This page has been archived and commenting is disabled.

Bill Black: Our System Is So Flawed That Fraud Is Mathematically Guaranteed

Tyler Durden's picture




 

Submitted by Chris Martenson

Bill Black: Our System Is So Flawed That Fraud Is Mathematically Guaranteed

“When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it."

- Frederic Bastiat

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.

Similar dismal action was taken by such other financial regulators as the Office of the Comptroller of the Currency, the Federal reserve and the FDIC. 

Where is the accountability?, you may be asking. Or perhaps, how did we allow things to get this bad?

To find out, click the play button below to listen to Part I of Chris' interview with Bill Black.

Fraud is both a civil wrong and a crime and it's when I get you to trust me and then I betray your trust in order to steal from you. As a result, there’s no more effective acid against trust than fraud and, in particular, elite fraud, which causes people to no longer trust folks, economies break down, families break down, political systems break down and such if you don’t have that kind of trust. So that’s what fraud is.

 

But what my work focuses on is: what kind of frauds are the most devastating? And it turns out that the most kind of problems that we’re seeing, systemic problems and such, arise when we have, what we call in criminology, control fraud. And control fraud simply means when you have a seemingly legitimate entity and the person who controls it uses it as a weapon to defraud others. And so in the financial sphere the weapon of choice is accounting and the losses from these kinds of control frauds exceed the financial losses from all other forms of property crime combined.

 

So for example, in the current crisis, as with the prior ones, if you’re a lender there’s an easy recipe for maximizing fake accounting income. And it goes like this. You need four ingredients:

  1. grow like crazy
  2. by making really, really crappy loans but at a premium yield (yield just means 'interest rate')
  3. while employing extreme leverage, and
  4. while setting aside only the most trivial reserves or allowances for the inevitable losses this kind of behavior produces.

George Akerlof and Paul Romer wrote the classic article in economics about this in 1993. And their title really says it all in terms of the dynamic:Looting the Economic Underworld of Bankruptcy for Profit. The idea is you have a seemingly legitimate entity, the person at the top is looting it. They loot it by destroying it but they walk away wealthy. Of course, in the modern era we don’t necessarily, we may bail out the entity. So it may not even fail in that sense.

 

But here’s what Akerlof and Romer also said that was so critical as an understanding. They said these four steps, these four ingredients: it's just math. It is – and I’m quoting them now “a sure thing.” So you’re mathematically guaranteed if you do these four things to report, not just substantial income, but record levels of income.

 

The big thing about the seemingly legitimate entity when the CEO is the crook is, first, everybody reports to the CEO ultimately, right? So the CEO is the point failure mechanism where if he or she goes bad, almost everything may go bad as well. So all those things that we call internal and external controls, all report to the CEO and the CEO therefore can, as I’ll describe, use compensation, hiring, firing, praise, and such to produce the environment that will commit, create allies for his fraud. Now, note that what I’m saying. The CEO, the art of this is not to defeat your controls. The elegant solution as in mathematics is to suborn the controls and turn them into your most valuable allies. And therefore, for example, when you’re running accounting control fraud where your weapon of fraud is accounting and that weapon of choice in finance is accounting. You’re going to want to hire the most prestigious accountants as your outside auditors because it is precisely their reputation that is most valuable when you can suborn them. And, they give you that clean opinion that you just described that will help you deceive other shareholders. So one enormous advantage is internal and external controls come to the CEO level.

 

A second incredible advantage is the CEO can optimize the firm as a weapon of fraud. And the CEO can do that. Basically, this falls into two big categories. One, you can put it in assets that have no readily verifiable market value because then it's a lot easier to inflate asset valuations and to hide real losses. And the second thing you do is grow like crazy. And, of course, that is the essence of something your listeners have all heard about, and that is a Ponzi scheme. And so these accounting control frauds have strong Ponzi-scheme like elements, which is why they tend to cause such catastrophic losses.

Click the play button below to listen to Part I of Chris' interview with Bill Black (58m:28s):

iTunes: Play/Download/Subscribe to the Podcast
Download/Play the Podcast
Report a Problem Playing the Podcast

Or Transcript available shortly.

To listen to Part 2 - Click Here.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sat, 04/28/2012 - 09:48 | 2382080 Miss Expectations
Miss Expectations's picture

In paragraphs 3 and 4 do you mean to say Office of Threat Supervision as a joke or do you mean Office of Thrift Supervision?

Sat, 04/28/2012 - 09:59 | 2382093 SHEEPFUKKER
SHEEPFUKKER's picture

Maybe that's why none of these crooks have been thrown in jail because they are too many offenders. lol

Sat, 04/28/2012 - 10:11 | 2382108 Badabing
Badabing's picture

In god we trust.

whos god?

Sat, 04/28/2012 - 10:30 | 2382138 Richard Chesler
Richard Chesler's picture

Kleptocracy you can believe in.

Sat, 04/28/2012 - 10:49 | 2382170 disabledvet
disabledvet's picture

that's the problem with Europe..."the don't believe in it." And unfortunately "making it INCREDIBLE" doesn't work either. Here it the good 'ol USA "we have trillion dollar deficits"...why, while INCREDIBLE...somehow are "okay." don't ask me how. "in God we trust" indeed is the best i can come up. who knew? "Sound money through wicked sarcasm!"

Sat, 04/28/2012 - 11:37 | 2382207 Oh regional Indian
Oh regional Indian's picture

Our system is So fraud, so fraud. That is what the Japanese are saying too. They've been de-frauded. Possibly of life...by the same system that spawned Bill Blacks Flawed Fraud.

To really meet fraud, you should come east though. The east was de-frauded of it's culture, took about 5 centuries...now... flawed fraud walks, honesty soxx.

someone wrote me and said "Seen Apple go Vertical?, Unreal, blow-off, never seen before".... just like that with fraud. I keep thinking that Al was Goring us with the message that EVERYTHING is going to go vertical. 

Peak Fraud, FTW...

ori

fending-benders-and-crackling-cajones

Sat, 04/28/2012 - 11:50 | 2382268 engineertheeconomy
engineertheeconomy's picture

mathematically it is impossible for one person to pay off a loan without someone else defaulting, because they only print the principle. The paper to pay it back , since it is more than the principle, has to come from somewhere. That is why we should all be allowed to print money. End the ponzi sooner rather than later.

 

Sat, 04/28/2012 - 12:12 | 2382298 Oh regional Indian
Oh regional Indian's picture

Is that how you would engineer the economy?

You must work at HP.

ori

Sat, 04/28/2012 - 13:18 | 2382378 Caviar Emptor
Caviar Emptor's picture

Spain suspends Schengen Treaty, imposed border controls incl Barcelona/Gerona airports to deter protesters before ECB Thurs mtg in Barcelona

Sat, 04/28/2012 - 17:15 | 2382682 AldousHuxley
AldousHuxley's picture

Truth is that we are all like wives of mobsters. We get the benefits of being associated with the top mob, but we also see how dirty the money is gained.

 

So Bill Black calling fraud is like mobster wife calling her husband a bad guy while wearing diamonds gifted by the same guy.

 

People like Bill Black live in relatively poorer conditions if you put his contributions at a global market price.

Sun, 04/29/2012 - 02:28 | 2383231 Cathartes Aura
Cathartes Aura's picture

I like that analogy AldousHuxley - applied to amrkns in particular - recipients of the largesse, decades of military & secret services dominating other nations and their people, claiming resources, undermining their sovereignty, steamrollin' over everything, hands grabbin' - all the while parading about in the fancy, as if it wasn't the result of covert dealings, sucking up the majority of "resources" as the world turns. . .

and now that "mobsters" have moved on, more or less, to "gift" their next fancy with supposed shiny trinkets of consumer-ville, the truth is staring us in the mirrors. . . party's over.

It's a mystery to me
We have a greed with which we have agreed
And you think you have to want more than you need
Until you have it all, you won't be free

 

Society, you're a crazy breed
I hope you're not lonely without me

 

When you want more than you have, you think you need
And when you think more than you want, your thoughts begin to bleed
I think I need to find a bigger place
Cause when you have more than you think, you need more space

 

Society, you're a crazy breed
I hope you're not lonely without me
Society, crazy indeed
Hope you're not lonely without me

 

Eddie Vedder ~ Society

https://www.youtube.com/watch?v=_gQQgiGFR4c

Sun, 04/29/2012 - 07:37 | 2383405 fiddy pence haf...
fiddy pence haff pound's picture

that's Trickle Down Voodoo Economics. Soon to be replaced by 

Eat-Shit Economics.

I think the banking profits these days are all being offshored, like the jobs

at the biggest manufacturing companies on the stock markets.

So, not only are the bankers soaking every country of all its real money (like pensions),

they're killing the real economy and deflating the bubbles (real estate, credit) they created

over the last 40 years.

I'm with Krugman. Bring on the aliens. This place is f^*&*ked.

 

Sat, 04/28/2012 - 13:49 | 2382409 False Capital
False Capital's picture

Not true. You forget about the dimension of time. So long as loan repayments are released by the bank back into the borrowers hands again then repayments can continue indefinitely. For example, the borrower may sweep the floors of the bank and thereby receive wages (e.g. from his own prior payments) to pay the banks interest demands. Money must pass through the bank and circulate for all to be "well" (another example of the flow, not the stock, being the key?). Essentially, the banker holds the reins of the economy and plays slave master to anyone who holds that currency.

Sat, 04/28/2012 - 10:55 | 2382184 Spastica Rex
Spastica Rex's picture

The Invisible Hand saves.

Sat, 04/28/2012 - 13:02 | 2382357 barroter
barroter's picture

The Invisible Hand of the market place is picking our pockets.

Sat, 04/28/2012 - 11:18 | 2382204 Ignatius
Ignatius's picture

When Frontline recently did what I consider to be a 'lightweight'  treatment of the GFC, Bill Black was not invited to the party.  Go figure.  Might be that pesky word 'fraud' that he keeps mentioning.

Sat, 04/28/2012 - 11:34 | 2382239 Blammo
Blammo's picture

Your right Ignatius. Fraud is such a buzzkill

Sat, 04/28/2012 - 11:11 | 2382206 Seasmoke
Seasmoke's picture

Well , Blankfiends of course

Sat, 04/28/2012 - 14:09 | 2382443 MassDecep
MassDecep's picture

"In god we trust.

whos god?"

 

Your about to find out....

Sun, 04/29/2012 - 00:05 | 2383155 BlackholeDivestment
BlackholeDivestment's picture

...no doubt!  

The revelation of mercy is risen and sustaining. The Truth is not a choice, it is the love of our Father in Christ and the Holy Spirit among the Saints. 

http://www.youtube.com/watch?v=IJ2n87_DxfI

Sat, 04/28/2012 - 11:18 | 2382216 dizzyfingers
dizzyfingers's picture

To  SHEEPFUKKER:

No, it's because after Black no one of Black's stature as an investigator and prosecutor every was a appointed again!

Sat, 04/28/2012 - 14:49 | 2382499 BidnessMan
BidnessMan's picture

The US has the world's largest prison system by far. Lack of space to put offenders in jail is not the problem.

Sat, 04/28/2012 - 09:59 | 2382094 Unprepared
Unprepared's picture

I think he meant "Office of Theft Supervision". It's a special department in the Mafia organization.

Sat, 04/28/2012 - 10:14 | 2382114 CPL
CPL's picture

aka accounts recievable.

Sat, 04/28/2012 - 10:22 | 2382125 DeadFred
DeadFred's picture

How can I get a job in the Office of Threat Supervision? I could do nothing by telecommuting and wouldn't even have to quit my other job. Sweet.

Sat, 04/28/2012 - 10:37 | 2382154 Unprepared
Unprepared's picture

Please proceed to your closest SEC's office.

Sat, 04/28/2012 - 10:14 | 2382115 Gully Foyle
Gully Foyle's picture

Fraud only exists when someone gets caught.

Until that point it is a wise business practice.

 

Sat, 04/28/2012 - 10:53 | 2382181 Unprepared
Unprepared's picture

What do you think the SEC and other regulating bodies are there for?

Sat, 04/28/2012 - 14:56 | 2382508 vh070
vh070's picture

Secure Economic Cronies?

Sat, 04/28/2012 - 11:08 | 2382203 Woodyg
Woodyg's picture

Obama calls them 'savvy businessmen'.....

Sat, 04/28/2012 - 10:20 | 2382122 Silver Bug
Silver Bug's picture

The system and fraud are one in the same now. It is a sad time we live in.

 

http://jimrickards.blogspot.ca/

Sat, 04/28/2012 - 11:18 | 2382215 evolutionx
evolutionx's picture

ECB accepts Portugal Bonds due Dec. 31, 9999

No joke: the European Central Bank accepts a Portuguese bond from the year 1943 as collateral due for repayment on Dec. 31, 9999. The ECB has turned into the dumping ground for European banks' junk bonds. The practice could harm the central bank's reputation as well as the Euro. The ECB issues Euros for almost everything.

http://www.webcompact.net/index.php/news/27884-ecb-accepts-portugal-bonds-due-dec-31-9999

Sat, 04/28/2012 - 13:44 | 2382412 Withdrawn Sanction
Withdrawn Sanction's picture

Sounds like a consol.  If so, it's not new and probably not the most important thing to be worrying about, let alone screaming about in bold.

see http://en.wikipedia.org/wiki/Consols

Sat, 04/28/2012 - 11:30 | 2382232 WhiteNight123129
WhiteNight123129's picture

SARKO WAS FINANCED BY GADDAFI, NEWS BLOWING UP ALL OVER FRENCH MEDIA.

ON LEMONDE.

http://www.lemonde.fr/election-presidentielle-2012/article/2012/04/28/un...

I let you guys figure with google translate of babelfish.

 

Sat, 04/28/2012 - 09:52 | 2382081 CPL
CPL's picture

Brakes are obviously for pussies when running a train off a cliff.

 

It will be the most beautiful pension explosion ever.  The governments of the world can't help but drink deeply from them when it comes down to it.  Not public pensions.  There's no money in them.

 

Private public service pensions have a tasty bite to them.

 

 

Sat, 04/28/2012 - 11:39 | 2382249 CPL
CPL's picture

Every heard about a Canadian Teachers Pension Fund with unfunded liabilities?  

One of the forces of nature of the entire WORLD market place.  Bigger than any investors group in any nation next to it's own nation's Ontario Teachers Pension Fund.  It's short and just starting to find out how deeply.

 

NS teachers pension plan's unfunded liability tops $1.65 billion TheChronicleHerald.ca The annual report released Friday by the Nova Scotia Pension Agency says the unfunded liability for the plan is $1.65 billion as of Dec. 31, 2011. Diminished investment returns accounted for nearly half of the increase to the unfunded liability, ...

http://thechronicleherald.ca/novascotia/90853-ns-teachers-pension-plans-...

 

The US pension funds in terms of weight and economic strength are tiny in comparison.  I would guess they've already been looted.

 

Sat, 04/28/2012 - 13:33 | 2382395 Sean7k
Sean7k's picture

You're lightweights. In Illinois, 84 billion in unfunded liabilities alone.

http://www.bondbuyer.com/issues/121_2/illinois-pensions-unfunded-1034827-1.html

You canucks need to pick up the pace.

Sat, 04/28/2012 - 13:55 | 2382419 CPL
CPL's picture

We're light weights in debt...the pension systems have a lot of assets.  Assets that were there last year and magically vanished in a brief audit.  The big pig I want to see do a review is the OTPP

http://www.otpp.com/wps/wcm/connect/otpp_en/home

The worlds largest asset holder on the planet.  If NSTPP which mirrors the OTPP is in shit, it means they all are.  OTPP is the gold standard in how pensions are managed for large government organisations.   If one thing Leo and I could agree on is that single fact.

 

Yeah Illinois is insane.  But I'm talking about national federal government level pensions in the US that flow the leader of the World.  I mentioned this in another thread.  All that money is fungible, it's a big managed pool.  If money is missing in one "pot", it's missing by the scale of the theft in all others minus the contributions to that date.

 

I'll guess they are all going to start "discovering" stuff about how everyone got ripped off and anything being offered financially in pensions is fantasy with a side of crazy.

Sat, 04/28/2012 - 14:46 | 2382493 John_Coltrane
John_Coltrane's picture

Interesing comment.  That's why pensions are never made in a lump sum up front.  That way they can cut you off anytime the ponzi explodes.  Then its back to work (so keep up your skills if you have any) or starvation (unless you've been converting fiat into gold or other hard assets (e.g. food, medicine, fuels and chemicals)). 

Lesson:  Maintain your most valuable assets:  skills and abilities, and things you need to live (energy and food) while everything "seems" to be under control.  Once trust is broken via fraud its every person for himself.

Sat, 04/28/2012 - 15:12 | 2382516 CPL
CPL's picture

It's such a mess, what's worse is people bought into the lie which is a black swan all by itself.

Sat, 04/28/2012 - 17:08 | 2382676 ClassicalLib17
ClassicalLib17's picture

" In Illinois, 84 billion in unfunded liabilities alone"  and that is just for teacher and state worker pensions.  There is another 63 billion in unfunded liabilities for current and future retiree healthcare benefits.  Next year, retirement spending for the state university retirement system will consume 2 billion dollars of a projected 3.5 billion dollar budget.

Sobering facts that may explain the reason I don't get much kick from my bourbon anymore 

Sat, 04/28/2012 - 11:40 | 2382254 CPL
CPL's picture

Or Argentina...

http://blogs.ft.com/beyond-brics/2012/04/27/argentina-raiding-its-own-pe...

Financial Times (blog)
The official gazette reported on Friday that the Treasury had borrowed
$342m from the state pensions agency, Anses (to be precise, its Pension
Sustainability Guarantee Fund, or FGS), on April 19 by selling it a
dollar-denominated one-year bond with a 5 .

Sat, 04/28/2012 - 11:43 | 2382257 CPL
CPL's picture

This one is my favorite. A new Madoff scam disguised as a pension fund to sell to the Arabs in MENA and fleece those investors as well.

http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=502066...

Sat, 04/28/2012 - 09:54 | 2382084 Misean
Misean's picture

So, what would money printing by the Feral Reserve be called...

Sat, 04/28/2012 - 10:14 | 2382116 Badabing
Badabing's picture

 unconstitutional

Sat, 04/28/2012 - 13:35 | 2382398 Sean7k
Sean7k's picture

Private corporation. The constitution does not apply. As David says below- counterfeiting.

Sat, 04/28/2012 - 10:26 | 2382131 DavidC
DavidC's picture

Counterfeiting.

DavidC

Sat, 04/28/2012 - 10:50 | 2382176 disabledvet
disabledvet's picture

check kiting.

Sat, 04/28/2012 - 10:29 | 2382135 DeadFred
DeadFred's picture

I hope you don't mind my copying your newish term. "Feral Reserve" has only 12K google hits yet is sounds so right.

Sat, 04/28/2012 - 10:43 | 2382162 Cheyenne
Cheyenne's picture

A cover-up to conceal Wall Street's insolvency.

Sat, 04/28/2012 - 13:00 | 2382354 Uncle Remus
Uncle Remus's picture

A hanging offense.

Sat, 04/28/2012 - 18:18 | 2382758 Sturm und Drang
Sturm und Drang's picture

Another day, another pallet of deutschm...ah... fiat.

Business as usual.

Sat, 04/28/2012 - 10:03 | 2382090 Dorelei
Dorelei's picture

What  did you expect from capitalism???

Big compagnies  will hire lawyers to find a flaw in every regulation you put in place.

Greed is theleitmotif of the system and itwill take any form to satisfy its goal....

Sat, 04/28/2012 - 10:30 | 2382136 gtb
gtb's picture

If it's regulated, is it really capitalism?

Sat, 04/28/2012 - 10:59 | 2382190 disabledvet
disabledvet's picture

"since the only goal is to be bought off by it." there is much to this i have to say. i will say "the banks have still failed." in that sense "epic fail" indeed! "the well has run dry and now we have to threaten and kill the witnesses, corrupt the jury pool and deal with the Judge thingy." The John Edwards trial comes to mind. things would be much easier if we had inflation actually...then "it wouldn't be so obvious." I mean "going after Google?" And then "Egan Jones"? Who's next? Mother Theresa? (i forgot. "they killed her." just like Elvis i might add.) Anywho "greed eats itself" so i agree "regulating it is a rather odd approach." perhaps if we arrested someone first? no? yes? perhaps his dog then...

Sat, 04/28/2012 - 11:27 | 2382225 Pairadimes
Pairadimes's picture

If it is regulated to the tune of almost $2 trillion a year in associated costs, government spends 46.5% of GDP each year and capital formation has been designed to privatize gains and socialize losses, is it really capitalism?

Sat, 04/28/2012 - 13:37 | 2382401 Sean7k
Sean7k's picture

It would be nice if people learned some of the basic definitions. 

Sat, 04/28/2012 - 11:03 | 2382199 oldschool
oldschool's picture

You're absolutely right, communism has worked so much better.

Sat, 04/28/2012 - 17:52 | 2382719 Vendetta
Vendetta's picture

except today its fascism.

Sat, 04/28/2012 - 12:13 | 2382279 Normalcy Bias
Normalcy Bias's picture

"Big companies" (at least the banks) write their own regulations. It's a very efficient feedback loop of corruption.

Sat, 04/28/2012 - 13:04 | 2382359 barroter
barroter's picture

Capitalism never could resist cutting it's own throat.

Sat, 04/28/2012 - 09:59 | 2382091 t_kAyk
t_kAyk's picture

The idea is you have a seemingly legitimate entity, the person at the top is looting it. They loot it by destroying it but they walk away wealthy.

That "entity" is now the entire world. 

Sat, 04/28/2012 - 11:10 | 2382205 disabledvet
disabledvet's picture

ideally...yes, indeed. Bernie Madoff comes to mind on that one. (i'm sure he's still fuming at his lack of notoriety actually. "I TOOK OUT THE WHOLE SYSTEM AND NO ONE CARES!" or something like that.) unfortunately "usually it involves your neighbor." and "that useless bitch who's in charge of the editorial board of the so and so." Oh, i forget..."the media is getting rid of newspapers per Wall Street and Joe Kernan's instructions." Interestingly..."that includes book stores as well." My question is "why aren't newspapers free?" actually. They really don't cost anything to make...and bookstores? How pricey can running one of those be? And why does ruining them make Wall Street happy? I've never understood that...

Sat, 04/28/2012 - 09:59 | 2382092 DaveyJones
DaveyJones's picture

Great to see something from Bill Black. He is the ultimate symbol of how far we have fallen down the corruption cliff in twenty five years. And the censorship cliff. You can only catch him on the web.  

Sat, 04/28/2012 - 10:57 | 2382186 Cheyenne
Cheyenne's picture

Black's book, The Best Way to Rob a Bank is to Own One, provides one very telling character study.

Duriing the S&L crisis, Black worked for Edwin Gray, a nervous chain-smoking friend of Ronald and Nancy Reagan who was initially opposed to reigning in out-of-control S&L's. Then Gray saw a video of real estate developments devastated by massive control frauds by the lenders. Thus began an epic battle to bring fraudulent bankers to justice.

Gray had powerful enemy in Charles Keating, who, aside from being the nation's leading anti-pornography crusader, had co-opted through political contributions five U.S. Senators including John McCain and John Glenn. Keating meant to put a stop to Gray and his team, which was led by Black.

The five Senators, who eventually came to be known as the Keating 5, called Gray into an office, unaccompanied by staff, and threatened to indict him for shutting down insolvent (though seemingly profitable) S&L's.

Gray's response?

"Fuck you, I'm doing it anyway." And Gray meant it, putting Keating and more than 1000 other fraudulent banksters behind bars.

Contrast Gray with polished milque toasts like Eric Holder and Lanny Breuer and you'll start to appreciate that the real problem here isn't a financial crisis or even a legal crisis; it's a straight-up lack of balls.

Sat, 04/28/2012 - 11:14 | 2382208 disabledvet
disabledvet's picture

yep. "Now it's Morgan/Stanley's turn." My prognosis? "They will succeed beyond the dreams of a avarice." Europe is going to have "the asset sale of all asset sales" soon...plus "the mother of all capital raisings." Here's how Morgan/Stanley looks at it:
http://www.youtube.com/watch?feature=player_detailpage&v=BXI-e8p1Adc

Sat, 04/28/2012 - 13:53 | 2382353 itstippy
itstippy's picture

Thanks for the post. 

Gray has balls or, more politically correct, backbone.  Doing what's right has always been seen as a charater flaw in the "big time" financial world. Occaisionally a person with backbone rises to a position of power, sticks to their principles, and does what's right. Such people derserve recognition.

I've passed up opportunities for profits because I want to do what's right. I'm comfortably solvent, and the people I do business with trust me to do the best I can to be fair & equitable. I am extremely proud of that.

OT - Where is Slewie?   

Sat, 04/28/2012 - 17:54 | 2382722 Vendetta
Vendetta's picture

polished milquetoast description of Holder or Breuer is so much kinder than the words I would use to describe them.

Sat, 04/28/2012 - 23:45 | 2383138 CatoTheElder
CatoTheElder's picture

Co-conspirator is closer to the truth

Sat, 04/28/2012 - 10:04 | 2382096 Harriet Wanger
Harriet Wanger's picture

Black has it all wrong. Regulation is the problem. Big government, you know, the kind powerful enough to enforce the law, is the problem. People who have paid into retirement all their lives, and actually expect to get that money back, are the problem. I hear this every day from prominent business people and politicians, so it must be true.

Sat, 04/28/2012 - 10:09 | 2382105 CPL
CPL's picture

Don't worry...all this and more is coming to Sweden.

 

Traders and investors used to talk like you four years ago in North America.  In a year, you'll understand the situation perfectly.

Sat, 04/28/2012 - 10:28 | 2382133 DavidC
DavidC's picture

Thanks Harriet, that made me smile!

DavidC

Sat, 04/28/2012 - 10:33 | 2382148 ceilidh_trail
ceilidh_trail's picture

So Harry had his sex change and moved to Sweden? No wonder we haven't heard from you in a while!:)

Sat, 04/28/2012 - 13:09 | 2382368 barroter
barroter's picture

Yeah, I'm persuaded. Business is innocent. It's all due to nasty regulations.  While we're at it, let's deregulate the crime of murder then there won't be any murder anymore.

Sat, 04/28/2012 - 14:10 | 2382425 fuu
fuu's picture

Oh how the mighty insignificant have fallen.

Sat, 04/28/2012 - 18:02 | 2382732 Vendetta
Vendetta's picture

of course, perhaps some here do not detect your facetious 'tone'. I hear almost everyday from someone the exact type of statements you mention, yet with all that is happened in this country with deregulation and 'free trade' the decline of our nations' status and financial integrity, many cannot see the direct correlation with these 'policies' as being responsible for the decline and they push for more of the same.

Sun, 04/29/2012 - 00:29 | 2383176 CatoTheElder
CatoTheElder's picture

Regulation IS the problem; bad regulation, that is.

The problem created by regulatory capture is NOT a dearth of regulation. In fact, the big businesses that achieve regulatory capture are quite fond of regulations that create barriers to entry and other forms of economic rent. And, in the case of the fully bipartisan Garn-St. Germaine Act that ultimately gave rise to the Akerlof-Romer article, the opportunity to loot government deposit insurance programs by bankruptcy. Its consequences were quite predictable; my masters thesis predicted it in 1981 (which was before passage of the Act, but while its various provisions were being debated.) As Bob Higgs says, "If the consequences were entirely predicable, in what sense are they unintended?"

Sat, 04/28/2012 - 10:19 | 2382097 JustObserving
JustObserving's picture

 

 

"Our System Is So Flawed" 

Our System is Fraud - the SEC, CFTC, and even the Congress, are owned by Hedge funds and financial interests.  84% of trading now is HFT (high frequency trading) enabled by deleting the uptick rule.  Removing the uptick rule had catastrophic consequences for the market but benefited HFT:

"On November 18, 2008, the Wall Street Journal published an opinion editorial by Robert Pozen and Yaneer Bar-Yam describing an analysis of the difference between regulated and unregulated stocks during the SEC pilot program. By using an analysis they claimed to be more comprehensive than the SEC's original study, they showed that unregulated stocks have lower returns, with a difference that is both statistically and economically significant. They also reported that twice as many stocks had greater than 40% drops in corresponding 12 month periods before and after the repeal.[19] [20]"

It is heart warming to see the SEC go after Egan Jones with such alacrity for downgrading the US on April 5, 2012.

The US capital markets are a fraud - everyone knows that.  Now Hong Kong attracts lot more public offerings than New York. Go East young man with your money - there is too much fraud here.

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

 

Sat, 04/28/2012 - 10:06 | 2382100 UP4Liberty
UP4Liberty's picture

So essentially, one of the best methods to be financially successful in today's economic environment is to create a Ponzi scheme which can be bailed out by a federal entity.  Sounds like a winner!

<sarc>

Sat, 04/28/2012 - 10:07 | 2382101 Cursive
Cursive's picture

 

 

The big thing about the seemingly legitimate entity when the CEO is the crook is, first, everybody reports to the CEO ultimately, right?

 

 

IOW, a fish rots from the head down.  I used to work with an engineer whose solution to corruption was to execute the CEO.  Sarbannes-Oxley (enacted 2002) was suppossed to fix everything, but just like all laws, it was a simply a revenue bill for CPA and consulting firms.  How many CEO's/CFO's have been charged under Sarbannes-Oxely?  I really think the engineer's approach has a lot of merit.

 

 

Sat, 04/28/2012 - 10:10 | 2382107 UP4Liberty
UP4Liberty's picture

Here's a good one which relates to the engineer's solution:

1792 Coinage Act

http://www.youtube.com/watch?v=yhldj52ZuUU

These crooks will always commit crimes if the penalty is so weak / lame that it does not disincentivize the criminal act.

Sat, 04/28/2012 - 10:19 | 2382121 GMadScientist
GMadScientist's picture

But if you try to sell the wrong plants or take a camera in a theater we will fuck your shit up!

 

Sat, 04/28/2012 - 10:33 | 2382149 UP4Liberty
UP4Liberty's picture

It's all about who you know, right?

;)

<sarc>

Sat, 04/28/2012 - 16:33 | 2382637 itstippy
itstippy's picture

There will always be someone who brings a camera to the theater, or sells the wrong plants, or whatever is "unlawful" but has a risk/profit margin that enables them to make a living. 

Scofflaws who supply fringe products efficiently are rigorously prosecuted until they get big enough to buy into the game and pay the vig.

It has always been so.

Sat, 04/28/2012 - 13:55 | 2382423 Withdrawn Sanction
Withdrawn Sanction's picture

Grant's interview the other day suggested another (less draconian but probably as effective) solution:  claw back all payments to banksters for the 7 years prior to any bailout.  Grant's solution was to claw back any payments above a threshold of 10 times the average manufacturing wage (or above about $400,000).  Reinstating double liability for bankers is probably also a good idea.

Executions seem like a perfectly good waste of ammo, but I could be wrong.  Take away instead the thing(s) that matter most to these asshats:  money and prestige.  Their lives are meaningless....that's why they waste them as banksters.  By killing them, you're actually doing them a favor.

Sat, 04/28/2012 - 18:09 | 2382744 Vendetta
Vendetta's picture

when the fines are the equivalent of a dinner tip and the 'admitting no wrongdoing' is acceptable, what disincentive is there?  Answer: none.

Sat, 04/28/2012 - 10:13 | 2382110 Oquities
Oquities's picture

To the guillotines!

Sat, 04/28/2012 - 11:35 | 2382242 junkyardjack
junkyardjack's picture

Winter is coming

Sat, 04/28/2012 - 10:22 | 2382120 GMadScientist
GMadScientist's picture

In a sense, securitization has provided enough obfuscation that the kind of house cleaning done during the Keating Five and Boesky days is technically infeasible.

As sorting the criminals from those merely aiding and abetting may be difficult, let's just nuke The City and Manhattan and move on from there.

 

Sat, 04/28/2012 - 10:27 | 2382132 tom a taxpayer
tom a taxpayer's picture

Bill Black for Attorney General or Special Prosecutor!

Sat, 04/28/2012 - 18:10 | 2382745 Vendetta
Vendetta's picture

tht would require a political system intent on doing the right thing.  Not happening ...

Sat, 04/28/2012 - 10:30 | 2382137 Quinvarius
Quinvarius's picture

As long as the music plays, everyone must dance.  Bad loans or frauds.  It is all the same.

Sat, 04/28/2012 - 10:30 | 2382139 WallowaMountainMan
WallowaMountainMan's picture

“When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it."

 

goldman sachs' lloyd conflicts of interests are part of our business model blankchecksarefinefein comes to mind.

Sat, 04/28/2012 - 10:33 | 2382146 lunaticfringe
lunaticfringe's picture

Read the thread. Cursive has it right. You must hold the hierachy of every organization accountable. The organization is only as corrupt as it's leadership. Recently, Corzine comes to mind. I used to think lawyers and car salesman were morally deficient. I realize now that those types cannot wipe the ass of bankers when it comes to "crookedness." A high bar indeed. Black is one of the good guys. They've been working very hard to ignore you William.

Sat, 04/28/2012 - 10:37 | 2382152 UP4Liberty
UP4Liberty's picture

LF - This is going to get very grim and end really badly.  The only way this is going to change is when the sheeple have a fundamental shift in how they RESPOND to the corruption - aka "revolution".  Sheesh...

Sat, 04/28/2012 - 10:37 | 2382155 ceilidh_trail
ceilidh_trail's picture

My new diet regimen is to not eat until Corzine gets indicted or his $$$$ is forced back, or, I lose 60 lbs. Wanna bet which occurs first?

Sat, 04/28/2012 - 10:50 | 2382173 adr
adr's picture

Systemic fraud has been awarded the highest honor at the dinner table of the elite. The likes of Corzine could walk up to a stranger on the street and rob them at gunpoint, the police would cheer him on.

When the victim asks the cop if he is going to go after the man who robbed him, the cop replies:

"Don't you know who that was. You should be honored to be robbed by him. You can only be so lucky to be in the presence of such a great important man."

The elite have been given a free pass to commit virtually any crime. Obama could walk up to a random white person on the street and blow the person's brains all over the place. The talking heads on MSNBC would all praise Obama for having such great courage. Not to mention with the NDAA he could just claim the person was going to commit a crime and executed to save lives.

The financial elite know they will not be procecuted for fraud, they have created a stock market completely made on the back of immense fraud for the explicit purpose to enrich executives. The executives in turn allow the politicians to become wealthy from the information they are given. The goal is to be wealthy without labor. To live on a permanent vacation financed by the theft of assests.

I have met CEOs that work that run private corporations. I have never met a CEO of a public corporation that does anything that can be labeled as work. Speaking at a conference or taking one minute out of a day to have a piece of paper read to him is not work. Most public CEOs don't even know what their corporation even does. None of them could actually work in the lower levels of the corporation, they have no actual valuable skills. As this article states, the only skillset needed to become CEO of a publicly traded firm is knowing how to run a Ponzi scheme. Also knowing when to exit in order to maximize your personal wealth.

Men who steal millions while bankrupting corporations are on the short list of directors to run theirs. It is sick. The only answer is to kill them all. The sad truth is they have all been expecting it, we are just too pussied to do it.

Sat, 04/28/2012 - 10:59 | 2382191 Bay of Pigs
Bay of Pigs's picture

+1 nice rant

Sat, 04/28/2012 - 11:01 | 2382192 El
El's picture

History shows it rarely ends well for these folks. Remember Marie Antoinette? Their time is coming, I think. 

Sat, 04/28/2012 - 11:07 | 2382202 Sandmann
Sandmann's picture

Republic to Oligarchy - the US Experience - first time around it was overthrown...but those guys are dead.......have the living any stomach to reclaim their country ?

http://www.spiegel.de/international/spiegel/0,1518,793896,00.html

http://maxkeiser.com/2011/10/31/the-second-gilded-age-has-america-become...

 

Sat, 04/28/2012 - 11:36 | 2382246 dizzyfingers
dizzyfingers's picture

adr: correct solution.

But another is "don't play their game".

No credit cards.

No bank accounts.

Use only cash.

Buy only what you need.

No extended-purchase contracts.

Labor for cash; no taxes.

Rent or live with relatives or squat in empty homes, don't own real estate.

Don't have a phone in your name.

Drop off the radar screen.

 

Sat, 04/28/2012 - 17:22 | 2382686 smiler03
smiler03's picture

Leave your IP footprints all over the web.

Sat, 04/28/2012 - 17:31 | 2382694 knukles
knukles's picture

+
Just amazing, isn't it?
:)

Sat, 04/28/2012 - 10:59 | 2382189 cherry picker
cherry picker's picture

Zeror Hedge has been publicizing what is wrong with much of the financial world and more importantly how we as citizens are being manipulated and controlled since its inception.

Most of what I read here smacks of truth, yet the world turns and I see many oblivious to it all, carrying on with their lives, driving Lexus and Beemers around.

There are those out there who think everything is fine.  Personally, I experience differently and Zero Hedge makes sense to me.  Is it because I was personally affected or is it because Zero Hedge is right, and if it is right, why is the truth only apparent to the few?

I am sure that I am not the only one asking myself these questions.

Sat, 04/28/2012 - 11:38 | 2382248 dizzyfingers
dizzyfingers's picture

Cherry Picker:

Those driving BMrs and Lexuses don't care.

Sat, 04/28/2012 - 13:02 | 2382356 Lednbrass
Lednbrass's picture

Most are quite happy in the Matrix- well, at least until the day that it cant provide them with endless distractions and cheap or outright free food.

Until that time they will remain plugged in, generating interest for the machine or remaining dependent enough on it to provide it with justification for its existence.

Sat, 04/28/2012 - 14:03 | 2382434 Withdrawn Sanction
Withdrawn Sanction's picture

Most of what I read here smacks of truth, yet the world turns and I see many oblivious to it all, carrying on with their lives, driving Lexus and Beemers around.

I understand the frustration, CP.  Three things to keep in mind:

  1. Rome wasn't built in a day;
  2. it does not take a majority or even a plurality to effect change (and it is unlikely to come from the Beemer/Lexus crowd in any case); and 
  3. when it starts to crumble, all hell will break loose incredibly fast; it will happen seemingly overnight.  

Hang in there...

Sat, 04/28/2012 - 11:01 | 2382195 R_Soles
R_Soles's picture

unfortunately the system has evolved ( degenerated) to the point where it is now more profitable for these cocksucking caretaker managers ( please, they are NOT entrepreneurs-they didn't invent anything of true worth) to bankrupt a bank or company by faking short term profits so they can get huge bonuses and stock option payouts. to them it is the antithesis of what we learned in business/accounting school which is to build and ensure value in the long term for shareholders. As a Canadian I think of all the $$$ STOLEN by two successive heads of Nortel as a recent example with bonuses as a result of fake reported profits while mutual funds lost their ass and employees in the thousands lost their jobs, and to this point bo one absolutely no one has gone to jail or had anything reposeesed etc. Yeah yeah, the "profits" were signed off on by a big accounting firm but as the article states they are bought off with dinners and big payments to their partners and so on.

The Italains had the right answer with Mussolini-get some rope and find the nearest lampost because until some of thes crooked CEO's pay a real price for their phucking things up, there is no real justice.

 

So...there is that

Sat, 04/28/2012 - 11:03 | 2382196 Sandmann
Sandmann's picture

There were BIG flashng Neon Warning signs. This is simply a Gigantic Version of Penn Square Bank 1982.   That did nothing to stop the Gamblers in Finance - we got LTCM  1998.  Goldman operated in the same predatory manner there at the LTCM offices in CT as they have done in the recent meltdown.

In Britain they had Equitable Life - the world's oldest mutual life assurance group trading whilst insolvent - and operating a Ponzi Scheme from the early 1980s which led to insolvency and the Government blocking publication of a Report for years.

 

The whole current Disaster is simply because the boil was not lanced in the 1980s and 1990s and we simply have to remember that -

 

Things may be a Nightmare and an Apocalypse....but for Some People Things are Just Fine and Dandy - they have exactly what they wanted

Sat, 04/28/2012 - 11:04 | 2382200 Jim B
Jim B's picture

Bill does another excellent interview here

 

http://www.econtalk.org/archives/2012/02/william_black_o.html

 

Bill Black actually is not a crook and has a lot of integrity! 

 

Boatloads of good podcasts! 

Sat, 04/28/2012 - 11:35 | 2382240 I am Jobe
I am Jobe's picture

No one wants to listen to people like Bill Black or Ron Paul. Joseph Goebbels would have and is proud of what he created. OFight the NAZI partyy and adopt the NAZI principle, USSA.

Sat, 04/28/2012 - 13:41 | 2382406 tired1
tired1's picture

The rabbit hole is deeper than you suspect. Many of the quotes commonly attributed to Goebbels were in actuality British disinformation.

Sat, 04/28/2012 - 11:14 | 2382209 El
El's picture

I wonder what it is that keeps people from defaulting on a mass scale, particularly those who have decided they no longer wish to participate in this highly flawed system. Is it because our ethics require that when we make a committment we need to keep it? What if our continued support of a clearly unethical system contributes to keeping it going and allows continued fraud, theft and unpunished illegality?

If I contract with you for credit in the amount of $10,000 and faithfully pay as agreed, and yet you raise the interest repeatedly until it is 30%, am I contributing to a broken system by continuing to pay? What if you have made speculative risks using other people's money, and your irresponsibility meant that I had to bail you out to the tune of $150,000. Although there is no expectation of me ever seeing that money again, do I still have a moral obligation to keep paying on the 10k at 30% interest? Where does the moral obligation to repay end in the face of such blatant criminality that goes unpunished?

I don't have any answers to the above hypotheticals, but these are the things I am thinking about right now.

Sat, 04/28/2012 - 11:16 | 2382212 wisefool
wisefool's picture

The fix, is to eliminate the tax code. It is the template for fraud and is enforced with a gun, and we wonder why we end up with crony capitalism in finance, accounting and non-IRS government agencies.

It is like the tree of knowledge in the Garden of Eden. It feels really good when the government gives a wedding gift (marriage deduction). It feels even better when we allow deductions for children. It feels really good when we can put a mobster in jail for tax evasion, instead of prosecuting hundreds of murders. It gives us data on peoples income such that we can run deficits of epic porportions. and eventually, 80,000 pages later, you'll get the executioner at the very top (Romney,Obama) paying a lower tax rate than medical doctors, who also make less money than a K street whore or a sexy BDO tax avodiance specialist. Money is not the root of all evil. unfair taxation is. every civilization has proven this.

Ron Paul 2012. write him in

Sat, 04/28/2012 - 11:40 | 2382250 tu-ne-cede-malis
tu-ne-cede-malis's picture

“The freedoms won by Americans in 1776 were lost in the revolution of 1913.”
     -Frank Chodorov, The Income Tax: Root of All Evil 

Sat, 04/28/2012 - 12:38 | 2382329 wisefool
wisefool's picture

snarc: TLDR, Hopefully we can atleast make sure homosexuals are no longer oppressed by the tax code. They are missing out on the "freedom" to file as a household. Or for the "right" leaning folks, we need to make sure homosexuals can not file as a household on their IRS paperwork.

/snarc. Ron Paul 2012.

Sat, 04/28/2012 - 16:41 | 2382651 wisefool
wisefool's picture

What is with the no response junkers on ZH? gay or straight you need to put on your big person pants to post here. That means, reply. IRS always does, and with more force than the Tyler running this place.

Sat, 04/28/2012 - 17:33 | 2382692 smiler03
smiler03's picture

If every single junker put in a reply then the ZH comments would be unusable in my opinion. Some of the first posts on threads have up and down votes in their hundreds. Also MillionDollarThreadJacker would take over entire threads even more than he already does. I didn't junk you.

Sat, 04/28/2012 - 13:00 | 2382355 WTFx10
WTFx10's picture

Concocted by a Jewish Organized Crime Syndicate masqueradeing as bankers. They invented loan sharking not the italians.

Sat, 04/28/2012 - 13:53 | 2382420 theriddick
theriddick's picture

Yidz......

Sat, 04/28/2012 - 11:22 | 2382220 djsmps
djsmps's picture

I thought Bill Black was Elvis's bass player.

http://www.youtube.com/watch?v=CeH2ls71CWE

Sat, 04/28/2012 - 11:33 | 2382237 I am Jobe
I am Jobe's picture

And here  thought Econ was pure science. Must have slept thru that one in College. Glad I did not go inot Econ or pursue an MBA. F the Fuckers. Amazing that USSA companies hires Econ and MBA's in countless numbers to ruin them. I guess finally this will all come to an end.

Sat, 04/28/2012 - 11:37 | 2382247 JR
JR's picture

Misean -- So, what would money printing by the Feral Reserve be called...

Bernanke and his central bank of private international “bankers” are engaged in fraud -- the greatest fraud in man’s history… and the “bankers” first step in this racket was to label money as a “medium of exchange.”  

Here are random explanatory quotes from Hugh A. Thomas’ book, “STORED LABOR: A New Theory of Money”.

Money is stored labor. The medium of exchange is morality (nonviolence and agreement).  Money, i.e., stored labor, is never in the middle of the transaction, it is never the medium. It is always on either side of the equation of exchange…. Money does not circulate…it exchanges.

Governments have looked to inflation repeatedly over the centuries in order to confiscate and control labor.  When governments get into the money game, they do so in order to rob people of their accumulated labor.  To be successful, this robbery requires [that] the victims remain ignorant of the government’s manipulations of money. 

Inflation is the dilution of stored labor.

When governments place their name on money, they are placing their name on the most generic form of private property, on the most commonly exchanged commodity. This is no different than if government placed its name on all clothing, houses or humans.

While the scientists of the enlightenment were breaking new ground in the understanding of physical nature, thieves were busy with the creation of central banks and paper notes.

In ancient societies, coin was engraved with the face of the current god or dictator. This ploy was a tactic to reduce the individual’s psychological link to his own labor, to his own life. The individual’s efforts were the government’s property. Who can rightfully question the God Janus or the Great Caesar?

With money having been replaced by fiat paper, with central banks manipulating production by credit expansion, the true meaning of money has little chance to be understood.

When one applies the idea of money as being stored labor to the historical record, many events that were formerly chaotic fall into conceptual order.

This is a fraud perpetuated by complexity. To control money is to control life…

Sun, 04/29/2012 - 00:37 | 2383183 JR
JR's picture

High prices cause inflation. -- Ben Bernanke

Thanks, LD, for the lol.

Sat, 04/28/2012 - 12:09 | 2382295 ekm
ekm's picture

And because of the inherent fraud of the financial system that not only does not produce anything, but by CREATING DEBT OUT OF NOTHING as payment (and yes everybody is paid with debt, not with money), they actually claim portions of people's livelihoods out of nothing.

Check here and you will understand why retail is no longer the sucker. Sucker days are gone. Survival days are in.

 

Sat, 04/28/2012 - 12:33 | 2382313 Fix It Again Timmy
Fix It Again Timmy's picture

Why is this happening?  Because for the perpetrators of fraud, their crooked dealings are like grocery shopping in an upscale supermarket with another person's credit card.  How hard is that?  How likely are you going to do time for that?

Sat, 04/28/2012 - 12:35 | 2382317 Benjamin Glutton
Benjamin Glutton's picture

Corporate Law, from an initial investigatory standpoint,seems to have largely shifted to a self regulatory framework governed within an alphabet soup of quasi government entities that  are not inclined nor required to make criminal referrals for crime committed WITHIN the clubhouse. Interestingly, selective tax law aimed primarily at Mom and Pop is alive and well.

The alphabet soup of "enforcement agencies" operate more like investigative vacuums from which no criminal evidence can escape. Oh they uncover plenty of what was once considered to be criminal activity...and promptly "vaporize" it with semantic slobber..

 

Thank You Mr. Black, Tyler and the entire ZH community for bringing truth to subjects intentionally cluttered daily by MSM/politicos.

Sat, 04/28/2012 - 12:35 | 2382318 Clashfan
Clashfan's picture

I dedicate this one to Mr. Black. Thanks for the piece: http://www.youtube.com/watch?v=UcmElrsCtnk

Sat, 04/28/2012 - 13:06 | 2382332 Caviar Emptor
Caviar Emptor's picture

This speaks to the article earlier this week on "Nixonianism" or how the corporate elite definitively took control of government beginning in in the 1970s under Nixon. 

Willam Simon was Treasury Secretary during this early period under Gerald Ford. In 2000 he gave this candid statement which is revealing of what was taking place at the time of his tenure and how it all began (crony capitalism in the making): 

"Throughout the last century the attachment of businessmen to free enterprise has weakened dramatically as they discovered they could demand--and receive--short-range advantages from the state. . . . I watched with incredulity as businessmen ran to the government in every crisis, whining for handouts or protection from the very competition that has made this system so productive."

http://en.wikipedia.org/wiki/William_E._Simon

Sat, 04/28/2012 - 14:14 | 2382450 wisefool
wisefool's picture

The reason I am a black sheep on ZH is because I defend the Nixon shock. In this case it was the sychophants who loved govenment enough to let the frogs cash in on what remained of western hemisphere gold. Nixon said no, you can just have our blood.

Fuel Innocent.http://www.youtube.com/watch?v=e-qEd9eatO8&ob=av2e

Pop culture aside (not really) we have SS agents doing the sex, drugs, rock and roll thing. We have a president paying a lower tax rate than me slow jamming the news. And there is Mitt.

If we get Ron Paul in 2012 we will get constitutional wars, which is more important than shiny metal every day.

 

Sat, 04/28/2012 - 13:21 | 2382380 Caviar Emptor
Caviar Emptor's picture


From AP Spain restores border checks ahead of ECB meeting

Police officers stand guard in a checkpoint near to the border of Spain and France in La Jonquera, Girona, Spain, Saturday, April 28, 2012. Spain has temporarily restored border checks in its northeast and at two major airports in a bid to stop protesters entering the country ahead of a European Central Bank meeting in Barcelona. Spanish authorities early Saturday suspended the Schengen Treaty which allows unrestricted travel inside member nations, and imposed controls at six border crossings with France and at Barcelona and Gerona international airports. (AP Photo/Emilio Morenatti)

Sat, 04/28/2012 - 13:55 | 2382424 Pat Fields
Pat Fields's picture

The phrase 'crony capitalism' irks me to no end. For a capitalist social order to exist, there must first be private property ownership in one's chatals, goods and lands. Tender of credit (aka: banknotes) is insufficient to acquire Title In Equity. Consequently, all possessions are held conditional upon performance to the title holder! As government is the ultimate 'guarantor' of banknotes, and that is the exclusive form of 'currency' worldwide, all semblance of capitalism has been substituted by governments universally, for legally covert feudalism, merely touting itself as capitalism.

Sat, 04/28/2012 - 14:04 | 2382435 earleflorida
earleflorida's picture

once again, excellent interview with mr. black

thankyou chris

Ps. we are,... going to hear part II, i hope?

Sat, 04/28/2012 - 15:30 | 2382539 Esculent 69
Esculent 69's picture

Now for an interview that will make you vomit, shart, loose control of your bladder, bleed from the eyes, and will require lots of pot just to cope with the damage to your mind by listening to such tripe. 

http://video.nytimes.com/video/2012/04/25/us/politics/100000001510732/10...

But if you are in the mood for some ballgag, nipple testicle noose, burn a cigarette out on you chest, good ol' S&M torture then listen to our lovable nobel prize winning economist and all around douchebag, I give you the ferret like Dr. //krugman

http://www.nytimes.com/2012/04/27/opinion/krugman-death-of-a-fairy-tale....

AAAAAAAAARRRRRRRRRRRGGGGGGGHHHHHHHH!!!!!!!!!!

Serenity Now!

Sun, 04/29/2012 - 14:49 | 2383775 earleflorida
earleflorida's picture

:)

here's some more flaming heartburn. larry summers was the mentor of geithner, but others say he was the protege of rubin. summers two uncles were noble prize winners for economics - p. samuelson and k. arrow. why does this matter? geithner spent little time in the states as an adolescent. he met obama's parents in malaysia through the ford co., in which his father had a huge presence which initiated micro-financing/managing programs, designed and implemented for underdeveloped countries [with cheap labor of course for future production off shoring?]. 

the apple doesn't fall far from the tree regarding geithner, regarding a rolled-up orchard of clintonian/ obamanian political hacks!

jmo

ref: http://en.wikipedia.org/wiki/Timothy_Geithner    http://www.usnews.com/news/articles/2008/11/24/10-things-you-didnt-know-...       http://www.usnews.com/news/articles/2008/24/10-things-you-didnt-know-abo...

again, thanks for the good-digging Esculent 69 

Sat, 04/28/2012 - 15:37 | 2382547 Chartist
Chartist's picture

It ain't hard to prosecute.  You have to follow the money then say, you're guilty until you prove your innocent  Put a noose around their neck and give them two minutes to explain themselves.  If the explanation doesn't sound good, pull the lever.  Will some innocent folks swing?  Yes, they will, but it won't be any different from our current form of justice. 

Sat, 04/28/2012 - 17:37 | 2382700 smiler03
smiler03's picture

 "you're guilty until you prove your innocent"

Are you serious? If so I think you need to move to a totalitarian country, North Korea would be ideal.

Sun, 04/29/2012 - 01:47 | 2383212 drunkenlout
drunkenlout's picture

The opportunity to have two minutes of explaniation is two minutes more than offered under NDAA.  And the oppportunity to be charged in public is infinitely greater.  I agree that these are features of a totalitarian country, I just never expected to live in one.  

 

Sat, 04/28/2012 - 15:37 | 2382548 Chartist
Chartist's picture

It ain't hard to prosecute.  You have to follow the money then say, you're guilty until you prove your innocent  Put a noose around their neck and give them two minutes to explain themselves.  If the explanation doesn't sound good, pull the lever.  Will some innocent folks swing?  Yes, they will, but it won't be any different from our current form of justice. 

Sat, 04/28/2012 - 15:39 | 2382551 W10321303
W10321303's picture

Bill Black was on tghe 'Mad Max' show. I would call this an extension of that interview. It is very good to get his very well informed views out there as much as possible.

Sat, 04/28/2012 - 16:29 | 2382565 ebworthen
ebworthen's picture

 

 

NO TRUST

I repeat.

NO TRUST

Sat, 04/28/2012 - 16:19 | 2382617 Diogenes
Diogenes's picture

Years ago I saw a story about a court case involving a particularly vicious con.

The judge asked the con man, "How could you cheat those people after they trusted you?"

The con man replied "You can't cheat people who don't trust you".

Think of that the next time you watch the news.

Sat, 04/28/2012 - 16:56 | 2382665 jack stephan
jack stephan's picture

Han Solo: [flying across the deserts of Tatooine] I think my eyes are getting better. Instead of a big dark blur, I see a big bright blur.
Luke: There's nothing to see. I used to live here, you know.
Han Solo: You're gonna die here, you know. Convenient.

Sun, 04/29/2012 - 01:42 | 2383210 drunkenlout
drunkenlout's picture

YES, WE CAN!  (Throw Obama's ass out the door.)  YES, we can.  But we'd better be careful not to let Romney's identical ass crawl back through the door.

Do NOT follow this link or you will be banned from the site!