A collection of a handful of articles that point the way to showing how tax dollars are being put to waste around the world:

Waste and laziness:

Of course, when I tell my friends in the private sector about my working conditions, they can scarcely believe it. As the recession bites, they consider themselves lucky to be holding on to their jobs, and are willing to work extra hours or take a pay freeze to ensure their firm's survival.

In the public sector, though, there is no competitive edge; no incentive to cuts costs or improve efficiency. Few genuinely fear for their job security, protected as they are by threats of union action every time the axe looks likely to fall.

It's the same story across the world: when a nation's public sector is allowed to expand into a bloated behemoth, it is almost impossible to cut it down to size, still less to change the culture of waste and laziness that sets in.

I don't know what the solution is. Even those, like myself, who join with the best of intentions are soon worn down and end up subscribing to the 'if you can't beat them, join them' school of thought.

Of course the real scandal is it's your money that's paying for the jollies, the prayer rooms and the never- ending workshops.

In my authority's borough, the average householder pays £1,330 a year in council tax. I'm sure they'd be thrilled to know that they're funding Jerry's internet gambling and Doreen's never-ending sick pay.

From: The Great Inertia Sector: A whistleblower's account of council work where staff pull six-month sickies

Abuse and collusion:

Now that employer, the Maywood, California Police Department, is being liquidated. In fact, the entire municipal government of Maywood, a Los Angeles suburb of roughly 40,000 people, is being dissolved on account of bankruptcy. The Los Angeles County Sheriff's Department will provide law enforcement coverage to Maywood, and a rump city council will coordinate delivery of services provided by neighboring Bell.

In Maywood, as case elsewhere, the economic crash has choked off the tax revenue on which the municipal government subsists. The town is currently facing a $450,000 deficit. But what finally broke the city, reports the Los Angeles Times, was the decision by the California Joint Powers Insurance Authority to terminate "general liability and workers' compensation coverage because the city posed too high a risk."

Victims of police abuse in Maywood were required to go to police headquarters to obtain official complaint forms. As the March 2006 case described above demonstrates, the police department was a hazardous place to visit unless you were part of the Brotherhood. If they were fortunate, citizens who attempted to file a protest would escape the building after suffering nothing worse than contemptuous verbal abuse from the sergeant in charge of dealing with complaints.

Eventually federal civil rights lawsuits began to pile up, as did the costs of settling them. The Maywood Police Department literally killed the city government it supposedly served.

From: Maywood, RIP: When Police Kill A City

Misinformation and misdirection:

In my article, Economic Megatrends That Will Drive Our Future, I point our seven megatrends that will impact our economy for the long term:

1. The culture of consumption is broken and won’t return to former levels. This is the key to everything.

2. Consumers will continue to increase savings to prepare for retirement.

3. Declining U.S. consumer demand will continue to negatively impact the world economy.

4. Deflation (deleveraging) will continue for some time.

5. Home ownership rates will decline to more historical levels of, say, around 66%, down from the high of 69% during the boom, which will keep a lid on home prices.

6. Government stimulus and recovery programs only delay recovery and deepen the pain for workers.

7. Massive federal deficits will double the national debt, result in higher taxes, and will act as a permanent drag on the economy.

I wrote this article in September, 2009, and it still stands. The significant things to note are No. 1 and No.2. Consumers are over-indebted and are doing their best to pay down debt.

One must ask what the private economy would do with the $62 billion already spent through the American Recovery and Reinvestment Act ($202 billion contracts, grants and loans awarded to date). I urge anyone who believes the spending through ARRA would stimulate the economy to check out the various contracts and grants that are being awarded. The main web site is Recovery.gov. You will see that most are repairs to federal facilities or grants for federal programs. I recommend you hold your nose while doing this. They are outrageous wastes of your tax money and they will damage the ability of the economy to recover and will place a great burden on future generations to pay them.

If government spending were the key to economic wealth then we should all be rich.

From: Will We Have Inflation, Deflation, or Hyperinflation? Part 3

Failure and collapse:

For going on three years, the developed world's economic policy has been dominated by the revival of the old idea that vast amounts of public spending could prevent deflation, cure a recession, and ignite a new era of government-led prosperity. It hasn't turned out that way.

President Obama's tragic mistake was to blow out the U.S. federal balance sheet on spending that has produced little bang for the buck. The fantastical Keynesian notion (the "multiplier") that $1 of spending produces $1.50 in growth was long ago demolished by Harvard's Robert Barro, among others. That $1 in spending has to come from somewhere, which means in taxes or borrowing from productive parts of the private economy. Given that so much of the U.S. stimulus went for transfer payments such as Medicaid and unemployment insurance, the "multiplier" has almost certainly been negative.

What the world has now reached instead is a Keynesian dead end. We are told to let Congress continue to spend and borrow until the precise moment when Mr. Summers and Mark Zandi and the other architects of our current policy say it is time to raise taxes to reduce the huge deficits and debt that their spending has produced. Meanwhile, individuals and businesses are supposed to be unaffected by the prospect of future tax increases, higher interest rates, and more government control over nearly every area of the economy. Even the CEOs of the Business Roundtable now see the damage this is doing.

From: The Keynesian Dead End

Greed and corruption:

Something has gone rotten in America. Investor Bernie Madoff made a fortune from a $65 billion Ponzi scheme that wiped out the life savings of a good chunk of his 4,800 investors. Given the power to fill a vacant U.S. Senate seat, Illinois governor Rod Blagojevich allegedly plotted to enrich himself, saying the public office "is a [expletive] valuable thing—you don't just give it away." After losing about 80 percent of its value last year, Wall Street giant Merrill Lynch paid out $209 million in bonuses to its top ten executives just ahead of its take over by Bank of America. Congress promised to crack down on earmarks, then passed a spending bill in March with nearly 9,000 of them. And just days after getting an $85 billion bailout, executives at insurance titan AIG shelled out $440,000 for a luxury retreat at a California resort; $23,000 of that went just for spa treatments. Then, after receiving even more bailout money, they attempted to award themselves $165 million worth of bonuses paid for by U.S. taxpayers.

From: Outrageous: We're Done with Greed

Insult and injury:

According to the report (PDF), the IRS made a variety of accounting errors last year that "could adversely affect the reliability of its financial statements" and result in "duplicate or erroneous refunds." Among the mistakes were a "failure to record the receipt of a taxpayer’s $3 million payment" and an $8 billion discrepancy between two accounting systems tracking how much money taxpayers owe. The audit also found a $5.1 billion "unexplained variance" between the total amount the agency took in last year and the amount its detailed tax files said it took in.

But what's a few billion here or there, right?

In truth, the shortcomings are all relatively minor infractions given the size of the IRS, and don't materially affect its performance of its duties. And you'll find similar lapses in virtually any close examination of a huge bureaucracy.

From: Irony alert: IRS fails government audit

To say that the shortcomings do not affect the performance of the IRS is wrong. On the contrary, when there is $5.1 billion difference then not only has there been performance issues in the past but also there will be performance issues in the future.

In 1946, when Ralph Nelson Elliott, who discovered of the Wave Principle, wrote Nature's Law -- The Secret of the Universe he said that the Fibonacci sequence provides the mathematical basis of the Wave Principle. Today, the Fibonacci sequence is used throughout many fields of knowledge (The Golden Mean in architecture for example) and in conjunction with the Wave Principle it is used by Elliotticians the world over to analyze markets, nature, and society/cultures (Socionomics).

But for those who would rather see images than numbers sometimes pictures are better than words to explain what Fibonacci is all about. Nature by Numbers, by Cristóbal Vila, does just that. It is a short movie inspired by numbers, geometry and nature:

The current deflationary spiral is about the contraction of credit. As shown in The Economist's interactive map, worldwide debt is at extreme levels. As the economy continues to contract, or implode, it will be extremely difficult to not default. But is not just countries that are in trouble:

The headlines are all about sovereign debt at the moment. But that is only part of the problem. Debt has risen across the economy, from consumers on credit cards, though industrial companies borrowing for expansion and financial companies using debt to buy risky assets.

The interactive graphic above shows the overall debt levels for a wide range of countries, based on data supplied by the McKinsey Global Institute. In theory there is no maximum level for debt relative to GDP, but Ireland and Iceland (not on this map) found the limit in practice when they hit eight-to-ten times GDP.

This is particularly troublesome if the economy slips into deflation, as happened globally in the 1930s and in Japan in the 1990s. Debt levels are fixed in nominal terms whereas asset prices can go up or down. So falling prices create a spiral in which assets are sold off to repay debts, triggering further price falls and further sales. Irving Fisher, an economist who worked in the first half of the 20th century, called this the debt deflation trap.

Interactive Map

(Click on image to go to interactive map.)

You can also listen to the interview with Philip Coggan's, the author of Repent at leisure, on the The Economist:

August 14, 2009 19:12 EDT: George Soros Cut Petrobras Stake in Second Quarter (Update2)

Billionaire George Soros cut his stake in his biggest holding, Petroleo Brasileiro SA, in the second quarter while buying more shares of other energy producers.

His New York-based hedge-fund firm, Soros Fund Management LLC, sold 22 million U.S.-listed common shares of Petrobras, as the Brazilian oil company is known, according to a filing today with the U.S. Securities and Exchange Commission. Soros bought 5.8 million of the company’s U.S.-traded preferred shares.

August 18, 2009, 1:45 P.M. ET: Obama Underwrites Offshore Drilling:

The U.S. is going to lend billions of dollars to Brazil's state-owned oil company, Petrobras, to finance exploration of the huge offshore discovery in Brazil's Tupi oil field in the Santos Basin near Rio de Janeiro. Brazil's planning minister confirmed that White House National Security Adviser James Jones met this month with Brazilian officials to talk about the loan.

The U.S. Export-Import Bank tells us it has issued a "preliminary commitment" letter to Petrobras in the amount of $2 billion and has discussed with Brazil the possibility of increasing that amount. Ex-Im Bank says it has not decided whether the money will come in the form of a direct loan or loan guarantees. Either way, this corporate foreign aid may strike some readers as odd, given that the U.S. Treasury seems desperate for cash and Petrobras is one of the largest corporations in the Americas.

August 20, 2009: U.S. Loan to Brazilian Oil Company Riles Conservatives in Favor of Offshore Drilling

In fact, the Export-Import bank receives no appropriations from Congress and thus does not rely on American taxpayer dollars and is also not "sending" $2 billion to the Brazilian company but offering lines of credit to U.S. firms so they can compete to land contracts as part of Petrobras' drilling operations.

The $2 billion "preliminary commitment" by the Export-Import Bank to Petrobras is expected to grow, as the U.S. competes on behalf of American exporters of goods and services against those from China. Beijing has extended a commitment of $10 billion -- but the Brazilians are said to prefer U.S. management and technology.

Then there is the George Soros angle.

Fast forward 10 months later to June 21, 2010: to Glenn Beck's Left Strangely Silent on Petrobras (on Fox News):

Part 1:

Part 2:

Part 3:

Part 4:

The problem? Last September Factcheck.org exposed the falseness of Glenn's accusations:

As reported by Bloomberg News, Soros reduced his stake in the company before any of the Ex-Im Bank’s promised loan has been dispensed.

What say you Glenn Beck?

Paul Krugman, New York Times columnist and Nobel Prize winning economist, has written an op-ed piece, The Third Depression, which calls for deflation and depression ahead:

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.

And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.

So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.

And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.

The tone of social unrest presented during the G20 Summit in Toronto is a manifestation of negative social mood which escalated to a higher violent pitch without any sign of stopping.

The expression of anger is a reflection of a negative social mood and although there have been protests and riots during previous G20 summits in Toronto this weekend's violence, on both sides of the confrontation, is visibly more belligerent than before. Have a look:

1. Police boldly attack protesters:

2. Protesters boldly vandalize police cars:

Some people are angry and will become more so because as the next wave of deflation digs in deeper into the economy, like a runaway freight train, anything any of the G20 and G8 leaders do to stimulate the economy will not work. From the latest EWI Elliott Wave Theorist report:

Economist in the aggregate will probably not recognize that a depression is in force until 2012 or perhaps beyond.

What will the violence be like then, in 2012, late in the bear market, when the double in the 'double dip resession' hits, when the economy hits bottom?

The anger in Toronto towards the G20 leaders stems from not only being mad about economic woes but also being upset about loosing individual rights to 'big brother,' as reflected by the 'police state' graffiti on the vandalized police car:

Police Officer: "Can I see your ID?"

Protester: "No, I rather remain anonymous."

Police Officer: "You're under arrest."

Ouch, Ontario Gives Police Sweeping Powers During G20 Summit in Toronto:

Before Dave Vasey, 31, was arrested and detained for a few hours on June 24, 2010, very few people knew about the vast powers of search and arrest that police were given for the G20 Summit being held in Toronto on June 26 and 27.

After Vasey’s story became public, Toronto Police Chief Bill Blair held a news conference where he explained that the law was neither new nor passed in secret. It was done just as much to protect protesters as other people. He was correct in saying that the law under which these enhanced powers of arrest and detention were granted was not new; it has been around for years. But, as far as the regulation that applies specifically to the G20 Summit weekend in Toronto, it was secret for all those who don’t make looking at new Ontario government regulations on the Internet part of their daily routine.

While G20 participants are protected behind a security fence (put up with taxpayers' money) and a police force numbering in the hundreds (paid for with taxpayers' money) the public is not. As Dan Dicks, from Press for Truth, explains:

If you happen to be involved with one of the 5 major media conglomerates here in Canada then you will not have a problem. But if you are a member of an independent media outlet like Press for Truth than you can expect a rigorous security check in almost any area of the city.

Plus the likely outcome of being arrested, as shown in the following two videos:

This is an example that goes towards showing the transition from positive (bull market) to negative (bear market) social mood. As deflation digs deeper and the economy deteriorates further (in Canada and around the world) there is on the one hand draconian like legislation and enforcement and on the other hand anarchy like protesting and violence.

This unedited video (viewable in full-screen HD) shows acts of vandalism and arson in Los Angeles following the NBA Finals on June 17, 2010. If you have information regarding persons seen in this video, or other acts of arson anywhere in Los Angeles, please call the LAFD Arson/Counter-Terrorism Section directly at (213) 485-6095.

If people are behaving like this when celebrating a win by a very popular basketball team then what kind of riots will we see when there is a full on depression?

April 15, 2010: "A Tea Party attendee holds up a sign to let people know how much each infant will have to pay in taxes during their lifetime Thursday on the east side of the Vigo County Courthouse [Terre Haute, Indiana]."

Elected (and non-elected) leaders around the world continue to perpetuate the unfortunate situation where children are born into debt.

In the United States, the Gross National Debt is:

For other countries, USA Today recently published data on the public debt as a percentage of select national economies:

Zimbabwe 304%
Japan 192%
Greece 108%
France 80%
Germany 77%
U.K. 69%
U.S. 58%*
Iran 19% (103)
Russia 7% (124)

(*Does not include Treasury debt held by Social Security Administration and the Federal Reserve.)

And elected (and non-elected) leaders around the world continue to perpetuate the unfortunate situation of taxing everything they can get their hands on:

- personal income tax
- self-employment tax
- corporate income tax
- capital gains tax
- city sales tax
- state income tax
- state sales tax
- gas tax
- meals tax
- hotel tax
- excise tax
- workers compensation tax
- cigarette tax
- wine and liquor tax
- motor vehicle tax
- real estate transfer tax
- and the list goes on...

All for the purpose of what? To fill posh IRS digs?

The $92 million renovations at the IRS compound in Andover will include a reflecting pool, an art gallery, indoor gardens, a 7,000-square-foot cafeteria and an amphitheater, but it remains unclear what new permanent jobs, if any, will come to the center.

Given the current feeble economic situation worldwide and the continued social mood change around the world, from optimism to pessimism, the overall situation for our future generations is not only bound to deteriorate with debt levels on the increase and more taxation on the way.

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