In Rem – Criminal Activity of Government
In rem (Latin, “power about or against ‘the thing’”) is a legal term describing the power a court may exercise over property (either real or personal) or a “status” against a person over whom the court does not have in personam jurisdiction. This was all based upon ancient tradition known as Deodand, which was a thing forfeited or given to God. In reality, Deodand was the law concerning an object or instrument that became forfeit because it has caused a person’s death – such as a runaway horse and wagon. The term deodand is derived from the Latin phrase“deo dandum” which means “to be given to God.”
The English common law the king merely replaced God with himself.Deodand traces back to the 11th century in England and was applied by the king to confiscate assets until Parliament finally abolished it in 1846. Nevertheless, under this law, a chattel (i.e. personal property) was considered a deodandwhenever a coroner’s jury decided that the property had caused the death of a human being. In theory, deodands were forfeit to the king who was supposed to sell the chattel and then apply the profits to some pious use. Of course, once any government gets its hands on money – just forget it – it is their’s.
Effectively, a jury decided that a particular animal or object was a deodand and then appraised its value and the owners were expected to pay a fine equal to the value of the deodand. If the owner could not pay the deodand, his township was held responsible.
Today, civil asset forfeiture has been so abused by the US government it amounts to outright theft. People cannot afford costly lawyers and the government exploits the poor all the time to just confiscate cash, cars, and houses. The police are using it just as the troops in Rome turned against the people to pay for their salaries. The police have been transformed into the enemies of the people for whatever they can confiscate they just get to keep.
Civil Asset Forfeiture Police Corruption Exposed
The police have become outright criminals and can confiscate people’s property and keep it for themselves. This is one of the best explanations I have ever seen. It correctly states that the legal action is against the property – NOT YOU!
ECB Negative Interest Rates Sends Money into Dollars
European Banks are now threatening companies with negative interest rates (penalty) when they want to simply park assets in money houses at short notice. Complaints about this practice are starting to rise quietly behind the curtain, which including operations such as airlines. According to our sources, several banks are beginning to levy this negative penalty interest upon large business customers under ECB policy. This idea floated by Larry Summers sounds like you will force investment to take place. However, we are finding simply a capital flight out of the Euro and into the dollar is contributing the free-fall in the Euro.
As always, politicians are clueless about how the economy works. People can move their cash from Euro to dollars to avoid the penalty interest and will not “invest” in Europe when they see no opportunity to invest. Even Keynes stated clearly that there are times to reduce taxes to “stimulate” the economy. Government keeps raising taxes because they need money yet attempt to force people to spend and invest when the economy is still imploding.
From a realistic problem, the ECB is now attempting to destroy many companies with this penalty interest by wiping out their short-term liquidity. If companies have no cash on hand because they spent it as the ECB desires, they would run the risk of bankruptcy unable to pay employees in an economic downturn we are likely to see 2016-2020. This policy is having a major impact upon the Euro – far more than anticipated just based upon our own clients.
Yet the problem concerns major companies in Germany listed in the DAX companies. Penalizing liquidity will be even more devastating for the small and medium-sized companies under the ECB’s policy. This is driving the Euro into a free-fall and sending capital flows into the dollar just to maintain liquidity – completely brain-dead ECB policy.
This trend becomes vastly problematic for the corporations leaving no effective alternative – end liquidity or move to the dollar. The banks themselves are responsible for the penalty interest. The low-interest rate makes it difficult for institutions to invest the money worthwhile – but dollar deposits are still better than negative and you can retain the liquidity to survive the economic storm on the horizon.
The banks are desperately trying to convince the CFO of the companies to move cash into other forms of investment. The situation remains tense, as long as the ECB conducts its low-interest rate policy. This is compounded by two additional problems (1) Banks are notoriously bad economic advisers just look at their own history of bailouts, and (2) there is the credit risk of the banks in Europe to begin with not to mention the IMF proposal to just confiscate 10% of all bank deposits. Let’s be real – it would be political disaster to confiscate from individuals and not corporations.
Then there is the problem of regulation. A managing director is forbidden to speculate with existing corporate capital for he is liable for criminal prosecution if he pulls money from the company and uses it for non-business related purposes. Yet the ECB penalty of liquidity can be very complex given the interplay with other regulations. Corporates have their hands tied in ways the ECB does not consider.Speculative transactions do not belong under the relevant jurisdiction for the purpose of normal business. The very idea of trying to force investment carries criminal liability if the directors lose money.
Penalty interest being charged on bank customers is highly dangerous in setting off capital outflows from Europe into the dollar. Capital will also flow from European to American banks as a hedge against the ECB. If a bank has to pay interest to the ECB, it is possible to shift the penalty interest paid as “fees” on to their own customers to mask the real requirement, yet this may fool individuals, but not corporates.
The Dollar – The Greatest Short Position Perhaps in History
It is amazing how people keep touting the demise of the dollar yet cannot comprehend that it remains the only game in town. We may yet see a tremendous capital flight to the dollar for a host of reasons from war and political risk to the landscape of interest rate trends. An Asia capital fight to the dollar may really set in motion the most dramatic swings in the world economy starting very soon.
The central banks are fearful of a massive exodus of capital and a flood into the dollar when US interest rates begin to rise. Central Banks in Asia are especially fearful to a rise in US interest rates from a capital flow perspective. They are hoping to defend again a flight to the dollar in the capital flows by keeping their own interest rates high. A rise in US rates will force rates to rise in Asia to stem the tide in capital flows and fixed-investment. Indeed, borrowing costs are rising in Asia. For the past two years now, the real, risk-free interest rate in the region has been risen to a high of about 5 percent, triple the long-term average. The China Shanghai share market peaked in 2007 and thus the investment flows have been into the fixed-investment flows. But rates are rising and an uptick in rates in the US will have a tremendous shock in Asia. This can send cash pouring into the USA even without saber-rattling.
In 2013, the total amount of investment in Asia (excluding Japan) was $6 trillion. The impact of an Asian investment downturn is tremendously ominous 2016-2020. Already, fixed capital formation fell 8% in Thailand during the first half of 2014. Investment has also declined in Hong Kong and Singapore as well in 2014. Investment did increase marginally in the Philippines, Malaysia and Taiwan. Only South Korea and India have witnessed somewhat moderate growth. China’s fixed-asset investment this year is up 24%, it’s a far cry from the stimulus-driven expansion of 70% five years ago.
When we look at the foreign-exchange reserves of developing Asian nations, we find that they are now growing 12% annually. This trend has been bullish for the dollar for central banks are deeply worried about Europe and this limits the scope of what they can hold to primarily dollars. Those who keep preaching the crash on the dollar are perpetually myopic and cannot see the financial landscape on a global scale.
Numerous countries and foreign companies borrow in dollars for rates have been cheap. This trend has masked the decline in China for Chinese companies were borrowing dollars at 1% in Hong Kong and depositing in Beijing collecting 5%. However, because world trade is measured simply by capital movement, this carry-trade masked the fact that real trade was declining matching the performance of the Shanghai Index.
We are preparing a special report on World Currencies. We are dealing with a potential massive rally coming in the dollar for it is hugely short with so many dollar loans (short) that have to be repaid (long). With books on the crash of the dollar and Europe touting these books that the dollar will crash, has set the stage for the exact opposite outcome.
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Proof Global Warming Exists – Oops!
