Corruption

The Kobayashi Maru test of Star Trek fame is a classic no-win situation. Star Fleet Academy students are given command in a no-win scenario: either ignore a distress call of a Federation ship inside the Klingon (enemy) zone or enter the zone on a doomed rescue mission and lose your own ship in a hopeless battle against vastly superior forces. Captain Kirk evaded the no-win choices by reprogramming the computers to enable him to win. I think the job market can be profitably viewed as a Kobayashi Maru test: the conventional either/or choice--do something you dislike for job security or go to grad/law school for an advanced degree--is a false choice.

You just have to admire Ron Paul for his non-flip-flopping tenacity.

But the system is gummed up.

There is little doubt, even amongst the most uninterested and apathetic of people, that America has reached the threshold of a dangerous new era in 2012.  Economically, the paper thin facade of recovery created by Federal Reserve fiat easing is beginning to fade, and the debt turmoil we currently see in the European Union is beginning to surface right here at home.  Socially, Americans are being subversively divided by the false left/right paradigm and the exploitation of artificially induced race tensions by the mainstream media.  Politically, Barack Obama’s presidential approval rating has hit all time lows, and the approval rating for Congress has hit a historic bottom.  The path our country has been set upon can only lead to disaster; that much is certain. 

Fraud ... What Fraud?

If the greatest trick the devil ever pulled was convincing the world he didn’t exist, the greatest trick our central bank ever pulled was convincing the world we couldn’t live without it. For most of that past twenty years, that PR campaign has been centered on the Great “Moderation”, so called because it apparently represented the full embodiment of economic management – a period of unparalleled prosperity, a Golden Age of soft economic central planning. Give the central bank enough “flexibility” and it will produce unmatched economic and financial satisfaction.

While normally we stay away from outright political commentary especially of the kind that has no direct relation to finance or the economy, the fact is that if the US had a functioning, uncompromised, uncorrupt, and effective Justice Department, much of what we see every day on Wall Street would be vastly different since if crime did indeed have punishment, then a vast portion of the questionable behavior that is exhibited by financiers would have been eliminated long ago. Which is why we find the news just released from The Hill that "Rep. Darrell Issa (R-Calif.) has circulated a draft copy of a resolution that would hold Attorney General Eric Holder in contempt of Congress" particularly relevant. For it is none other than Holder's complete lack of involvement and intervention to outright daily crimes conducted in the financial world that is as much a reason for the deplorable economic state of this country and the world, as are all those other factor extensively discussed in books and documentaries each and every day.

The dispersion across European nations in terms of growth and unemployment (as we noted earlier) are just two indications of the dramatic amount of economic hubris, as JP Morgan's Michael Cembalest describes it, associated with the belief in a sustainable European monetary union. Using the World Economic Forum's multitude of competitive factors (across economic, social, and political characteristics), the JPM CIO notes that compared to hypothetical and actual monetary unions in the world that the EMU exhibits the largest differences between member nations of any (current or historical), and still Europe soldiers on. "Countries in the European Monetary Union are more different than just about any other monetary union you could imagine" so it’s hard to know how it will turn out. It’s a tough road, and this data helps explain why. Europe’s problem is not just one of public sector deficit spending differences, but also of deeper, more fundamental differences across its various private sector economies. Whether it’s equities, credit or real estate, EMU valuations need to be considerably more attractive than US counterparts to justify investment given the challenges of the European project.

Bill Black is a former bank regulator who played a central role in prosecuting the corruption responsible for the S&L crisis of the late 1980s. He is one of America's top experts on financial fraud. And he laments that the US has descended into a type of crony capitalism that makes continued fraud a virtual certainty - while increasingly neutering the safeguards intended to prevent and punish such abuse. In this extensive interview, Bill explains why financial fraud is the most damaging type of fraud and also the hardest to prosecute. He also details how, through crony capitalism, it has become much more prevalent in our markets and political system.  A warning: there's much revealed in this interview to make your blood boil. For example: the Office of Thrift Supervision. In the aftermath of the S&L crisis, this office brought 3,000 administration enforcements actions (a.k.a. lawsuits) against identified perpetrators. In a number of cases, they clawed back the funds and profits that the convicted parties had fraudulently obtained. Flash forward to the 2008 credit crisis, in which just the related household sector losses alone were over 70x greater than those seen during the entire S&L debacle. So how many criminal referrals did the same agency, the Office of Threat Supervision, make?

Zero

When they see you as a chicken breast, you know your vote matters little and your life even less.

All you need to read and more.

I have to confess, I am tired of writing "structured" articles, the ones where I have to limit my thoughts to 800 words.  So with this one I am taking a break.  This is an unstructured stream of thought, in no particular sequence.  

Senator Frank Church's Prophetic Warning in 1975

“Solidarity of the union has its limits,” said even soft-spoken Jens Weidmann, President of the Bundesbank

Government Smears Journalists Who Investigate Government Corruption