Posts Tagged greed

Rand Paul’s First Slip & Fall – Down the Rabbit Hole of the American Political Landscape

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBERTARIAN DUALITY SYMBOL

Within 24 hours of getting the first Tea Party nomination for a major political office in the United States, Kentucky Senatorial candidate Rand Paul already committed his first political faux pas in his equivocation regarding a key component of the 1964 Civil Rights Act.

In an interview last night on MSNBC’s Rachel Maddow Show, Rand was pressed by Maddow to state whether or not he would oppose the key provision under the landmark legislation prohibiting private sector discrimination based on race.  Rand categorically denied that he was a racist and insisted that this position, based on Libertarian principles which philosophically oppose government intervention in the private sector, was the basis for his argument that this portion of the legislation was flawed and that he would not support it. 

Today, Rand backtracked from his political posture last night, now saying that he would not advocate for the repeal of the legislation, in whole or part.  He said that appearing on Maddow’s show was a “poor political decision” – inferring that her questioning was another Sarah Palin, liberal media “gotcha” moment.  He complained to Maddow about her line of questioning during the interview, claiming that the issue of private property owners’ rights under the law was “an abstract, obscure conversation from 1964 that you bring up … You bring up something that really is not an issue.”

I like Rand Paul.  I don’t believe for one moment that he is a racist.  Neither does Rachel Maddow, and her questioning was not a hatchet job.  She is sincerely interested in how Libertarian purists might dismantle 235 years of constitutional interpretation and legislation.  I watched the interview, and her questions were fair.  Moreover, I think both Rand and his father, Ron Paul, are well-intentioned, intelligent anti-establishment politicians.  There is ample room for men of their intellectual and philosophical stature under the tent of American politics.  But their positions on serious political and legislative matters must be explored.

Unfortunately for Rand, that is why his alignment with principles of Libertarianism, and the Tea Party’s deep criticism of prior legislation like the Civil Rights Act of 1964 does make it an issue.  If the Tea Party candidates are going to run on a platform that advocates for the dismantling of any and all government regulation affecting private property rights, they have to accept the fact that critics have good reason to question their intentions regarding repeal of prior legislation, and what those actions would mean for ten’s of millions of Americans.

Most people are not familiar with Libertarianism – a modern, free market philosophy – it eschews government interference in any aspect of private life, while advocating for freedom of speech and behavior, so long as it does not harm anyone.  Of course, in theory, it all sounds very enticing.  I personally considered myself to once be a Libertarian. 

However, that all began to change after recognizing that those among us who have more “freedom” – as in money or power - will utilize that advantage in order to quash or interfere with the freedom of others to pursue their own goals and dreams.  What I often hear in response is that “life isn’t fair” – inequities will always exist.

If that is so, we are headed back to a time when robber barons and monopolists are allowed to manipulate and “game the system” for their own devices.  Wall Street’s domination of the finanical landscape is a case in point.  Once they have wrested complete control or dominated an intolerable degree of economic and political life in America, social unrest and anarchy will inevitably rule the day.  Case in point:  the colonial revolt against England in 1776.  I would think Rand Paul and the Tea Party might see the irony in that.

Even Adam Smith – author of Wealth of Nations, and the father of free markets – recognized that government intervention was a necessary evil.  For those of you who doubt this, read the book (here is a free online edition).  I did over thirty years ago. And I have read it several times since then.  Smith was a closet “socialist” (with a small “s”).  The principle underlying his whole theory was the overall social good would be elevated by HARNESSING – as in placing a bridle on – greed.  When you harness a horse – you keep it under control.  You do not let it run completely free. 

Libertarians think the horse should never be bridled; under any circumstances.  The law of unintended consequences will always come into play when you let a horse run wild.

For that reason alone, Rand Paul must accept the reality of having to go down the rabbit hole of American politics. 

 Just go ask Alice . . . or Barry Goldwater.

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Goldman Sachs’ “Fabulous Fab’s” Fabulous Fraud

 

 

 

 

 

 

 

 

 

“THERE IS A SUCKER BORN EVERY MINUTE”

                                - David Hannum [no, it was not P.T. Barnum]

Confidence is the single most important element of any fraud.

That is why fraud schemes are called confidence games or confidence tricks

Ever heard of a “Three Card Monte“?  It is the most classic con game run on the streets.  This is a card game that initially inspires confidence in the “mark” – the person who is the target of the fraud - by showing them how easy it is to make money by making the correct bet.  Both the dealer and another person pretending to play the game conspire together in order to make the “mark” feel confident that he will win game.  In other words, the game is already rigged before the “mark” even plays.

Moreover, it preys on several elemental human flaws:  greed and ego.  That is why it works.  We always think we can do better than other people – that we are smarter than them; and, once we start we cannot stand to lose money, so we keep upping the bet to make up for our rising losses.  That’s why Vegas makes so much money.  They rely on our greed and ego to lead us to the tables.  As does Goldman Sachs (GS) down on Wall Street.

Except in Goldman Sachs’ case – just like a “3 Card Monte” - they create a fraud.  At least that’s what the SEC is now alleging.  And the allegations are not looking too good on paper.  Nor in the national business media, as numerous business journalists - here, here and here - weigh in on the matter, gleefully watching as GS twists in the firestorm of their own creation that appears to be developing.

The best response came from Dylan Ratigan, former business journalist for CNBC and current host of The Dylan Ratigan Show on MSNBC.  After GS posted its press release authored by company spokesman Lucas van Praag, Ratigan fired-off a serious of questions for Goldman Sachs to answer. If you want a preview of the cross-examination in this case, this will be as good a template as you will see.

What’s even worse are the emails that the young Goldman executive who was setting up these deals was sending when the parties were deep in the midst of putting this together;  deals designed to benefit his company – resulting in a very large bonus for him – and virtually ensuring that many of Goldman’s own clients were going to be left holding the bag, while one client profited handsomely .  Fabrice Tourre, the self-proclaimed “Fabulous Fab”, sent the following message to someone:

“Only potential survivor, the fabulous Fab standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrousities!!!”

So Goldman is circling the wagons, and denying any wrong-doing.  However, what Goldman is conveniently omitting – not ironically, given their business practices at issue - is that they failed to disclose to clients investing on one side of the “confidence game”, that Goldman was actively working for another client on the other side of the confidence game whose interests were diametrically opposed to the first parties’.  And they said nothing, while making huge fees off both clients.  It’s a classic conflict of interest scenario – which is tantamount to fraud if they breached a duty to disclose that fact – and the fact was a material issue central to the transaction.

Moreover, Goldman Sachs’ claim that they “lost money” on this deal may be tenuous, at best.  The fact that the value of the investment may have dropped over time does not account for the fact that GS had purchased huge insurance policies to mitigate those losses, as well as buying “shorts” in order to make money as the value dropped – which could actually result in a hefty profit.

Nevertheless, Goldman Sachs insinuates that it will never admit they have done anything wrong; that “it will be a cold day in Hell.  After all, it was Goldman Sachs’ CEO, Lloyd Blankfein, who was quoted in The Times :

“I’M DOING GOD’S WORK.”

Frankly, Lloyd, I think it was Satan’s work. 

And maybe Hell will freeze over . . .

UPDATE:  Here is a guide to the Goldman Sachs issue from U.S. News and World Report.

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Obama Meeting With Fat Cat Bankers Elicits Call for Guaranteed Loans?

Fat Cat Banker

 

 

 

 

 

 

 

 

 

So President Obama chides the bankers on CBS’s 60 Minutes Sunday night, referring to them as “fat cats”.  On Monday morning he meets with them  – at least the ones who showed up – to tell them they need to step-up their lending.  What was their response?

Some of those in attendance said the government should “cut the red tape” in lending requirements for Small Business Administration (SBA) loans.

WTF?

We just gave these guys trillions of dollars interest-free in March of this year to lend back to Americans in order to prop up the economy.  Then they hoard the money, investing it in everything from bonds (very conservative returns), to credit card holders (then turned around and raised interest rates to all-time highs), to high-risk derivatives – you know, those insane and arcane financial instruments that broke the casino the last go around.  Thereafter, they paid themselves handsome bonuses for their genius (listen, give me a boatload of $$$ interest free and I can make a profit on it investing in high-grade bonds – the “spread” of 2% interest is a no-brainer; let’s see, 2% of $35 Billion – wow, nice freakin’ bonus, Lance; you are such a genius). 

Now when pressed to lend the money, they have the audacity to suggest that the government-backed SBA loans are the way to go about fixing this mess.  Let’s see.  I will loan the money you just gave me interest free to small businesses.  You guarantee 80% of the loan.  I get the borrower to pledge his business as an asset to back up the remaining 20%, of course, making sure that the appraised fire-sale value of the “hard assets” – real estate, equipment, etc, far exceeds the other 20% of the total loan.   Even if the deal goes South, the government pays me 80% of the money back (which they gave to me interest free, anyway), and I sell the business for 20 cents on the dollar and recover the other 20%.

What a deal!  I take NO risk, and get all of the rewards.  Isn’t Capitalism great?

Mr. President.  Wake up!!!  These guys are sandbagging us.  Good will has left the building.  The last remnants of Capitalism are gone, buried along side Adam Smith, who is rolling over in his grave as I speak.

P.S.  For those not familiar with Adam Smith, he was the author of Wealth of Nations – the book written in 1776 where he first forwarded the economic theory of Capitalism.

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“CSR” – Corporate Social Responsibility and Capitalism

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In a story not likely followed by most people, the sport of Formula One (F1) racing has forever been tarnished – maybe beyond repair.  Many persons will think, so what?  Who cares about a bunch of European snobs and their expensive race cars?  Yet, this story has a much deeper message that is even more relevant today than ever before. 

In the single most despicable act of cheating in sports, Renault, the French car manufacturer, was given a suspended sentence from competing in F1 racing by the World Motor Sport Council for ordering one of it’s drivers to intentionally crash his car.  Yes, you read that right – intentionally!  What, you may ask, would be the motive for such an insane order, and why would the driver follow that instruction?

Money, prestige, fame, and greed, just to name a few reasons.

The scandal which has now been designated as “Crashgate”, involved Nelson Piquet, Jr., the 23 year old son of a former 3-time World Champion Formula One driver.  The young Piquet, Jr. had struggled in a dangerous and demanding sport where the fine line between talent and perfection is severely tested with each race.  In F1, being really good is rarely good enough.  And he was really good.  

Piquet, Jr. was leading the race at Singapore when his team ordered him to “have an accident” in order to allow his fellow teammate, Spanish driver Fernando Alonso, to win the race.  Alonso, a two-time F1 World Champion would accumulate more points towards a rare third world championship.  And Alonso had no chance to win at this point in the race unless something drastic occurred.  In other words, to Renault and it’s racing team, a victory by Piquet, Jr. was meaningless in the big scheme of things.  A win by Alonso would bring Renault closer to another prestigious season in the exalted world of F1 motor sports.  And damn the possible consequences – severe injury or death to their driver, other drivers, track workers, safety personnel, or fans.  So Piquet, Jr., being “the good lieutenant”, crashed his car into a wall.

After later being fired from the team, Piquet, Jr. “blew the whistle” on Renault.  The car company never challenged his claim, thus consenting by their silence to the judgment of the F1 sport, and racing world.  This immoral and utterly irresponsible action brings into question the issue of Corporate Social Responsibility - a term often bandied about by companies in an effort to convince the public that they have every one’s best interests at heart.  Here is Renaults’s CSR statement from their website:

“Renault maintains relations with a wide range of stakeholders, including customers, suppliers, local communities and residents, associations, and international organisations… These relations are based on two guiding principles: dialogue and transparent, loyal behaviour. Renault’s commitment also extends to the key social issues linked to the automotive industry, such as sustainable mobility and road safety (sic), and to initiatives for civil society.”

The hypocrisy herein, is self-evident. 

As to the problem, one writer asks “whether this is an isolated example of a total loss of perspective . . . ?”   Let’s be realistic.  In an age where banks can almost destroy the global economy and then ask taxpayers to bail them out, where pharmaceutical and health care companies engage in fraud and deceit in order to increase profits at the expense of their customers and patients, and where businessmen will stop at nothing in order to succeed – even at the potential loss of human life – we have to question the notion of self-regulation of corporate behavior.

As for those of you in business who claim that that the concept of Corporate Social Responsibility is just liberal nonsense – go read this paragraph from Adam Smith’s little tome, Wealth of Nations - the basic treatise on Capitalism:

“Our merchants and master-manufacturers complain much of the bad effects of high wages . . . thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.  [Furthermore] the interest of the dealers . . . in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.”

What Smith refers to here is that Capitalism is supposed to serve the interests of the general population, and was not designed to generate profits at any cost, contrary to what many of it’s adherents claimWith each passing day, it becomes easier to understand why Capitalism’s failures are becoming more pronounced, and more importantly, how the original principles of Adam Smith’s economic theory have become twisted and distorted over the past two hundred and thirty years by large corporations, uber-powerful business interests, and their hatchet men. 

Capitalism only works when it’s principles are not distorted by the prism of ill-gotten profit, power, or prestige  gained at any cost.  When a corporation places it’s interests ahead of the value of even one human life, and then hides behind the shield of Capitalism in defense of their behavior, it paradoxically diminishes the real virtue of free enterprise – it’s power to elevate the well-being of every human being.

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Maybe Rome (America) Really is Burning

Rome is Burning Firescreen

 

 

 

 

 

 

 

Do you think that maybe America shall reap what what she has sown? 

This is not some biblical or religious condemnation nor commentary.   It is obvious that the country is at a watershed moment in it’s history, and it does not bode well for the future.  A speech given by a Senior FBI Special Agent in Charge John Gillies in Boca Raton, Florida noted that the seeds of widespread corruption in this society were sown by failures in personal ethics and integrity, and he further insinuates that greed is the driving force.

Agent Gilles said that cheating and corruption in it’s multitude of forms, whether by law enforcement and public officials, wealthy tax cheaters, sports stars like Tiger Woods, or business “fraudsters”, only undermines the moral fabric of our society, and is “the number one criminal threat” in the United States.

It is reasonable to argue that this social paradigm shift has occurred in an atmosphere of unrelenting hubris that this country has displayed in attempting to force the rest of the world to kneel to it’s whims and philosophies – particularly the notion that the United States is the standard-bearer of economic and moral values that all other nations and societies should emulate.  

Nonetheless, some will continue to blame the lack of conservative values and the influence of liberalism as the root cause of this condition.  If that is the case, then can anyone provide a logical explanation for the dominance of Conservatism from 2001 through 2008, and the concomitant rise in these problems?  Special Agent Gilles noted that there was a 25% rise in corruption and fraud during the past five years – and that the scale of these crimes was unprecedented.  Remember:  Bush and the Conservatives had virtual control of the political structure throughout that period, and had gutted the regulatory and legal systems of the means to uncover these crimes.  

Just food for thought.

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Bank Of America’s Criminal Deception of U.S. Treasury on Bailout

 BoA bailout

 

 

 

 

 

 

 

 

 

Illustration from Deesillustration.com

 

The Chairman of the House Oversight and Government Reform Committee, Congressman Edopholus Towns (D -Brooklyn, N.Y.) is leading the investigation into whether executives for Bank of America made misrepresentations based on false claims to the government in December 2008 regarding it’s agreed takeover of Merrill Lynch in order to receive significant taxpayer bailouts.

The committee has acquired thousands of documents that included handwritten notes from lawyers representing BoA in it’s takeover of Merrill Lynch that indicated the bank’s claim of a “Material Adverse Change” in circumstances regarding the takeover was unfounded.  Nonetheless, it appears executives for the bank used this legal clause as a veiled threat to withdraw from the takeover in order to to persuade the U.S. Treasury and then Secretary Hank Paulson to give them more bailout money.  If true, this would be tantamount to extortion – which is a criminal offense – let alone fraudulent misrepresentation.

BofA spokesman Larry Di Rita said that BoA’s actions “were based on our desire to make the best decision for our shareholders . . .”

This self-serving statement is utterly laughable in light of U.S. District Court Judge Jed A. Rakoff’s take on BoA’s behavior in the suit brought by the SEC against the bank.  BoA screwed it’s shareholders by intentionally withholding information regarding the Merrill Lynch bonuses and then blaming their lawyers.  Now we learn the high likelihood that these same executives ignored the advice of their lawyers and wilfully mislead the U.S. Treasury when they looked to the government for financial bailouts.  Why BoA is allowed to perpetuate this ongoing charade defies logic and reason. 

These men are financial terrorists! 

When will they be made to answer for their crimes against the American people?

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Do Wall Street Vampires Really Need H1N1 Vaccinations?

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It is a fair assumption that people without hearts and souls are immortal, and not subject to the vicissitudes of Mother Nature’s nasty flu viruses that she visits on us annually.  So why does Wall Street get first crack at these vaccinations?

I guess women, children, and the elderly are dispensable in comparison.  Now that is real evidence of rationing health care and Death Panels - - just not quite in the form that the Tea Baggers envisioned.  And it only cost Wall Street $5 Billion in campaign contributions over the past decade to the Washington politicians in order to buy protection from their own malfeasance, and the random cruelty of Mother Nature.

As well as unjustifiably obscene bonuses, to wit.

What a bargain.

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Small Business Finally Gets the Attention It Deserves

 Small Business Owner

 

 

 

 

 

 

 

 

The sector of our economy that is treated like a step-child in comparison to Big Business is finally getting it’s just due.  Small businesses in America generate over 65% of the jobs in an economy that has recently been hit with an unemployment rate of 10%.  President Obama announced today that the bailout will be “refocused” on this segment of the U.S. economy

One question Mr. President?  What took you so long?  Guess Tim Geithner and Larry Summers first had to take care of their old buddies at Goldman Sachs, et. al., just like Henry Paulson and Alan Greenspan did with the Bush Administration during the global economic collapse these greedy animals created.  Meanwhile, the real heroes of the American economy who are still in business keep on shoveling coal down in the engine room, while those businesses that could not go on quietly close their doors in the vacuum of unavailable lending capital being horded by the rapacious bankers.

 Makes one wonder how many of those unemployed people Goldman Sachs is going to hire after announcing this week its record-breaking $16 Billion employee compensation package for the first nine months of 2009?   It is a safe bet that any money the Mammoth Financial Institutions are going to “put back into the economy” is going straight into the campaign coffers of the Democrats and Republicans who are currently sitting on the House and Senate sub-committees that will protect them from proposed regulatory legislation.

You can take that bet straight to the bank – just don’t deposit your winnings, because they will piss it all away.

Too bad we cannot “refocus” that money towards small businesses in America.  The impact of even that ”modest” amount of capital directed towards a few thousand struggling small business would truly have a stimulative impact on our economy, and specifically abate the rising unemployment in this country.

But, remember. 

“It’s all about Wall Street, Stupid.”

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Mean-spirited to Take Away Bank of America CEO’s Salary?

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Do you know the definition of a banker?  It is a person who will lend you an umbrella on a sunny day, and then ask for it back when the rain starts falling. 

Ken Lewis is retiring as CEO of Bank of America after overseeing the rapid implosion of one of the largest financial institutions in the country. 

As the global financial collapse was getting started last year, he decided to purchase both Country Wide Mortgage and Merrill Lynch so that he could really become a player in the global financial casino.  When BoA teetered on the verge of bankruptcy as a result of “biting off more than it could chew”, the government bailed his bank out, while Lewis engineered the payout of huge financial bonuses for former Merrill Lynch employees behind every one’s back. 

Later, when it was discovered that BoA had failed to disclose this fact in SEC filings,  the SEC brought civil charges against the bank, wherein an agreement that was reached that would have resulted in the bank paying a record $33 Million fine – which meant shareholders, not the executives, would ultimately be the one’s who would suffer the consequences.  The federal judge overseeing that matter angrily denied to sign off on the settlement, openly stating that was incensed over the fact that no one was taking responsibility and that the government had not brought criminal charges (the civil case is now set for trial in February 2010). 

In the wake of all of this,  BoA shareholders then demanded that Lewis voluntarily resign.  Furthermore, as a result of this unprecedented business debacle, Kenneth Feinberg, the government pay czar overseeing executive compensation of financial institutions that received TARP (government bailout) funds, recommended that Lewis relinquish his 2009 salary and bonus.  Rather than fight the issue, Lewis has agreed to take no compensation for 2009, and pay back the $1 million dollars in salary that he has already received for the year.

OK, so you are saying to yourself, “Finally, one of these guys will not get paid for screwing up!”

Well, not everyone is in agreement with you.  Greg Donaldson, chairman of Donaldson Capital Management in Evansville, Ind., responded to the news of Lewis’ not being paid his salary for 2009, by saying, “[i]t’s punitive and it’s mean-spirited, and it’s an attitude that will send shivers through every person who does business with the government or is regulated by the government.”

After a comment like Mr. Donaldson’s, I just hope bankers never have the audacity to come asking for an umbrella from the U.S. taxpayers one more time.  It will be a cold day in Hell when we ever quietly acquiesce to our government bailing them out again.

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Credit Card Companies Manifest Their Rapacious Greed Before Financial Reform Implemented

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Recall just recently when Ann Minch protested BoA’s credit card practices on youtube.com?  Ms. Minch was merely requesting that Bank of America reverse their arbitrary increase of the interest rate on her credit card.  When the bank refused, she “went viral” with her complaint on youtube.com, the world took notice, and the bank lowered her interest rate on the credit card.

How soon they forget.

You did not really think that the banks were suddenly going to “get religion” over one woman’s attempt to bring national attention to the unremitting greed of these financial behemoths, did you? 

Now Congress has threatened to act on this even sooner in an effort to reign in the the banks’ rapacious greed (I guess re-enacting the old usury laws would cost the politicians way too much in campaign contributions from these banks – so this is their lame attempt at “protecting us”).  In response, Chase Bank , Wells Fargo, and others are again quietly trying to screw as many customers as quickly as possible before their ability to extract every last dollar from us is finally limited to some degree through government regulation (ohhhhhh, that evil “R” word, again).

An Ohio couple is the lastest victim of this unconscionable business practice.  Worse yet?  Their credit card was issued through Chase Bank, a retail arm of J.P. Morgan Chase – one of the largest recipients of TARP (bailout) money.  Want to add even more insult to injury?  Now these mammoth financial giants raise your interests rates to squeeze more of your hard-earned money out of you, driving you ever closer to to the edge of bankruptcy, after you (the U.S. taxpayer) subsidized them about a year ago so they would not go bankrupt.

Is the utter irony of any of this lost on everyone?

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