GLOBAL ECONOMICS

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Global economics is playing a ever more prevalent roll towards the one world order, as many influential law firms on Wall Street and other cities are representing America’s largest corporations, including oil companies, dotcoms, banks, insurance companies, and some of America’s highest net worth individuals. They have recognized the attractions in establishing offshore asset protection strategies, which can include establishing private and corporate bank accounts for themselves and their clients. They pay very little or no taxes. It all may have started with third world dictators, kings, prime ministers, and or presidents and more recently drug dealers and terrorists, who found themselves sitting on top of fortunes they had acquired during their reign of power, or lucrative drug business. For them, as much as they hated to face the fact, there was the chance that they were not going to be in power forever or able to continue there illicit drug trade. They felt that they desperately needed alternatives, hence the birth of creative offshore banking and other offshore services that has led to criminal and illegal money laundering activities.

· With mergers, acquisitions, downsizing, and layoffs bringing in the new millennium, the new global parameters changed, not just for the “big boys”, but also for anyone who wants freedom and independence in their business dealings. Small business owners make up 80% of the commercial enterprises in the United States. By the way, small businesses represent: over 99% of all employers; employ 52% of the private work force; employ 61% of the private workers on public assistance; employ 38% of the private workers in high-tech occupations; provide virtually all of the net new jobs; provide 51% of the private sector output; represent 96% of all exporters of goods; receive 35% of federal contract dollars; are home based 53% of the time and are franchises 3% of the time. U.S. businesspersons are beginning to understand that our ability to compete depends critically on how well, or badly we respond to the changing world scene. Smaller firms seeking to participate in the international realm are faced with challenges such as finding overseas markets, dealing with the initial complexities of exporting, and financing export sales. Many entrepreneurs who want to survive and be in business will have to play the global game. This means, you must educate yourself and learn to take advantage of the offshore opportunities or you may find yourself an employee of someone who is and that may not be an American firm. Demand for these services will be driven by the desire to minimize ones tax bill, to manage risk and learn how to invest the profits globally so one can be competitive.

· Currently, private sector debt financing will only assume very limited risk regarding foreign transactions similar to their U.S. criteria. The U.S. government must become increasingly more involved in providing export-financing assistance in not only debt capital loans but also equity capital loans. The U.S. government, as well as many state and local ones, offer programs to assist American exporters with their financing needs. Some are guarantee programs that require the participation of an approved lender only. A few provide loans or grants to exporters and even to foreign governments. Current U.S. Government export financing assistance only comes in the form of guarantees made to U.S. commercial banks, which in turn control the loans to small U.S. business exporters. Government programs should improve exporters chances by subsidizing, or at the very least, ease credit requirements, all at low cost below market levels. With some exceptions, banks are allowed to charge market interest rates and fees, and part of those government-approved fees are paid to the government to cover administrative costs and so called default risks. Often U.S. banks use government programs to reduce their risk before they provide debt capital financing.

· The Export-Import Bank of the U.S. is the governments trade finance agency, offering numerous programs. Other agencies fill other market niches. The Department of Agriculture offers a variety of programs for farmers to foster agricultural export. The Trade and Development Agency provides grant financing for projects planning activities conducted by U.S. firms. The SBA also offers programs to address the needs of smaller exporters. The Overseas Private Investment Corporation (OPIC) provides specialized assistance to U.S. firms. The Agency for International Development provides grants to developing nations that can be used to purchase U.S. goods and services.

· Switzerland has been the dominant offshore banking center for years. This has all changed since the discovery of the huge amount of gold that was deposited in their banks by Germans during World War II, which may have helped fund part of the German war machine. The Swiss have now agreed to repay a small amount of the billions deposited in their banks during the war. Swiss banks are losing even more ground, as they are suspected of having signed clandestine treaties with the United Kingdom, Israel and other “G7 members”, many at the behest of the Central Intelligence Agency and the Drug Enforcement Agency of the United States. The treaties purpose was to discourage drug and gun dealers, terrorist and other illegal money launderers; however, legitimate entrepreneurs have been affected adversely as well. All of this has contributed to the weakening of Switzerland’s so-called “safe jurisdiction”. Now, their so-called “vial of secrecy” can be pierced more easily, which turns off the legitimate multi-nationals too. Another major factor in the use of strong, safe, offshore facilities is confidentiality and privacy, which are imperative to risk management planning. So in effect, it’s feared that they will be acting as agents for those governments similar to what the U.S. banks are suspected of doing for the IRS in the United States. Switzerland has now signed the MLAT and their passport stamp is a red flag, and they don’t pay interest on their bank accounts. After all, the whole idea of offshore banking is basic trust and confidentiality, the absence of withholding taxes, concern for privacy, always honoring the account holders best interests, and providing the highest level of professional service.

· It is my belief that a new breed of private and/or international banking system will evolve as the cornerstone of the worlds global economies, at least until a new world currency is developed. To achieve this new global trading unit, there will be a gradual evolutionary process that will take the world from a primitive system to a more highly organized modern form. This will simplify doing business on a global scale for entrepreneurs of all nations. All countries are now connected economically, but the thinking of most U.S. bankers and many politicians is still archaic. They continue to think coast-to-coast and border-to-border, not realizing the old way of doing business, the American way, is gone. A lot of people are uninformed about international private offshore banking. Unfortunately, many of them are American business leaders. The rest of the world does things a little differently and if we cannot learn to adapt, America will be in danger of becoming a second rate economic power.

· As Marvin Cetron and Owen Davies point out in the “American Renaissance”, “The American position is a very special one. For its entire economic and perhaps military decline, it remains the decisive factor in every type of balance and issue. Because it has so much power for good or evil, because it is the linchpin of the western alliance system and the center of the existing global economy, what it does, or does not do, is so much more important than what any of the other powers decides to do.” The quote was that of Paul Kennedy, from “The Rise and Fall of Great Powers.”

· It is my view that we need to watch mainland China (PRC), Japan, and all the so-called New Industrial Countries (NIC).

· By the fall of 1998, the U.S. economy was being pulled down by global economic woes. The first signs of the so-called “Asian flu” reared its ugly head with the devaluation of Thailand’s currency in July 1997. Then shortly followed by South Korea, Indonesia, Malaysia, and the Philippines. That caused debt lenders, banks and other investors, to cut their losses and bail out. Many blamed “crony capitalism”, bad loans to high government officials and friends, which was typically how IMF and government agencies and banks would design debt capital loans. They chose not to make the same capital available to the people directly as equity capital, (investing in the people rather then the “crony capitalism” system). Japan was next with its already depressed economy. Almost half of Japan’s trade was and is with Asia, which then forced Japan into its deepest recession ever. Then by early summer, Latin America and Russia experienced investors trading local currencies for dollars, which in turn caused interest rates to climb. Russia’s rates rose to 100 percent. By then, the “Asian Flu” was a full-blown “Asian Crisis” and threatened the rest of the world’s economies, including the United States.

· America... this is a wake up call! If we want to remain competitive and maintain our economic supremacy, we must change our old ways of doing business. Then, global economic competition will bring in the dawning of the 21st century and America will maintain its uncontested economic world leadership mantel and the power of economic self-determination.

· In my view, the U.S. Government has to start helping our small to medium size companies the same way other countries are helping theirs. They need to use the U.S. embassies to help foster company growth and become agents to all American companies, not just the multi-nationals. GATT, NAFTA, the Uruguay Round of trade talks really was mainly designed for huge corporations. Items that have additionally contributed to the reduction of American sovereignty are interlocked within the GATT and NAFTA TRADE agreements. When all of Latin America joins NAFTA it will became an American trading bloc that will be an economic powerhouse, larger than the European or Pacific Rim groups. The North American bloc by its self will be bigger than the European Community by more than 35 million people and 34 or 35 percent in gross national product.

· The requirement of a two-thirds vote by the US Senate was ignored when Congress ratified these so-called executive agreements. Executive agreements are really just treaties in disguise, but they lack the usual constitutional safeguards. It is not impossible that staggering proposals, such as an international criminal court or global tax, might slip in under the cover of soft law, executive agreement, or treaty. America’s small businessperson has a good track record, has shown great intestinal fortitude, and has proven to be the backbone of the American economy. Small business in America has survived and flourished for more than 200 years. This impressive record was obtained in spite of the fact it had to overcome overwhelming odds during this time, with very little help from the U.S. government. In fact, many of the obstacles came from government, such as high taxes, and bureaucratic red tape with most of the breaks going to big business and foreign governments.

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