More evidence that the US Government is cracking down on tax evasion. In April, actor Wesley Snipes was sentenced to three years jail for tax evasion. As expected, he is appealing that sentence.

Then last month, his tax guru Eddie Ray Kahn was pinged for promoting tax fraud schemes.

Now Michael Vallone, a peddler of dubious tax shelters has just been sentenced to 223 months in the slammer.

Still, with some of frauds in the mortgage industry created by people who made their fortunes, and got away with it being left unpunished, you would have to say these tax fraudsters are just easy targets.

Anyone who thinks Paulson's $700 billion bailout, which privatizes profits and socializes debt, will save the US economy, should think again.

London-based investment consultancy Independent Strategy says Paulson's package is just stupid. In its report here, it warns:

"Things have got worse more quickly than we expected. The 'second' Paulson package is even more stupid than the first, demonstrating that it is possible for humans, but not dogs, to have an inverse learning curve.

"It does nothing to write off the dud assets of banks in a meaningful way, close the hopeless and refinance (through temporary nationalisation) those institutions worth saving, while wiping out existing shareholders and management. The package continues to bail out banks at unrealistic prices and potentially their borrowers too, who need equally to be punished for over-borrowing and overconsumption, if the underlying causal flaws of the credit cycle are to not to be repeated ... All of this points to a continued freeze of credit markets, more insolvencies and a worse global economic recession. It is no time to bet on an optimistic outcome of misguided and tardy policy reactions."

As the International Herald Tribune notes, things are so far gone now that it will take more than belated policy activism to get things moving again.

And as Howard Davidowitz, head of Davidowitz & Associates Inc told the Los Angeles Times, we can expect to see up to 8000 stores closing in the next few weeks. "This will be the worst Christmas shopping season in a century", he said.

We are now seeing news reports that retirement is about to become a thing of the past. If only out of economic necessity. Boomers can't afford to retire now that the market has damaged retirement savings.

But there is another more fundamental reason. The western world is perched precariously on a demographic fault line with the baby boomers about to exit the workforce. Starting from about fifteen months from now, the baby boom will start turning into a baby bust and that will produce a seismic transformation. If you don't think it's a problem, take a look at Japan. From 1994 to 2004, Japan's workforce contracted, going from 65 million workers to 63 million. At the same time, Japan has done nothing to turn that around by, for example, encouraging migration. The period also coincides with the malaise of the Japanese economy.

I look at these important issues in my column here.

The International Monetary Fund in its latest report warns that the US is headed for recession. And that is regardless of what happens with any bailout package. "The financial turmoil that began in the summer of 2007 has mutated into a full-blown crisis, encompassing broader securities markets and the banking systems of several advanced economies ... based on a comparison of the current episode of financial stress with previous episodes there remains a substantial likelihood of a sharp downturn in the United States, given the similarities between the current dynamics of asset prices, credit ratios, and household financial positions and previous episodes that were followed by recession."

And certainly the numbers and graphs don't look good.

First let's take a look at US house prices.



What that graph says is that US house prices are in free fall, and that amounts to a massive wealth reduction

Secondly, the graph below shows a massive drop in consumer sentiment and spending. And if people aren't spending, it will feed into the rest of the economy.



The graph below is a real worry because it points to a sharp rise in unemployment with thousands thrown out of work

The bailout, at best, might restore some confidence to the markets - but for about 10 minutes only. The world's biggest economy is in serious trouble.

For many years now, we have had an ongoing debate about whether Sarbanes-Oxley is forcing foreign companies to quit US equity markets.

Now we have a new study Why do foreign firms leave U.S. equity markets? An analysis of deregistrations under SEC Exchange Act Rule 12h-6 suggesting that Sarbanes-Oxley has had nothing to do with it.

The bottom line is that since they brought Rule 12h-6, it's been a lot easier for foreign firms to deregister. But in an analysis of 59 companies, the researchers found that the foreign firms that quit the US market had lower returns and fewer growth opportunities. But any impact of Sarbanes-Oxley, they found, was not economically significant. "We do not find any reliable evidence that foreign listed firms suffered from SOX or that SOX had a more adverse impact on deregistering firms," they write.

Still, you can't expect this will be the final word on the matter. Expect this debate to continue for some time.

Now that the Senate has passed through the Senate, the heat is on the House to give it the green light. But take a look at the Bill, full of pork barrelling give-aways - including ridiculous items like the exemption of excise on certain wooden arrows and huge dollops of tax relief - that make the elected representatives look good. And you start to wonder. What's clear is that US politicians have given up any claim on global leadership because they have failed to comprehend the enormity of this global issue. More on the giveaways from the Los Angeles Times.

What's clear is that this piece of legislation, thrown together quickly with lots of arm twisting, will not save global markets. The package is vague on many areas, like the pricing of the securities the US Government intends to purchase. And you can forget about stronger regulations for financial institutions.

As Bill Clinton's former labour secretary Robert Reich writes, it won't make any difference: America faces a long and painful recession.

"Regardless of the Wall Street bailout, typical Americans have run out of coping mechanisms to keep up their standard of living. That means there is not enough purchasing power in the economy to buy all the goods and services it is producing. We are finally reaping the whirlwind of widening inequality and ever more concentrated wealth.

"The only way to keep the economy going over the long run is to increase the real earnings of middle- and lower-middle-class Americans. The answer is not to protect jobs through trade protection. That would only drive up prices of everything purchased from abroad. Most routine jobs are being automated anyway. Nor is the answer to give tax breaks to the very wealthy and to giant corporations in the hope they will trickle down to everyone else. We have tried that and it hasn't worked. Nothing has trickled down. The Wall Street bailout may be necessary in order to keep credit markets working, but it is almost irrelevant to this larger and more important story."

A few weeks ago, I did a blog entry looking at how investment in renewable energy will eclipse the amount of money that poured into the Internet.?

That's one big call. Still, now we have a University of California study, reported here, showing that the amount of venture capital channelled into renewable energy actually doubled in the 12 months from 2005-2006.

No doubt, energy consumption is driving much of this trend. Energy efficiency is turning into the holy grail.