News & Analysis
Retiring CFTC Judge: We Covered Up Market Manipulation
NEW DEVELOPMENTS IN THE CFTC SCANDAL: On September 17, 2010, CFTC Administrative Law Judge, George H Painter, issued a "Notice and Order" announcing his retirement from his position. In this notice Judge Painter wrote of a conspiracy at the highest levels of the CFTC (within the ENFORCEMENT DIVISION) where a long time judge of 20 years has been conspiring with past CFTC Chairs to RIG THE ENFORCEMENT OF THE LAW by NOT finding ANYONE guilty of market manipulation. Here are Judge Painter's own words:
"There are two administrative law judges at the Commodity Futures Trading Commission: myself and the Honorable Bruce Levine. On Judge Levine's first week on the job, nearly twenty years ago, he came into my office and stated that he had promised Wendy Gramm, then Chairwoman of the Commission, that we would never rule in a complainant's favor. A review of his rulings will confirm that he has fulfilled his vow. Judge Levine, in the cynical guise of enforcing the rules, forces pro se complaints to run a hostile procedural gauntlet until they lose hope, and either withdraw their complaint or settle for a pittance, regardless of the merits of the case"
A copy of Judge Painter's letter can be found below with a stamp proving that it was received and filed by the CFTC on October 13, 2010. – RoadtoRoota
Dominant Social Theme: Please don't look at the man behind the curtain.
Free-Market Analysis: We are well aware of the corruption that inevitably arises when regulatory democracies persist and like tumors begin to swell. The United States is perhaps the world's most powerful regulatory democracy, and likely its most icily corrupt. Nevertheless, it is absolutely startling to find a senior judge (see article excerpt above) at one of America's most important financial regulatory agencies – the Commodities Futures Trading Commission – bluntly accusing a former CFTC Chairwoman (Wendy Gramm, wife of former Senator Phil Gramm) and a fellow judge of deliberate malfeasance, apparently over decades. Sub dominant social theme: "This kind of thing doesn't happen in the US!"
OK, rewind. It has been kind of ironic to watch the US mainstream media wring its collective hands over the "corruption" in Afghanistan as if the US itself, and its deliberately corrupt system of regulatory democracy, were not worse by orders of magnitude than anything Afghanistan could summon. The three most corrupt places in the world are probably Beijing, Brussels and Washington DC in no particular order. We'll throw in London as a fourth. And Moscow as fifth. And, wait, there's India, too. We probably could go on and on. Is there a pattern here, dear reader?
The corruption of the West's regulatory democracies began after the American Civil War and grew far worse in the early 21st century once the Federal Reserve was founded. The corruption was driven by a familial elite of Western power players, mostly banking families that wanted to install one-world government. They intended to do so incrementally using regulatory democracy as a Trojan Horse. Thus the West's institutions were imperceptibly corrupted over time and almost every aspect of Western culture and commerce was tainted as well.
Once the money spigot had been turned on via the Federal Reserve, many other central banks began to form around the world. At the same time, after World War I, the first effort to create a global government was made with the League of Nations. When that collapsed, it can be seen that the elite tried again almost immediately with the United Nations after World War II. The two world wars militarized the West, especially America. Central banking began to distort the West's economies and gold was in a sense demonetized. World government was initiated with the empowerment of the IMF, the World Bank and the Bank for International Settlements in Basel, Switzerland, which enjoys total immunity from prosecution around the world. What a deal – a modern day Vatican! The seeds for the EU were conveniently planted as well during this time.
Much of the rest of the 20th century was subsumed by the "cold war" between the Soviet Union and the West, and thus the militarization of the West, especially the US, continued apace. The USSR was in fact midwife to the endless expanson of the Anglo-American military-industrial complex and provided a convenient justification for even the most outrageous goverenment manpulations. Anything, seemingly, could be justified on national security grounds, and the most outrageous and violent violations of public trust were apparently initiated and boldly concluded.
There is, for instance, considerable uncertainty (as we have been exploring) as to whether the NASA flights to the moon were genuine. Operation Gladio, which the CIA operated in Europe, set up violent Marxist cells with an eye toward pushing Europe rightward in response. In America, the CIA and FBI apparently facilitated the Hippie movement with a similar idea – to confuse the baby-boomers about their constitutional heritage and generally to fracture civil society via drug-taking, radical socialism and vitriolic feminism.
At the same time in both Europe and America, most major civil and industrial institutions were being corrupted by the money spigot of central banking. Every few years a boom would turn into a bust as waves of paper currency washed ruinously over national economies around the world. The results were always the same: Increased governmental involvement in private industry and the further consolidation of private industry under corporate control. Public unions were empowered, public health care became ubiquitous in the West, public education expanded with merciless incompetence and vast regulatory apparatuses were set up to compensate for the lack of market competition.
The end result of all of this is a Western "capitalist" system that has little or no marketplace governor. The entire mechanism has been reborn as a public enterprise beholden to the elite. Teacher, lawyer, educator, accountant, doctor or military person – all are entangled in a quasi-public system beholden to government at almost every level (and many are aware of their unwitting complicity, even if they can't verbalize it). For those who seek to survive outside of the system, there are various intelligence agencies and other adversarial governmental institutions manufactured to make life difficult. The graduated income tax is yet another form of entrepreneurial control.
Competition has been drained away, replaced by regulatory democracy. Yet regulation cannot substitute for competition. Regulation is merely an excuse for the powers-that-be to operate behind-the-scenes without fear of confrontation. Create a society that removes competition and substitutes government watchdogs and it is easy for the powers-that-be to engage in whatever manipulations they wish via mercantilism.
Regulators are always subject to "regulatory capture" by the biggest private players. Thus, regulation never provides "fairness" but only continually raises the barriers to entry for all but the largest firms that can afford the fines and penalties. The regulators themselves are bought off. Lucrative jobs in the private sector await those regulators who make friends with those they are supposed to regulate. Regulatory democracy enshrines corruption throughout society. It substitutes mandates of man for competitive discipline and marketplace competition.
All regulatory agencies within modern Western democracies are corrupt. Laws are written to exempt the powerful and criminalize what was previously seen as respectable business practice. At the higher levels of regulatory democracies, those who enforce the "laws" are well aware of the system's basic corruption. None of it is intended to facilitate fairness; it has been constructed to ease the path of mercantilism for the most powerful.
One could say in fact that agencies like the tremendously inept SEC and CFTC are merely gatekeepers of the status quo. They have been put in place to give the public the sense that big financial players and banks are being "watched." In fact, as we can see from the letter written by Judge Painter, the CFTC in particular (but one could substitute almost any agency) are created not to impede business-as-usual but to enhance and it and protect it. That business-as-usual, of course, has to do with facilitating the power elite's stranglehold over wealth and power.
This is the reason, in fact, for market manipulations, mostly aimed (unsuccessfully these days) at damping the value of money metals (gold and silver) in favor of paper currencies that the elite itself can control and print through central banks. Entrepreneurs attempting to build gold and silver based mining companies are often targets as well, of this we are all too aware. The "silver lining" to all of this, if there is one, is that the truth-telling of the Internet has thoroughly upset the artificial construct – the all-encompassing monetary and professional matrix – that the elite created through money power in the 21st century. As we have written before, there is nothing more powerful than an idea whose time has come.
Conclusion: Lately, we have suggested that the West must return to private justice and common law – and in fact we expect this may be a natural process of changing times. The infinite corruption of the West's judicial processes will certainly come under scrutiny as the Internet helps reveal the dysfunction, generally, of Western regulatory democracy. Economic, political and judicial practices are part of the larger disintegration. Tug on one thread to unravel all.
Posted by Kerry Craig Walker on 12/04/10 12:47 PM
I have personally witnessed this same treatment by the legal system on the state supreme court level...but I keep on jumping through all of the hoops in hopes of getting past them. Search: Kerry Walker Story
Posted by Lesley Winston on 10/29/10 12:38 PM
Florida is the #1 judicial hell hole in the country. It is controlled by the Florida Bar Association, a virtual union in a right to work state.
The Florida Bar Association engages in RICO activities including, obstruction of justice, honest services fraud, protectionism, extortion and others. Members of this association are a plurality in the executive and legislative branches preventing interference with the judiciary's control of the State of Florida through The Florida Bar. Check out
Click to view link.
The formation of integrated bars has occurred in 37 States. This is effectively the largest most powerful union in the World. It has led to the "infinite corruption of the West's judicial processes". We are doing our best to reveal the dysfunction but we need help. Your article is a part of the thread baring. Our radio broadcasts are another.
Reply from The Daily Bell
This is the dysfunctional and brutal secret of state-monopoly justice. Not does it deform and terrorize society and families, it feeds on itself, becoming more authoritarian, unjust and obscenely puffed up, its fangs dripping with the blood of the innocent and the tears of ruined families and innocent women and children.
Posted by LEE on 10/23/10 05:27 PM
TRUE EVER HEARD OF CMKX FOR OVER 7 YEARS 40000 SHAREHOLDERS HAVE BEEN TRYING TO GET JUSTICE WE EVEN FILED THE LARGEST LAWSUIT IN AMERICA A 3.87 TRILLION DOLLARS LAWSUIT WITH THE SEC AND ALL MEDIA REFUSE TO MENTION IT ONLY THE RUSSIN TV CARRIED THE NEWS WHAT ABOUT ABC NBC CNN CBS AFTER GETTING HUNDREDS OF EMAIL AND LETTERS THEY STILL REFUSE TO MAKE IT PUBLIC
Posted by Major on 10/22/10 11:32 PM
This is just the tip of the Click to view links been going on for decades. Everyone senses and knows that it's never added up. Just like we know the Kennedy and King assassinations of the 60s dont add up. Will all the culprits ever be brought to justice to pay for the tremendous damage they have done to society. I can only pray they will.
Posted by Michael on 10/22/10 04:21 PM
Could you elaborate more on the government being behind the Hippie Movement, other than the writings of David McGowan? Also, what makes his work so credible to you?
Reply from The Daily Bell
Posted by Metal Augmentor on 10/22/10 08:44 AM
It is just about always inappropriate to ascribe fraudulent motive to a philosophical difference. Judge Levine obviously does not believe the CFTC's reparation procedure should be conducted in the context of a public hearing, if at all, preferring instead arbitration via the National Futures Association, futures exchange or other self-regulatory organization.
By contrast, Judge Painter clearly revels in exposing broker shenanigans while playing unabashed advocate for the unsophisticated investor who has lost big speculating in futures and options -- whereby in the esteemed opinion of Judge Painter the investor should automatically be entitled to a 50% recovery. None of this is particularly controversial given that judges are free to interpret and apply the law within broad limits in accordance with their individual jurisprudence.
There is probably even a shred of truth in Levine being Wendy Gramm's man on the inside to keep investors from recovering trading losses even when they are mostly at fault -- but appointing someone who shares your philosophy or ideology does not equate to a "promise" or "vow" never to rule in an investor's favor as alleged by Judge Painter. Indeed, it is quite likely that Judge Levine was picked because he would function as a counterbalance to Judge Painter's judicial liberalism.
More importantly, these "revelations" about Judge Levine have little if anything to do with covering up by the CFTC of alleged market manipulation. We are talking about investor losses arising from misrepresentations by a broker, not losses alleged to result from illegal trading that distorts commodity prices.
Ironically, Judge Levine's philosophy is actually the one closest to classic free market principles -- preferring the industry to self-regulate instead of having a regulatory process subject to government incompetence -- whereas Judge Painter is your dyed-in-the-wool regulatory advocate, the type of person this blog normally rails against.
Your inability to see this irony goes a long way in explaining why you might entertain the silly idea that the moon landing was staged (absence of gravity does a great job of keeping astronauts from worrying too much about "dropping" screwdrivers or wrenches).
Reply from The Daily Bell
(absence of gravity does a great job of keeping astronauts from worrying too much about "dropping" screwdrivers or wrenches).
Obviously the context was training on earth not going to the moon in a weightless environment.
Posted by Alex on 10/21/10 09:17 PM
Thanks for the very informative article.
A typo you may want to correct:
"...far worse in the early 21st century once the Federal Reserve was founded". I think you meant "early 20th century" as the Fed was established in 1913.
Reply from The Daily Bell
Posted by A on 10/21/10 06:13 PM
Quoting DB, "...there is plenty of evidence that regulations drives private watchdogs out of business."
I don't doubt that, it makes intuitive sense. However, in the absence of all regulation, are you confident that the number and breadth of private watchdogs would equal what the government provides? How can these private watchdogs even do their job, if the companies they are trying to watch operate in a completely opaque manner?
A private watchdog needs some kind of funding to operate, either through charity or profit. You can maybe sell me on charity, but not on profit. To profit, the private watchdogs would either have to charge the consumer directly, for access to their "approved products" list, or charge the producer to have the product certified. But the producer would just pass that cost on to the consumer. The net result is an effective tax, so products get stratified: the safe, watchdog-approved stuff for the wealthy, and the use-at-your-own-risk stuff for everyone else.
Quoting DB, "How did people ever live in past centuries without these massive central-banking fueled regulatory democracies?"
Certainly not as safely, as comfortably, and as long as we do today. Not to mention, prior to the industrial revolution, daily life was a simpler existence, and for the vast majority of people, a hard struggle. Do you really want to live the way people did centuries ago?
Quoting DB, "You believe that only a government bureaucracy can keep people safe."
Not really, but, for the reasons I've stated above, I think a completely unregulated, market economy is worse on average.
In other words, I fail to see how that kind of arrangement isn't Social Darwinism. In a pure market economy everything is based on value (real or perceived). And I think health care is the ultimate example of this. While I don't believe it's possible to give every single person the best health care possible, I think the exact opposite of that is tragic. If you get sick and can't pay for treatment, the market economy says too bad. You don't have enough money because you don't have enough value.
The pure market economy only reinforces the notion of class. The wealthy are a special class: they get the best of everything, because clearly they are providing the most value to society. But take a look around---is every rich person you know the "ideal" human, the kind you want dominating the gene pool? Drug dealers, weapons manufacturers, day traders---they make a lot of money, so they are the ones that deserve the best health care? I.e., wouldn't a pure market economy say that these people are role models for the rest of us?
Posted by Average Guy on 10/21/10 03:51 PM
The gist of this post seems to be that you can't have regulations without corruption. The corruption is so deep and widespread, that there should be no regulation. I think you have to recognize that regulation is a double-edged sword, not just a purely bad thing.
A thought experiment: what does a typical day look like to the average person living in a system of absolutely no regulation? My suspicion is that the "zero regulation" crowd takes for granted all that regulation does for them. Consider the cumulative knowledge of all regulatory agencies combined: this is what the average person has to know to live safely and comfortably in today's modern, high-tech world.
In other words: just about everything you come into contact with meets some regulatory standards. Your home, your water, your electrical and gas services, foods and drugs... do you know more than the regulators in every single one of these categories? Can you deem the plumbing in your house safe, your foundation structurally sound, you electrical system is up to task, the food you eat is safe, the water is drinkable, your drugs are pure, etc etc?
The answers to this always seem to be "the market will sort it out." It will, IF everybody is well-informed enough. And how will that happen? The market forces will be strong enough to make every company complete transparent, and voluntarily provide customers with enough, legitimate information to make the best rational decision? Seriously?
Or is this a veiled argument for social Darwinism? Let's return to our primitive roots, but with all the modern technology? The weak should be thinned out, and those who can't keep up can take up a dangerous, remedial, caveman-like subsistence life?
I don't doubt that all regulatory agencies have some degree of corruption. At a minimum, I'm sure they are inefficient and overly bureaucratic. Why not instead work to minimize the negatives of regulation while keeping the benefits? Increased transparency and accountability are a start.
Reply from The Daily Bell
Yes, you believe that only a government bureaucracy can keep people safe even though there is plenty of evidence that regulations drives private watchdogs out of business. How did people ever live in past centuries without these massive central-banking fueled regulatory democracies?
Posted by Kevin on 10/21/10 03:37 PM
The moon landing was faked? Come on. There is NO credible reporting to that effect at all. Let me guess...you're sitting at home naked waiting for The Rapture
Reply from The Daily Bell
Actually, having read more and more deeply, the chances that NASA actually went to the moon (250,000 miles and back) on rinky dink, tin-foil wrapped delivery vehicles (so flimsy that the astronauts lived in fear of dropping a wrench or screw-driver) are increasingly nil from our humble point of view. The fakery runs throughout in our view, like a deep, dark ditch.
Posted by Lila Rajiva on 10/21/10 01:30 PM
Always wondered about Zappa. Thanks for the insight.
Reply from The Daily Bell
Makes one think ...
Posted by Dave on 10/21/10 01:17 PM
This marvelous writing that began by uncovering raw corruption at the highest levels of the CFTC ended up being a fabulous summary of what we all feel, suspect or know about our fabulously corrupt system of western government.
Because the reach of the corruption is so all-encompassing, it could be used as the basis for an outline of a book or class showing how the super wealthy use government to siphon off wealth while pretending to regulate, citing numerous examples along the way.
As time passes, we see gross negligence in every department and dark corner of government; certainly US government. This article sheds some light on the "how" and "why". The "who" has always been everyone complicit in supporting or receiving a paycheck from the government we love to loathe.
Reply from The Daily Bell
Thanks for the kind words.
Posted by Edward Ulysses Cate on 10/21/10 12:08 PM
I just read in today's Wall Street Journal (Page C7) that George H. Painter "struggled with mental illness and alcoholism, court records show."
"Those records were filed in an effort by his wife to seek guardianship over the judge."
"Judge Painter's wife, Elizabeth Ritter, is a longtime lawyer at the CFTC. She and Judge Painter are in the middle of divorce proceedings."
"The judge's son, Douglas Painter, and a niece said in legal filings protesting the guardianship claim that the judge doesn't exhibit the mental problems described in court records by his wife."
"The son's legal filing contains results . . . dated July 1, 2010, that describes Judge Painter as mentally competent."
Geez, no mention of the judge's retirement letter talked about above, but already laying the groundwork for his character assassination. I guess telling the truth in the U.S. is a sign of mental illness these days.
Reply from The Daily Bell
We just checked the letter again at Click to view link. It stamped as received. It is signed by the Judge himself. He worked at the CFTC until very recently, apparently for 20 years. If he was such a mess, one would guess that he would have "retired" earlier. It is a fairly clear and definitive statement. What the powers-that-be may seek to do is cast aspersions that will give the mainstream media justification for not reporting on the story. Too much "doubt" and controversy. Messy divorce and all that ...
Posted by Tomlynn on 10/21/10 11:40 AM
Good reporting. It's very American to be critical of our own government's faults...That's why we're not Europe, and we will pull through. God help us to be humble and recognize (advertize) what we are doing wrong that we may change and be in His grace once more.
Posted by Tom on 10/21/10 10:54 AM
...the Federal Judiciary; an irresponsible body (for impeachment is scarcely a scarecrow), working like gravity by night and by day, gaining a little today and a little tomorrow, and advancing its noiseless step like a thief, over the field of jurisdiction, until all shall be usurped from the States, and the government of all be consolidated into one.
When all government... in little as in great things, shall be drawn to Washington as the centre of all power, it will render powerless the checks provided of one government on another and will become as venal and oppressive as the government from which we separated. (1821) Thomas Jefferson
Posted by Notsofast on 10/21/10 10:28 AM
The stamp you are talking about is on a blank piece of paper before the document was composed IN My opinion of course. Look at it carefully people.
Reply from The Daily Bell
We have a letter. We have a signature. We have a stamp. You believe it all to be a forgery. Of course anything is possible. Wouldn't Judge Painter have ... possibly, maybe, likely ... denounced the "forgery" by now. It was written in Sept. Perhaps he is just on a long vacation.
Posted by Edward Ulysses Cate on 10/21/10 10:02 AM
It is indeed unfortunate for decent folks to have to fight the same battles each generation. Bastiat wrote this in 1850 (The Law):
"Sometimes the law defends plunder and participates in it. Thus the beneficiaries are spared the shame, danger, and scruple which their acts would otherwise involve. Sometimes the law places the whole apparatus of judges, police, prisons, and gendarmes at the service of the plunderers, and treats the victim " when he defends himself " as a criminal."
Posted by Leonardo Pisano on 10/21/10 09:42 AM
Amazing stuff. Thanks for the link. Off topic: I have an issue I would like to discuss outside this forum with you, John. Can you please email me at leonardo.pisano57 AT Click to view link ?
Posted by Leonardo Pisano on 10/21/10 09:37 AM
"The difference is that A is an impossibility, whereas B is viable. In actuality when people live together in non-authoritarian tribal environments (plan B), deep cooperation is the rule. Ironically, the freer the society, the more communal and even spiritual it would tend to be."
Thanks for your reply. In my view there always be some equilibrium between A and B. I would not say that A is impossible. Though highly unlikely, 100% tax can be in fact equal to no tax. Slaves don't pay tax, do they? But I agree that scenario A will be impossible in the current world because people will simply resist and riot. The PE therefore is very subtle in their mechanisms, by giving the people the feeling that they are free and have control over their lives. And where they feel helpless and detached Government is present as the indispensable rescuer.
But freedom is eroding, especially in the EU (and what I hear also in the USA, but I don't live there so it's hear-say only). I sincerely hope that the Bell rings loud enough to awake a larger part of our society. I think all your readers intuitively agree that we need a critical mass to counter the trend rather sooner than later.
A major problem for achieving plan B is how to defend against aggressive violators (other tribes). Inequalities are usually the trigger for that (differences in wealth, raw materials, etc), and these are the rule rather than the exception.
Posted by Roadrunner on 10/21/10 09:19 AM
Instead of a long and drawn out litany of political vitrol, I have chosen to make a common man statement ...
How can this man, Levin, have the title "Honorable" before his name when he willingly participates in the deliberate miscarriage of justice. My solution:
1. Arrest this ("judge") Levin.
2. Prosecute for conspiracy
3. Arrest ("judge") Gramm
4. Prosecute for conspiracy
5. Imprison Gramm and Levin (50 year sentence...NO parol)