When penguins in Antarctica get hungry, they get nervous.  Grouped together on an iceberg, none of them wants to be the first to jump in the water and go fishing — because there just might be a leopard seal waiting for them.  There’s nothing in the sea a leopard seal finds more tasty to eat than fresh penguin.

So the waddle (on land or ice, a group of penguins is a waddle;  in the water, it’s a raft) bunches together, the ones in the back pushing forward, the ones in the front backing up away from the ice edge.  When you see them, it’s easy to imagine these guys in front yelling, “Hey!  Stop pushing!”  Finally, one or two in the front get pushed in, and the entire waddle freezes, waiting motionless to see their fate.  Only when the unwilling pioneers are seen swimming safely with no leopard seal in sight, do the rest of their feathered brethren pour off the edge of the iceberg into the sea and join them.

Ever so often, there will be a particularly brave — or foolhardy — fellow who will jump in the water all by his lonesome without being pushed, figuring he can outswim and outwit a leopard seal.  His fate can be grisly.  Thus I am a cautious and patient penguin, watching way back in the waddle.  For several years now, I have been watching a courageous soul who leaped unafraid into the icy water and remains untouched by a leopard seal. 

At first I was sure he was a goner, because he dared the leopard seal to come after him.  But it’s been years now, and thousands of penguins have leaped into the water to join him — all of them still swimming free and uneaten.  So I thought it was time to tell you about him.  His name is Eddie Kahn, and the leopard seal is called the IRS.

Eddie leads a team of experienced CPAs and tax attorneys called American Rights Litigators (ARL).  Disdainful of “tax protests” such as 5th Amendment or legal tender arguments that quickly get their advocates behind bars, Eddie and his ARL team looked instead into the structure of federal law. 

When Congress passes a law, codified as a statute, it then delegates to a regulatory agency the authority to issue the implementing regulations specifying to whom and under what circumstances the statute applies.  These regulations must, by law, be published in the Federal Register.  Lacking these implementing regulations, the law cannot be applied and has no force. 

Well, it turns out that the implementing regulations for the IRS’ enforcement statutes — things like the requirement to file a tax return and the authority to place a lien — cannot be found in the Federal Register.  When queried on this, the Senior Counsel for the Office of the Federal Register, Michael White, replied in writing, “Our records indicate that the Internal Revenue Service has not incorporated by reference in the Federal Register a requirement to make an income tax return.” 

What happened is that up until 1972, the IRS and the BATF (the alcohol-tobacco-firearms folks) were part of the same Treasury agency, so the IRS piggy-backed onto the BATF’s enforcement authority with fully published regs in the Federal Register. Yep, the “revenooers” do have full legal authority to go after moonshiners.

But after the two were separated into legally different agencies, the IRS never got implementing regs of its own — because to do so would be to admit they did not have them in the first place.  Lack of implementing regulations published under Title 26 — the IRS section — in the Federal Register means that the IRS has no assessment authority, no collection authority, no authority to enforce a lien or seize property, no authority to pursue criminal penalties for failure to file a return or to make a false/fraudulent return. 

Eddie and ARL have developed a broad array of sophisticated strategies, based on IRS enforcement statutes and lack thereof, to protect over 4,000 clients from being devoured by IRS leopard seals.  I must tell you that I am not one of them.  I told you that I’m still playing it safe way back in the waddle.  Yet when I see not just Eddie and a few others cavorting in the ocean, but a vast raft of thousands upon thousands, it does give one doubts about the danger.

So if you should have any difficulty with the lovable gentlemen at the IRS, you might consider contacting Eddie and his ARL team.  You can reach them at 1-800-882-0248, or by loggin

One of the most critical imperatives for Israel right now is to stop the suicide bombing.  One of  the best ways would be to blow up the bombs -- and preferably the bomber along with it --  prematurely.  The ideal would be to blow up the bomber so only he (or the occasional she) dies and no innocent Israelis.Here are two different versions of how to accomplish this.

It is obviously important that OBL (Osama bin Laden) not be simply hunted down and shot to death. He should be captured and interrogated until all the information he has about his terrorist network has been extracted from him – then he should be summarily executed. No trials, no being "brought to justice." What, then, would the most efficient and effective form of interrogation be?

As many recent commentaries have noted, there was no unified command of Afghan “Mujahaddin” freedom fighters resisting the Soviet occupation of their country in the 1980s. There were about half a dozen major groups and a host of smaller ones.

The legendary commander Ahmad Shah Massoud, assassinated by OBL (Osama Bin Laden) agents just before The Atrocity, belonged to the “Jamiat” group led by Burhanuddin Rabbani. Qari Baba, the famous commander in Ghazni who looked like a cross between Buddha and Genghiz Khan, was part of the Harakat group. Ramatullah Safi was the most outstanding commander of the Gailani group. Abdul Haq was the same for the Younis Khalis group.

With one exception, all of these groups and commanders pretty much cooperated with each other. Their political leaders met and worked together (I attended some of their meetings), their commanders and bands of fighters did the same (which I witnessed in the field). Rarely did they fight amongst themselves, but focused instead on their common enemy, the Shuravi — Afghan for Soviet Russians.

The exception was Gulbuddin Hekmatyar, leader of the “Hezbis.” I went inside Afghanistan with every major Mujahaddin group – except for the Hezbis. I met Gulbuddin and interviewed him in August 1984 – and found him to be an Islamic Fascist, an admirer of the Ayatollah Khomeini, and a hater of America.

Everywhere I went inside Afghanistan in the 1980s, the story was always the same: the Hezbis spent their time fighting other Mujahaddin groups for turf instead of the Shuravi. Rather than fight for the freedom of Afghanistan, Gulbuddin hoarded his weapons, planning a takeover of his country once the other Mujahaddin had liberated it for him.

It may — or it may not — come as a surprise to learn that the CIA was obsessively insistent that the lion’s share of arms and support they gave to the Afghan Mujahaddin went to Gulbuddin. The term “obsessive” is in no way hyperbolic. The CIA’s obsession to support Gulbuddin in vast preference to all other Mujahaddin leaders bordered on the pathological.

Every CIA agent I ever talked to — especially the armchair analysts at Langley – – was insufferably condescending whenever I would state that Gulbuddin’s people did no fighting, that the other groups were begging for weapons while the Hezbis had an oversupply of weapons they didn’t use. The agents would patronizingly assure me their “intel” contradicted what I and every other independent observer who actually went into Afghanistan saw with our own eyes – – so we all must be wrong.

A number of United States Congressmen also had figured out that the CIA was lying about Gulbuddin’s effectiveness, and were well aware of the great danger he was to the future of Afghanistan. I once delivered a personally written note from one such Congressman to Burhanuddin Rabbani. We had met a number of times before, but on this occasion we had a long discussion. The note was an explicit request for Rabbani to have his people spare no effort to assassinate Gulbuddin.

“If you do not do this,” I explained to Rabbani and his chief aide, “Engineer” Abdul Rahim, “any victory the Afghans achieve over the Shuravi will result in chaos and disaster. Gulbuddin has to be killed, killed dead, if Afghanistan is to have any future and any freedom.”

After our discussion, the Congressman’s letter, of which no copies were made, was burned before my eyes. A few days later, Gulbuddin’s Toyota Land Cruiser blew up in Peshawar, Pakistan. Gulbuddin’s driver was killed, but Gulbuddin, although injured, survived. Subsequent attempts also failed.

When the Shuravi were forced to retreat in defeat in February, 1989, freedom for Afghanistan seemed clearly on the horizon. Yet right on schedule, Gulbuddin began his war for power. While Rabbani, as leader of the strongest and best organized freedom fighter group, attempted to put together a coherent government in Kabul, Gulbuddin began shelling the city. The CIA and their Pakistan counterpart, the ISI (Inter-Services Intelligence) forced Rabbani to accept a coalition government with Gulbuddin as Prime Minister, and with it, the resignation of Massoud as his Defense Minister. Massoud’s departure as Defense Minister precipitated Afghanistan’s collapse into the utter chaos that made the Taliban possible.

Afghanistan, it must be understood, is an artificially created country, an ethnic hodge-podge glued together for the purpose of keeping the British Raj and the Russian Empire apart and not touching. Look at the map and you’ll see this narrow sliver of Afghan territory, the “Wakhan Corridor,” on the top right corner that goes all the way to China, barely separating what is now Tadjikistan (but in the late 1800s Russian Central Asia) and what is now Pakistan (but then British India).

Pakistan is similarly artificial, another ethnic stir-fry created as a refuge for Indian Moslems who didn’t want to be ruled by Indian Hindus (who outnumbered them 2-to-1) when India got its independence after WWII.

North of the Hindu Kush mountains in Afghanistan, the ethnic majorities are Tadjik and Uzbek. South the main tribe is the Pushtuns. Pakistan is composed of Baluchi nomads in its south western deserts bordering Iran, Sindhis in the southern Indus region, Punjabis in the central Indus – and along the border with Afghanistan it’s all Pushtun. The Pak government has never exercised true sovereignty over the Pushtun area, known as the NWFA (North West Frontier Agency), and has always been terrified of the demand for an independent “Pushtunistan” breaking Pakistan apart.

It was this fear that caused the Paks to freak out when Afghanistan went completely anarchic. Gulbuddin was their Pushtun guy. The Tadjiks — Rabbani and Massoud – – were out. The Paks had gotten their wish and the Chinese proverb about being careful for what you wished for had become nightmarishly apropos. In desperation, they turned to a group of nutcase fanatics calling themselves “students” (“taliban”) although most of them were thoroughly illiterate. The ISI saw an opportunity for a business relationship in the bargain – – a joint venture to operate the heroin business.

Sixty percent of the world’s heroin comes out of Afghanistan. That only happens with the full cooperation of the governments involved — in this case the Taliban government in Afghanistan and the ISI “government within a government” in Pakistan. With the money from the heroin trade, the Taliban were able to bribe opposing commanders and proceeded to take over the country with hardly a battle. Only Massoud resisted. The Taliban chased Gulbuddin out of Kabul and into exile with his Islamic Fascist friends in Iran.

The point to all of this history is that the CIA’s buddy Gulbuddin has publicly announced – on September 18, one week after The Atrocity – his support for Osama Bin Laden and his intention to return to Afghanistan to join Al Qaeda.

The CIA owes Afghanistan an abject apology for its disgraceful support of this evil man. Were it not for this support, Afghanistan would have had a chance to stabilize in the 1990s, the Taliban would have not come to power, Al Qaeda would not have established a sanctuary under Taliban protection, and given that, The Atrocity of September 11 might never have occurred.

[Update: Gulbuddin re-entered Afghanistan to join with re-grouped Taliban forces in February, 2002. In May, 2002, a CIA Predator drone located Gulbuddin and fired a Hellfire missile, missing him but killing a number of his followers. On September 5, 2002, he organized an assassination attempt on Afghan President Hamid Kharzai in Kabul, killing a over a dozen people.

On February 19, 2003, the State Department issued this statement: Designation of Gulbuddin Hekmatyar as a Terrorist

The U.S. Government has information indicating that Gulbuddin Hekmatyar has participated in and supported terrorist acts committed by al-Qa’ida and the Taliban. Because of his terrorist activity, the United States is designating Hekmatyar as a Specially Designated Global Terrorist under the authority of Executive Order 13224. At the same time, the United States will request that the UN 1267 Sanctions Committee include Hekmatyar on its consolidated list of entities and individuals associated with Usama bin Laden, al-Qa’ida, and the Taliban, which would obligate all Member States to impose sanctions, including assets freezes, under UN Security Council Resolutions 1267, 1390, and 1455.

On April 5, 2004, US forces in Afghanistan announced the capture of Gulbuddin’s senior commander Amanullah. Gulbuddin himself remains at large. The CIA has yet to issue an explanation, much less an apology, for its support of Gulbuddin in the 1980s.]

For an increasing number of Islamic historians, the tradition of Mohammed being the source and explanation of the Arab Conquest, wherein Arab tribesmen on horseback emerged out of the Arabian deserts to conquer Syria, Mesopotamia, Persia, Afghanistan, Egypt, Libya and Spain in less than 80 years (636-712), stands history on its head. They demonstrate that the story of Mohammed uniting various Arab tribes as Genghiz Khan did for the Mongols, and providing them with the religious fervor to conquer in the name of Islam, is "sacred history," rather than real history.

Jack Wheeler Strategic Investor, July 2001

The origin of the phrase “thinking out of the box” comes from an intelligence test called the Nine Dot Box.  Imagine three rows of three dots, each equally spaced some distance apart on a regular piece of paper.  The task is to connect the dots with a  minimum number of lines drawn by a pen or pencil.  The only rules are:  you must draw a line through every dot once and only once, all lines must be straight (no curves), and your pen/pencil cannot leave the paper. 

Most people cannot figure out how to do it in less than five lines.  Only those with superior intelligence and creativity realize that it can be done if they go “out of the box.”  That is, most people assume there is an imaginary box outlining the square of dots beyond which their dot-connecting lines cannot go.  The really smart folks question this assumption and see that if they draw lines extending outside the imaginary periphery, they can do it in only four connected straight lines.

Yet four lines is not the true minimum.  Once in a great while, someone of peak creative genius questions the assumptions further, and realizes that if they don’t restrict their thinking to the two dimensions of a flat piece of paper but go three-dimensional, rolling the paper into a cylinder then torquing it so the dots are at an angle to each other, all the dots can be connected in one single continuous straight line around the cylinder.

And then comes the literal one-in-a-million thinker who sees that the dots can be connected by no lines at all — by folding the paper into sections so that the dots are all stacked up on top of each other, and poking the pen/pencil point through the stack.  This kind of thinking is not simply out of the box — it is completely out of the box.

Perhaps the most succinctly profound statement ever made on man’s relationship to reality was that of Sir Francis Bacon:  “Nature, to be commanded, must be obeyed.”  Creativity and innovation do not come from wishes or whims.  The key to out-of-the-box creativity is not by asking “How do I break the rules?  What can I get away with?”  It is by paying incredibly focused attention on what the rules of reality say, and asking, “Are there any rules here that I am making up?  What restrictions am I placing on myself that I don’t have to?” 

It follows from this that societies and cultures that value individual freedom to question and challenge assumptions are going to innovatively flourish far more than those that do not.  As we discussed last month, societies that promote emulation rather than envy possess the key to prosperity.  Societies dominated by envy and the fear of being envied extinguish innovation.  As the world’s premier emulation culture, America’s capacity for technological innovation is leaving cultures unable to de-envy themselves — such as Tony Blair’s England, Gerhard Schroeder’s Germany, and naturellement the French — in the economic dust.  Thus the explosion of European envious resentment towards the U.S.

Well, that’s Europe’s problem.  It’s 43’s job to handle them (“43” is what the White House Staff call their boss, the 43rd President, while his father is termed “41”:  thus the bumper stickers you see in Washington, “Viva 43!”).  The question for you as a small private investor is:  “How do I cash in on America’s unmatched capacity to innovate?”

Getting in on Microsoft or IBM when they were fledgling private start-ups is the perennial investor fantasy.  Stock in an early-stage pre-IPO company that explodes can result in a 50 or 100 times return.  Yet plunking down a pile of dough on one of the many companies that end up in the tank for every single business success is the ubiquitous investor bad dream.  The commonly-accepted way to spread out an investor’s risk in the market is via a mutual fund:  betting on a professionally-selected group of public companies with the winners hopefully outpacing the losers.  Less risk — and a lot less gain.  So here’s an out-of-the-box question:  Why isn’t there a mutual fund for private start-ups?  If there were, you could have less risk and a lot more gain.

It turns out there is.  A group of bright folks in Bethesda, Maryland have set up a completely out of the box venture capital fund.  Most venture capitalists are tightly anal guys.  Going outside of the boxes within which they confine their thinking is congenitally impossible for them.  They put all their eggs in just a few baskets, sinking large amounts of capital into a handful of companies for huge pieces of equity.  They then insist on reducing their risk by “managing” (i.e., controlling) the entrepreneurs involved — which is like herding cats.  The entrepreneurs in turn look upon them resentfully as “grab-as-much-as-you-can” Vulture Capitalists.  The Artemis Strategy Fund does things differently.

Artemis starts out being win-win, not greedy.  Working collaboratively with its portfolio companies, it comes up with a realistic valuation that everyone (especially investors) will accept.  Innovation requires capital.  Since it costs money to raise money, the cost of raising capital is funded with a bridge loan from Artemis.  The loan is repaid quickly out of initial funds raised, Artemis receives 2% of the company’s stock (not bad for a short-term bridge), and the repaid funds are rolled over into a bridge loan for the next company.

Artemis has developed a proprietary screening process (over 40 specific, measurable factors for predicting ultimate success) for identifying high potential start-ups.  Three to six companies are selected each month because success is a numbers game — a certain percentage of well-selected companies will reach liquidity, while another percentage will be “home-runs” with phenomenal returns for investors.

Bethesda lies at the heart of  the famous “I-270 Corridor” of life science companies — so Artemis focuses (although not exclusively) on biotech and biomedical start-ups developing out-of-the-box breakthroughs in genomics, proteomics, bioinformatics, and genetically based medicine.  One Artemis portfolio company, Capital Genomics, is leap-frogging over billion dollar market cap Affymatrix with a technology that incredibly accelerates identifying individual-specific drugs designed to work only upon the patient’s genetic profile (and no one else’s, thus FDA approval is not required as it is not a drug for public use).  Another portfolio company, Aixlee Pharmaceutical, has a breast cancer vaccine in Phase I clinical trials.  But Artemis is diversified — Modern Maritime, for example, has a proprietary software that enables the $720 billion maritime industry to navigate the ocean of international shipping regulations.  Logical Fashion has a technology that identifies what objectively looks good on a woman, then connects her to what is available in fashion catalogs and stores.

Now with a track record, Artemis is starting to attract attention from big funds that see Artemis as a promising acquisition — with 40-70 new companies each year it’s the perfect feeder for new pre-screened investments.  More likely, however, is that Artemis will be going public with an IPO because the increasing share price of stock in its portfolio companies creates such an enormous increase in unrealized earnings over the next few years.  Artemis seems to have hit upon an out-of-the-box way to make out-of-the-box profits from the creatively free business and scientific genius driving America’s economy. 

Early last October, a senior White House henchman, let’s call him Richard Head, paid Janet Reno a visit.  The conversation went something like this. 

Head:  Ms. Reno, the president is very concerned that you do the right thing regarding criminal investigations of his administration. 

Reno:  That’s reassuring, Richard — may I call you Dick? 

Head:  Yes — so we at the White House would like you to prosecute Bill. 

Reno (spilling her coffee):  Prosecute the president?  But I thought no matter how massive the evidence against him, I was to stonewall… 

Head:  No, Ms. Reno, that’s the wrong Bill — we mean Bill Gates.  Say, that coffee smells good.  What’s in it? 

Reno:  It’s half Starbucks, half Porfidio tequila.  Why Gates?  And what on earth for? 

Head:  I don’t know what for — make it up.  That’s your job.  But Gates should be obvious.  As the world’s richest man, a DOJ prosecution will focus envy at him and get people’s attention redirected away from the president.  The media will talk about what you’re doing — going after Microsoft — not about what you’re not doing — going after us. 

Reno:  Brilliant.  They don’t call our boss Slick for nothing.  I need another coffee —  (pressing her intercom) Bull, could you get me my usual?  (A hefty woman enters, bearing a large mug)  Mr. Head, may I introduce my very personal assistant, Bulleta van Dyke? 

Head:  My, uh, pleasure, Miss Dyke.  Actually, Ms. Reno, the president is fully briefed on the nature of your beverages and friendships, and makes sure the media behaves with regard to reporting on them.  So I can inform the president of your cooperation? 

Reno:  As always.  That’s why I’m here, isn’t it?

There you have it, folks.  Willie plays big leagues hardball.  Recall the monumental pressure on Reno to issue major indictments or appoint special prosecutors just a little while ago?  With the Microsoft anti-trust action, that’s gone now.  And look at how just about everybody has been taken in by it, with much of the Internet community ranting against Gates.  This is clear evidence of Clinton’s evil political genius. Knowing just when to infect Americans with the plague of the century in order to save himself.

The Black Plague of the 20th Century is the social disease of Envy.  A book published this year in France, The Black Book of Communism, is outraging and startling intellectuals by comparing Communism to Naziism.  But the connection should be obvious:  both are pathologies of envy.  Nazis preach race-hatred toward “rich exploitative Jews.”  Communists preach class-hatred toward “rich exploitative bourgeois.” 

Envy is also the motivating pathology behind Islamic fundamentalism:  envy of the West causes some Moslems to go criminally insane. 

Envy-mongering has always been the path to power of the Left, and the Democratic Party in the US.  Anytime, for example, Republicans try to lighten the weight of the lead ball of government we all have to drag around, the Democrats scream, “tax break for the rich!”

It works every time, so well it’s reduced the Republicans to invertebrates.  Harnessing the malevolence of envy is a natural for a demagogue like Slick Willie.  He knows that the envy he has directed at Gates has more to do than with Gates’ wealth.  It’s that Gates treats Washington as an annoying irrelevance — and instead of admiring him for it, many Americans hate him for it because they can’t do the same. 

If we are lucky, Gates will ignore the envy and go after Washington’s jugular.  It will be a disaster if he doesn’t and succumbs to the Liberal Disease:  the fear of being envied.  Liberalism isn’t a political ideology at all  It’s simply an envy deflection device, a  psychological strategy to avoid being envied.  Classic examples are Teddy Kennedy and Ted Turner — and you can easily grasp the scope of the disaster I’m talking about by imagining Gates becoming like them. 

Pray then, that Gates decides to play real hardball.  The DOJ case against Microsoft is of course nonsense.  As Gertrude Stein would say, “A browser is a browser is a browser.”  IE.4 allows you to seamlessly browse through Web sites and spreadsheets, files, or any other application on your hard drive simultaneously.  Bundling it with Windows is a great idea, and instead MS is being prosecuted for it!  The utter absurdity of the case is even more clear when you realize that the bundling in no way prevents you from using some other browser like Netscape’s. 

So far, Gates has fought Reno in court (unfortunately only on the case’s merits, and not challenging the constitutionality of all federal anti-trust law).  But what if he decided to up the ante?  What I would like to see is a senior MS VP, let’s call him Bill “Duke” Nukem, pay Reno a visit and the conversation go like this:

Nukem:  Thank you for taking the time to see me, Ms. Reno.  I’m here to encourage you to drop your action against us. 

Reno:  How would you do that? 

Nukem:  Microsoft is prepared to move offshore to a friendlier jurisdiction.  Vancouver is a pretty place, a short drive from Seattle, and the BC government would welcome us with open arms.  There are many other jurisdictions we could choose from. 

Reno (spilling her coffee):  Surely you’re joking. 

Nukem (takes a whiff):  Porfidio is my favorite tequila too — although I don’t order it by the case as you do.  Let me explain reality to you, Ms. Reno.  Microsoft is a sovereign entity, and we demand you treat us as such, as do other countries.  A few weeks ago, President Ramos of the Philippines flew to Seattle, where he accepted an amnesty from Bill Gates, who forgave the illegal copying of millions of dollars of Microsoft software by various government agencies in the Philippines, in exchange for Ramos’ vigorously enforcing Microsoft’s intellectual property rights in the Philippines.  Now doesn’t that sound like a treaty between sovereign nations to you, Ms. Reno?  We will negotiate with you in the same manner. 

Reno:  And if we don’t? 

Nukem:  Then very unpleasant things could happen to your government’s entire computer network.  We have far more computing power, knowledge, and talent than you do, surely you know that.  You leave us alone, we leave you alone;  if not, we don’t.  Deal or no deal? 

Reno:  I’ll have to check with my boss. 

Nukem:  Fine.  Just remember he’s your boss, not ours.  You should let him know that you picked the wrong Bill to go after.  By the way, how’s your friend Bulleta?

Pray that Gates has the cajones to do this. If he loses or capitulates, envy wins and the government’s power and arrogance expands over us all.  If he wins, showing that the government can be ignored and forced to back down, others will follow his lead.  And then maybe Reno will finally have to target the right Bill.