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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER
Your Link to Freedom, Prosperity & Privacy in the Offshore World
Wednesday, August 21, 2002 - Vol. 4 No. 83
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In This Issue:
* COMMENT: Back to Stocks?
* OFFSHORE: Swiss Defend Secrecy, Return Peruvian Spy Millions.
EU Wants Uniformity; UK Balks. Liechtenstein Corporations.
* WEALTH: IRS Subpoenas Private Records. China, Korea Tax Evasion.
Zimbabwe Takes Farms; Companies Next. New Zealand's Future.
* PRIVACY & RIGHTS: PGP Revived. EU E-mail Snoops. How to Best to
Remember 9/11. H.L. Mencken on Government.
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Our mid-week guest commentator is ERIC ROSEMAN, Sovereign
Society Council of Experts member and a leading Canada-based
offshore investment advisor. Bob Bauman, A-Letter Editor
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* COMMENT: Back to Stocks?
Dear A-Letter Reader:
Global stocks continue to stabilize this month following months ofprotracted selling. In fact, equities have staged a rally over the lastfour weeks, driving global indexes higher for the first positive monthof gains since March. The Federal Reserve has acknowledged weakness inthe US economy and will likely cut interest rates by at least 50 basis points by Dec. 31st. This should provide additional liquidity and support for stocks. Bonds, I think, already have priced in these future rate cuts.
Is it safe to go back into stocks?
Investors must remain extremely cautious. Previous rallies have been bear market traps. The US economy is slowing. Recent indicators point to weak manufacturing, a slowing consumer and rising corporate and individual debt levels. But commodity benchmarks are rising. This suggests that global economic growth is rebounding from the slowdown late last year. Energies, grains, precious metals and most foodstuffs are on a firm uptrend. The last confirmation would be from Treasury bond yields, which remain stable and just last week hit 39-year lows with the benchmark 10-year T-bond falling below 4% on August 14th.
The big picture is now growing bearish for bonds and neutral-to-bullishfor stocks.
Inflation is coming back. Avoid Treasury bonds at these levels. The bond bull market is very aged at this point and will succumb to substantial profit taking before year end. The Federal Reserve is upping the money supply to the tune of roughly $20 billion per week; this is a recipe for higher interest rates, a lower dollar and a significant decline in bonds.
For aggressive risk investors, bet against the Treasury for the next big profits. Individuals can bet against the T-bond by speculating in the Rydex Juno Fund (1-800-820-0888). This is an aggressive speculation, requiring a $25,000 minimum, no load. Rydex Juno sells index puts against T-bonds. The Fund has been decimated over the last three years as bonds skyrocketed. Investors are warned that a maximum 5-6% position size is sufficient. A 10% stop-loss should also be applied to your purchase price.
Treasury bonds have started to discount another recession and several rate cuts. The Fed will do all it can to stem further deflationary pressures on the economy by pumping massive amounts of liquidity to boost growth. Bet on the Fed, but short the Treasury bond market for huge gains 12 months from now.
That's the way that it looks from here.
Eric N. Roseman in Montreal, Canada.
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COMMENT LINKS:
* Eric Roseman's ENR Asset Management, Montreal, Canada.
LINK: http://www.eas.ca/
E-MAIL: eroseman@qc.aibn.com
* Weak American Recovery Affects World. The Economist. LINK:
http://www.economist.com/agenda/displayStory.cfm?story_id=1289545
* No Chance for a Global Stock Market? The Economist. LINK:
http://www.economist.com/agenda/displayStory.cfm?story_id=1283813
* US Government Deeply in the Red. BBC News.
LINK: http://news.bbc.co.uk/2/hi/business/2206203.stm
* US economy trapped in record trade gap. BBC News.
LINK: http://news.bbc.co.uk/2/hi/business/2205549.stm
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* OFFSHORE *
SWISS BANKER DEFENDS FINANCIAL SECRECY
ZURICH. Credit Suisse CEO says Swiss banking secrecy law is right.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=9131
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SWISS TURN OVER MONTESINOS CASH TO PERU
GENEVA: Swiss Government turns over US$77 million to Peru;
cash alleged from corrupt arms deals by ex-head spy.
LINKS: http://news.bbc.co.uk/2/hi/americas/2205181.stm
http://www.swissinfo.org/sen/swissinfo.html?siteSect=105&sid=1283890
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E.U. DEMANDS COMMON FINANCIAL LAWS; U.K. SAYS NO
BRUSSELS: EU bureaucrats want uniformity for corporate, banking and financial laws. UK says this is a step backward for them.
LINK:http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT
/FullStory&c=StoryFT&cid=1028185874181
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LIECHTENSTEIN CORPORATIONS
Minimal taxes, maximum asset protection. LINK (free registration req):
http://www.mondaq.com/article.asp?articleid=1288&product_id=2&company_id=344
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* WEALTH *
I.R.S. DEMANDS PRIVILEGED CLIENT RECORDS
WASHINGTON. IRS serves summons on banks, accounting firms, lawyers and financial advisors demanding privileged data they refuse to surrender about clients' tax avoidance and estate plans.
LINK:http://www.sun-sentinel.com/business/local/sfl-zirs20aug20.story?
coll=sfla-business-headlines
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CHINA PURSUES TAX EVASION
SHANGHAI, China. Communist tax collectors target the new rich.
LINK: http://www.chron.com/cs/CDA/story.hts/world/1540747
* Korean tax collectors crack down on offshore tax evasion. LINK:
http://english.chosun.com/w21data/html/news/200208/200208190015.html
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ZIMBABWE LAND CONFISCATION ONLY THE BEGINNING
HARARE. White owned farms now, oil companies and other businesses to be confiscated next under madman Mugabe.
LINKS:http://news.ft.com/servlet/ContentServer?pagename=FT.com/Story
FT/FullStory&c=StoryFT&cid=1028185901468
http://www.economist.com/world/africa/displayStory.cfm?story_id=1284012
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WHAT LIES AHEAD FOR NEW ZEALAND?
The Economist's post-election survey. LINK:
http://www.economist.com/countries/NewZealand/profile.cfm?story_id=1290603
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* PRIVACY & RIGHTS *
PGP ENCRYPTION SOFTWARE IS BACK
Phil Zimmermann's PGP, the popular encryption technology, is back in the hands of an independent company.
LINK: http://www.theregister.co.uk/content/4/26734.html
* All new PGP Corp. LINK: http://www.pgp.com
* Europeans buy it here. LINK: http://www.intellect.co.uk/pgp
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E.U. BUREAUCRATS ATTACK PERSONAL PRIVACY
Demand year long retention of all e-mails, phone calls. LINK:
http://www.guardian.co.uk/uk_news/story/0,3604,777526,00.html
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CELEBRATE VICTORY, NOT DEFEAT
Just how should America remember September 11, 2001?
LINK: http://reese.king-online.com/Reese_20020819/index.php
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BE ASHAMED OF THE GOVERNMENT
H.L. Mencken: "Every decent man is ashamed of the government he
lives under." LINK: http://www.mises.org/fullstory.asp?control=1018
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