The Reason to Be
(Note: underlined words/phrases correspond to links.)
I think this is the most extraordinary collection of talent and human knowledge that has ever been gathered together at the White House — with the possible exception of when Thomas Jefferson dined alone.
— said John F Kennedy, to 49 Nobel Prize winners in 1962
There were 50 intellectual giants in the room at the time and — yet — JFK saw fit to say that.
Almost two centuries earlier, Thomas Jefferson could not of course see the source of such colossal compliment directed his way, but he did see things that might’ve made it deserved. One, in particular, was not just prescient, but extremely relevant to our modern predicament:
I believe that banking institutions are more
dangerous to our liberties than standing armies.
— said Thomas Jefferson
But what about banking institutions that are bankrupt — and by that we mean bankrupt now, in the present day — but pretending that they are not, accounting that they are not, cooking the books to look like they’ve got tangible capital when it’s all been already looted by insiders of the bank, the way Prof. Bill Black, a former Executive Director of the Institute for Fraud Prevention and one of the most principled and most knowledgable regulators of our time, would title his book, that The Best Way to Rob a Bank is to Own One? The same way banks got looted in 2007 heading into 2008, when dividends, bonuses, and executive comp overall struck the stratosphere, despite bank execs knowing full-well back then that housing, and all they’d securitized in relation to it, and had tethered to on a noose, was in full-scale free-fall?
And what if these financial leviathans happened to be so immense in size as to be almost planetary in scope, spread out over 100-plus sizable economies, with controlling interests in over 30,000 entities in those countries?
And what if they were all interlaced and intertwined by a derivatives interconnect measured notionally at $1.3 quadrillion and counting, with the difference between “notional” and “net” being irrelevant when a contagion of nothing more than confidence hits, and a crisis comes calling, dropping counterparty after counterparty like dominoes?
The way they fell in 2008 to what was, at its essence, a crisis of confidence. As we’ve said on MainStreetGov.com, in 2008 it was not depositors who lined up to get their money out of banks, but non-depositors. The run on financial institutions came from wholesale, not retail. The more sophisticated the money in the wholesale funding market, the faster it fled. Why? Because, in the 2 years leading up to that September of 2008, in the 2 years since real estate had begun a certifiable summit-plummet, the so-called ‘smart money’ in capital markets knew that financial institutions were either top-to-bottom cooking their books to the max, or left-to-right stretching their numbers to the extreme, and that the seemingly solvent on paper were (in fact) effectively insolvent in reality.
So, with all of the aforementioned now mentioned, how dangerous would such banking institutions be to our liberties?
The answer: way more dangerous than any bank in Jefferson’s time, and far more dangerous than you know…
Now, ask Republican, Democrat, or any high official in our nation’s capital if any of that rings true, and (with rare exception) they’ll swear it does not. And, with those vehemently opposed too few and too far between, they’ll work to appoint a former Chief Executive Officer of Goldman Sachs, or a former Chief Operating Officer of Citigroup, as Secretary of the Treasury to prove it — like they did for three successive Presidents who’d not just pandered, but bent-over-backward to Wall Street, namely Bill Clinton and George Bush and Barack Obama, who nominated Bob Rubin of Goldman Sachs and Henry Paulson of Goldman Sachs and Jacob Lew of Citigroup, respectively, to stand guard — Hah! — over the People’s money.
Before he handed us Lew from Citi as Treasury Secretary in 2013, Change You Can Believe In’s very own Barack Obama was also thoughtful enough to give us George W Bush’s Chief Bailout Officer (as head of the New York Fed) as Treasury Secretary in 2009 — and we all know who that is by this smile — adding credence to the age-old saying that “the more things change, the more they stay the same.”
Upon leaving office, the Republican, the Democrat, and high official will (with rare exception) turn full-blown plutocrat, collecting check after check from their High Finance benefactors … hundreds of thousands of dollars for a short speech (be it about gardening in Arkansas for some part of it), a quarter of a million bucks for a dinner (a la carte, Ben Bernanke), millions of dollars for a quick ‘consultancy’ (just about every influence-peddler in D.C. gets this) or, better yet, $5 million for a part-time gig at a hedge fund (Larry Summers style), and possibly tens of millions of dollars in the end for an executive position at a private equity house that had enjoyed the spoils of taxpayer favors, dished-out by Treasury, since the day that exec had elevated to the top of Treasury … and, again, the ensemble of politicos and bureaucrats in D.C. will think nothing of it.
Aside from the distinct possibility of payoffs also making their way to bearer bonds in numbered accounts inside bastions of banking across the pond, it appears that getting to make more in an hour after leaving public office, than one got to make in a whole year while in public office, is now the New Normal for public officials, as they herd up against and stampede through the revolving door.
Never mind:
- that grease need not have a date of expiry on the lube-tube that Wall Street and K Street manufacture,
- or that bribery need not be restricted by deadline in its delivery,
- or that the difference to a kickback while in office, vs after leaving office, is nil when you know the source to be federally protected — why worry about when the graft gets given, when you know the regulated outfit, offering up the quid pro quo, is federally assured its survival, no matter what happens to its balance sheet, or what gets done to it by its own managers?
In Dec 2014 — and, as usual, into the thick of the holidays when public attention to such matters would run light and lenient with Christmas and New Year around the corner — Wall Street (by way of Citigroup) got the Congress and the White House to stick this bailout into (of all places) the 2015 Omnibus Appropriations Bill, knowing it had to pass, or else Government would’ve shut down:
“Each asset-backed security underlying such structured finance swaps is of a credit quality and of a type or category with respect to which the prudential regulators have jointly adopted rules authorizing swap or security-based swap activity by covered depository institutions” [covered, that is, by the taxpayer]
As for what Asset Backed Securities and Credit Default Swaps had to do with keeping the National Mall & Memorial Parks going, or federal employee payrolls flowing, is beyond us.
So how else do you explain a Citi-authored and Wall-sponsored provision, to park an alleged $7 Trillion (notional) in derivatives into taxpayer backed depositories, somehow making its way into a Fiscal Year 2015 Omnibus Appropriations Bill, other than as some form of grease in action?
How else do you explain the authorization for hundreds of millions of dollars of bonuses, awarded to the bankers who’d bankrupted AIG, somehow making its way in 2009 into the much touted Economic Stimulus Bill, other than as some form of graft in action?
How else do you explain a $108 billion increase in funding for the International Monetary Fund, for the benefit of bailouts of banks in the Eurozone, somehow making its way (also in 2009) into a supplemental wartime spending bill, other than as some variable of corruption in action?
Yes, you’re reading that number right. $108 billion for a bank bailout reservoir, attached to a $91 billion defense appropriation.
And don’t for a moment think the IMF helps out countries in trouble, or their peoples. The IMF’s purpose is to bail out bankers who’d recklessly and intentionally over-lent to countries, leaving those countries unable to service that debt.
Reckless over-lending, at a premium yield to the credit-unworthy especially, is great for banker bonuses. That’s why they loved Greece’s inclusion in the Eurozone, even if it took bogus accounting with a derivatives-based makeover by Goldman Sachs to get there. That’s why they loved, and continue to love over-lending to subprime borrowers, whether it be for houses or cars they know the borrowers cannot afford. As Jamie Dimon, the CEO of JP Morgan Chase wrote in a letter to shareholders: “Low quality revenue is easy to produce, particularly in financial services. Poorly underwritten loans represent income today and losses tomorrow.”
But why worry about the “losses tomorrow” when there’s the taxpayer there, offered on a platter for the rescue, right?
So the IMF buys the unserviceable debt of countries at a premium from the bankers, and then — with all its might — bullies those countries into submission to whatever austerity the IMF deems necessary. Sometimes sales of lands and assets and utilities at a discount have been ordered as repayment.
In voting for the $108 billion IMF attachment, the chairman of the Senate Foreign Relations Committee, John Kerry, a former Democratic Party presidential candidate and future Obama Secretary of State, said: “Economic growth abroad helps us kick economic growth into gear here at home.” What Kerry wanted to say (but couldn’t) was: Bank bailouts happening abroad, helps us avoid bank bailouts happening here at home.
And, notice, our government officials protect not just the corrupting industry but its corrupting officers as well. While every deferred/non prosecution agreement awarded to an Über bank, by the U.S. Justice Department, absolves the Über bank of a felony charge, lost in translation in the award of amnesty to the corporation is the plain and simple fact that corporations CANNOT commit felonies. They are, after all, inanimate objects. It takes human beings to commit felonies, and if the fraud is large enough to alter things like the cost of electricity, the price of aluminum, the value of oil, the rate of exchange of a major currency, or something as vast and all-encompassing as the London Interbank Offer Rate, it must be — it simply must be — the OFFICERS of the corporation committing the felonies.
But who cares, right? Let’s just fine the corporation for the felonious act, and let the corporation’s Chief Financial Officer tax deduct the fine, for the distribution of even more executive comp back to the execs! (Yeah, that’s exactly what’s been happening.)
Given that the capital on many a megabank balance sheet is either largely or wholly fictional, yes — a criminal prosecution of a systemic bank will probably expose that capital to be fictional and set off the Mother of all Crises (both U.S. Attorney General Eric Holder and the former Assistant Attorney General for the Criminal Division of the Department of Justice, Lanny Breuer, have in so many words, and nuances, admitted as much) … but still … have they no shame at 950 Pennsylvania Avenue to immunize the officers engaged in criminality as well.
“But it’s not the officers — it’s these rogue traders going off the range” we hear. Come on. In any corporation, be it a bank holding company or not, the tenor for integrity is set at the top. If the CEO were known for zero tolerance towards criminality, known for promptly handing to authorities anyone found breaking the law, for prosecution to the fullest extent of the law, with the firm’s attorneys assisting the prosecution, think there’d be traders “going rogue” at the rate we’re seeing?
Citigroup’s Tom Hayes would find all that out the hard way, with hard time of 14 years served upon his head, leaving his wife to teach his infant child to wave goodnight at a big picture of daddy, before bedtime, because daddy had to “go away” for some time.
Think this trader got that much hard time, just for manipulating Libor only. Even Hayes himself knows his sentence was for retracting a guilty plea and attempting to implicate his bosses.
For a criminal enterprise to arise, criminal masterminds must rise to lead it first. There’s no What comes before? The chicken or the egg? causal dilemma to it.
Still, by May 20 2015, with JP Morgan Chase, Citigroup, Barclays, RBS, and UBS hit with enduring felonies for failing to sail through deferred and non-prosecution grace periods gracefully (that is, without committing even more felonies, after the last bunch), the government decided there was more than dilemma to the causality, that there was in fact a tri-lemma in their midst, with perhaps a rooster needed to be added onto the chicken-and-egg mix — and, so, it granted waivers to the felons, so that they could continue to solicit the public’s money, manage it, and bet with it, however they pleased. (From his cell, Bernie Madoff must perennially wonder why he hadn’t gone to work for one of the waiver’d firms.)
But waivers to go on doing what they do, are not all they got for their felony convictions — instead of orange jumpsuits, the felons (heading up the felonious firms) also got to wear T-shirts that read: The Taxpayer’s Still Got Our Back!
Look, the damage done (and still being done) to the American economy in lost output, to American jobs in lost quality, to the peace of mind of the American People in lost security, by a few “white-collar” criminals, inhabiting a handful of elite bank C-suites, far exceeds the damage done to society’s well-being by all the “blue-collar” criminals, through time, combined. Yet, while we hunt down and imprison the latter, the former not only get off scot-free, they even get to (quote) “dine at the White House” — hat-tip Lawrence Lessig, the Director of the Center for Ethics at Harvard University, in memory of the senselessly hunted down, and finally felled, Aaron Swartz.
History has a nasty habit of repeating itself on those who forget its lessons. What caused the Savings & Loan Crisis in the 1980s and 1990s, is precisely what caused the Financial Crisis of 2008. With all due respect to former CFTC Commissioner Bart Chilton, who assigned blame to “$600 Trillion in unregulated Swaps” as cause for the 2008 Crisis, monstrous quantities of swaps did intensify the Financial Crisis of 2008, but swaps are NOT what caused the 2008 Crisis — the root cause of the Financial Crisis of 2008, that happened to be nearly a hundred times the economic damage-inflictor of the Savings & Loan Crisis, was identical to what caused the S&L Crisis, and it happened to be fraud (repeat: accounting and securities fraud) reflected in the Income Statement and Balance Sheet shenanigans, encouraged by bank managements, for one and only one purpose that only corruptors know best: magnifying executive compensation. Ask any honest regulator, criminal referral coordinator, or prosecutor that knows firsthand. Ask!!!
2008, the Financial Crisis, the Bailouts — shouldn’t that be water under the bridge by now, some argue. We wish it were that — water under a last bridge. But it appears, it’s merely heading for the next one. In Sep 2013, exactly 5 years after the last crisis, former Treasury Secretary and Goldman Sachs CEO, Henry “Hank” Paulson, made a prophecy, telling Germany’s leading economic newspaper, Handelsblatt, that “the world should prepare for a new financial crisis.” In Sep 2013, exactly 5 years after the last crisis, the Bank of International Settlements — the most notable global institution to publicly foretell the crisis of 2008 — would warn of “a phenomenon reminiscent [of the run-up] to the global financial crisis [of 2008].” In Sep 2013, again exactly 5 years after the last crisis, William White, formerly chief economist at the Bank of International Settlements, and among the most notable to forecast the financial crisis of 2008, would say: “This looks to me like 2007 all over again, but worse.”
Why would another financial crisis be close at hand? Ask Mr. White — as the leading analyst at the central bank for all central banks, he should know: “We have a lot of zombie banks out there… Central banks can’t rescue insolvent institutions…” Yes, especially ones converted from Too Big to Fail’s into Way Too Big to Fail’s after the last go-around.
Not to crowd this space with technicalities, but these two technicalities may deserve placement here to backup our claim that White’s right about there being zombies out there, and very scary ones at that, in the threat-extent they present to the global economy. Because, remember, the bite of just one of these zombies, is enough to infect the entire human race with misery. So here they are:
1. While by no means a foolproof tell-all, the ratio of a company’s stock price to its book value tells a lot, especially when applied to a systemic bank. Take Deutsche Bank AG for example, one of the most derivatively enlaced and interlaced systemics out there, with the largest (notional) derivatives portfolio on the planet to date. In June of 2015, as of this update, its price-to-book was struggling in the 0.5 vicinity, the lowest of the systemics we track daily. Means, investors think the assets are either heavily overstated, or liabilities are heavily understated — we’d submit: both.
Means: Deutsche Bank’s percentage of adjusted tangible equity to adjusted tangible assets (per International Financial Reporting Standards) of 1.9% (when we looked) — an atrocious number, as it is — may well be quite a bit below that, and in saying quite a bit below, know that we are not restricted by the zero-bound.
2. The so-called Texas Ratio (used to gauge the zombie-ness of financial institutions in Texas, during the S&L crisis) is a simple measure to apply — by putting bad loans up against cash and equity, it basically says the higher the ratio, the sicker (or dead-er) the bank.
When Portugal’s 2nd biggest private bank (Banco Espirito Santo) collapsed in Aug 2014, it’s measured/reported Texas Ratio was a lot less zombier than the one measured/reported at the time for Banco Santander, the biggest bank in Spain, the largest in the Eurozone by stock market capitalization (as of this writing), and a bank that’s on the Fed’s all-consuming Systemic list, much like Deutsche Bank.
Santander, like Deutsche Bank, has failed Fed stress tests. It’s real hard to fail a Fed stress test — even Bear Stearns and Lehman passed Fed stress tests at various instances leading up to their end. Matter of fact, Lehman passed a New York Fed blessed bonehead stress test months before its bankruptcy in 2008, despite Lehman being insolvent through most if not all of 2007. (Ask those Lehman tried to sell itself to in 2007 — yes, those who got to look under the covers of Lehman’s balance sheet, and found the giant gaping hole in its advertised capital cushion.)
Systemics in the Eurozone, especially, are neck-deep and oozing out their ears in all kinds of high risk goo, and, as is typical of such creatures, they are immersing themselves in even more new goo, in hopes of extricating themselves from the old goo that’s keeping executive compensation down. (Subprime auto loans due 6 and even 7 years out, being just one example of the new gunk that Santander’s sunk itself into.)
As we said earlier, in 2012 J.P. Morgan Chase CEO Jamie Dimon would (in a letter to shareholders) write: “Low quality revenue is easy to produce, particularly in financial services. Poorly underwritten loans represent income today and losses tomorrow.” Dr. Bill Black, who we referenced earlier, would (we’re sure) do away with Dimon’s sugarcoated use of euphemism and simply call that “income today and losses tomorrow” clause: the fraud recipe, as in:
- Grow extremely rapidly by
- Making terrible quality loans with a premium nominal yield, while
- Employing extreme leverage, and
- Providing grossly inadequate allowances for losses
To make executive comp as lavish as possible, for as long as possible, for as long as “the music” lasts.
“Central banks can’t rescue insolvent institutions” — true, they can only delay their demise. But that doesn’t mean central banks don’t try. Take the Federal Reserve’s LSAP/QE programs, for example, which have (in some shape or form) been going on for almost 7 years, as of this update. Through those years, there’s been lots of explanations and excuses for it from the usual suspects, like “this is a Main Street policy” … “to get jobs going” … quote, Ben Bernanke. (Yes, when Bernanke wasn’t immersed in self-adulation of his mental faculties, he did fool around with propaganda once in a while).
Irrespective of what the official line is out of the Fed, LSAP/QE is none other than an attempt at a replay of the zombie romance movie “Warm Bodies” in which a human girl, played by actress Teresa Palmer, tries to revive a zombie boy, played by actor Nicholas Hoult, using love to turn zombie into human — think of the Federal Reserve (or the European Central Bank, for that matter) as Ms. Palmer, and an undead global systemic banking system as Mr. Hoult, and think of the money the Fed and the ECB are injecting into front-running opportunity for the banks as the love the human injected into the zombie.
To no end, renowned bloggers continually claim that Zero Interest Rate Policy, or ZIRP, and Quantitative Easing, or QE, have failed to deliver on their promises. Perhaps — but, if so, only with respect to their officially or publicly stated promises, which we all should know to be bull-crap, with the one about QE creating jobs being the biggest lump of that bull-crap.
Make no mistake about it: QE, for one, has been wildly successful at keeping the fat-cats not just fat, but purring at the porches of our central banks. No doubt the opportunities for trading-in-advance of central bank trades, during the day, gave Wall’s execs their fair share of wet-dreams through the night.
And, as for the Fed’s Zero Interest Rate Policy, or ZIRP — not to mention what the Fed prefers — that being Negative Interest Rate Policy, or NIRP, were it not for the crisis in pensions demanding even some slight semblance of “normalization of rates”— you’re talking a gazillion bucks saved by the banks in interest costs that they’d otherwise have to pay to customers depositing money in their accounts. (Call old Ma and Pa Kettle at home and ask how their lifelong savings in that Certificate of Deposit is doing … oh, but wait, they’re not at home, they’re at work, still earning trying to make a living since nothing’s coming back to them from that CD.)
Recall: Total outstanding household debt was somewhere near $14 trillion in 2008 when ZIRP began. Seven years later, it was about $0.5 trillion less, meaning it wasn’t households that borrowed to advantage ZIRP. It wasn’t small businesses that borrowed, either.
So, was it big businesses that borrowed to advantage ZIRP? Yes and no. No, they did not borrow the free short-term money to finance long-term plant & equipment that’d create jobs. But, yes, they did borrow the free short-term money to finance share repurchases, to elevate earnings per share, so that their stock options would exercise and make them even richer.
Matter of fact, about all of the big business debt taken on since 2008, to advantage ZIRP, has gone to stock buybacks and debt-fueled takeovers (the kind that resulted in shutdowns of plant & equipment, closures of overlapping enterprises that were formerly competing that no longer needed to compete, or streamlining as they called it, translating to layoffs of workers).
ZIRP was also fantastic for market speculators, who used zero cost carry trades by the truckload to inflate asset markets to dizzying heights.
Wall Street loved it. The higher every asset class went, the more money the bankers made off public and private offerings, commissions, spreads, trading profits, investment banking fees, you name it.
But that was the whole idea of the Federal Reserve’s, wasn’t it — to again give bankers the world and everything in it, when — in 2008 — with their banks dead, lawsuits looming, and jail time waiting for accounting and securities fraud, those bankers came pretty damn close to not even having a pot to piss in.
Thus, Wall Street bigwigs now pray at the altar of Financial Crises, and thank it every day for having blessed them with that last Crisis of 2008. With the audacity to name his memoir of bailouts “The Courage To Act”, no doubt Ben Bernanke joins them at that altar too, with his check for the 8-figure advance he got to write the book, in hand.
A word to the wise in the financial blogosphere: Central Bank Monetary Policy has worked wonders if you measure wonders in personal enrichment of those enacting the monetary policy. Whether those enrichments are collected before or after the enactment, or both before and after, varies from individual to individual. The people deliberating in the Fed’s Eccles building at Constitution Ave NW, Washington DC, or plugging away in the ECB’s spanking new €1.4 billion headquarters at Ruckertstrasse, Frankfurt, are not stupid. They know when something’s not working. If they’re continuing a policy despite knowing it’s not working, it’s out of pure self-interest.
We need to accept what’s going on for what it is. If we cannot, then we may as well give up on opening our eyes, or fighting to keep them open, and become the sci-fi character Cypher and say: “You know, I know this steak doesn’t exist. I know that when I put it in my mouth, the Matrix is telling my brain that it is juicy and delicious. [But] you know what I realize? Ignorance is bliss.” And then, having said that, we should return to a state of suspended animation — and illusion — in that Matrix.
Moving on…
The last we checked, Germany alone was steadily making its way toward a major chunk of German GDP in its exposure to the unraveling rescues of its once-coveted Eurozone. Also, the last we checked, the anti-Euro Alternative für Deutschland Party was fast rising in the polls. And, with all that, serious cracks if not gaping fissures have opened up in the increasingly fraying relationship that the German Bundesbank is having with the European Central Bank. With the Eurozone’s Latin lands mired in economic malaise, and a rising tide of anti-austerity parties gaining in Spain, Italy, and France, it’s beginning to look like checkmate around the corner for the Eurocrats. (The flood — no, deluge — of Muslim immigrants ain’t helping either.)
In the wake of a Eurozone crisis, think the taxpayer won’t be called in for the rescue of — for starters — America’s Big Five: Morgan Stanley, Citigroup, Bank of America, JP Morgan Chase, and Goldman Sachs, all intertwined in Mutually Assured Destruction to their Eurozone brethren. Think again, because Title II of the “Dodd-Frank” Wall Street Reform Act assures it, as Title I has already been deemed D.O.A. or Dead-on-Arrival at the banking Resolution Conference of 2013.
Oh, and in case you’re wondering, Dodd-Frank, aka Public Law 111–203, signed by Mr. Obama on July 21 2010 to much pomp, splendor and fanfare, did NOT end bailouts. It enshrined them in a bill that started out at 848 pages, was 16,000 pages long within a few years, replete with thousands of holes and loopholes, and may end up at 35,000 pages, hollowed by craters a mile wide, before Wall Street lawyers/lobbyists are done ghost-writing the rule-writing phase of the bill.
When we last looked in 2014, six years after Lehman’s downfall, they were still unwinding Lehman’s derivative trades! And they did not expect to finish the liquidation for years! Think they can unwind and liquidate something many times bigger and much more complex, like JP Morgan Chase? When Lehman went up in smoke, it maintained controlling interests in slightly over 200 entities in about 20 countries; last we looked, JP Morgan Chase had sizable interests in near 5200 entities in almost four times as many countries.
2018/2019 — watch the whole house of cards come down. Watch unemployment and underemployment take-off, and widespread civil unrest manifest against the banks and anyone (or anything) in bed with the banks.
Recall:
About 6 months into President Obama’s second term, Janet Napolitano resigned as Secretary of Homeland Security. The President signaled he liked Raymond Kelly to replace her. Then NYPD Commissioner under “Its a Cheap Shot to Go After the Banks” mayor Michael Bloomberg, Raymond Kelly — a Senior Managing Director for Corporate Security at Bear Stearns at the beginning of the new millennium, and the choice of CEO Jamie Dimon to run corporate security at JP Morgan Chase in 2014 — maintains intimate ties to big bank execs.
A Distinguished Fellow at Wall Street’s public policy formation & formulation hangout, the Council on Foreign Relations (think of it as a supra-governmental entity, operating in the shadows), we think the Kelly pick, to head-up Homeland Security, to be no accident.
Here’s why:
Cities and states have been struggling with their finances since the last crisis. Some municipals are evidently bankrupt, struggling to fund their pension plans, pretty much hanging on with new loans to service old loans. A few muni’s are in junk bond status, making even that difficult. Another crisis, one much bigger, would bankrupt cities and states en masse.
How do you pay local and state law enforcement when there’s no money for payroll? How do you contain widespread civil unrest and mass protest with police forces eroded? After the next round of Crisis & Bailout, cities and states will need more cops, not less. A quasi-federalization of local and state law enforcement might become necessary, to increase armed-and-uniformed manpower.
What better way to sell Homeland Security taking over local and state law enforcement, than to put a onetime local cop in charge of it? What better way to defend banks from domestic “terrorists” like Occupy, and protect bankers from Second Amendment “crazies” like the Tea Party, than to install a recognized defender and protector of banks and bankers at the very top of National Police, and especially one who calls Jamie Dimon a friend.
(The Kelly pick did not of course pan out — stop & frisk may have played a part in it, Kelly may himself have demurred in the end, we don’t know — but what we do, is that his selection to run D.H.S. seemed more than a mere coincidence, in our estimation.)
There is a reason for the militarization of law enforcement in cutesy little idyllic lakeside towns like Neenah, Wisconsin, where a Mine-Resistant Ambush-Protected armored vehicle arrived. There is a reason for Washington, Iowa, with just 8 officers to its police department, also receiving one of those war machines, despite both towns barely registering serious violent crime in the years prior. (As of the original date of this writing, we could only find crime rates for 2012. In both Washington, Iowa, and Neenah, Wisconsin, there were zero murders and zero instances of arson in 2012. As of Sep 2014, there was 1 registered sex offender living in Neenah — perhaps the 20 tons of armor and firepower was to keep him — and any distended extension of him — contained.)
In Morgan County, Indiana, a police official echoed a soundbite suggested by Homeland Security that its MRAP could come in useful in the event U.S. soldiers, returning to their families after service to their country abroad, took up arms against their own country at home. “You have a lot of people who are coming out of the military that have the ability and knowledge to build I.E.D.’s and defeat law enforcement techniques,” said Sgt. Dan Downing of the Morgan County Sheriff’s Department. Yep, uh-huh, that sounded totally credible, and respectful, to those of us who hold our veterans in the highest regard.
There’s a reason for mine-resistant 39,850-pounders even going to campus police at universities — New Mexico State University campus PD and Ohio State University campus PD, to name just two — because students do form the most concentrated hotbeds for dissent, historically. (Although, in fairness to them, they aren’t typically known to mine campus grounds in protest.)
There is a reason for the Minerva Research Initiative “to uncover the conditions under which political movements aimed at large-scale political and economic change originate” that The Guardian described in the following terms in 2014: “Pentagon preparing for mass civil breakdown” … “Social Science is being militarized to develop operational tools to target peaceful activists and protest movements”.
There is a reason for the Directorate of Military Support for Domestic Operations, or DOMS, and for Presidential Directive 3025.18: “Support provided by U.S. Federal military forces, National Guard, Department of Defense civilians, DoD contract personnel, and DoD component assets, in response to requests or assistance from civil authorities…” signed in Dec 2010, around the time euro-area banks were loaded up on Greece, and Greece was burning and threatening to set off a banking crisis that could transmit transatlantic across the collateral interconnect and derivative daisy chain.
Even the U.S. Army War College’s Strategic Studies Institute has called for readiness on the part of the U.S. military for a “violent, strategic dislocation inside the United States” incited by “unforeseen economic collapse.” The Institute’s report has talked about a “loss of functioning political and legal order” and a “rapid dissolution of public order in all or significant parts of the U.S.” in the aftermath of such an economic collapse. The study spoke of “purposeful domestic resistance” and considered the possibility that “widespread civil violence would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security.”
There is a reason for mass surveillance of our citizenry, of Occupy leaders and organizers — of “Occupy Wall Street” leaders and organizers especially — and of Tea Party managers, marketers, recruiters, and (in some cases) protestors. In her memoir A Fighting Chance, Elizabeth Warren (then in charge of oversight of the TARP bailouts on behalf of the taxpayer) would recount a conversation she had with Larry Summers, the Wall-to-Washington revolving-door’s most prolific passenger, who at the time was Director of the National Economic Council and President Obama’s top economic adviser…
After dinner, “Larry leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don’t listen to them. Insiders, however, get lots of access and a chance to push their ideas. People — powerful people — listen to what they have to say. But insiders also understand one unbreakable rule: They don’t criticize other insiders.
Anyone think Senator Elizabeth Warren, the thickest thorn in the backside of Wall-to-Washington “insiders” in 2009, and (we sincerely hope) a thicker one now, isn’t being surveilled?
The evidence we laid out under “Protect & Defend” that included the 2013 Congressional testimony by three of the intelligence apparatus’s top apparatchiks — John Inglis, General Alexander, and Lt. Gen. Clapper — and also included references to the pattern of ‘intelligence failures’ that coincided with the expansion of the surveillance state, should convince most — who are open-minded enough to remove the blinders, and reflect — that mass surveillance ain’t about terrorism as much as it is about preservation of the continuity of the Wall-to-Washington Establishment Status Quo.
There is a reason for even the tapping of German Chancellor Angela Merkel’s cell phone — she did nearly pull the plug on Greece in Sep 2012 (says ex ECB official Lorenzo Bini Smaghi) and could pull the plug on the whole Euro experiment with a return to the Deutsche Mark when Spain, Italy, and France team-up, and gang-up on her and all her fellow austerians.
Reminder: Director of National Intelligence Lt. Gen. James Clapper’s did once admit that the N.S.A.’s spyware is there to also serve as (quote) an “Early Warning System” to let Wall Street in on any threats to its well-being, presumably including those that might epicenter elsewhere.
Sep 2008 was the front-end of a Category-5 hurricane. The blue sky of the eye of the hurricane followed, an eye distended by unprecedented Federal Reserve intervention designed solely for the purpose of goosing bank P&L’s in tatters and lifting banker bonuses in free-fall. All powerful hurricanes have a back-end to them, and the back-end tends to be far more destructive than the front-end. And, by all our measures, there’s much more to the wrath of the coming storm, than the one that passed.
Ladies and Gentlemen, we started the conversation to this section (a long way up from here) on the subject of grease, graft, kickback, and corruption — and, so, we should also phase it out there…
A highly advanced stage of corruption has opened up a cavernous wound in America, a wound whose depth and dimension are growing. The corruptors, meantime, get to bask in what appears to be increased Establishment protection, with every tool in the Establishment arsenal, including the taxpayer. As for the admission, by those corruptors, to manipulation of electricity markets, oil & gas markets, metals markets, interest rate markets, currency markets, and the rigging of possibly every market known to man (felonies without limit), that’s what’s become water under the bridge to those involved, no matter how many times it happens, over and over again — because that’s what water under the bridge looks like to them, something continuous, free flowing, unresisted and without end.
So why do they do it? So that the multimillion-dollar revolving doors keep turning, the multimillion-dollar speech circuits keeps humming, the multimillion-dollar advances for autobiographies keep signing, and the $$$,$$$,$$$’s keep rolling. Why else?
Is it any wonder, therefore, that both Republican and Democrat in D.C. find each other rich — filthy rich — soon after leaving office?
But — guess what — if you ask them, off the record, how they got that stinking rich, they’d lean over, throw you a wink and unabashedly whisper: “Public $ervice, of course.”
America is not a former Soviet satellite, a mid-east Emirate, Kingdom, Monarchy, Banana Republic or any other Third World caricature, where the rulers get rich at the expense of the ruled. We are supposed to be example to the world, that the most powerful in the world, be they elected by us or appointed by us, shall not be hunters of treasure, but creators of it.
— From the Founders’ Statement in the Articles of Origin of the 2020 Platform of the Economic Party, USA
But that’s not what we have going on now in Washington DC — is it?
And they wonder why by 2013 a strong majority believed a third major political party was needed (Gallup). Or why a number of polls were beginning to show a growing majority laying claim to the notion that neither the Democratic Party nor the Republican Party“represented the American people”. Or why most wished they could defeat and replace every single Member of Congress, including their own representatives, if they could (NBC-Wall Street Journal).
On June 10 2014, House Majority Leader Eric Cantor (R-Va) got a taste of that, as conservative voters in his 7th congressional district sent him packing (by 10 percentage points, no less) against an opponent who spent as much on his entire campaign as Cantor spent on steaks, despite Cantor’s clout and seniority in Congress, proximity to the Speaker, not to mention the jobs he hauled into the 7th by way of federal contracts.
As the #1 contributor to Cantor’s mega-million-dollar campaign, Goldman Sachs was kind enough to tell us why Cantor had been served a dish, best served cold, with this (unintended) political obituary, delivered by its chief operating officer, Gary Cohn: “[Eric’s] been a great public servant. And I think we’ve all enjoyed having Eric in the Congress.” That’s right, Gary, and — obviously — voters had noticed how great a public $ervant he’d been and how far your enjoyment had gone.
Matter of fact, since Oct 3 2008 when Cantor helped shepherd TARP through flocks of extremely nervous sheep in the House, with Treasury Secretary & ex Goldman Sachs CEO Henry Paulson by his side, “Eric” had been nothing less than an absolute and unmitigated joy for Cohn & Co.
By the end of the first quarter of 2014, dissatisfaction with “with the U.S. system of government and its effectiveness” had reached an all-time Gallup record. Fewer than one in five trusted the government to do what is right, all or most of the time. A survey by AP/NORC found that 7 in 10 voters do not have any confidence in the government “to make progress on the important problems and issues facing the country in 2014.” Almost 8 in 10 Americans felt the state of the economy was either not good or poor. A majority could no longer regard their President as honest, in effect rendering the People’s highest elected representative dishonest in the eyes of that People.
And a 107-nation poll by Transparency International, a corruption monitor, had found Americans more likely than Italians to say that the media in their country were all “corrupt or extremely corrupt”, leaving perhaps Fox News, CNN, MSNBC and their mutant ilk to duke it out amongst themselves as to who might be “corrupt” versus “extremely corrupt” in the narration and dissemination of their so-called “news”.
And the scary thing about all these statistics — scary, that is, to the Establishment — was their trend-line, suggesting they were getting not better, but worse, and heading for crossover into the danger zone for that Establishment.
In 2010, in St. Louis Missouri, President Barack Obama lamented: “People have lost faith in government. They had lost faith in government before I ran, and it has been getting worse” as if he, at the very pinnacle of that government, were in some way not part of that government.
Empty promises, fake slogans, and ideas lying fallow, have convinced most Americans of what they’d known all along: the Democratic Party was failing America, the Republican Party was failing America, and with “the buck stops here” perennially true, despite what some insular types at the White House may think, a President was failing America.
The Millionaire’s club (that our political ruling class had become by 2008) steadily turning itself into a deci-Millionaire’s and centi-Millionaire’s club since the so-called economic “recovery”, while the middle class was sinking into the poor and the poor were sinking into the more-poor, was beginning to convince even the holdouts.
With just about everyone in Government jamming up against the revolving door, frothing at the mouth to collect big bucks on the other side, the perception that Wall Street and K Street owned the American Government, had begun to solidify — which might explain why the same 107-nation poll by Transparency International had found Americans more likely than Italians to say that big business in their country were (also) all “corrupt or extremely corrupt”.
All things corrupt eventually crash and burn under the weight of their own corruption, as will this. History is littered with their ashes.
As far back as 2011, almost 9 out of 10 Americans were either frustrated or outright angry with their government (Pew Research). By 2014, the anger, especially, was palpable. The urge, at large, to hasten the demise of an Establishment Status Quo, that had outlived its utility to American Democracy, had grown. Powerful cathartic forces were clearly gathering, preparing and readying to clean out the rot, and return this land of ours to its righteous purpose and rightful being.
Is it any wonder? Trust in politicians is at a historic low. Trust in the government’s legislative arm could very easily be the lowest of any democracy on the planet. Members of Congress, Republican and Democrat, are on their collective way to a low single digit approval rating — if not for the friends and family of those 535 Senators and Reps, their thousands of staffers, and their tens of thousands of aspiring and veteran corruptors showing up in the polling, we’d bet the legislative arm is already at low single digits. (No doubt the veteran corruptors, in particular, have been giving Capitol Hill a 100% approval rating to skew the reported result.)
In essence, trust in themselves — in self governance — is (for now) all that the People got left. Thus, the raison d’être or ‘reason to be’ for this thing we call Main Street Government.
Said Thomas Jefferson: “Experience hath shown, that even under the best forms of government, those entrusted with power have — in time and by slow operation — perverted it into tyranny. All tyranny needs to gain a foothold, is for people of good conscience to remain silent. When the government fears the people, there is liberty”. We do not worship at the altar of Jeffersonian philosophy, but you got to admit the good man saw things long ago that we see happening now.
We are not conservatives or liberals or libertarians, by the broad definition of a paintbrush, although we count all of them amongst our ranks, but we are Americans yearning for a Renaissance, in every sense of the word. With that said, it is our most earnest intent that the American Voter and Main Street Gov, hand-in-hand, together, hand-deliver to government a hereafter never-to-be-forgotten: Fear of the People.
Visit Main Street Gov for more.
