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Twenty-eighth Issue 11 April 2005
Annual Sovereignty Review



Buy this essay and others in Jim's new book Being Sovereign.

The Indomitus Report
Volume 2, #13

18 April 2005
Dollar Crisis

Being Sovereign

        "The worst government is often the more moral. One composed of cynics is often very tolerant and humane. But, when fanatics are on top, there is no limit to oppression."

        - H.L. Mencken, "Minority Report,"
        HL Mencken's Notebooks, 1956

This week's top quote comes from Doug Casey's April 2005 International Speculator. The cover of that document shows Doug attired in an attractive ghutra, aqaal, and disdasha, traditional Arab garb. In it, Doug reviews his trip to Syria, which he describes as "small, poor, quiet, old, and passive." I would urge you to read what Doug's written about Syria and, indeed, American foreign policy generally. Subscription information is available at Casey Research.

Mencken's quote is rather apt. Under Clinton, there was corruption, decadence, moral turpitude, unreasonable policies, attacks on sundry individuals and outrages like the Branch Davidian massacre. On the whole, however, Clinton's tyranny was considerably more tolerant and humane than that of Bush. The tyrant Bush has been a true believer, crusading in the Holy Land, savaging the people of Iraq for the sins of their dictator Saddam against Bush's father. Clinton's team almost certainly conceived and engineered the 1995 Oklahoma City bombing of the Murrah Federal Building as a Reichstag fire to create turncoats within the militia and Texas sovereignty movements. Bush's team may have had Mossad help in engineering if not entirely orchestrating the 11 September 2001 attacks, and certainly exploited them for additional dictatorial powers. Proving either case would be difficult, but the two align in one respect with Mencken's comment: Clinton's Reichstag fire cost the lives of scores of Americans, mostly employees of the government or their children; Bush's more zealous team either organized or exploited the deaths of thousands of Americans, mostly civilians working for the banking cartel.

Unfortunately, both Bush and Clinton are reminders of the warning of Justice Louis Brandeis, "The greatest dangers to liberty lurk in insidious encroachment by men of zeal, well meaning, but without understanding." Clinton fits Mencken's idea of cynicism, a sort of "aprés moi, le deluge" decadence and obvious immorality. Bush meets the Brandeis term "men of zeal" head on. Neither actually seems well meaning. Both are clearly without much use for understanding.

Each fool is a sort of epitome of the mediocrity available from the bipartisan system. Socialistic Republicans like Bush and McCain are saber rattling, social welfare purveying, fascists who curry favor with corporate interests using traditional Republican methods like regulating and cartelizing industries, adding massive trade barriers to the economy, and increasing the scope of government through spending, including some of the most profligate deficit spending since the Reagan administration. They do so while playing to the Christian conservatives. Socialistic to the point of communistic Democrats like the two Clintons, the Kennedy clan, or Schumer do all these same things while playing to the effete intellectual Leftist elite, perhaps pretending to have budget surpluses while, curiously, the national debt increases each year.

The Bipartisan Campaign Finance Reform Act which Bush signed into law while crying crocodile tears over its unconstitutional provisions and assuring the people that the Supreme Court would never uphold it has, <voice="Gomer Pyle">Suhprize, Suhprize, Suh-prize!</voice>, been upheld by the Supreme Court. (Past presidents of merit such as Jefferson and Jackson were known to veto legislation they determined to be unconstitutional, which is one more reason to call Bush a fool.) This law is the centerpiece for the new Feral Election Commission attacks on the web blogging industry, with the expectation of full blown censorship come the 2006 election. Notice that there are two parties mentioned in the act's name, whereas the political scene has many other parties including a Libertarian, a Green, a Natural Law, a Constitution, a Reform, a Socialist, a Communist, and a Prohibitionist party, to name but a few. The act was not named the Dekapartisan Campaign Finance Reform Act, was it? Anyone reading the terms of the act must be clear that the law has two purposes: to make it even easier for incumbents to win re-election, and to make it even harder for minor party candidates to win election.

There won't be any significant "reform" of such a system, where the entire process of reform has been co-opted by the major figures of corruption and oppression. The campaign finance reform act is itself a clear example of how "reform" doesn't happen. It is also a sort of amusing irony that the term "campaign finance" shows up in the act's title, since its function is to prevent the financing of political campaigns. Someone with Ross Perot's billions to waste on a presidential bid would be unable to do so, even if Perot's examples of failure didn't persuade the candidate to avoid the process.

(In this week's Libertarian Enterprise Doug Newman exposes a quote from Finley Peter Dunne: "A man that would expect to train lobsters to fly in a year is called a lunatic; but a man that thinks men can be turned into angels by an election is a reformer and remains at large.")

So how do we get off this planet? We can't operate a world-changing industry from within the United States, as muscle-bound with regulations and vested interests as it is. We can't build missile systems in most other countries owing to various non-proliferation treaties. Any really useful system like the NERVA nuclear energy reaction vehicle with its incredibly high specific impulse would be forbidden in any useful Equatorial jurisdiction like, say, Somalia.

The key thought was inspired by Doug Casey's newsletter this month. Doug points out that the borders of Syria appear on the map as they do because France and Britain were carving up the Ottoman Empire after defeating the Turks and the Huns in World War One. As Doug points out, the work of carving up the Ottoman Empire in the Mideast was about as horrifying and as horror-causing as the Berlin conference in 1884 which divvied up the African continent. (A fairly good conception of the pogroms and brutal massacres arising from the arbitrary, Euro-fashioned African borders is available for cheap by renting or buying "Hotel Rwanda" for an inside look at a typical French neocolonial atrocity.)

So, if the borders in the Mideast are nonsense, laid down by French and British diplomats with a bit of kibbitzing from Col. Mandell House of the Wilson administration, and the borders of Africa are horrid fictions thrown down on paper by more sinisters than ministers at the 1884 Berlin conference, presumably amidst free flowing alcohol, where can one go for meaningful borders? Not north America, certainly.

The key thought is: Balkanization is a good thing. The one great hopeful trend is the dramatic increase in countries during the Twentieth Century, amidst some of the most oppressive governments in history, during the course of civilian massacres and brutal wars costing as much as half a billion human lives and trillions of dollars in treasure. If a trend is so powerful it can exert itself in that kind of milieu, amidst endless chatter from the world government non compos mentis types jawboning for unification, it is worth watching.

Indeed, so powerful is this trend toward the fracture of regional empires and the disintegration of arbitrary borders that it is certainly worth being a part of, investing in, and exploiting while it plays out. Free trade zones, aboriginal sovereignties, and new country initiatives offer many opportunities for participation and investment.

Even though Doug doesn't always find good quality investment opportunities in the countries he visits, he looks for them, and sometimes finds really great ones. And, of course, he organizes the Eris Society conference every year to bring together in Colorado many people from around the world who wouldn't otherewise get to know one another. Skip down to the new country developments section for a discussion of this year's Eris.

If you have difficulty believing in the collapse and disintegration of the United States, consider the views James Turk and John Rubino offer on the coming collapse of the dollar, discussed below. Crises are coming, and each will represent danger and opportunity.

Another way of looking at the disintegration of the United States is through the lens of history. The United States are not one country by preference, by cultural inclination, by common language, nor by ethnic traditions. The United States are one country by force.

Previously, the territory of the United States included independent countries like the Kingdom of Hawai'i, the Republic of Texas, the California Bear Republic, the Mormon Theocracy of Utah, and the Confederate States of America. Nineteenth and early Twentieth Century projection of force was required to assemble the territory and unify it out of unwilling component elements. Millions of men and women and billions in treasure were expended to make the United States what it is today. Given that rebellions, revolutions, and wars for independence from empires like Spain, Britain, France, and the USA have been fought on this continent previously, it is no great stretch to suppose that similar rebellions, revolutions, and wars for independence will be fought on this continent in the future.

These maps, too, shall change.

Free Market Money

There's a very interesting book that hit the USA market at the end of December 2004. It has excellent advice for anyone interested in the free market money industry. Excerpted above are several of the quotes that caught our attention.

The fact that China's central bank still has substanital reserves of silver to dump on the market while the Federal Reserve and USA at least pretend to have substantial reserves of gold to dump is an interesting connection. We've not seen it elsewhere in print.

The quote about gold being money and fiat currencies not is quite apt. The major thrust of the book is captured by this one sentence.

Of course, mainstream political and economic reporters and leaders don't agree that the dollar is about to collapse. According to Turk & Rubino, they say things are stable now for two reasons: they hardly ever recognize a trend reversal before it blows up in their faces, and they suffer under several misconceptions. Here at The Indomitus Report we think there's a third reason not fully examined in The Coming Collapse. We suspect there's a preference not to be forthcoming with the facts about which many of these political and economic leaders are familiar. One cannot lead lambs to the slaughter if one frightens the lambs away from the abattoir.

What misconceptions? The ideas that debt doesn't matter, that governments can be trusted (to manage a country's currency), that the USA economy operates independently of foreign exchange markets, and that gold is a relic with no role in a "modern" economy. Of course, these are misconceptions, and their opposites are reasons why the dollar is about to collapse.

It should be clear at this point that the nature of the collapse is not deflation. Rather, Turk & Rubino expect an inflationary death spiral, perhaps as early as 2006. Keep in mimd our examination of the Yugoslavian five quadrillion percent inflation as an example of what such a death spiral looks like.

Will the dollar collapse? The case made in The Coming Collapse is quite thorough. Debt levels are at an unmanageable high level. Consumer debt, mortgage debt, corporate debt, federal debt, unfunded federal mandates, federal obligations to the coming tidal wave of retirees, and the trade deficit are discussed. But the really terse explanation shows up on page four of their book.

      "All great societies pass this way eventually, running up unsustainable debts and printing (or minting) currency in an increasingly desperate attempt to maintain the illusion of prosperity. ... Either they simply collapse under the weight of their accumulated debt, as did the US and Europe in the 1930s, or they keep running the printing presses until their currencies become worthless and their economies fall into chaos.

      This time around, governments the world over have clearly chosen the second option. They're cutting interest rates, boosting spending, and encouraging the use of modern financial engineering techniques to create a tidal wave of credit. And history teaches that, once in motion, this process leads to an inevitable result: Fiat (i.e., government-controlled currencies will become ever less valuable, until most of us just give up on them altogether.

Naturally, as a result of this anticipated dollar collapse, other fiat currencies would likely inflate at the same time, and suffer similar, if slightly later, fates. Yet, for all this soothsaying about doom, the authors are quite optimistic. They believe that, among other things, digital gold will be embraced by merchants and consumers, creating a power shift of tremendous proportions.

There's a lot to like about this book. We don't agree with the traditional line that gold confiscation won't touch pre-1933 gold coins, and that the premium for such coins, even in non-numismatic quality, is a sort of insurance against confiscation. Since governments cannot ever be trusted, they certainly cannot be trusted not to seize wealth in whatever form they find it. On the other hand, we do agree completely that digital gold offers useful offshore storage, a diversification of vaulting services, wholesale pricing of storage, and low transaction fees. Unfortunately, the opportunity to discuss the many legitimate players in this market such as e-Bullion, the Liberty Dollar, and Pecunix was missed.

Instead, industry founder e-gold is mentioned along with industry leader in terms of gold in storage, GoldMoney. The treatment of e-gold focuses on the failure of Standard Reserve and the fraud conviction of one of Gold & Silver Reserve's largest shareholders. JP May's alternative explanation for the plateau of e-gold bars in inventory is not included. Of course, the recent surge in e-gold bars is an event after the book was in print.

The book's treatment of GoldMoney was also far too circumspect and even modest to a fault. There's no mention of the many active uses for GoldMoney, except to suggest that some newsletters on the gold mining industry and related economic sectors are available in exchange. No mention is made of the prospect of paying dividends in gold, no mention is made of a major mining company (Durban Roodeport Deep) investing in GoldMoney, no mention is made of the user base or the quantity of gold in storage. These lacunae combine with the fact that diversification is the watchword for surviving the coming collapse but the divers gold and silver storage alternatives operated by the second oldest, third oldest, and fifth oldest major players in the market are not mentioned to suggest that the book is not as complete as it should be.

In the table below are the securities which were recommended by the Turk & Rubino duo at the end of December 2004. Assuming you bought their book when it first became available after Christmas 2004, the table below reflects the current value of their suggested investments. In each case where a 28 December 2004 closing price was not available, we grabbed 29 December 2004.

Turk and Rubino Suggestions
Security Symbol 28 Dec 2004 18 April 2005 Delta

Gold

Au

444.1

426.50

(17.60)

Silver

Ag

7

7.00

-

Platinum

Pt

874

860.00

(14.00)

Palladium

Pd

187

198.00

11.00

Golden Star Resources

GSS

4.01

2.65

(1.36)

Glamis Gold

GLG

17.5

14.18

(3.32)

Meridian Gold

MDG

18.75

15.38

(3.37)

Eldorado Gold

EGO

2.95

2.47

(0.48)

Nevsun

NSU.TO

2.21

2.48

0.27

Newmont

NEM

44.69

40.62

(4.07)

Gold Fields

GFI

12.53

10.71

(1.82)

GoldCorp

GG

15.02

13.16

(1.86)

IAMGold

IAG

6.94

5.44

(1.50)

Agnico-Eagle

AEM

13.87

13.80

(0.07)

Harmony

HMY

9.19

7.21

(1.98)

Rio Narcea

RNG.TO

2.6

1.75

(0.85)

Royal Gold

RGLD

17.89

17.47

(0.42)

Crystallex

KRY

3.68

3.81

0.13

Durban Deep

DROOY

1.49

0.75

(0.74)

Freeport McMoran Cu/Au

FCX

38.1

35.00

(3.10)

High River Gold

HRG.TO

1.77

1.45

(0.32)

Kinross Gold

KGC

7.07

5.35

(1.72)

American Century Global

BGEIX

12

10.29

(1.71)

Central Fund Canada

CEF

5.47

5.28

(0.19)

Gabelli Gold

GoldX

16.22

13.86

(2.36)

Invesco Gold

FGLDX

3.65

3.24

(0.41)

Rydex PM

RYPMX

38.31

32.17

(6.14)

Tocqueville Gold

TGLDX

32.93

29.71

(3.22)

US Global Gold

USERX

8.23

6.83

(1.40)

US Global PM

UNWPX

16.72

14.42

(2.30)

USAA Gold

USAGX

15.3

13.55

(1.75)

Apex Silver

SIL

17.5

14.67

(2.83)

Coeur d'Alene

CDE

4.03

3.29

(0.74)

Hecla Mining

HL

5.96

4.78

(1.18)

Pan American Silver

PAAS

16.38

14.67

(1.71)

Silver Standard Resources

SSRI

12.47

10.57

(1.90)

Anglo Platinum

AAPTF.PK

39.5

37.20

(2.30)

Aquarius Platinum

AQPBF.PK

5.1

5.10

-

Impala Platinum

IMPAF.PK

78.25

84.52

6.27

Lonmin

LNMIF.PK

19.17

18.50

(0.67)

Norilsk Nickel

NILSF.PK

-

North American Pd

PAL

8.48

5.91

(2.57)

Stillwater Mining

SWC

11.24

8.03

(3.21)

American Century Cap Pres

CPFXX

2.18%

Dreyfuss 100% UST

DUSXX

1.96%

Fidelity Spartan UST

FDLXX

2.23%

Schwab UST

SWUXX

1.98%

US Treasury Securities

USTXX

1.77%

Weiss Treasury Only

WEOXX

2.04%

American Century Int'l Bond

BEGBX

14.81

14.16

(0.65)

Loomis Sayles Global Bond

LSGLX

16.01

15.63

(0.38)

Managers Global Bond

MGGBX

22.36

21.86

(0.50)

Payden Global Fixed-Income

PYGSX

10.47

10.36

(0.11)

PIMCO Foreign Bond

PFODX

10.48

10.59

0.11

T Rowe Price Int'l Bond

RPIBX

10.72

10.10

(0.62)

Shorts

-

Ambac Financial

ABK

83.03

73.94

(9.09)

American Express

AXP

56.35

51.20

(5.15)

Bank of America

BAC

46.97

44.61

(2.36)

Capital One Financial

COF

83.95

73.06

(10.89)

Centex

CTX

58.84

56.78

(2.06)

Citigroup

C

48.35

46.3

(2.05)

Countrywide Fin.

CFC

36.86

31.84

(5.02)

Fannie Mae

FNM

69.84

54.38

(15.46)

Freddie Mac

FRE

72.49

61.22

(11.27)

JP Morgan Chase

JPM

39.21

34.82

(4.39)

Lennar

LEN

55.35

53.39

(1.96)

MBIA Inc

MBI

63.73

53

(10.73)

MBNA

KRB

27.99

23.45

(4.54)

Providian

PVN

16.37

16.38

0.01

Wells Fargo

WFC

62.58

59.4

(3.18)

Berkshire Hathaway

BRKa

88590

85250.1

(3,339.90)

Cisco Systems

CSCO

19.26

17.18

(2.08)

Dell Computer`

DELL

41.99

35.5

(6.49)

Intel

INTC

23.28

22.28

(1.00)

Microsoft

MSFT

26.95

24.761

(2.19)

iShares Dow RE

IYR

122.31

113.67

(8.64)

Merrill Regional Bank

RKH

142.53

130.53

(12.00)

iShares Dow Fin Serv

IYG

112.9

103.61

(9.29)

iShares Dow Fin Sect

IYF

97.58

89.14

(8.44)

Select SPDR Fin

XLF

30.56

27.92

(2.64)

Bear Funds (Long)

-

Comstock Part Cap Val

DRCVX

2.83

2.93

0.10

Comstock Part Strat

CPFAX

3.35

3.33

(0.02)

Prudent Bear

BEARX

5.26

5.6

0.34

Leuthold Grizzly Short

GRZZX

6.69

7.34

0.65

A few thoughts: Yahoo Finance disappoints on the prices of treasury funds. These are shown as Yahoo reports them, without any historical data. Norilsk Nickel seems to have changed its symbol. In the interest of getting this report out on time, we skipped a symbol lookup and any search on treasury fund prices. (These are left as an exercise for the reader.) You can see that the price of gold is down, which is not consistent with the timing Messrs. Turk and Rubino suggest for their stock picks. Palladium is the only metal up since their suggestions. Few of the stocks they suggest for long positions have done well, with the notable exception of Impala Platinum. On the other hand, these are stocks which are supposed to do well in a dollar collapse, which hasn't yet been fulfilled.

On the plus side of the ledger, their recommended short positions are all down, except Providian which is trivially up. We used the green ink to show negative numbers for short positions, since in this case down is good. Berkshire Hathaway is the most impressive short in dollars, but is only off 4%. Fannie Mae is off 22%. These successful short calls, especially in finance and home building, suggest that there is something to the dollar collapse expectation.

Also on the plus side, the bear funds have done pretty well, with the exception of one of the two Comstock suggestions. The best performer on the whole rack is the Leuthold Grizzly Short, up 10%.

We'll not be following all these stocks, since they aren't our picks. However, we'll revisit this table again next year sometime to see how the dollar collapse is going, and how the resource stocks are faring.

On the whole, The Coming Collapse is a nice, brief book at some 200 pages. It has a pleasant dust jacket and a nice hard cover, with appropriate gold foil on the inner spine. There were more than $25 of insights and unique thoughts, and plenty more than $25 of upside in the suggested short positions. When precious metal prices recover, the long stock picks should be good, as well.

Gold Mining

Here's how the stocks we presently suggest in this area look right now (afternoon Monday 18 April 2005):

Company Symbol C$ US$
D
Exploring
Almaden AMM.TO 1.68 -
-C$0.06
Free Gold ITF.TO 0.16 0.14
- C$0.12
Luzon LZN.V 0.22 -
-C$0.07
Western WNP.V 2.40 -
C$0.66
Holding
Lumina LCC - 6.50
1.61
Silver Standard SSRI - 10.56
-2.22
Vista VGZ.TO 3.90/a> -
- C$1.10
Mining
Newmont Mining NEM - 40.63
-2.67
Northgate NXG - 1.21
- 0.44

With all this red ink, we'd like to note that we still view all of the above as appropriate buy opportunities. If you sold half your Western Prospector when you doubled on our suggestion, you may find it is a good value at the lower prices now available. Resource companies are going to do very well as the "Coming Collapse" materializes, and you may not have time to place an order if Robert Landis is right about the speed with which the hyperinflation will propagate.

These are speculations based on anticipated conditions. We are not making suggestions for day traders.

Free Market Money

Gold fell to key mid-term support at $423, and remains above this level. It is unclear how many more times gold will be stomped upon as it tries to exceed $444/oz, but keep in mind that copper made it over a critical level earlier this year. Gold will, too. Also keep in mind that the Summer doldrums for gold are coming on, and if gold doesn't exceed its overhead resistance before the first of June, it very likely won't until Fall.

Silver is at $7/ounce. We expect it to move up again to test the $8.50 region this Spring.

Gold closed Monday 18 April at $426.50.

Silver closed at $7.02 Monday.

Copper dipped earlier this month to $1.4950 and is now back above $1.52. The new peak set 11 April 2005 was $1.57/pound.

The uranium price from UxC is showing up on the CanAlaska home page, so there's probably a bit of code one could snag if one wishes to monitor this price as it changes. The 11 April 2005 price is $23.20 per pound for U3O8.

The three stocks we've suggested in this sector are PVH, GBH, and MCG. GBH doubled from the last price we discussed in March. We continue to urge GBH management to be forthcoming with an annual report and the promised April dividends.

Company Symbol gAu
D
Gold Barter Holdings GBH 0.15

- 0.85

MicroCasino MCG 0.60

+ 0.087

Pecunix Venture Holdings PVH 0.025

- 0.025

Space Frontier

The Houston Space Society has been storing its 50,000 volume library for seven years in climate controlled storage. The group agreed on Friday to raise funds to purchase a small single-family house in SouthWest Houston for the purpose of making the library available to researchers, members, and select members of the public.

The identified property is being offered at $75,000 which is below market for the area. It includes a 100 x 100 foot lot, single car garage, three bedrooms, one bath, and kitchen. The Houston Space Society (HSS) has developed a master plan for the development of several contiguous properties in the area into a significant Houston Space Institute.

With $75,000 the property would be acquired and enough funds should be left over to file to have the property removed from the tax rolls. The HSS is a 501c3 non-profit organization and Texas educational and scientific charity. As such, it should be able to exempt this small property from property taxes, further protecting the investment.

HSS is currently soliciting contributions and suggestions on how best to raise the funds. We'll also be discussing a mortgage for the property with our bank. Copies of the master plan, property description, and information on the library are now available. Contact information is found at the group's web site.

In other space frontier news, it appears that NASA's new administrator is committed to ignoring the Columbia panel and going ahead with shuttle flights. We pray for the families of the victims.

SpaceDev is at $1.67. It is up $0.17 since we first suggested it.

Launch Technology

Russia is proposing to upgrade its Soyuz manned launch system to something it calls "Project Kliper." It appears that this project is also being proposed for funding from the European Space Agency. A model of the Kliper may be shown in Japan at the Expo 2005 show later this year.

The vehicle would be similar to the Soyuz in operation, with a crew of two, pilot and co-pilot. It would differ in having room for up to four passengers along with 1500 pounds payload. It would likely be launched by the Onega booster, which is a Russian rocket similar to the Soyuz launch vehicle but with upgrades. The Kliper vehicle would be ten meters long and have a gross lift-off weight of 14.5 tonnes.

The Onega is currently flyable from the Russian space center at Plesetsk and at Tyuratam (also known as the Baikonur cosmodrome) in Kazakhstan. A Soyuz-capable launch complex is currently under construction at the French space port in Kourou, French Guiana. (French neo-colonialism being what it is, we'd not be surprised by a Rwanda-style atrocity in this region.)

New Country Developments

This year's Eris Society conference promises to be a great thing. Invited speakers include Aubrey de Grey on longevity research, Rich Picciotto on surviving the collapse of the WTC tower as an on-duty fire chief, L. Neil Smith on his Space Scouts project, Art Goodtimes on mushrooms and politics in Colorado, Peyton Quinn on martial arts and freedom from fear, Paul MacCready of Gossamer Condor fame on human and solar powered flight, Henry Gifford on building better buildings, Ken Royce on the geo-political polarization of America, Jim Davidson on free market money, and a panel discussion with Rigoberto Stewart of Limon REAL, Sandy Sandfort of the space free trade zone in Panama, Ian Sawyer on a free trade zone project in Somalia, and Meaghan Walker Champion on the Somena Free Zone, moderated by Jim Davidson. Of these, the only speaker showing as confirmed is Aubrey de Grey.

Each Eris Society gathering is unique. After all, the group is named for the goddess of discord, who responded to Zeus's decision not to invite her to a party by having Hephaestus (who was Vulcan to the Romans) craft a gold apple engraved "to the fairest" in Greek. Eris brought discord to Zeus's dinner party by tossing the gold apple into the middle of the gathering.

Naturally, the fairest of the goddesses were eager to get the apple. Hera, Athena, and Aphrodite were the three main contenders. Hermes was picked to make the choice, and he realized it would be a disaster for him to choose any one of the three, so he designated a champion, Paris of Troy. Aphrodite promised Paris the most beautiful woman in the world for his lover if he would pick her, so he did. Unfortunately, Helen was already married to Menelaus of Sparta. So, when Paris claimed his prize, Menelaus complained to his brother Agamemnon, who organized a Greek army of fifty thousand and a thousand ships to move them. Thereafter the Trojan War lasted ten years. Odysseus, whose craft found a way past the walls of Troy to bring victory for the Greeks, was forced to wander for a further ten years before returning home.

So, this year's Eris conference promises to be quite exciting. New sovereignties, the Balkanization of the USA, longevity, free market money, human and solar powered flight, and other topics should amuse and delight. Please make plans to attend.

Longevity

It is always hard to be sympathetic toward a bureau-rat. These people are inherently compromised by the fact that they work for the government, take funds stolen from taxpayers, and work for a corrupt system. Even when their conduct is very good, their work is tainted by the means involved. Every one of these government bureau-rats is in part responsible for the treatment of men and women like Walt Anderson.

Nevertheless, Dr. Graham's story illustrates how the government feeds on itself when it runs out of external victims to screw over. In Dr. Graham's case, he was threatened and coerced to change his conclusions in a report he desperately wanted to get out to his colleagues in the scientific community. When he relented, his so-called superiors insisted that he had voluntarily changed his conclusions.

"The reality is that the FDA has been hopelessly corrupted," writes Jon VanZile in this month's Life Extension magazine.

In the Vioxx® case alone, some 100,000 deaths were caused by having a dangerous drug on the market. Tens of thousands of other deaths are likely from other drugs. Pfizer's drug Celebrex® has been found to be associated with four times the incidence of heart attacks as placebo users, according to a study begun in 1999, submitted to the FDA in 2001, and not made public until 2004. Bextra® may be similarly compromised. Prozac® and Zoloft® appear to be associated with twice the incidence of suicides among children compared to those children who took a placebo. Meridia® weight loss drug has been associated with high blood pressure and stroke. Crestor® cholesterol drug has been associated with renal failure. Accutane® for acne is linked to birth defects. Serevent® for asthma is apparently associated with aggravated asthma causing death.

There's almost certainly a solid investment strategy involved in shorting the manufacturers of these drugs. Not only are many of them likely to see revenues reduced if and when these drugs are removed from the market, but based on the pattern, it seems likely that lawsuits will abound accusing the major drug makers of thwarting the process of getting information about drug risks to the public.

The amazing thing is not that Dr. Graham is proposing to reform the FDA, nor that the Congress has various vocal critics of the FDA babbling about reform. One expects such madness from bureau-rats and politicians. The amazing thing is that the Life Extension Foundation's magazine is not calling for the end of the FDA. Rather, their own article on the subject calls for Congress to "dismantle and rebuild the FDA from the ground up."

Isn't it time to abandon the FDA, abolish it, dismantle it, and avoid rebuilding it? Isn't it time to return to market forces and private alternatives to regulation? There's more than enough evidence that the FDA is so thoroughly corrupted that it, or its successor in interest, won't ever be able to protect the public from dangerous drugs. The only way to bring competition to the pharmaceutical industry is to remove the barriers to entry that the FDA puts in the way of all drug makers. Let the private sector regulate the industry, through standards organizations, insurance underwriters, consumer groups, and lawsuits. It's time to get the government out of the business of telling business what to do or how to do it.

And it's high time to put the political reformers in the rubber rooms next to the guys teaching lobsters to fly.

We mentioned Alteon in March. At our last report, it was 64 cents. Now it is down to 60 cents. It's time to move on. No further reports on Alteon will be provided.

Elan Corp, PLC, was at $3.98 when we looked in on it today. We continue to investigate this company.


Publication Note: Another issue on time, though just barely.


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