Guest Post: The U.S. Is A Kleptocracy, Too

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

The U.S. Is A Kleptocracy, Too  

If we dare look at the plain facts of the matter, we have to conclude the U.S. is a kleptocracy not unlike Greece, only on a larger and slightly more sophisticated scale.

Yesterday, I noted that Greece Is a Kleptocracy; the U.S. is a kleptocracy, too. Before you object with a florid speech about the Bill of Rights and free enterprise, please consider the following evidence that the U.S. is now a kleptocracy worthy of comparison to Greece:

1. Neither party has any interest in limiting the banking/financial cartel. The original Glass-Steagal bill partitioning investment banking from commercial banking was a few pages long, and it was passed in a few days. Our present political oligrachy spends months passing thousands of pages of complex legislation that accomplishes essentially nothing.

As Federal Reserve Bank of Kansas City President Thomas Hoenig recently noted (in a rare admission by an insider--I wonder how long it will be before he "resigns to pursue other opportunities," i.e. is muzzled):

The problem with SIFIs ("systemically important financial institutions," a.k.a. too big to fail banks) is they are fundamentally inconsistent with capitalism. They are inherently destabilizing to global markets and detrimental to world growth. So long as the concept of a SIFI exists, and there are institutions so powerful and considered so important that they require special support and different rules, the future of capitalism is at risk and our market economy is in peril.

Do you really think Dodd-Frank and all the other "fooled by complexity" legislation has accomplished anything? Hoenig cuts that fantasy off at the knees:

As late as 1980, the U.S. banking industry was relatively unconcentrated, with 14,000 commercial banks and the assets of the five largest amounting to 29 percent of total banking organization assets and 14 percent of GDP.

Today, we have a far more concentrated and less competitive banking system. There are fewer banks operating across the country, and the five largest institutions control more than half of the industry’s assets, which is equal to almost 60 percent of GDP. The largest 20 institutions control 80 percent of the industry’s assets, which amounts to about 86 percent of GDP.

In other words, nothing has really changed from 2008 except the domination of the political process and economy by the financial cartel has been masked by a welter of purposefully obfuscating legislation. This is of course the exact same trick Wall Street used to cloak the risk of the mortgage-backed derivatives it sold as "low risk" AAA rated securities: by design, the instruments were so complex that only the originators understood how they worked.

That is the current legislative process in a nutshell. Much of the 60,000 pages of tax code are arcane because they describe loopholes and exclusions written specifically to exempt a single corporation or cartel from Federal taxes.

The U.S. is truly a kleptocracy because its political leadership actually has no interest in limiting the banking/financial cartel. When questioned why their "reforms" are so toothless, legislators wring their hands and bleat, "Honest, I wanted to limit the banks but they're too powerful." Spoken like a true kleptocrat.

2. Our stock markets are dominated by insiders. It is estimated that some 70% of all shares traded are exchanged in private "dark pools" operated by the TBTF banks and Wall Street, and the majority of the remaining 30% of publicly traded shares are traded by high-frequency trading machines that hold the shares for a few seconds, or however long is needed to skim the advantages offered by proximity to the exchange and speed.

If that's your idea of an "open market," then you're the ideal citizen for a kleptocracy.

3. The rule of law in the U.S. has been divided into two branches: one in name only for the financial Elites and corporate cartels, and one for the rest of us mere citizens.
Between corporate toadies on the Supreme Court who have granted corporations rights to spend unlimited money lobbying and buying legislators as a form of "free speech"--ahem, how can something that costs billions of dollars be "free"?--and vast regulatory brueacracies that saw nothing wrong with MERS and the complete corruption of land and mortgage transfer rules, the U.S. legal system is now a perfection of kleptocracy.

As economist Hernando de Soto observed in The Destruction of Economic Facts, the ForeclosureGate mortgage mess is not just a series of petty paperwork mistakes--it is the destruction of the entire system of trustworthy transfer of property rights for non-Elites:

Knowing who owned and owed, and fixing that information in public records, made it possible for investors to infer value, take risks, and track results. The final product was a revolutionary form of knowledge: "economic facts."

Over the past 20 years, Americans and Europeans have quietly gone about destroying these facts. The very systems that could have provided markets and governments with the means to understand the global financial crisis—and to prevent another one—are being eroded. Governments have allowed shadow markets to develop and reach a size beyond comprehension. Mortgages have been granted and recorded with such inattention that homeowners and banks often don't know and can't prove who owns their homes. In a few short decades the West undercut 150 years of legal reforms that made the global economy possible.

The results are hardly surprising. In the U.S., trust has broken down between banks and subprime mortgage holders; between foreclosing agents and courts; between banks and their investors—even between banks and other banks.

Frequent contributor Harun I. summarized the reality of this political and financial coup by kleptocrats:

As described by Georgetown University bankruptcy expert Adam Levitin, in testimony to subcommittee of the House Financial Services Committee, "If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever, [and] could cloud title to nearly every property in the United States." It would also raise the question of the legality of the resulting millions of foreclosures on American homeowners, since the banks cannot prove "ownership" of the foreclosed property.

The statement above gets to the elemental issue that apparently is lost on many otherwise intelligent people. This is not about frivolous claims based on technicalities. This is about securities fraud (theft) on a ludicrously massive scale. These so-called securities were sold to governments, pension funds and other financial institutions globally. Trillions were made by banks selling what is becoming clearly understood to be worthless pieces of paper and when the jig was up, which ultimately led to the destruction of economies globally, they made ordinary citizens the losers by sliding their worthless pieces of paper to the balance sheet of taxpayers worldwide.

And while some are quibbling over whether someone should get a free house, those who have perpetrated the greatest swindle in the history of mankind are about to get away with it, because they are "systemically important", code for TBTF (too big to fail).

You think money laundering and tax evasion is a specialty only of Caribbean island "banking centers"? Think again; we have corporate oversight equivalent to that of Somalia. U.S.A. a haven for corporate money laundering: A little house of secrets on the Great Plains:

Among the firm's offerings is a variety of shell known as a "shelf" company, which comes with years of regulatory filings behind it, lending a greater feeling of solidity.

"A corporation is a legal person created by state statute that can be used as a fall guy, a servant, a good friend or a decoy," the company's website boasts. "A person you control... yet cannot be held accountable for its actions. Imagine the possibilities!"

"In the U.S., (business incorporation) is completely unregulated," says Jason Sharman, a professor at Griffith University in Nathan, Australia, who is preparing a study for the World Bank on corporate formation worldwide. "Somalia has slightly higher standards than Wyoming and Nevada."

The U.S. was declared "non-compliant" in four out of 40 categories monitored by the Financial Action Task Force, an international group fighting money laundering and terrorism finance, in a 2006 evaluation report, its most recent. Two of those ratings relate to scant information collected on the owners of corporations. The task force named Wyoming, Nevada and Delaware as secrecy havens. Only three states - Alaska, Arizona and Montana - require regular disclosure of corporate shareholders in some form.

4. Just as in Greece, taxes are optional for the nation's financial Elites. In Greece, you don't mention your swimming pool to avoid the "swimming pool tax." Here in the U.S., that sort of tax avoidance is against the law (smirk). Here, you hire a Panzer division of sharp tax attorneys and escape taxation legally (well, mostly legally--whatever it takes to win).

If you are unfortunate enough to be a successful small entrepreneur who nets $100,000 a year, you pay 15.3% self-employment and 25% Federal tax on the bulk of your income, a combined rate of 40.3%, and a combined rate of 43.3% on all income above $82,400.

Those who net millions pay less than half that amount, somewhere between 17% for the top 1/10th of 1% and 21% for the top 1%: Citizens for Tax Justice, which looks at all taxes paid including federal, state and local taxes, said that in 2010 the top 1 percent of earners will pay 21.5 percent of taxes.

Note that the 21.5% paid by the top 1% includes all state and local taxes. Here in California, the small businessperson earning $100,000 pays between 5% and 9% state tax, so their combined state and Federal tax burden on their highest earnings is a whopping 50%. Then there are property taxes and the 9.5% sales tax, and endless junk fees skimmed from small business. Add all that together and the total taxes paid rises to the 60% level, or roughly triple what the top 1% pay.

(Bitter note from a tax donkey: To all those tax-and-spenders who whine that California has "low taxes," please pay my "low" property tax bill, will you? It's "only" $11,000 a year.)

Super Rich See Federal Taxes Drop Dramatically:

The Internal Revenue Service tracks the tax returns with the 400 highest adjusted gross incomes each year. The average income on those returns in 2007, the latest year for IRS data, was nearly $345 million. Their average federal income tax rate was 17 percent, down from 26 percent in 1992.

Eric Schoenberg says to sign him up for paying higher taxes. Schoenberg, who inherited money and has a healthy portfolio from his days as an investment banker, has joined a group of other wealthy Americans called United for a Fair Economy. Their goal: Raise taxes on rich people like themselves.

Schoenberg, who now teaches a business class at Columbia University, said his income is usually "north of half a million a year." But 2009 was a bad year for investments, so his income dropped to a little over $200,000. His federal income tax bill was a little more than $2,000.

"I simply point out to people, 'Do you think this is reasonable, that somebody in my circumstances should only be paying 1 percent of their income in tax?'" Schoenberg said.

Do you really think you don't live in a kleptocracy? Why? Because the truth hurts?

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Zero Govt's picture

it is fascism and Marxism/socialism ...but i've come to realise the two ideaologies converge in the exact same human character type: parasites, unproductive, cheating, lying, lazy scum living off a productive host (society)

all roads lead to human character

kridkrid's picture

Psychopathic parasites, but I'm not sure about "lazy".  The study and advancement of all of the ism's is meant to create a cover for the criminals and a distraction for the masses. 

Ahmeexnal's picture

Old news. Tell me something the Sioux, Apache, Navajo, Cree, Klamath, Hopi, Pima, Comanche, Cheyenne,  Crow, Dakota....and numerous other formerly free nations didn't  know hundreds of years ago.  

trav7777's picture

they didn't shed a single tear of remorse for the tribes they utterly annihilated?

AnAnonymous's picture

they didn't shed a single tear of remorse for the tribes they utterly annihilated?

 

Oh yes, they were extremelly efficient at that. The pratical evidence is the low number of Indian tribes that were found in NA. Only the most populous could survive.

US citizens nature is eternal.

wanklord's picture

Americans are a bunch of stupid animals easy to manipulate and subdue.The sooner the US economy collapses the better, so these brutes will finally learn NOT to live beyond their means.

LFMayor's picture

Isn't this the same shit that rolled out of your mouth, what, a week ago or so?
Do you have this saved in a text file for cut and paste and it just came back up on the top of the list?

Let's see, I'm going off memory here:
Europe slaughtered most of their able young men when tech overtook tactics and we saved your ass.
Then, you wouldn't listen to our "play nice" admonitions and you did it again the next generation, this time slaughtering each other on an industrial scale.
Then, when the soviet tanks killed all the grass east of the fulda gap, we held them back so you could vacation in the Med instead of spending on defense.

You're welcome, asshole.

Kayman's picture

LFMayor

Thank you for pointing out that Europe has been given a free ride on the backs of the American taxpayer since 1939.

 

Bobbyrib's picture

We also keep fighting their wars for them (Bosnia and now Libya). These former world powers are now utterly worthless when it comes to war (except for Britain).

chumbawamba's picture

Thank you for giving me a convenient and highly visible location for posting the following:

TO ALL NATURAL BORN AMERICAN CITIZENS

If you have a Social Security Number, you are NOT protected by the Constitution.  Rather, you are a ward of the socialist District of Columbia, a beauracratic satellite office of the Vatican.

Your SSN is a MARK, a property tag.  Once you take it, you become merely chattel, to be taxed, regulated, fined, levied, and controlled in anyway that your Masters see fit.

Social Security is a CONTRACT between you and the United States of America (a federal corporation, see USC Title 28 3002 (15) (A) (B) (C)).  By entering into this contract you waive your Constitutional rights and accept in return a kind of lifelong indentured servitude.  If you received your SSN as a youth (i.e. under the age of 18) then you were illegally entered into a contract, because as a minor you cannot lawfully be held to a contract, and no adult can enter you into one either because that is the definition of slavery.  But it's only illegal if you object, and you can only object if you know you can, and you can only know you can if you spend the time to read the law, every last page of it.  But fortunately, we have been afforded shortcuts by Good People who blazed a trail.  It's a trail along a steep mountain overgrown by vegetation and thorns, but it is there, if you will be motivated to find it and brave enough to follow it.

Don't believe me?  Fuck you.  I've been researching this longer than you've been reading Zero Hedge, in fact longer than ZH has even been around, and I stand on the shoulders of giants who came long before me to proclaim to all of you that your freedom is merely a beauracratic filing formality.

You want proof?  Go through the process and see what happens:

http://famguardian.org/TaxFreedom/Forms/Emancipation/SSTrustIndenture.pdf

Once you've successfuly rescinded your SSN, that's your proof.

You have nothing to lose but your bondage.

I am Chumbawamba.

tip e. canoe's picture

yo chumba, that file is very buggy fyi.  won't open and crashes my pdf reader everytime.

indio007's picture

There is no such thing as a natural born citizen in a body politic see Calvins Case.

pazmaker's picture

Do they accept Paypal???    hahaha!

Whatta's picture

you are a ward of the socialist District of Columbia, a beauracratic satellite office of the Vatican.

Huh? Vatican don't want no homo-luving, warmongering, aborting USofA as a satellite.

 

I AM NOT chumba or wumba

purplefrog's picture

I'll go you one better than that, Chumby Baby.  The con-stitution has never been the law of the land.  Have any of you checked out some of the SCOTUS decisions.  It's all commercial law and any resemblance of any law to the con-stitution is only that - a statutory look-alike.  Just try bringing up the con-stitution in a federal court as a defense.  It will be cited as frivolous.

Just look around you.  Would we even have a Fed if the con-stitution were the law?  Could people have their property taken from them for the public good if the con- were the law of the land?  Wake up people.  Funny money is proof positive that the constitution is not the law.

Okay, junkers.  Have at it.

 

 

chumbawamba's picture

You are correct, but the flood always begins as a trickle.  Once you shatter one illusion, each subsequent one becomes easier to surmount.  Once people realize they live in a real-life Matrix they will keep seeking until they find the truth.  The problem is, no one really knows how deep it goes, not even the bastards that control this level and the two or three below.

I am Chumbawamba.

trav7777's picture

you're full of crap; most people will TURN AWAY and persist in denial even when the obvious is trying to pry their eyelids open

purplefrog's picture

Yeah, you're right, of course.  It took me awhile and I had a mentor!  And I'm still not seeing it all yet.

Maniac Researcher's picture

Trust Chumbawamba -- he's been doing research for years! And by research, I mean reading unsubstantiated, intellectually lazy, poorly sourced material that lacks any substantive peer review outside of its target audience.

But don't worry, Chumba is an expert! He's distilled this important information for you and peppered it with bigoted comments, unassailable fallacy arguments, and broken links.

To cap it off, he provides this material by humbly re-mentioning his name - just in case we miss it at the beginning of his sage advice-filled comments.

With friends like Chumbawamba helping us resist capitalist exploitation and imperial hegemony, who needs enemies?

knowless's picture

the link to the PDF worked for me.

it's a how to guide to attaining sovereign citizenship status in the US, no idea if it works, but they lay down all the forms and the reason they are necessarry.

pods's picture

PF, from my research, the organic constitution was (and is) still in effect, but the 14th amendment and the implied consent of citizens through the use of corporate money (FRNs) allowed corporate commercial law to be used in place of our common law.

Really is a big, deep rabbit hole.  

Chumba, let us know how it goes trying to get out.

I think it was Kayl who did something similar, but within the UCC, (s)he took control of his own commercial affairs, so stayed within the system, but somehow took back his credit.

Really a Matrix moment when it started to fall in place.

There is a movement for sovereigns to re-enter a constitutional republic.  Have not joined yet, but have read alot about the subject.  Act of 1871, 14th amendment, FRNs, etc. 

http://www.republicfortheunitedstates.org/

pods

chopper read's picture

Chumbawamba.  well put.  I have found your comments to be largely correct.  By the way, I may also add that one must be 'domiciled' here in a particular state and have paid for this domicile with 'lawful money' (at least 21 silver dollars) to not be classified as a pauper.  Finally, no interest-bearing bank accounts as usuary is condemned (in Ezekial) in the Bible which serves as a foundation for our laws. 

sounds nutty, I know.  junk away.

Maniac Researcher's picture

Chumba, this is your target audience.

 

WaterWings's picture

+1

In other words Angels and Demons, with Tom Hanks, is propaganda?

Fanfare for the Common Man (link to music)

It was written in response to the US entry into the Second World War.

 

Goossens had suggested titles such as Fanfare for Soldiers, or sailors or airmen, and he wrote that "[i]t is my idea to make these fanfares stirring and significant contributions to the war effort...." Copland considered several titles including Fanfare for a Solemn Ceremony and Fanfare for Four Freedoms; to Goossens' surprise, however, Copland titled the piece Fanfare for the Common Man. Goossen wrote "Its title is as original as its music, and I think it is so telling that it deserves a special occasion for its performance. If it is agreeable to you, we will premiere it 12 March 1943 at income tax time". Copland's reply was "I [am] all for honoring the common man at income tax time".[2]

 

http://en.wikipedia.org/wiki/Fanfare_for_the_Common_Man

LFMayor's picture

Wow Trav, we're back onto that noble savage stuff again!  Wasn't so long ago we were kicking this around, remem?

I read once from a chronicler of the Miami, westermost of the Iroquois league:
"War and Torture, it seems, are their sport and leisure."

trav7777's picture

I'm a true believer now.  Only white people do anything wrong and everything bad that ever happened to anyone is white people's fault.

Everyone else is distilled purity.

Maniac Researcher's picture

aww. the poor bigot wants a cookie.

downrodeo's picture

follow the leader------>  

two wrongs and all. ya know.

kridkrid's picture

nah... that was just manifest destiny, brother. 

CH1's picture

And that means what? That we should forget about their crimes, because they are "old"?

Saying "old news" is kind of like a Jedi mind trick. Move along.

pan-the-ist's picture

Your niave, but some day, you'll grow up.

The system gets looted.  On the one hand is the rulers, on the other hand there are working people.  When the rulers use the government (as they have since the beginning of time) to strike at the workers (used to call them slaves) the slaves revolt and make it better for the slaves.

There are times when the slaves have it good at the expense of the rulers, there are times when the rulers have it good at the expense of the slaves.

Rodent Freikorps's picture

Yeah, liberalism and socialism are just the camoflage the thieves wear. They aren't stupid enough to actually believe that shit works. History proves it has never worked, unless the goal was the slow death of the nation.

The parasites are just their foot soldiers.

augie's picture

SUNSHINE AND LOLLIPOPS FOR EVERYONE!

downrodeo's picture

I would guess that the amount of time in which the slaves have it good is much less than the amount of time in which the rulers have it good. It would seem to me that momentum usually favors the owner class. On the other hand, I have only been alive for 2.6 decades, so I can't comment from experience.

trav7777's picture

not all fascists are the same, dude.

Some of them are very strong ideological nationalists, like Hitler was.

Obviously, with Simon & Schuster writing the history books and Warner Bros, MGM, etc. making the historical movies, you get only a tiny slice of the picture and told from one particular, very narrow viewpoint.  And this becomes the historical narrative.  Upon complete examination of the facts, everything is not so cut-and-dried.  From another person's perspective, what occurred was driven by a desire for ideological purity and moral clarity.

There are vast differences between Stalin's brand and Putin's brand.

B9K9's picture

I've come to the conclusion that anyone still discussing these matters is either bored or doesn't really fully comprehend what is occurring. 2.5 years ago, when ZH was first launched, it seemed like a novel concept to reveal the inner-workings of the systemic fraud inherent in the global ponzi. Now it's old news - yawn.

Look fellas, another Ghawar or two or three, necessary to allow 1 billion+ Chinese & Indians to replicate Western lifestyles and drive total credit outstanding north of $50T is not forthcoming. Like "no tickie, no washie", the equation is in reality "flat energy, no growth, no ponzi".

I mean, really, what else need be said? Knowing this, the objective of the power-elite is to survive the culling. To that extent, they are maximizing their wealth consolidation on the off-chance it may provide them good stead when TSHF.

For all the rest of us, it would behoove you to log off the 'Net and start honing your (a) interpersonal skills; and (b) your practical, contributory skills. Tribalism is coming back (as if it ever left), and the key to survivial is to both not have enemies and to be able to help out. Anything less will put your sorry ass in the remainder bin.

Uncle Remus's picture

For all the rest of us, it would behoove you to log off the 'Net and start honing your (a) interpersonal skills; and (b) your practical, contributory skills. Tribalism is coming back (as if it ever left), and the key to survivial [sic] is to both not have enemies and to be able to help out. Anything less will put your sorry ass in the remainder bin.

 

The crux of the biscuit.

Duuude's picture

B9K9...Well said except for the enemies part. They do have a proclivity of showing up...

 

http://timshel.org/timshel.php

 

Nice to see you.

 

 

 

 

Gully Foyle's picture

B9K9

"I've come to the conclusion that anyone still discussing these matters is either bored or doesn't really fully comprehend what is occurring."

Neither. It is easier to talk revolution than to be a revolutionary.

Ever watch two guys fight? First they always threaten, " Man I'm gonna fuck you up". All bluff and bluster.

A real fighter just strikes.

Then walks away.

 

 

i-dog's picture

+1

Best lesson I was ever taught: "Say nothing ... and hit 'em while they're still talking"! Works every time. :)

Which is what we should all be doing now...while they're still rolling out the TSA/FEMA/NSA police state infrastructure. They're not finished talking yet!

End the Feds!! (Federal Reserve & Fed.gov)
End the European 'Experiment'!! (EU & EUR)
De-fund the IMF!!

tip e. canoe's picture

happy 2 year ZH bday b9k9...remember this oldie but goodie?

I've caught some flack by stating that the Bible is the most importance reference document we possess. For some reason, a few people apparently mistook my obvious atheistic principles for ecclesiastical belief. Wrong; however, if one is interested in any historical precedent of how this situation plays out, simply open a page in the Bible and start reading.

Seven years of feast & famine? Check. Powers-that-be pre-emptively attempting to wipe out the opposition? Check. Lectures on the evils of money-lending? Check. The one constant throughout history is that on a fairly regular cycle, the PTB get whacked.

http://www.zerohedge.com/article/head-greek-debt-office-replaced-former-...

still unfolding just like the Good Book says, isn't it?

trav7777's picture

you're anglosaxon?  Our tribe is in suicidal disarray.

If you dislike Lebron James now, apparently you are a rayciss.  There is no reason for someone to not have voted for NeObama than raycissm.  Only raycissm prevented him from getting 100% of the vote- that includes all the motherfuckers who didn't even go in to pull a lever.  They rayciss too.

And there are actually a lot of punk ass belly crawling WASPs who believe this shit.

Every failure throughout history of any non-wasp is rayciss and the fault of wasps.

U got a well-organized tribe with all the money sitting at the top and a VERY clear sense of their own manifest destiny as the chosen of God.  Dislodging this requires brutal ethnic cleansing.  Their own holy work mandates that they treat you as an inferior outsider and do everything they can to fuck you over and take what you have.  How the hell do you go up against this without matching brutality?

LFMayor's picture

Preach it brother.  The flash mobs of "underpriveledged youth" are helping spread the message and wake the sleepers with their little roadshows, too.

In the end, this will all get sorted out the best way. Old school.

laughing_swordfish's picture

 

You wouldn't by any chance be talking about that certain "ethnicity" whose "Ancestral Homeland" is in what used to be called Palestine, would you?