STAFF NEWS & ANALYSIS
SEC to Beef Up Penalties in Defense of the Little Guy
By Staff News & Analysis - November 30, 2011

SEC Pushes to Toughen Penalties for Offenders … The Securities and Exchange Commission, bruised by a judge's rejection of a proposed settlement with Citigroup Inc., sought the power to impose much- larger penalties on financial firms and individuals that commit fraud … SEC Chairman Mary Schapiro, in a letter sent to senators late Monday, asked Congress to pursue legislation that changes the legal formulas used by the agency to calculate penalties. Ms. Schapiro's proposals would allow the SEC to impose fines up to nine times greater than the maximum currently allowed by U.S. law. – WSJ

Dominant Social Theme: The SEC needs more power to punish major offenders.

Free-Market Analysis: All is going according to plan, so far as we are concerned. The powers-that-be are orchestrating a virtual orgy of anger against the securities industry and people are so angry with top honchos like Hank Paulson (of TARP fame) and Lloyd Blankfein (Goldman Sachs CEO) that they will gladly support increased Fedgov power if that is what it takes to put the crooks in jail.

The furor IS orchestrated, in our view. It is a pincer-like movement, as we've described before. On the one hand, you suddenly have Congress passing Draconian security-laws that will allow the US military to arrest anyone, anytime, anywhere on the suspicion of aiding a terrorist.

Then set in motion a controlled opposition movement like Occupy Wall Street and attack it with civilian officers (police, rather than military) to ensure its authenticity. Thus, you have two sides of an authoritarian vice. You have broad-based domestic repression aimed at people generally and you also have, on the other side of the vice, terror aimed at wealthy people who would not be caught up in Congress's legislation.

This is the way that terror can visit itself on everyone, rich or poor. It's being done deliberately, in our view, and it's no coincidence that OWS and the latest congressional "Terror Act" (authorizing unilateral US military detentions around the world) arrived around the same time, give or take a month.

This doesn't seem to be occurring to most people, however. Even the alternative media is decrying the congressional actions while cheering on "peoples'" demos – apparently not aware they are two halves of the great, grinding jaws that are going to mash to a pulp the tiny freedoms that Americans have left.

It is serious stuff, in our humble view. We are privileged to watch it in action. There is no doubt now from our perspective that history is being manipulated, and has been in this modern era for decades, even centuries. We watch it unrolling and we can almost predict where it is headed. The same tactics are being used by a power elite that apparently used them in the past to great effect. Why change the wheel when you don't need to?

In fact, this is a kind of perfect storm of manipulated fascism, in our view. And while, over time, we do expect that legitimate movements of protest against what's going on in the West will emerge or re-emerge, the time is not yet. These movements, including much of the so-called Tea Party, are evidently and obviously controlled – at the top anyway.

Who are they controlled by? By a tip-top power-elite that wants to control the world and is using financial chaos to provoke further authoritarian measures. This SEC request (see excerpt above) is a perfect example, writ small, of course.

Is it helpful? Will it punish those who need to be punished? Hm-mm. We've been trying it for a century and it hasn't worked so far, in our view. In fact, we've made a case that regulation doesn't really work and more regulation works "worse."

But that's not really the point, is it? The whole idea is to use economic chaos and people's resultant anger to acquire MORE power for the state. Why more power? Because that's how the global power elite works, via mercantilism.

The more power the state has, the more power the elites garner, as they stand behind the state and control its workings. We wrote about this yesterday: The Real Reason Bloomberg Sued to Open Up Fed Records?

Soon enough (after Obama is reelected – or whomever takes over) … hearings shall commence. America shall be thoroughly disgusted by the crimes committed on Wall Street. Toward the end of the hearings, when the public is fully aroused, Ben Bernanke shall appear before the congressional commission to proclaim his sorrow and shock.

Yes, The Bernank shall explain that he "didn't know" and that the Fed "failed" in its supervisory powers. The congressmen shall be furious. They shall castigate The Bernank. They shall pontificate and perorate. They shall call down the very Hounds of Hell on The Bernank and his incompetence.

And then … they shall give the Fed MORE power to do what it does best – put small banks and small securities firms out of business. For that is all regulation is … a way of creating barriers of entry so that the large firms shall prosper and the small ones shall fall by the wayside.

It has another name as well: regulatory capture. The large, strong businesses capture the regulatory departments by offering their top people lucrative contracts. Then the top regulators, when they are older, join the businesses they used to "regulate."

These "grayhairs" then counsel their juniors at the regulatory facilities in Washington as to what "must be done." The junior people in Washington, DC are willing to listen because they, too, want to get the big payoff by joining a big firm. They don't want to be too tough because it will affect their job prospects if they get all "doctrinaire" about anything.

And so it goes. After a while (say 10 or 20 years) ALL the regulations propounded by such outfits as the SEC and CFTC and the NASD are created to disadvantage smaller players while advantaging the larger ones that can afford to retain lots of lawyers and accountants.

It gets worse! The little guys go to jail while the big guys pay their "fines" out of the pockets of their customers. Regulation is not merely futile; it's actively anti-business, anti-competition and anti-consumer. You'll never hear these arguments, though, (outside of the Internet) because that's Washington's dirty little secret.

Regulation doesn't work because it can't work. Every regulation is a price fix that merely further distorts the economy. And throwing people in jail likely doesn't seem to work either. What would help is shutting down central banks that create great waves of Money Power and irresistible business cycle distortions. When everyone else is getting rich around you, it's difficult not to succumb to greed as well.

These phony manias turn society inside out and remove agrarian elements. People leave the farm and sustenance living to move to the city where they can find a glamorous and high paying job in some "white collar" field. But eventually the boom fades and there is hell to pay. There are no jobs, white collar or otherwise. And soon perhaps there will be no food, either. It's a great thing for the elites, however. People in cities are easier to control – especially when they're starving.

Meanwhile, the other side of the cycle kicks in from a regulatory perspective as well. Bureaucrats take advantage of people's anger and desperation to pass more laws, more regulations and more penalties that will, in fact, only empower the very people (and classes) that are the target of people's wrath.

Our argument has always been that the Internet Reformation (as we call it) will make this mechanical cycle much more difficult to implement this time around. It seems evident and obvious to us that the Anglosphere power elite is moving aggressively toward world government right now, perhaps fearful of what the Internet has been exposing.

After Thoughts

Will the elites eventually have to take a step back instead of a step forward? We have proposed the possibility!

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