Res Ipsa Loquitor

"Thank God for the judiciary," said our lawyer.

The federales caught up with us on Wednesday. We were hauled before a couple of lawyers from the SEC and asked to explain ourselves.

At issue was the incident that we reported more than 2 years ago. A colleague, Porter Stansberry, had discovered a uranium processing company he thought for sure would go up. He even interviewed an official of the company. The spokesman told him to u2018watch the stock on May 22,’ when a new arms agreement with the Russians was supposed to be concluded.

Asked about this conversation by the SEC…

"Did not," said the aforementioned official.

"Did so," said Porter.

Before we knew what had happened, the SEC had made a federal case out of it.

"Well, these government agencies are getting out of control, but at least the courts still protect us," continued our Consigliore. But this week’s brush with the law made us wonder.

"No one needs to remind me that our government, at all levels, is becoming bigger, stronger and less concerned about individual liberties," began an email received here last week.

"One of the most appalling and amazing examples was the recent U.S. Supreme Court decision upholding a state law (which about half of the states have) requiring people to identify themselves to law enforcement if asked and imposing a fine or jail time if convicted of refusing to do so. The background is this: A cop (I recall it was in Nevada) got a vague call about a domestic disturbance involving a man, truck and woman. He came upon an elderly man standing outside a truck. There was a younger woman inside the truck. The cop asked the man to identify himself. The man, a crusty old rancher (not to be confused with a Jolly Rancher), refused. He was arrested solely for refusing to give his name (and of course his name was obtained soon after the arrest), convicted and fined. The man was not connected in any way with the disturbance that prompted the cop’s inquiry. As I recall it, he and his daughter (the woman in the truck) were waiting to meet someone.

"The U.S. Supreme Court held that the law was constitutional on its face and as applied in this situation, though some of the justices allowed that one would not have to identify one’s self if to do so would be self-incrimination. How’s that for a Catch-22? If you are completely innocent, you commit a crime by refusing to identify yourself. If you are guilty, however, you are free to refuse to identify yourself and thereby confirm for the cops that you are a criminal."

Has America become less free? Looking around, the evidence is mixed. Eighty years ago, you couldn’t even take a drink without risking a visit from the cops. Books were banned in Boston if they were considered too racy. And shacking up with a woman other than your wife — especially if she was the wrong color — was likely to get you arrested on a morals charge.

All that is history. There are no morals charges anymore, because there are no morals worth charging. What used to be sin is now not only permissible — but actually fashionable. The most sordid spectacles make their way to prime time — on the evening news.

But while sinners have been let loose, the honest man can hardly make a move without running into someone who wants to protect society from him. Giving his name to the fuzz on the scene is the least of it. He has to reveal every detail of his life — for tax returns, passports, medicare, social security, insurance, business licenses, gun licenses, hunting licenses, professional licenses, building licenses, dog licenses, liquor licenses.

It may be a licentious age, but never have so many licenses been required to mind your own business. Except for the First Amendment, guaranteeing the right to say what you want, nearly every protection of the constitution has been swept aside so the do-gooders, regulators, politicians, inspectors, gendarmes, world improvers and snoops can get a grip on you.

The team from the SEC were there to help, of course. They were bright and attractive people. We could not help but like them. But what they want to do, as near as we can determine, is force our company to get the equivalent of another license. They want to be able to determine what we can say and what we can’t. Otherwise, the case makes no sense.

Porter says one thing. The guy at the uranium company says another. Even before talking to Porter, they chose to believe the other guy. Makes no sense, until you realize that their real objective is to pry open the First Amendment, reach down and throttle financial publishers.

Typically, the local press got the story all wrong. They figured if the SEC is after you, it must have something to do with manipulating stocks or insider trading. Au contraire, if there had been any stocks manipulated this case would not have been of such interest to the SEC. Everybody knows the SEC can throw its weight around in a front-running or insider trading case. What makes this juicy to both sides is that there was no stock manipulation involved. This is a pure First Amendment case. It is a gem for the courts, a brazen opportunity for the SEC, and a gold-mine for the lawyers.

"Remember, you’re not just fighting to protect your own right to publish what you want," said our attorney. "You’re fighting to protect the First Amendment; it’s the most important freedom we have."

But you have no reason to be interested in our legal issues. We wouldn’t mention it, except it illustrates the status of the judicial system in America, 2004.

"Don’t be so gloomy," our lawyer advised. "The courts will do the right thing. They’re not going to throw away the First Amendment. It’s the last one standing. And remember, this is an important, landmark case. Lawyers will cite this case for many years."

Let’s hope it is cited by the defense.

Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century.