom of religion, freedom of the press, gun ownership, due process, trial by jury and protection from unreasonable searches and seizures and cruel and unusual punishments — become meaningless.”

Without habeas corpus, you could be thrown in prison for the “terrorist” act of criticizing the government and the government would never have to declare the precise reason it hauled you away. And in theory at least, the First Amendment would still be in force!

“This defense bill,” says The Rutherford Institute’s John Whitehead, “not only decimates the due process of law and habeas corpus for anyone perceived to be an enemy of the United States, but it radically expands the definition of who may be considered the legitimate target of military action.”

“This bill will not only ensure that we remain in a perpetual state of war — with this being a war against the American people — but it will also institute de facto martial law in the United States.”

135 SWAT Raids per Day: “Life Goes on, But It Is Debased…”

Rampant corruption and the apparatus for wide-scale repression: These are the hallmarks of what military theorist John Robb calls “the hollow state.”

“The hollow state has the trappings of a modern nation-state (‘leaders,’ membership in international organizations, regulations, laws and a bureaucracy), but it lacks any of the legitimacy, services and control of its historical counterpart,” Robb wrote in 2008. It is merely a shell that has some influence over the spoils of the economy.

“The real power,” Robb continues, “rests in the hands of corporations and criminal/guerrilla groups that vie with each other for control of sectors of wealth production. For the individual living within this state, life goes on, but it is debased in a myriad of ways. The shift from a marginally functional nation-state in manageable decline to a hollow state often comes suddenly, through a financial crisis.”

It is in this context that the growing “militarization” of police looks even more ominous than it does on the surface.

The Pentagon has distributed $2.6 billion in military surplus to local police agencies since 1997. Thus do towns of only a few thousand people have their own SWAT teams. Time was their use was limited to hostage-takings and other high-stakes situations. SWAT raids nationwide numbered only 3,000 per year in the early 1980s, according to University of Eastern Kentucky criminologist Peter Kraska.

Nowadays, SWAT teams are used to serve routine warrants. By the time Kraska stopped counting in the mid-2000s, the annual number had exploded to 50,000 — an average of more than 135 per day.

What happens when the tinder-dry combination of piñata-party corruption and a police-state structure meet the spark of violence?

We don’t know where all this is going… but we know it makes us uneasy…which is why we are increasingly interested in casting our gaze for investment opportunity far, far away from US shores.

The US remains a land of (some) opportunity, but it has lost its monopoly.

Regards,

Addison Wiggin,
for The Daily Reckoning