December 17, 2010
Auckland, New Zealand
Earlier this week, the 6th US Circuit Court of Appeals (one step below the Supreme Court) made an important ruling that should please anyone who longs for freedom.
In US vs. Warshak, the court ruled that government agents must obtain a warrant in order to compel Internet service providers to turn over customer email accounts.
Anyone who has ever read the Fourth Amendment and has been asleep for the last 10-years might be wondering why this is even news… but given the landslide loss of privacy in recent years, it’s noteworthy when the rights of the people are held up over authoritarianism.
In its 14 December decision, the court wrote that “email requires strong protection under the Fourth Amendment; otherwise, the Fourth Amendment would prove an ineffective guardian of private communication, an essential purpose it has long been recognized to serve.”
Granted, government agencies may contest the ruling as it conflicts with other laws like the Stored Communications Act; also, the ruling will not affect continued monitoring, interception and wiretapping that is used for intelligence purposes rather than courtroom evidence.
Regardless, this is still a blow to government agents that use the Constitution as a punch line around the office water cooler.
On that note, one of the questions we received recently was from reader LK, who asked, “Simon, you routinely write about how freedom is on the slide in the west. I agree… but if things are bad in Canada, America and Britain, aren’t they even worse in Latin America?”
No… but to be fair, you cannot lump an entire region together.
I’ve found that there are plenty of places in the world where you can live your life with minimal government influence. Look at smaller countries that don’t have enormous nanny governments capable of sponsoring bloated police agencies and Internet monitoring.
You mention Latin America– Chile, Paraguay, and Uruguay are excellent places to start.
Next, Jeff asks, “Simon- Ben Bernanke was interviewed on 60 Minutes some days ago and it caused quite a stir across the contrarian blogosphere. I was surprised that you didn’t comment– did you happen to see it? What did you think about Chairman Bernanke’s remarks?”
These interviews are pointless to watch, though it did cause quite a stir. I frankly got a bit sick of how writers picked apart the interview and focused on things like Bernanke’s ‘pulsating forehead vein’ or his stammering speech.
The guy has a pulsating vein in his forehead, big deal… and he always stammers when he speaks– Bernanke doesn’t exactly strike me as a strong, confident man. Maybe he’s lying, or maybe he truly believes what he’s saying… either way, talk is cheap.
What really matters is the man’s long-term behavior; and consistent with someone who has no experience outside of government and academia, his continued QE efforts demonstrate a lack of awareness for how funny money fuels prices in the real world, especially commodities and in developing nations.
To me, the most notable comment from the interview was his remark about housing in the US; he suggested that housing couldn’t possibly get any worse. I disagree… consider the facts:
1) Home sales are terribly weak, even while interest rates are at historic lows;
2) interest rates may remain flat for some time, but eventually they’ll rise… and rising rates are bad news for home prices;
3) demand remains weak, consistent with unemployment;
4) banks aren’t lending, especially jumbo loans, etc.;
5) waves of foreclosures have yet to hit the market;
6) bankrupt local governments have their eyes on higher property taxes, which are not favorable for home values;
7) foreigners, who would otherwise gladly mop up excess US housing inventory on the cheap, are treated like criminal terrorist scum when they enter the country… as such, demand from non-residents is anemic at best.
These are just a few of the factors that weigh on the US housing market. Unless you’re staying put in the US for a very, very long time, your money is better allocated elsewhere.
Last, Julian asks, “Simon, I’m planning a trip to Dubai next year and was wondering whether it would be a good idea to open a bank account there. Is it true that this is only possible for residents, or can anybody open an account?”
The UAE is a fairly strong banking jurisdiction because of its incredible wealth and independence. The first thing you should know is that all of the Emirates (Dubai, Abu Dhabi, Ajman, Sharjah, etc.) fall under the same federal level banking regulator– Central Bank of the UAE.
The Central Bank does -not- require bank customers be residents of the UAE, so it is up to the individual bank whether they will accept non-resident customers. In my experience there, many banks are happy to accept non-resident foreign customers… including US citizens.
Another thing you should know about the UAE is that there is no deposit insurance. This requires that customers do their own due diligence on a bank rather than mindlessly rely on some bureaucrat’s insipid guarantee that’s backed by debt and worthless paper.
Islamic banks tend to have stronger balance sheets than standard commercial banks since Sharia law has rules against excessive reserves and money creation.
Finally, you should know that ‘survivorship’ is not a recognized legal principle in the UAE… so in order to avoid having your heirs deal with Emirati probate court, it’s best to have an estate plan worked out in advance.
This is a smart thing to do regardless of where you bank, and one of the best things you could ever do for your estate is to establish a foreign trust. More on that in future letters.
