News & Analysis
Occupy Wall Street's Prosecutor: Building a Bigger Regulatory State ... Again
Systematically Ignoring Fraud as a Systemic Risk ... One of the most revealing things about this crisis is the unwillingness to investigate whether "accounting control fraud" was a major contributor to the crisis. The refusal to even consider a major role for fraud is facially bizarre ... Two of the nation's top economists' study of the S&L debacle led them to conclude that the S&L regulators were correct – financial deregulation could be dangerously criminogenic. That understanding would allow us to avoid similar future crises. Neither the public nor economists foresaw that [S&L deregulation was] bound to produce looting. – William K. Black, OWSnews.org
Dominant Social Theme: Fraud is endemic and I, William Black, with the help of Occupy Wall Street will root it out in order to perfect the greater American state. Once lawyers, prosecutors and the police are fully in charge, we will finally have prosperity and peace.
Free-Market Analysis: Attorney William Black (left), about whom we have written previously, is back with an article posted at OWSnews.org, the new website for the Occupy Wall Street movement, which has not-so-mysteriously sprung up as a billboard for various OWS news and views (see above excerpt).
In the article, Black basically repeats his call for massive investigations into Wall Street fraud. In doing so, he AGAIN cites America's very own STASI, (the FBI) approvingly. He is also, apparently, a big fan of the US penitentiary-industrial complex. Ironically Black's dislike of "deregulation" does not extend to the regulatory state's "privatization" of its ever-expanding gulag of slave-laborers; here, he remains silent.
Black seems like an honest man, by his own lights anyway, a person of some accomplishments, an educator and prosecutor. But what is it about the FBI that he so enjoys? Its determination to attack free-market thinking? Its illegal wiretaps? Its intimidation of Congress? Its escalating war on the few freedoms that Americans have left? Its illegal expansion to nearly 100 countries around the world?
It is ironic that Black, who looks a bit like Santa Claus in some poses, is now posing as a great avenging litigator for the Occupy Wall Street movement. He obviously wants to repeat his previous "success" with the S&L movement. He wants to be known as the Man Who Cleaned Up Wall Street; now, with this new OWSNews.org site, he has the right platform to make his case.
A week ago, we predicted this sort of thing. We wrote, "We're sure that this OWS news site will receive PLENTY of publicity ... This is how the power elite manipulate history. Set up a movement – an anomalous one – and invite anyone and everyone to participate. Provide non-leader/leaders at the top of YOUR choosing and then use your controlled media outlets to give them the publicity that no one else has access to. Finally, create a megaphone – a mouthpiece – controlled by your 'controllers.'"
William Black seems to be the designated mouthpiece for the new storm of criminal prosecutions that is about to descend on Wall Street. He is making his availability very clear. It is likely part of a plan. Soon, no doubt, Washington shall announce additional criminal investigations into Wall Street "crime."
And somehow or other William Black shall emerge as a leading candidate to lead the probes. It seems predictable in our view. That's the reason he's writing these articles. First set up a platform; then get someone to occupy it. That's how promotions work. They're supposed to look logical.
In this case, the whole idea is to ensure that the Anglosphere power elite and its money mechanism – central banking – doesn't get any unwanted attention. This is the same trick that was played in the 1930s the last time people were genuinely mad at the system.
Rapidly, FDR convened hearings in Washington and began upping regulations and sending people to jail. He replaced libertarian criticisms with a populist response. Don't like the way the system works? Punish some people and send them to jail. It's always the same thing – a kind of blood sacrifice to palliate the masses.
How can people object to being raped if the rapist is going to jail? And once the rapist is behind bars RAPES SHALL STOP FOREVER. That's the logic of populism. Prosecute the b—stards, make them pay and everybody else shall live happily ever after.
Of course in the meantime, the REAL problem, which is central banking, shall be ignored. FDR didn't just ignore, he actively covered up REAL crimes that had been committed. In fact, the good, gray men of the New York Fed had printed currency well beyond what Congress had authorized. They'd printed so many bills that it was impossible for them to be redeemed by gold.
And so they panicked. Roosevelt was compelled to declare a series of bank holidays and eventually to criminalize gold holdings. Roosevelt, despite the image that the power elite wants to portray of him, was part of this criminal mafia of good, gray men. They'd inflated the money supply so much (illegally) that they caused the Crash of '29 and the subsequent Depression.
And what was the result? Wall Street was split up by Glass Steagall! Commercial banks and private banking were now to be separated to prevent "abuses." Never mind that abuses came from the New York Fed. Never mind that illegal monetary inflation (and additional regulation) was responsible for the horror of the Depression.
Even today, the lies come in bunches, stinking like bad flowers. It was "protectionism" that caused the Crash and subsequent Depression. it was "deflation." it was "speculation." Nope. Cornel West got it wrong in his debate with Peter Schiff. Not that it seems to have stopped him.
It was an illegitimate manipulation of the money supply aggravated by the wholesale criminalization of the innocent act of holding gold and then further aggravated by a deluge of regulations, laws and restructurings that ruined America in the first-third of the 20th century. And now the US and its leadership are aching to do it all over again. Gradually the focus shall shift from the destructive power of central banking to the bad men who committed fraud. Here's the "Black-ian" analysis:
The epidemic of accounting control fraud that drove the second phase of the S&L debacle (the first phase was caused by interest rate risk) was followed by an epidemic of accounting control fraud that produced the Enron era frauds. The FBI warned in September 2004 that there was an "epidemic" of mortgage fraud and predicted that it would cause a financial "crisis" if it were not contained.
The mortgage banking industry's own anti-fraud experts reported in writing to nearly every mortgage lender in 2006 that: "Stated income and reduced documentation loans speed up the approval process, but they are open invitations to fraudsters." "When the stated incomes were compared to the IRS figures: [90%] of the stated incomes were exaggerated by 5% or more.
[A]lmost 60% were exaggerated by more than 50%. [T]he stated income loan deserves the nickname used by many in the industry, the 'liar's loan'" (MARI 2006). We know that accounting control fraud is itself criminogenic – fraud begets fraud. The fraudulent CEOs deliberately create the perverse incentives that that suborn inside and outside employees and professionals. We have known for four decades how these perverse incentives produce endemic fraud by generating a "Gresham's" dynamic in which bad ethics drives good ethics out of the marketplace.
All the most clever sophistry is on display here. He alludes to "interest rate" risk when what he is really saying (in passing) is that the Fed kept rates too low for too long, as it always does. But he is not really interested in prosecuting central bankers or their direct associates or enablers. Certainly not that impossibly wealthy handful that CONTROL central banks around the world! He would argue, anyway, that the law doesn't allow it. So he will focus on other targets.
He comes up with sexy names as well. "Liar's loan." Sounds good. This is part of the larger, pervasive effort by the legal industry to ensure that everyone who loses money on any transaction is deemed a victim. The criminal is the one offering the money.
Finally, we are supposed to be impressed that he has invoked "Gresham" and dressed up a perfectly adequate observation in entirely new clothes. Now "good" ethics are supposedly driven out by "bad" ones. The perverse and vicious system of money creation is never at fault, you see. Blame the sinners, not the sin.
Black is setting up for something. Just wait. And if it is not Black, it will be someone else. But sooner or later, the credibility of the illegitimate system of American jurisprudence shall be reinforced, the US prison-industrial complex shall continually expand and the real systemic problems shall continue to go unaddressed.
Conclusion: The elites run an old playbook. They never come up with anything new. We shall see if in this era of the Internet Reformation, it shall be enough.
Posted by amanfromMars on 11/16/11 02:41 AM
Are we then to conclude that Charles and the New Windsors need to pull their fingers out and engage with something and others altogether more dashing and cavalier, astute and innovative, Rod Farmer? You know, in order to be able to do something right royal and outstanding ... . Great Game changing.
I say, what a jolly good, spiffing idea ... . hereby seconded, dear chap. Does that mean that the present Royal Household is currently invested and infested with dinosaur types with the squeak of a mouse, whenever the roar of a lion is required in an answer? I do believe it does.
Posted by Rod Farmer on 11/10/11 04:16 PM
Good info Speedy. But a case can be made for WW1 being a family war game that got out of hand. Victoria, Frederick and Nicholas were first cousins.
Victoria was the bully of the family and Frederick was terrified of her. Had she outlived Frederick there would have been no war. (This I know from my Great Grand Father, Frederick Jubb, Captain, Royal Horse Guard.)
Posted by taxesbyanyothername on 11/10/11 03:25 AM
The whole investment through your employer thing seems like a variation on a theme. Insurance via employer and politics via union. Everyone pays and noone pays attention.
Posted by Dilence Sogwood on 11/09/11 10:12 AM
Get rid of the whole apparatus? Sure, but it couldn't be a black hole. You would need private audits to an extent not currently known. A private system could absolutely replace the government-sponsored framework. Your naked thought there would scare a lot of people, but there would be viable ways to move forward.
People would have to do more work on their investments, but in the long-run, they would be wealthier by making select, prudent investments they fully understand. ... or they could hire top talent and pay them a portion of the gains... or they could short bad stocks and bonds... the list goes on. But the game would change.
The 401k system is a facist joke. Raise taxes, but lower them if you participate in a system that consistently underperforms money printing.
Reply from The Daily Bell
A private system could absolutely replace the government-sponsored framework. Your naked thought there would scare a lot of people, but there would be viable ways to move forward.
Ha, whaddya think they GOT RID OF. Audits in the 1920s in the US, for instance, were private affairs. (There were no "public companies" of course.) Companies that paid for them and presented the findings to an investing public were held to be of superior quality. And rightly so.
Then in the 1930s, the SEC decided ALL companies would have to be audited. Guess what? Now companies spent lots of money attempting to "fix" the audits. Before, the companies of superior quality had spent money to GET an audit. Now companies spent money to avoid them, or at least the consequences ...
Thus it ever is with regulation. Force the market to "do" something and it will ... only not what you expected! Not ever!
Posted by Dilence Sogwood on 11/09/11 09:55 AM
1-Dependence solely upon SEC filings for primary information about potential investments will make accounting fraud easier for criminals to exploit. The SEC wants to block means of gathering fundamental information outside of their framework.
2-Naive investing has always been stupid. This idea that you buy a stock in your 401k because they make a shiny product is foolish. Even if SEC documents were perfect disclosure, it is still the responsibility of the investor to read them and process the information. Even if an investor isn't getting as much information as possible, you can learn a lot in 300 pages of disclosure. You might even spot a fraud or inconsitency on your own. Oh but that's boring... Is there an app for that?
There is much hard work that goes into making good investments. Buying a mutual fund with benchmarked managers is not a way to employ top-notch talent. However, the government has set the system up to favor this money-losing below-average approach. Mutal funds are highly regulated, but they tend to severly underperform their silly benchmarks, which underperform zero return.
So, how will regulating accounting standards further help underperforming, undertalented mutual fund managers do a better job?
Better for the wealth of the nation to deregulate the investment choices the little people have and to give more and differentiated analysis tools. Lower taxes would help too.
Reply from The Daily Bell
How about just getting rid of the whole regulatory apparatus? Probably too radical, eh? ...
Posted by Hoss on 11/09/11 08:10 AM
My thanks to the Elves for a superlative article. Some random thoughts:
"Black seems like an honest man... " A Regulation Surfer is someone who gets rich off regulations, either by punishing the victims or by helping them to 'comply'. Someone whose job would not exist if the regulation weren't there. It's one step removed from armed robbery, but still the money is collected solely because of the gun pointed at the victim's head. One who rails in favor of more regulations and more enforcement might be honestly mistaken on the surface, but there is a fundamental dishonesty at the core that drives it. I know, I'm too critical. He's 'just doing his job', right? Heh.
"Stinking like bad flowers... " Excellent turn of phrase but when I read that I wondered if perhaps you were not being a little too generous on the olfactory part.
"penitentiary-industrial complex ... " Now this one is brilliant, and I promise to steal it, pretend it was my idea, and proclaim it far and wide. Thanks!
And last, the total magnitude of Liar's Loans was a tiny percentage of the bloated market. It was the insane leverage based on them that was the real threat. The crime was in the vanishing point of the 'fraction' that constituted the 'fractional reserve' based on them. Only a few of them had to fail to bring the whole thing crashing down. And as you point out, the REAL crime is in printing paper money to support the fake gains made off this leverage, always and everywhere at the expense of the victims.
Thanks again to you all, Anthony, Elves, and feedbackers.
Reply from The Daily Bell
Thanks, ol' Hoss. No attribution is necessary!
Posted by Abu Aardvark on 11/08/11 06:33 PM
Whee! Here's another one ... Adam Kokesh: "My most difficult interview yet"
Click to view link
Posted by Jones on 11/08/11 01:37 PM
Posted by amanfromMars on 11/08/11 12:57 PM
A little something to warm the cockles of your heart ... ... ..http://youtu.be/4EKrXFcVyXE
Reply from The Daily Bell
Well, you have gone a long way toward redeeming yourself! Well. part ways ...
Posted by rossbcan on 11/08/11 11:28 AM
Of course; Regulation is FUTILE:
Click to view link
... a scam of "pretending to attempt the impossible", just to make a profit under the faux pretense of "protecting us" from criminals, by criminals.
Posted by speedygonzales on 11/08/11 10:35 AM
'By using the new atheist exile politics they, the Zionists, provoked and increased anti-Semitism in Europe which led to the Second world War. . . The worldwide boycott against Germany in 1933 and the later all-out declaration of war against Germany, initiated by the Zionist leaders and the World Jewish Congress. . . ' - Rabbi Schwartz, New York Times, Sept. 30, 1997
"We are socialists, we are enemies of today's capitalistic economic system for the exploitation of the economically weak, with its unfair salaries, with its unseemly evaluation of a human being according to wealth and property instead of responsibility and performance, and we are all determined to destroy this system under all conditions."
Dolfi Hitla was intent on having a community of mutual interest that desired mutual success instead of one that was divided over the control of money or differing values.
THE COMMON INTEREST BEFORE SELF-INTEREST -THAT IS THE SPIRIT OF THE PROGRAM. BREAKING OF THE THRALDOM OF INTEREST - THAT IS THE KERNEL OF NATIONAL SOCIALISM.
2. We demand equality of rights for the German people in its dealings with other nations, and the revocation of the peace treaties of Versailles and Saint-Germain.
Note: Usaics, leader Rickie Perry, asks for abolition all international trieaties. When Perry signed death penalty order he said that international law ain't apply to Texas.
11. The abolition of incomes unearned by work. The breaking of the slavery of interest.
Note: Loox familiar to bailouts in our days or they know somethin' about FRACTIONAL RESERVE BANKIN'. Ain't it?
12. In view of the enormous sacrifices of life and property demanded of a nation by any war, personal enrichment from war must be regarded as a crime against the nation. We demand therefore the ruthless confiscation of all war profits.
Note: No comment. Who is against it in Usaia? 0.1%.
13. We demand the nationalization of all businesses which have been formed into corporations (trusts).
Note: Corporate statism.
19. We demand that Roman Law, which serves a materialistic world order, be replaced by a German common law.
Note: Constitutional Common Law versus Universal Comercial Codex aka Admiralty jurisdiction. Paradox
This is gr8 example that history repeats. Not because of natural order of history is like natural order of four seasons but because the same guys use the same trix to rip us off.
Only way to prevent this scale of rip off is: Decentralization, decantralization and decentralization one more times. Plus open competition to common criminals even hated State banx aka Brownian's theory. Enemy of my enemy is my friend. No permanent enemy, no permanent friend. Permanent interests only.
Multipolitical party system, declare lobism as corruption, no corporate money in elections or donation to whole bucket and there is gonna be split by party result in elections. This does not apply to private donors. Direct 2 rounds elections of president,governor,mayor,congres.
In reality. Ordinary Usaics are NAZI!!! Compare Arizona with NSDAP:
5. Non-citizens may live in Germany only as guests and must be subject to laws for aliens.
Note: Usaia go further. Non citizens must worx in prison as slaves to support private prison industry.
6. The right to vote on the State's government and legislation shall be enjoyed by the citizens of the State alone. We demand therefore that all official appointments, of whatever kind, whether in the Reich, in the states or in the smaller localities, shall be held by none but citizens.
We oppose the corrupting parliamentary custom of filling posts merely in accordance with party considerations, and without reference to character or abilities.
7. We demand that the State shall make it its primary duty to provide a livelihood for its citizens. If it should prove impossible to feed the entire population, foreign nationals (non-citizens) must be deported from the Reich.
Note: This is real conflict with Corporate Statism:
Corporate statism or state corporatism is a political culture and a form of corporatism whose adherents hold that the corporate group is the basis of society and the state. The corporate group is typically comprised by political-economic power elites, for example those represented by the U.S. Chamber of Commerce. In other countries, the corporate group may be a specific national or ethnic group.
Note2:"In other countries, the corporate group may be a specific national or ethnic group." So this specifific national or ethnic group serve interest of The City of London corporation aka chamber of commerce.
9. All citizens shall have equal rights and duties.
To be honest with Y'LL I presonally ain't C anythhing wrong with it. It loox like Dolpfi and Dad's Founders had very close ideas. It seems that they knew enemies of society. Then is understandable why:
FEMA Says Founding Fathers Are Terrorists.
Click to view link
Simply: Whoever jeopardise status quo of corporate statism can be marked as : nazi, terrorist,bolshevik,enemy combatant and so on and can be held in prison without trial or killed by order of president aka corporate puppet.
Circle is closed. Corporations educate and support their "horses" who then promote corporate interests to the public in the way that public thing that it is public interests.
Posted by oneman on 11/08/11 08:51 AM
Posted by speedygonzales on 11/08/11 08:50 AM
When American colonists declared independence from England in 1776, they also freed themselves from control by English corporations that extracted their wealth and dominated trade. After fighting a revolution to end this exploitation, our country's founders retained a healthy fear of corporate power and wisely limited corporations exclusively to a business role. Corporations were forbidden from attempting to influence elections, public policy, and other realms of civic society.
Initially, the privilege of incorporation was granted selectively to enable activities that benefited the public, such as construction of roads or canals. Enabling shareholders to profit was seen as a means to that end.
The states also imposed conditions (some of which remain on the books, though unused) like these:
* Corporate charters (licenses to exist) were granted for a limited time and could be revoked promptly for violating laws.
* Corporations could engage only in activities necessary to fulfill their chartered purpose.
* Corporations could not own stock in other corporations nor own any property that was not essential to fulfilling their chartered purpose.
* Corporations were often terminated if they exceeded their authority or caused public harm.
* Owners and managers were responsible for criminal acts committed on the job.
* Corporations could not make any political or charitable contributions nor spend money to influence law-making.
Click to view link
'Full Responsibility for the First world War, lies squarely on the shoulders of the International Bankers. They are responsible for millions of dead and dying'. - U.S. Congress - Record 67th Congress, 4. Sitting, Senate Document nr. 346)
'The bolshevik Revolution in russia was the work... . Our Plan is to have a New world Order. What worked so wonderfully in Russia, is going to become Reality for the whole world.' - The American Hebrew Magazine, 10, Sept. 1920
Click to view link
Posted by Abu Aardvark on 11/08/11 08:38 AM
DB: "The elites run an old playbook. They never come up with anything new"
Well, yes, but it's been a while since they pulled something like THIS ...
"The Coming Very Dangerous 3 Minute Takeover by Government of All Radio and Television Broadcasts on Nov. 9"
Click to view link
... no need to get suspicious, however, since we all know and agree - "desperate times call for desperate measures", eh?