LILA RAJIVA: The Mind-Body Politic
Individuals Not Ideologies
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Archive for March, 2010
C. S. Lewis On Pseudo-Intellectuals And Indoctrination
Update:
I posted this excerpt from Lewis yesterday, not because I entirely endorse it, but because it sets off so many interesting trains of thought..
Some libertarians would be unsettled by the description of “true” pedagogy as a kind of reproduction of the teacher. The description even set me thinking whether, contra Lewis, there may actually be a devious line running from the good kind of pedagogy to the bad kind….
But the confrontation between “fact” and “value” that Lewis describes does seem accurate to me and actually reminds me, strangely, of Robert Pirsig’s analysis of “quality” in the philosophical novel, Lila.
Original Post
Novelist and Christian scholar, C. S. Lewis, in “The Abolition of Man”:
“Those who know the Tao can hold that to call children delightful or old men venerable is not simply to record a psychological fact about our own parental or filial emotions at the moment, but to recognize a quality which demands a certain response from us whether we make it or not. I myself do not enjoy the society of small children: because I speak from within the Tao I recognize this as a defect in myself—just as a man may have to recognize that he is tone deaf or colour blind. And because our approvals and disapprovals are thus recognitions of objective value or responses to an objective order, therefore emotional states can be in harmony with reason (when we feel liking for what ought to be approved) or out of harmony with reason (when we perceive that liking is due but cannot feel it). No emotion is, in itself, a judgement; in that sense all emotions and sentiments are alogical. But they can be reasonable or unreasonable as they conform to Reason or fail to conform. The heart never takes the place of the head: but it can, and should, obey it.
Over against this stands the world of The Green Book. In it the very possibility of a sentiment being reasonable—or even unreasonable—has been excluded from the outset. It can be reasonable or unreasonable only if it conforms or fails to conform to something else. To say that the cataract is sublime means saying that our emotion of humility is appropriate or ordinate to the reality, and thus to speak of something else besides the emotion; just as to say that a shoe fits is to speak not only of shoes but of feet. But this reference to something beyond the emotion is what Gaius and Titius exclude from every sentence containing a predicate of value. Such statements, for them, refer solely to the emotion. Now the emotion, thus considered by itself, cannot be either in agreement or disagreement with Reason. It is irrational not as a paralogism is irrational, but as a physical event is irrational: it does not rise even to the dignity of error. On this view, the world of facts, without one trace of value, and the world of feelings, without one trace of truth or falsehood, justice or injustice, confront one another, and no rapprochement is possible.
Hence the educational problem is wholly different according as you stand within or without the Tao. For those within, the task is to train in the pupil those responses which are in themselves appropriate, whether anyone is making them or not, and in making which the very nature of man consists. Those without, if they are logical, must regard all sentiments as equally non-rational, as mere mists between us and the real objects. As a result, they must either decide to remove all sentiments, as far as possible, from the pupil’s mind; or else to encourage some sentiments for reasons that have nothing to do with their intrinsic ‘justness’ or ‘ordinacy’. The latter course involves them in the questionable process of creating in others by ’suggestion’ or incantation a mirage which their own reason has successfully dissipated.
Perhaps this will become clearer if we take a concrete instance. When a Roman father told his son that it was a sweet and seemly thing to die for his country, he believed what he said. He was communicating to the son an emotion which he himself shared and which he believed to be in accord with the value which his judgement discerned in noble death. He was giving the boy the best he had, giving of his spirit to humanize him as he had given of his body to beget him. But Gaius and Titius cannot believe that in calling such a death sweet and seemly they would be saying ’something important about something’. Their own method of debunking would cry out against them if they attempted to do so. For death is not something to eat and therefore cannot be dulce in the literal sense, and it is unlikely that the real sensations preceding it will be dulce even by analogy. And as for decorum—that is only a word describing how some other people will feel about your death when they happen to think of it, which won’t be often, and will certainly do you no good. There are only two courses open to Gaius and Titius. Either they must go the whole way and debunk this sentiment like any other, or must set themselves to work to produce, from outside, a sentiment which they believe to be of no value to the pupil and which may cost him his life, because it is useful to us (the survivors) that our young men should feel it. If they embark on this course the difference between the old and the new education will be an important one. Where the old initiated, the new merely ‘conditions’. The old dealt with its pupils as grown birds deal with young birds when they teach them to fly; the new deals with them more as the poultry-keeper deals with young birds— making them thus or thus for purposes of which the birds know nothing. In a word, the old was a kind of propagation—men transmitting manhood to men; the new is merely propaganda.
It is to their credit that Gaius and Titius embrace the first alternative. Propaganda is their abomination: not because their own philosophy gives a ground for condemning it (or anything else) but because they are better than their principles. They probably have some vague notion (I will examine it in my next lecture) that valour and good faith and justice could be sufficiently commended to the pupil on what they would call ‘rational’ or ‘biological’ or ‘modern’ grounds, if it should ever become necessary. In the meantime, they leave the matter alone and get on with the business of debunking. But this course, though less inhuman, is not less disastrous than the opposite alternative of cynical propaganda. Let us suppose for a moment that the harder virtues could really be theoretically justified with no appeal to objective value. It still remains true that no justification of virtue will enable a man to be virtuous. Without the aid of trained emotions the intellect is powerless against the animal organism. I had sooner play cards against a man who was quite sceptical about ethics, but bred to believe that ‘a gentleman does not cheat’, than against an irreproachable moral philosopher who had been brought up among sharpers. In battle it is not syllogisms that will keep the reluctant nerves and muscles to their post in the third hour of the bombardment. The crudest sentimentalism (such as Gaius and Titius would wince at) about a flag or a country or a regiment will be of more use. We were told it all long ago by Plato. As the king governs by his executive, so Reason in man must rule the mere appetites by means of the ’spirited element’.20 The head rules the belly through the chest—the seat, as Alanus tells us, of Magnanimity,21 of emotions organized by trained habit into stable sentiments. The Chest-Magnanimity-Sentiment—these are the indispensable liaison officers between cerebral man and visceral man. It may even be said that it is by this middle element that man is man: for by his intellect he is mere spirit and by his appetite mere animal.
The operation of The Green Book and its kind is to produce what may be called Men without Chests. It is an outrage that they should be commonly spoken of as Intellectuals. This gives them the chance to say that he who attacks them attacks Intelligence. It is not so. They are not distinguished from other men by any unusual skill in finding truth nor any virginal ardour to pursue her. Indeed it would be strange if they were: a persevering devotion to truth, a nice sense of intellectual honour, cannot be long maintained without the aid of a sentiment which Gaius and Titius could debunk as easily as any other. It is not excess of thought but defect of fertile and generous emotion that marks them out. Their heads are no bigger than the ordinary: it is the atrophy of the chest beneath that makes them seem so.
And all the time—such is the tragi-comedy of our situation—we continue to clamour for those very qualities we are rendering impossible. You can hardly open a periodical without coming across the statement that what our civilization needs is more ‘drive’, or dynamism, or self-sacrifice, or ‘creativity’. In a sort of ghastly simplicity we remove the organ and demand the function. We make men without chests and expect of them virtue and enterprise. We laugh at honour and are shocked to find traitors in our midst. We castrate and bid the geldings be fruitful.”
From Chapter One, “Men Without Chests,” in C. S. Lewis, The Abolition of Man.
Harvard Undergrad & Perlman Student, Intern Beats Wall Street Whizzes
Update (March 30):
If anyone claims that looking at gender and the way it inflects culture is inherently collectivist, I’d say they need to define collectivism more accurately. The way libertarians define it now, it’s more a term of abuse than a credible unit of analysis, unless it’s qualified pretty heavily.
There is a body of evidence that males are over-represented in highly aggressive behaviors of certain kinds. That isn’t an argument that men are “less moral” or that women are “more moral.” Not at all. For instance, women predominate in certain other kinds of crimes. In studies of child-killing/infanticide, women killers are often represented more heavily when considering certain age groups. Why? Perhaps because children are weaker than women physically and because women spend more time around them and usually have primary care of them. On the other hand, there are fewer female serial killers than male.
The richest financiers in the world are males. That’s a fact. Males are heavily over-represented in the financial industry and it’s a very male-dominated culture. There are complex reasons for that.
But they’re irrelevant to this post.
Do women benefit from welfare-state programs and set-asides and does that affect voting patterns, consumer culture, tax policy, and welfare policy? I’d say, with some caveats, probably yes.
[But conversely, men might benefit from crony capitalism on Wall Street and defense boondoggles, and indirectly, through set-asides from women that benefits families].
But, again, that doesn’t have much to do with this post…
For all I know, some of these financiers were pushed into reckless behavior because their wives were shopaholics or suing them for everything they had.
But, once again, that’s not this post.
So, this isn’t gender bigotry. It’s simply one way of looking at the influence of our own collectivist tendencies (masculinity as it’s constructed, as well as masculinity as a biological reality) on Wall Street culture.
Original Post
Deal Journal tracks down another outsider who spotted Wall Street’s corrupt practices ahead of the pros. Turns out she’s a woman too. There’s something about estrogen that doesn’t lend itself to mega financial swindles. We’re waiting for the Harvard thesis on the gender behind Wall Street’s agenda.
I hate to come to this conclusion, but a lot of the hot-air, recklessness, ego, hype, aggression, and cut-throat competition really does sound like the product of a culture that conflates masculinity with viciousness and braggadocio. Paulson, Weill, Rubin, Dimon…no women in the top sharks. But when you look at whistle-blowers and expose writers, women stand out: Ann Williamson, Padma Desai (both on the Russian crisis) Lucy Komisar, Meredith Whitney, Janet Tavakoli….
“Deal Journal has yet to read “The Big Short,” Michael Lewis’s yarn on the financial crisis that hit stores today. We did, however, read his acknowledgments, where Lewis praises “A.K. Barnett-Hart, a Harvard undergraduate who had just written a thesis about the market for subprime mortgage-backed CDOs that remains more interesting than any single piece of Wall Street research on the subject.”
“Barnett-Hart’s interest in CDOs stemmed from a summer job at an investment bank in the summer of 2008 between junior and senior years. During a rotation on the mortgage securitization desk, she noticed everyone was in a complete panic. “These CDOs had contaminated everything,” she said. “The stock market was collapsing and these securities were affecting the broader economy. At that moment I became obsessed and decided I wanted to write about the financial crisis.”
Back at Harvard, against the backdrop of the financial system’s near-total collapse, Barnett-Hart approached professors with an idea of writing a thesis about CDOs and their role in the crisis. “Everyone discouraged me because they said I’d never be able to find the data,” she said. “I was urged to do something more narrow, more focused, more knowable. That made me more determined.”
She emailed scores of Harvard alumni. One pointed her toward LehmanLive, a comprehensive database on CDOs. She received scores of other data leads. She began putting together charts and visuals, holding off on analysis until she began to see patterns–how Merrill Lynch and Citigroup were the top originators, how collateral became heavily concentrated in subprime mortgages and other CDOs, how the credit ratings procedures were flawed, etc.
“If you just randomly start regressing everything, you can end up doing an unlimited amount of regressions,” she said, rolling her eyes. She says nearly all the work was in the research; once completed, she jammed out the paper in a couple of weeks.”
More here about the young lady whose research probably played a big part in Michael Lewis’ new book, “The Big Short.”
[At least, Lewis acknowledged the research. That puts him several rungs above most celebrity authors].
Meanwhile, I really like that a violinist was involved in this. My own father was a very gifted amateur violinist and Perlman, Zukerman, Oistrakh, Elman, Kreisler, Menuhin and many others defined my childhood.
Perhaps a lifetime of being immersed in real virtuosity and creativity left Barnett-Hart immune to the glamor of the phony maestros of Wall Street …
CFTC Hearing: Paper Gold Is A Ponzi Scheme
Adrian Douglas at GATA on another revelation at the CFTC hearing (a “revelation” that’s actually well known):
“As dramatic as this revelation was at the CFTC hearing, there was another bombshell at the hearing. This was the testimony I was able to deliver at the hearing while assisting Harvey Organ with his testimony. I was able to show that the London Bullion Market Association (LBMA) over-the-counter gold market is nothing but a massive “paper gold” Ponzi scheme. What was then astonishing is that the bullion bank apologist, Jeffrey Christian of CPM Group, who has always been staunchly against GATA, endorsed my comments as being “exactly right” and went on to confirm that the LBMA trades more than 100 times the gold it has to back the trades.
There were lots of almost as equally explosive admissions at the hearing, so I have made a transcript of the relevant section of the webcast. I have posted the two short video clips here and here which are what have been transcribed.
http://www.youtube.com/watch?v=9wIMpe9SjfQ
http://www.youtube.com/watch?v=e9bU0r6JP4s
The transcript is given below with some notes added by me.
Hayek and Bork On Intellectuals
In an earlier blog, I expressed my disagreement with a common criticism in libertarian circles that socialism was motivated mostly by envy and spite. I made the point that most socialists I’ve known have had honorable motives, but, in my view, are superficial in their analysis of events. I cited Michael Oakeshott to that effect.
In this debate between noted legal scholar (and former corporate attorney) Robert Bork, Hayek makes the same point, only in relation to intellectuals: They confuse the intelligible with the rational.
More Capital Controls Hidden In Obama Stimulus Act
Zerohedge notes the tightening of capital controls in the hiring incentives act (HIRE) passed on March 18 by the Obama administration. A more sober summary of the changes introduced can actually be found at Lexology. Salient points from Lexology’s summary:
1. Withholding Tax on Payments to Foreign Financial Institutions, Trusts and Corporations. Effective January 1, 2013, the HIRE Act essentially forces foreign financial institutions, trusts, and corporations to choose between either agreeing to provide the IRS with information about their U.S. account holders, grantors and owners, or subjecting themselves to a 30% withholding tax on almost any payment they receive from a U.S. payor. The rules applicable to foreign financial institutions differ from those that apply to foreign trusts and corporations……….
….In general, “withholdable payments” to an FFI are subject to the 30% withholding tax unless the FFI enters into an agreement with the Treasury Secretary requiring the FFI to:
- Obtain sufficient information from every holder of every account maintained by the FFI to determine whether the account is a United States account.
- Comply with the verification and due diligence procedures that the IRS and U.S. Treasury may require regarding identification of United States accounts.
- Provide annual reports on each United States account maintained by the FFI, which must include:
- The name, address, and TIN of each account holder which is a specified U.S. person and, in the case of any account holder which is a U.S.-owned foreign entity, the name, address, and TIN of each substantial U.S. owner of such entity;
- The account number;
- The account balance or value; and
- Except as provided by the Treasury Secretary, the gross receipts and gross withdrawals or payments from the account.
- Deduct and withhold a tax equal to 30% of any “passthru” payment by the FFI to either a “recalcitrant account holder,” which is a U.S. account holder who withholds information from the FFI, or another FFI that does not meet the requirements necessary to avoid the 30% withholding tax.
- Comply with requests by the Treasury Secretary for additional information about any United States account held by the FFI.
- If foreign law would prevent the required reporting on United States accounts, attempt to get a valid waiver, if one is available under the applicable foreign law, from the account holder, and close the account if a waiver is not obtained within a reasonable period of time…………..
Foreign Entities that are not Foreign Financial Institutions. The new Code Section 1472 also requires 30% withholding on withholdable payments made to nonfinancial foreign entities, unless the withholding agent is provided with certification either (1) that the foreign entity has no substantial U.S. owners or (2) that identifies the name, address, and TIN of each substantial U.S. owner.
Payments to corporations whose stock is regularly traded on an established securities market or of (Lila: correction, “to”) an expanded affiliated group of such corporations, to entities organized under the laws of a U.S. possession and owned entirely by bona fide residents of that U.S. possession, to foreign governments and central banks, and to international organizations are not subject to 30% withholding under Code Section 1472.
[Lila: File under Crikey, What Does This Gobbledygook Mean?]
2. Required Disclosure by Individuals of Foreign Financial Accounts, Increased Penalties, and Extension of Statute of Limitations.The HIRE Act requires individual taxpayers who have an interest in a “specified foreign financial asset” to attach a statement to their income tax return if the aggregate value of all such assets during any year is greater than $50,000………
Required Disclosure. The taxpayer must disclose: In the case of any account, the name and address of the financial institution in which such account is maintained and the number of such account.
- In the case of any stock or security, the name and address of the issuer and such information as is necessary to identify the class or issue of which such stock or security is a part.
- In the case of any other instrument, contract, or interest, such information as is necessary to identify such instrument, contract, or interest, and the names and addresses of all issuers and counterparties with respect to such instrument, contract or interest.
- The maximum value of the asset during the taxable year.
Penalties. There are new penalties for both the failure to disclose a foreign financial account and for understatements of tax attributable to undisclosed foreign financial assets.
The HIRE Act imposes a $10,000 penalty for failure to furnish the required information when due. If the taxpayer fails to correct such failure for more than 90 days after receiving notice of the failure, an additional $10,000 penalty is imposed for each 30-day period (or fraction thereof) during which the failure continues after the expiration of the 90-day period following the notice, up to a maximum penalty of $50,000.
In addition, the HIRE Act increases the penalty on of any portion of an underpayment of tax that is attributable to any undisclosed foreign financial asset understatement from 20% of the understatement to 40% of the understatement.
Extended Statute of Limitations for Undisclosed Foreign Accounts. The HIRE Act extends the statute of limitations for audits of certain unreported income from a foreign financial account from three years to six years.
3. Repeal of Foreign Exceptions to Registered Bond Requirement. The HIRE Act denies an interest deduction for interest on any unregistered bond (typically these will be bearer bonds), effective for bonds issued after second anniversary of the date of enactment.
4. PFIC Reporting. In addition to the reporting already required from shareholders of a passive foreign investment company (PFIC), effective as of March 18, 2010 the HIRE Act requires that each United States person who is a shareholder of a PFIC file an annual report containing such information as the Secretary may require. A foreign corporation that generates passive income (typically interest and/or dividends) is classified as a PFIC if (a) 75% or more of the corporation’s gross income is passive income for purposes of the CFC rules or (b) 50% or more of the average value of the corporation’s assets produce, or are held for the production of, passive income.
5. Electronic Reporting by Financial Institution Withholding Agents. The HIRE Act authorizes the IRS to impose electronic reporting requirements on financial institutions that are withholding agents, even if the institution files less than 250 information returns (the current threshold).
6. Foreign Trust Changes. The HIRE Act makes a number of changes in the rules governing foreign trusts. A transferor to a foreign trust that has a U.S. beneficiary is treated as owner for U.S. tax purposes of the portion of the trust payable to or accumulated for the benefit of a U.S. beneficiary. The HIRE Act provides that an amount is treated as being accumulated for the benefit of a U.S. beneficiary even if the U.S. person is only a contingent beneficiary or if any person has the discretion to distribute from the trust to any person unless the trust specifically identifies the class of permitted beneficiaries and none of the members of the class are U.S. persons.
Loans to a U.S. person or allowing a U.S. person to use trust property are also treated as payments to or accumulations for the benefit of a U.S. person unless the U.S. person repays the loan at a market rate of interest within a reasonable period of time or pays fair market value for the use of the property.
The HIRE Act also requires that any person who is taxable as the owner of a foreign trust must provide such information about the trust as the IRS may require. Penalties for failure to comply with the foreign trust reporting requirements were also increased, effective for returns required to be filed after December 31, 2009.
7. Taxation of Dividend Equivalents. The HIRE Act provides that dividend equivalents used in lieu of dividends to avoid 30% withholding on FDAP income, such as securities lending transactions, sales-repurchase agreements, and notional principal contracts, are treated as U.S.-source dividends for U.S. tax purposes………..”
My Comment:
The Zerohedge headline is rather alarmist, but on closer inspection, despite the dreadful sneakiness of sticking this into some apparently minor stimulus legislation, the controls are only a continuation of a trend already well under way.
The 30% withholding for refusal to disclose US account holder information is pretty high and so are the new penalties, and I’ll post on what I find out about them, but the disclosure rules are already in effect.
Most of this seems to be part of the administration’s attempt to go after off-shore business accounts suspected of money-laundering, tax-evasion, or criminal activity.
The proximate causes of the financial crisis lie in the off-shore and re-insurance racket. And the Obama administration is determined to end banking secrecy in order to end that. I can sympathize, because indeed multinational corporations do siphon off most of their profits through shell accounts in tax-havens, paying little or nothing to the jurisdictions in which they actually work and use public services. Meanwhile, the havens have become festering centers of crime, drugs, and arms sales, and also the home of penny-stock fraud , as well as of naked short-selling scams.
The European Union Bank, chartered in Antigua in the Caribbean, for example, which boasted of being the first online bank, and which offered secrecy to account holders, was chartered as a subsidiary of Menatep, a large Russian bank, notorious for involvement with organized crime, as this Washington Post piece by Douglas Farah in 1996 noted.
The outfit Tax Justice.net is a global effort to deal with this huge relatively unrecognized problem, initiated by veteran off-shore investigator Lucy Komisar. It seeks banking transparency and an end to the off-shore racket.
This is a laudable goal. And so far as exposure of the crimes and corruptions of these havens help us understand poverty, development, and the impact of globalization, neo-liberalism, and various tax and regulatory regimes, I’m sympathetic.
But, beyond that, I’m wary of the methods and underlying premise. Strengthening the government regulatory and enforcement apparatus has more potential for abuse than use, this late in the crony capitalist game. There’s a much simpler and more libertarian approach to the underlying problems. And that is to reduce income taxes to the lowest level compatible with paying incurred obligations. A simple flat tax should do it.
Abolish pay-roll, personal income, and corporate taxes. Make up the short-fall where it should be made up - in the kind of user fees and sales taxes described at Fair Tax.org, which are targeted at the biggest users.
Roads, for instance, are largely used..and damaged…by commercial trucks. Yet, these trucks pay far less than they ought, because of the lobbying of their trade associations. Fix these sorts of leakages and then cut income taxes and taxes on investment and job-creating activities, as illustrated in this WSJ piece on people moving to low income tax states. Then go back to sound money and a market interest rate.
You’ll get rid of the incentives for corruption, encourage small businesses to compete more easily, and keep big business onshore. But that’s unlikely to happen any time soon….
Instead, we’re going to have deeper infringements on privacy.
We already knew that private bank accounts were a thing of the past for most ordinary people. Not for the very rich, of course. But we already knew that too..
It remains to be seen whether the new controls will change that.
Make Sense, Not War…
News flash for wannabe revolutionaries, paramilitaries, militias, etc., etc.
“To go to war is something even the most ignorant savage does with relish; but to start a revolution requires the ability for calm, rational thought and a manly courage to risk it all that does not currently exist in this country. Where once our forefathers shot at government troops marching through the Massachusetts countryside towards Lexington and Concord, today we are a frightened little flock that goes to pieces at the thought of Goldman Sachs suffering a well-deserved bankruptcy. 2010 America does not possess what successful revolutions are made of.”
– C. J. Maloney at Lew Rockwell
Hmm. I think Mr. Maloney underestimates human beings. But a sober appraisal of the possibility and the consequences of violence is in order.
Or, to make a slogan out of this:
Make Sense, Not War…
Soros To Buy Stake In Bombay Stock Exchange, Goldman Seeks Commercial Banking License in India
Palak Shah at the Business Standard :
“US micro hedge fund legend George Soros and the world’s third biggest philanthropist George Kaiser are in the race to acquire close to 4 per cent in the Bombay Stock Exchange (BSE), Asia’s oldest stock exchange.
Soros has bid for the BSE stake, held by the embattled Dubai Financial Group LLC, through Soros Fund Management LLC, and Kaiser has done so through private equity fund, Argonaut.
Other investors who have bid for BSE stake include New York-based private equity majors J C Flowers and Caldwell Investment, promoted by Toronto investment broker Thomas Caldwell. Caldwell is a specialist investor in stock exchanges and bought 4.3 million shares of the New York Stock Exchange in 2006. Sources added that a private equity fund has bid Rs 370 for each share, valuing BSE at over Rs 3,800 crore. Avendus Capital is advisor to the deal.
Dubai Financial, part of sovereign fund Dubai Holding, holds 3.92 per cent stake in BSE, which it bought when the exchange was demutualised in 2007. BSE was then valued at Rs 3,780 crore. While BSE and Avendus could not be reached for comment, sources familiar with the developments said Dubai Financial felt the exchange deserved a higher valuation in the current situation.
In the recent past, the valuation of the exchange saw a sudden spurt after a new management team took over in 2009.
While some stock brokers sold BSE shares at around Rs 180 a piece some six months ago, a bank auctioned 0.27 million shares at Rs 320 a couple of months ago.
Under the new management, BSE changed its derivative trading cycle to compete with the National Stock Exchange, launched a mutual fund trading platform and is upgrading its technology platform. BSE currently has a near 28 per cent share of the equity spot market in the country and has been making efforts to develop its derivative trading segment, where National Stock Exchange is a monopoly player. BSE will launch currency derivatives in May and is also in the process of increasing its stake in Central Depository Services Ltd to 51 per cent.
Currently, six foreign investors hold 25.65 per cent of BSE and five Indian institutions hold 12 per cent.
A little under 62 per cent of BSE’s shares are widely held. Among the key Indian shareholders are firms such as Bajaj Holdings and Investment, which owns 2.94 per cent, Infosys Technologies CEO and MD S. Gopalakrishnan, who owns 1.04 per cent and media major Bennett, Coleman and Co, which owns 1.04 per cent.
BSE recently announced 12 bonus shares for every share held and the exchange currently has around Rs 2,000 crore of cash reserves, which translates into cash per share of at least Rs 190.
BSE posted a net profit of Rs 55.42 crore on revenue of Rs119.21 crore for the quarter ended December 2009.”
The launching of the mutual fund platform and the upgrading of the technology and expansion of derivative trading is exactly what Goldman Sachs introduced into the New York Stock Exchange in the 1990s. And we saw what happened in the 15 years following. And Goldman is in India, currently seeking a commercial banking license to operate there.
With the same players around (Soros, Goldman Sachs etc. ), there’s no reason to believe that what’s coming up for the Bombay Stock Exchange won’t take the same direction. Before the financial crisis, the Indians had little exposure to the highly levered derivatives and toxic debt that blew up the system elsewhere. Let’s see whether this upcoming round they’ll be as lucky. With economies stagnant elsewhere, Asia and some select African countries are the only places where there’s actual economic growth occurring.
I’m afraid the same handful of corrupt players will game the system there…
More here at The Economic Times:
“His hedge fund Quantum, which was reported to have posted earnings of over 30% last year, went on a buying- spree at a time, when most funds were dumping stocks in a sliding market. On July 4, Quantum Fund bought a 3.8% equity in Jain Irrigation Systems, and close to 1% of the holding of Jai Corp for a value consideration of Rs 167 crore. Since February, the fund has made investments valued at close to Rs 600 crore, or $ 140 million, in various companies, including Indiabulls Financial Services, Indiabulls Real Estate and Kalindee Rail Nirman. Quantum’s selective stock picking comes at a time, when institutional investors have been pulling out a large chunk of money amid concerns over a combination of factors such as weak global markets, soaring global oil prices and spiraling inflation in India. “Hedge funds normally are active, when there is some momentum in the market. Quantum may be trying to do some value-buying, but one has to see how long the fund stays invested, given the prevailing uncertain market conditions,” said a stock-broker..”
Remember Formula K (or, the First Law of Kleptocracy) :
s(B) + s(G) + s(S) v. EE where ’s’ is always a positive integer
Some (s) of the big banks (B - eg. JP Morgan, Goldman Sachs, Citi etc.)
+
Some parts of government (G - eg. parts of the SEC/Treasury/Fed Reserve Chairman, IMF, World Bank etc.)
+
Some hedge-funds and speculators (S - eg. Soros, Paulson (?), Loeb, Cohen and others reportedly involved in manipulation and collusion with government)
Versus
Every one else (EE)
Hanky-Panky At The Counting House
I thought I’d repost a piece that I wrote in Dissident Voice, way back in 2006. It helps give some background to the JP Morgan manipulation story.
And it also adds some background to the ongoing re-valorization of the once discredited IMF. Along with that re-valorization, is the hyping of anyone supporting even further central regulation, although the financial crisis occurred in all sorts of places that have plenty of it.
All this centralization and global government is supposedly for the welfare of the world - but there is no “welfare of the world” that can be safely accepted as gospel from the mouths of the financial industry and its political and media allies.
Note the date of the piece below - back on June 6, 2006, when, dare I say it, most of the financial talking- heads and blogs now being treated as the only legitimate interpreters of reality were doing…well, they weren’t reading GATA or supporting its work, I’m pretty sure. To have done so then would have made them persona non grata in the very same liberal media that is now embracing this research and that GATA, in turn, seems to be endorsing….for its own reasons..
Check it out for yourself.
Here’s an excerpt from the piece: “Hanky-Panky at the Counting House” (June 6, 2006)
Also, at Dissident Voice, you can find “Was The IMF Involved in Gold Price Manipulation” (June 8, 2006) which was also posted at Daily Reckoning and on one of the gold sites. I think it’s been taken off Daily Reckoning since.
“The unofficial theory is naturally a lot juicier, although described by even sworn enemies of paper currency as conspiratorial. Still, it’s managed to rear its head in the Wall Street Journal, so it can’t be all wet. Here is what widely respected libertarian Congressman Ron Paul had to say on Feb 14, 2002:
While the Treasury denies it is dealing in gold, the Gold Anti-Trust Action Committee (GATA) has uncovered evidence suggesting that the Federal Reserve and the Treasury, operating through the Exchange-Stabilization Fund and in cooperation with major banks and the International Monetary Fund, have been interfering in the gold market with the goal of lowering the price of gold. The purpose of this policy has been to disguise the true effects of the monetary bubble responsible for the artificial prosperity of the 1990s, and to protect the politically-powerful banks that are heavy invested in gold derivatives. GATA believes federal actions to drive down the price of gold help protect the profits of these banks at the expense of investors, consumers, and taxpayers around the world.
GATA has also produced evidence that American officials are involved in gold transactions. Alan Greenspan himself referred to the federal government’s power to manipulate the price of gold at hearings before the House Banking Committee and the Senate Agricultural Committee in July, 1998: Nor can private counterparts restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise. [Emphasis added] (3)
More specifically:
Gold is borrowed by Morgan Chase from the Bank of England at 1 percent interest and then Morgan Chase sells the gold on the open market, then reinvests the proceeds into interest-bearing vehicles at maybe 6 percent.
At some point, though, Morgan Chase must return the borrowed gold to the Bank of England, and if the price of gold were significantly to increase during any point in this process, it would make it prohibitive and potentially ruinous to repay the gold. (4)
In plain English, the strong dollar policy that put the sizzle in the stock market under Clinton was made possible only by manipulating the gold market to keep prices low. The low interest rates which kept the economy on the boil went hand in hand with low gold prices. Investment banks used the low rates to borrow gold from the central banks and sold them short (short selling being the technique of selling assets you don’t actually own in the hope of buying back at a cheaper price because you anticipate a fall in the price). This allowed the banks to make billions from a market rigged to take the risk out of their shorting. And it kept the dollar pumped up. And who was the architect of this strong dollar policy? Why, none other than Robert Rubin of Goldman Sachs — one of the bullion banks most implicated in the gold fixing scenarios.
So, the appearance of another Gold-man at this critical moment is all the proof the gold cartel theorists need that more manipulation is in store to keep the dollar up, gold down, and the bullion banks from losing their . . . er . . . shorts. (5)
And if this seems conspiratorial, consider what Paul Mylchreest, investment analyst at Cheuvreux, top ranked for its research in Western Europe and part of Credit Agricole, the largest bank in France says today, “Central banks have 10-15,000 tonnes of gold less than their officially reported reserves of 31,000. This gold has been lent to bullion banks and their counterparties and has already been sold for jewellery, etc. Non-gold producers account for most and may be unable to cover shorts without causing a spike in the gold price…” (6)
Or what the Wall Street Journal itself wrote about what took place in the seventies:
Worried the falling dollar was undermining its anti-inflation efforts, the Carter administration announced a multi-part support package on Nov. 1, 1978: The Treasury would use gold sales and foreign borrowing and draw on its reserves with the International Monetary Fund to defend the dollar. At the same time the Federal Reserve raised its discount rate a full point. (7)
And that was in the ’70s, when there was no credible alternative to the dollar, India and China were sleeping giants, Russia was still the Soviet Union, and the United States was not threatening to nuke the Middle East.
How bad is the situation?
[A]s of June 2000, J.P. Morgan reported nearly $30 billion of gold derivatives and Chase Manhattan Corp., although merged with J.P. Morgan, still reported separately in 2000 that it had $35 billion in gold derivatives. Analysts agree that the derivatives have exploded at this bank and that both positions are enormous relative to the capital of the bank and the size of the gold market.
It gets worse. J.P. Morgan’s total derivatives position reportedly now stands at nearly $29 trillion, or three times the U.S. annual gross domestic product. Wall Street insiders speculate that if the gold market were to rise, Morgan Chase could be in serious financial difficulty because of its “short positions” in gold. In other words, if the price of gold were to increase substantially, Morgan Chase and other bullion banks that are highly leveraged in gold would have trouble covering their liabilities. (8)
That was 2000. This is 2006.
So long as gold remains a mere relic . . . a yellow reminder of what used to be money . . . no harm done. Unless something absurd happens, that is. Something absurd like, say, gold doubling to $573 an ounce inside 5 years. If that happened, then the “carry trade” of borrowing gold to invest in paper could become a very expensive way to bankrupt the entire global financial system. (9)
This spring gold hit over $700. And that’s why the hanky-panky is likely to begin in earnest now.
Lila Rajiva is a freelance writer in Baltimore, and the author of the must-read book The Language of Empire: Abu Ghraib and the US Media (Monthly Review Press, 2005) She can be reached at: lrajiva@hotmail.com. Copyright (c) 2006 by Lila Rajiva
NOTES
(1) “Good as Goldman: Bush drafts Hank to bat third,” Daniel Gross, Slate, Tuesday, May 30, 2006.
(2) “Please, Sir, I Want Some More. How Goldman Sachs is carving up its $11 billion money pie,” Duff Mcdonald, New York Metro, Dec 21, 2005.
(3) Speech of Congressman Ron Paul, U.S. House of Representatives, February 14, 2002, www.house.gov/paul
(4) “All That Glitters Is Not Gold,” Kelly Patricia O’Meara, Insight Magazine, March 4, 2000.
(5) According to GATA, the cartel includes J.P. Morgan Chase, Deutsche Bank, Citigroup, Goldman Sachs, Bank for International Settlements (BIS), the U.S. Treasury, and the Federal Reserve
(6) “How Central Banks Have Kept Gold Down,” Adrian Ash, Money Week, February 9, 2006.
(7) “As Dollar Weakens, Hidden Strengths May Stave off Crisis,” Wall Street Journal, January 17 2005.
(8) See Note 4.
(9) See Note 6.FBI Leads Joint Terrorism Task Force Raid On Christian Militias
Yesterday, the FBI led a Joint Terrorism Task Force (JTTF) raid on Christian Militias in several states, reports the Detroit news:
“Federal prosecutors plan to unseal charges today against members of a self-described Christian militia arrested Saturday and Sunday in Michigan, Ohio, Indiana and Illinois.
At least seven people were taken into custody in raids by an FBI-led Joint Terrorism Task Force as part of an investigation into an Adrian-based unit of the Hutaree, a group that professes it is training in modern armed combat techniques for a prophesied coming battle with the Antichrist.
The suspects are expected to make an initial appearance in U.S. District Court in Detroit today, according to federal authorities, who declined to discuss the charges behind the multistate arrests.
From The Detroit News: http://www.detnews.com/article/20100329/METRO/3290334/Militia-members-arrested-in-Sun.-raid-to-be-charged-today#ixzz0jZ256RLl“My Comment
- The arrests were part of an investigation into the nation-wide Christian militia Hutaree.
- Other militias in the Detroit region targeted, like the Michigan militia, cooperated and testified against the Hutaree
- Mike Lakomar of Michigan militia states that five arrests were made on Saturday and five early on Sunday morning
- Lakomar states that the FBI became interested in the Hutaree after it made physical threats against Islamic organizations
- The Hutaree may have been targeted for linking to conservative Christian sites, practicing survivalism, and professing a belief in the imminent coming of Christ and an apocalyptic show-down
- Jim Gulliksen of the Michigan militia claims that the FBI targeted the Christian group because of widespread anger against the Obama health care overhaul and because of the threats. Gulliksen claimed that some months ago other Hutaree members had been arrested on weapons charges.
- The Michigan militia member allegedly threatened was Muslim.
- Gulliksen differentiated the Michigan outfit from the Hutaree by saying the Michigan members were concerned “with the nation,” whereas the Hutaree were more concerned with their religion.
It would be interesting to find out if the FBI, which isn’t talking right now, is really focusing on Christian survivalist groups solely because of the religious nature of their beliefs. If they’re actually basing their investigations on whether a group professes Christian beliefs or not, instead of focusing on actual physical aggression or credible and documented threats (beyond hearsay), that is alarming, as it could indicate discrimination against conservative Christian beliefs (which, of course, can always be defined very flexibly).
JP Morgan Gets $3.4 Billion For Buying Wa-Mu; Shareholders Get Zip
At Seeking Alpha, Troy Racki writes about the second rape of Washington Mutual stock-holders and US tax-payers by JP Morgan:
“In the settlement offer WaMu will relinquish all claims against JP Morgan and the FDIC. In return WaMu will be allowed to keep a $3.9 billion dollar deposit it held in its own bank. Most of the $3.9 billion deposit was generated from the sale of preferred securities in 2006 and 2007. Additionally WaMu will be allowed to keep $1.8 to $2.0 billion of its own tax return created from huge losses in 2008. The rest of the projected $5.6 billion return will be split between the FDIC and JP Morgan.
According to the settlement terms JP Morgan will receive $5 billion in HELOC backed securities valued on the open market at 60% of par, $193 million in Visa class B securities, $2.1 billion in cash, and a $20 million wind farm, all from WaMu. Given the initial purchase price of WaMu for $1.9 billion in 2008, these additional assets received means that JP Morgan will pay a negative $3.4 billion for their purchase of the bank.
The loss of these assets will heavily impact WaMu’s balance sheet which now stands to make only the bondholders whole, according to the settlement’s disclosure statement. Currently senior WaMu holding company debt trades at 106 cents on the dollar.
Under the terms of the settlement WaMu shareholders will receive nothing.
In the disclosure statement WaMu’s attorneys stated that the proposed settlement will net the most for all creditors and that further legal dispute would only financially harm the estate. This comes in stark contrast to prior statements by WaMu’s equity counsel that a protracted legal battle with JP Morgan and the FDIC may have returned up to $20 billion to the estate.
Currently the settlement is awaiting the approval of the FDIC, Washington Mutual bank bondholders, WaMu unsecured creditors, WaMu preferred shareholders, and the bankruptcy judge. An incomplete plan of reorganization was also filed on Friday along with the disclosure statement. The incomplete POR lacks a balance sheet meaning that WaMu’s unsecured creditors are left only to guess at what they may eventually recover, if anything.
Despite the negative purchase price, Jamie Dimon, CEO of JP Morgan has indicated that the purchase of WaMu could have been closed for less, much less. In July 2009 he stated that JP Morgan “could have bought WaMu for a dollar” because of the projected losses that would have been taken on the deal.
The losses never materialized. In May 2009, JP Morgan wrote up its WaMu loan portfolio by $25 billion.
Had the $1 purchase price gone through JP Morgan would have eventually been paid $5.1 billion by WaMu and the FDIC to assume the bank.
While the deal may be good for JP Morgan, former WaMu customers are not so fortunate. Nationally many WaMu Providian credit card customers have since experienced dramatic rate increases. In Oregon, WaMu checking clients report that deposits are being held for fourteen days prior to being accredited to accounts. This abnormally long waiting period means that many checking customers are now being hit by multiple $35-a-peice overdraft charges for having insufficient funds. In northern California, out-the-door waiting lines for teller service at one branch sparked verbal outrage and multiple client threats to move deposits to a community bank branch. The branch responded after twenty minutes by temporarily adding a teller.
Meanwhile FDIC chairwoman Sheila Bair is continuing to push for additional powers that would allow the FDIC to not only shutter banks but their holding companies. This authority would allow for the FDIC to avoid future conflicts when it closes a bank but is unable to force a holding company to capitulate, as is in the case with WaMu. It has come under scrutiny after internal JP Morgan e-mails and PowerPoint presentations revealed that as early as March 2008 regulators were in negotiations with JP Morgan on the closure of Washington Mutual, termed “Project West”, six months prior to the bank’s seizure.”
More later…
Mumbai Attack Suspect David Headley: Truth And Lies
Some background on suspected Mumbai conspirator, David Headley, in an interview in December 2009 on India’s ND TV with the Daily Beast’s Gerald Posner.
Headley Spy Case Raises Questions In India About CIA Role
Asia Times columnist M. K. Bhadrakumar writes that US citizen David Headley, a key player (Indian sources say, the mastermind), in the November 2008 Mumbai terrorist attack that killed 166 people* has reached a plea bargain with the Federal Bureau of Investigation (FBI) that allows the US Government to hold back from producing evidence against him in a court of law that would have revealed details of his ties to US intelligence. [*163, according to the NY Times, March 26, 2010; 165, according to the Wash Po, March 27, 2010]
Headley will be protected from cross-examination by the prosecutor, and the 166 victims will not be represented by a lawyer at the Chicago trial that’s now commencing.
Nor can he be extradited to India or questioned by Indian agencies about his links to US and Pakistani intelligence.
(Note: He will be accessible to India through video conferencing, deposition, and Letters Rogatory)
Headley, the son of a former Pakistani diplomat and an American socialite from Philadelphia (according to the NY Times piece), was a drug-pusher in the 1990s who then went on to work for the Drug Enforcement Agency.
He’s said to have prepared for the attack with five visits to India between 2006 and 2008, each time returning via Pakistan and meeting with several handlers, some of whom included members of the terrorist group Lakshar-e-Toiba (LeT), which has close ties to Pakistan’s intelligence agency, ISI (Inter-Services Intelligence)
Headley has reportedly named five-six serving officers of the Pakistan army as among the leaders of the Karachi Project, which organizes attacks on India through fugitive Indian jihadis being sheltered in Karachi by the ISI and the LeT.
The Asia Times article goes on to ask some questions about the CIA’s possible involvement that are likely to strain US-Indian relations:
“How much did the CIA know?
The plea bargain details that while working as an American agent Headley attended at least five “training courses” conducted by the LeT in Pakistan, including sessions in the use of weapons and grenades, close-combat tactics and counter-surveillance techniques, from February 2002 until December 2003.Training courses in April and in December 2003 were each of three months’ duration and in such close proximity to the 9/11 attacks that it stretches credulity to believe the CIA didn’t care to know what their agent was doing in the LeT training camps.
Today, the heart of the matter is how much did the CIA know in advance about the Mumbai terrorist strike and whether the Obama administration shared all “actionable intelligence” with Delhi?
A senior Indian editor wrote on Sunday, “Headley … was convicted on drug charges and sent to jail in the US. We know also that he was subsequently released from jail and handed over to the Drug Enforcement Administration, which said that it wanted to send him to Pakistan as an undercover agent. All this is a matter of public record. What happened between the time the US sent Headley into Pakistan and his arrest at Chicago airport a few months ago? How did an American agent turn into a terrorist? The US will not say.”
Yet, cooperation in the fight against terrorism lies within the first circle of US-India strategic cooperation. The Mumbai attacks led to unprecedented counter-terrorism cooperation between India and the US - “breaking down walls and bureaucratic obstacles between the two countries’ intelligence and investigating agencies”, as a prominent American security expert, Lisa Curtis, underscored in US congressional testimony on March 11 regarding the Mumbai attacks and Headley.
To quote Curtis, “Most troubling about the Headley case is what it has revealed about the proximity of the Pakistani military to the LeT.”
Curtis put her finger spot on the US government’s deliberate policy to view the LeT through the prism of India-Pakistan adversarial ties. This is despite all evidence of the LeT’s significant role since 2006 as a facilitator of the Taliban’s operations in Afghanistan by providing a constant stream of fighters - recruiting, training and infiltrating insurgents across the border from the Pakistani tribal areas.
The US policy is impeccably logical. It prioritizes the securing of Islamabad’s cooperation on what directly affects American interests rather than squandering away Pakistani goodwill by Washington covering for the Indians.
This political chicanery lies at the core of the unfolding Headley drama. What emerges, even if one were to give the benefit of the doubt to the CIA, is that Headley was its agent but he possibly got involved with Pakistan-based terrorist organizations and became a double agent
No doubt, the US administration is behaving very strangely. It has something extremely explosive to hide from the Indians and what better way to do that than by placing Headley in safe custody and not risk exposing him to Indian intelligence?”
CFTC Whistle-blower Andrew Maguire Injured By Hit-And-Run Driver
Update: Apparently there was also a fire in the CFTC building, says Bob Wenzel:
“A fire earlier this week in the basement of the building located at 140 Broadway in New York City has forced the temporary move of the New York office of the Commodity Futures Trading Commission, which was located in the building. The office has been relocated on a temporary basis to 201 Varick Street.
Reports on the internet state that gold and silver records of the CFTC were damaged in the fire, which would be interesting given it is just one week before the Congressional Precious Metals Manipulation hearing. However, Steve Schneider a CFTC spokesman at their Washington D.C. headquarters informs me that the damage was unrelated to the CFTC and that no CFTC documents were lost or damaged in the fire.”
******************************************************************************************************
Original Post
Commodity Futures Trading Commission whistle-blower, Andrew Maguire, who testified at Thursday’s CFTC hearing on Metals Futures trading, was injured the next day, along with his wife. They were struck by a hit-and-run driver in the London area, says a report this evening on the GATA website. The couple was admitted to a hospital overnight and released the next day. They are expected to make a full recovery, said GATA’s contact CFTC member Adrian Douglas.
Maguire’s car was hit from a side road by another car that then tried to race away. As it did, it almost struck a pedestrian who tried to block it. It hit two other cars before police, using helicopters, chased it down.
Deep breath.
OK.
First, a number of people deeply involved in the Madoff scandal die.
Just a month before the fraud is exposed, Alex Widmer, CEO of Bank Julius Baer, Switzerland’s largest wealth manager, dies unexpectedly, the family withholding the cause from a desire for privacy (November 5, 2008).
Then, top HSBC banker Christian Schorr was found hanging from his hotel room ceiling (December 21, 2008).
Just after him, there was the aristocratic manager of Madoff feeder-fund Access International Advisors, Rene-Thierry de la Villehuchet, found dead in his New York office, his arms and wrists slashed by a box-cutter (December 22, 2008)
Next, Freddie Mac’s Chief Financial Officer David Kellerman commits “apparent” suicide (April 22, 2009).
In the fall of the same year, Jeffrey Picower, an attorney who ran a foundation that invested in Madoff’s fund and allegedly siphoned off $7 billion through it, was found dead in his swimming pool in Florida (October 25, 2009).
More recently, the co-head of trading at suspect hedge-fund Third Point, Adam Sackett, died unexpectedly of a bacterial infection at the age of 35 (March 20, 2010).
That happens only the day before the release of the Valukas report on the 2008 collapse of investment bank Lehman Brothers, which strangely exonerates hedge-funds from any involvement in the collapse. This is accompanied by triumphant proclamations in the media that the markets have not, and cannot, be manipulated by speculators.
Now, we have an important whistle-blower almost mowed down on the streets while he’s in the process of outing blatant manipulation of the precious metals market by JP Morgan traders.
No conclusions yet, mind you. Our bar is high. We’re quite willing to believe it’s all coincidence, astrological alignment, and mystical karma, until proven otherwise.
But meanwhile, if you’re planning to blow any whistles, leak, snitch, or snoop, it looks like it might be a good idea to hire a food-taster and look both ways (and behind) when you’re crossing the road….
….and do pick up a kevlar vest while you’re at it.
Whistleblower Reports Precious Metals Manipulation By JP Morgan
Bill Murphy, chairman of The Gold Anti-Trust Action Committee (GATA) reports that on March 23,2010, GATA director, Adrian Douglas, was contacted by a London metals trader, Andrew Maguire, who had been told directly by JP Morgan traders how they manipulate the precious metals (PM) markets on non farm payroll data release, COMEX contracts rollover, and similar recurring occasions, to make money.
Maguire had previously contacted the enforcement division of the CFTC (Commodity Futures Trading Commission) to report this. On February 3, 2010, he gave a two-day advance warning of PM manipulation on the release of the non-farm payroll data on February 5 that took place as predicted.
Read more at GATA.
Bloomberg: Lehman Lawyers Claim Report Is Misleading
“Lehman Brothers Holdings Inc. lawyers said the examiner who reviewed the firm’s collapse included misleading statements in his report about Barclays Plc’s purchase of the Lehman brokerage.
Examiner Anton Valukas’s March 11 report quoted a Lehman lawyer, Weil Gotshal & Manges LLP partner Thomas Roberts, as saying Barclays’s purchase of the brokerage unit was intended to be a “wash,” with neither gains nor losses for the buyer, according to letters filed today in U.S. Bankruptcy Court in New York.
The law firm wrote that Valukas omitted statements that “the wash” was merely theoretical and there was no provision for a break-even deal in the sale agreement.
Lehman is seeking to recover $11 billion from Barclays, claiming the bank received a secret discount when it bought the brokerage. Barclays disputes that claim….”
I’ve thought for a while that the Valukas report was being hyped, and sure enough, Bloomberg, which has been a lot better than the other newspapers, has got some evidence to back that up now.
Here’s what I wrote in a comment at Deep Capture, just a few days ago, about the Valukas report and Bloomberg’s treatment of it (as compared to the uncritical praise at other news outlets):
Comment:
**************
The writer [the Bloomberg reporter] actually undermines [Michael] Lewis at every turn, calling his story loaded and one-sided and ending with this intriguing additional evidence that Lewis somehow doesn’t “get” it – a point I made in my post “Jim Rogers Tells Greeks To Go Bust” [http://mindbodypolitic.com/2010/03/09/rogers-tells-greeks-to-got-bust][Lila: Lewis, with Einhorn, has been using the Valukas report as an endorsement of his trader-activist-good-guy thesis]
Quote from end of the Bloomberg piece:
“What Lewis fails to note is that the day prior, Lewis himself had filed a column for Bloomberg News from Davos mocking Nouriel Roubini’s warning “that the risk of a crisis happening is rising.” Such forecasts of doom came from “people with no talent for risk-taking gather(ed) to imagine what actual risk takers might do,” Lewis wrote. The headline described them as “Wimps, Ninnies, Pointless Skeptics.”
Lila:
Like many people close up to the industry, Lewis gets all the details, but misses the overall narrative, maybe because he’s caught up in the activist mystique that traders like to project.
It’s a shame. Because “Liar’s Poker” is such a good book.
I’m afraid this new book and the movie by [Oliver] Stone, probably an upcoming book by [Bethany] McLean, will set the official narrative unless more people work on filling in the picture more accurately and less self-servingly.
Note also that Bloomberg’s heading on the Valukas report, unlike the rest of the MSM, emphasized Citi and JP Morgan’s help in pushing Lehman over.
*******************************
(End of comment)
Goldman Executive In Nigerian Cabinet
Update (hat-tip to Jim Hall at Deep Capture):
Financier/speculator/activist George Soros (Soros Fund Management) is in Nigerian scouting for opportunities for investment, according to all Africa.com:
“The Soros delegation met Nigerian bankers including senior managers from United Bank for Africa and Diamond Bank during their trip to Lagos, according to sources within the banks. Representa-tives of at least two other big US and European funds have also visited Lagos since the start of the year, according to another industry source. Soros Fund Management declined to comment.”
The banking sector is heavily represented in the Nigerian stock-exchange, and after a high in March 2008, has taken a tumble that many blame on the withdrawal of funds by foreign investors. However, foreign hedge funds and investors apparently take up only 10-12% of share capital, say analysts. They blame the market collapse on the popular practice of banks lending money to people to buy shares, which led to speculation and soaring prices. Since then,
“The plunge in stock prices has provoked concern about the extent of banks’ exposure to losses from these loans and raised questions about the level of supervision by the Central Bank of Nigeria and other regulators.”
So there’s a Goldman Sachs hedge-fund executive in the Nigerian cabinet, which obviously would have a good deal to say about the running of the Central Bank, and there’s George Soros, meeting with Nigerian bankers.
That’s all three parts of my formula for corruption (”some government officials, some speculators, and some banks” versus everyone else):
s(G) + s(S) + s(S) v EE, where ’s’ is always a positive integer
“Nigeria’s acting President Goodluck Jonathan has appointed a Goldman Sachs prime brokerage executive to the country’s cabinet. Olusegun Aganga, who is based in London, heads Goldman’s hedge fund consulting services. The managing director has reportedly been actively developing the firm’s business in Nigeria and sub-Saharan Africa.”
Now what would that business be?
A Goldman report, “Health Buys Wealth” suggests one angle:
Maybe, Goldman is angling for some lucrative private-public deals in health care, infrastructure, and other “humanitarian” investments?
Albert J. Nock: Ignore The Masses; Address the Remnant
Great piece at Lew Rockwell by Albert J. Nock on the vanity of instructing the masses
“In the year of Uzziah’s death, the Lord commissioned the prophet to go out and warn the people of the wrath to come. “Tell them what a worthless lot they are.” He said, “Tell them what is wrong, and why and what is going to happen unless they have a change of heart and straighten up. Don’t mince matters. Make it clear that they are positively down to their last chance. Give it to them good and strong and keep on giving it to them. I suppose perhaps I ought to tell you,” He added, “that it won’t do any good. The official class and their intelligentsia will turn up their noses at you and the masses will not even listen. They will all keep on in their own ways until they carry everything down to destruction, and you will probably be lucky if you get out with your life.”
Isaiah had been very willing to take on the job – in fact, he had asked for it – but the prospect put a new face on the situation. It raised the obvious question: Why, if all that were so – if the enterprise were to be a failure from the start – was there any sense in starting it? “Ah,” the Lord said, “you do not get the point. There is a Remnant there that you know nothing about. They are obscure, unorganized, inarticulate, each one rubbing along as best he can. They need to be encouraged and braced up because when everything has gone completely to the dogs, they are the ones who will come back and build up a new society; and meanwhile, your preaching will reassure them and keep them hanging on. Your job is to take care of the Remnant, so be off now and set about it.”
Blodget Fires Carney From Business Insider
Business Insider owner, Henry Blodget, has fired John Carney, the editor of its blog, Clusterstock, apparently over differences on what sort of news commentary to run. From Village Voice blogs:
“We’re told Carney was fired by Blodget this afternoon, and it was speculated that this was the result of the last few weeks of disagreements between Blodget, publisher Julie Hansen, and Carney over how to best run Business Insider: Blodget wanted more sensational, pageview-grabbing posts and click-friendly features like galleries, while Carney wanted to put forth breaking news scoops that told a longer narrative. It was also speculated that Carney, one of the highest paid members on the Business Insider staff, wasn’t bringing the traffic numbers to sufficiently satisfy Henry Blodget, given his high profile within the financial reporting world, but that Clusterstock’s homepage had the highest traffic of all the verticals at Business Insider during Carney’s tenure, and that his own stories generated “tons of [unique visitors].”
While I didn’t care for Carney’s routine dismissal of naked short-selling critics, he was a thoughtful writer on other topics, the latest evidence for which was his column on why Lehman executives should not be criminally prosecuted.
It’s not that I agree with everything he says there. I don’t. I think there’s a place for criminal prosecution, even in a “they all did it” culture. It’s just that it isn’t the popular thing to say now, with anger running high out there, and I admire people when they make unpopular arguments, based on reason.
Meanwhile, at Economic Policy Journal, Robert Wenzel makes a fairly good case that the firing had to do with Carney not putting in the sweat and blood needed for a start up, and - perhaps - upstaging/undermining one of Blodget’s own scoops..
Since then, I’ve also seen Carney’s name on a list of speakers at the Milken Institute…
[That's Michael Milken, the junk-bond dealer-turned-philanthropist, and Sith Lord of market-racketeering even unto this day, according to Deep Capture: http://www.deepcapture.com/michael-milken-60000-deaths-and-the-story-of-dendreon]
Not that that necessarily means anything, of course, since scores, if not hundreds, of writers, business men and consultants voice their opinion at the Milken Institute. Still, it does remind you how incestuous the financial world is, and makes you wonder whether the coziness of the culture really does prevent most arguments made there from being much more than a post hoc rationalization of the buttered side of some piece of bread somewhere. Not in any vulgar quid pro quo sense. But simply in the sense of a shared blind spot, much like the blind spot Dick Fuld shared with other investment bankers, like, say Henry Paulson, who, we hear is doing just fine on the faculty of Johns Hopkins University...
Chomsky On the Loneliness Of Honest Inquiry
“Since the dominant voice in any society is that of the beneficiaries of the status quo, the ‘alienated intellectual’ who tries to pursue the normal path of honest enquiry – perhaps falling into error on the way – and thus often finds himself challenging the conventional wisdom, tends to be a lonely figure.”
~ Noam Chomsky, “The Function of the University in a Time of Crisis” in For Reasons of State (1973), p. 91
Diversity-Loving Students Demonstrate Against An Opinion They Don’t Like..
A sad day for freedom of speech. University of Ottawa student protests led to the canceling of a scheduled speech by controversial conservative writer, Ann Coulter.
Nothing wrong with protesting. That’s just what the tea-parties were about. But for one group of students to obstruct what another group might want to hear is uncivil, to say the least.
And then there was that letter by University of Ottawa Provost Houle. It all but threatened Coulter with criminal prosecution should she cross over into “hate speech.”
“I would, however, like to inform you, or perhaps remind you, that our domestic laws, both provincial and federal, delineate freedom of expression (or “free speech”) in a manner that is somewhat different than the approach taken in the United States. I therefore encourage you to educate yourself, if need be, as to what is acceptable in Canada and to do so before your planned visit here.
You will realize that Canadian law puts reasonable limits on the freedom of expression. For example, promoting hatred against any identifiable group would not only be considered inappropriate, but could in fact lead to criminal charges. Outside of the criminal realm, Canadian defamation laws also limit freedom of expression and may differ somewhat from those to which you are accustomed. I therefore ask you, while you are a guest on our campus, to weigh your words with respect and civility in mind.”
(http://www.nationalpost.com/news/story.html?id=2710037#ixzz0j8rftU3r)
At Salon, Glenn Greenwald points out the creepiness of such a threat, even for a “hate-monger,” while Coulter grabbing onto the “hate” tag, is accusing Houle of a hate-crime, in his turn.
Personally, I’d like to see the word “hate” given a rest. Coulter’s language is often crude, insensitive, and juvenile, sometimes inflammatory, and a lot of the time just plain wrong, but “hate” is pretty harsh. And far too broad. Didn’t Noam Chomsky - whose writing on foreign policy I admire - call Murray Rothbard’s writing - which I admire even more - a form of hate?
These days “hate” is just invective - like “fascist” or “Nazi” - for something you don’t like.
Besides, even Ann Coulter can be insightful and truthful.**
[Admittedly, the ratio of insight to invective in her writing has diminished over time, but some part of the blame for that also rests on her critics. Liberal venues- which are the prestigious ones - are often so intolerant of conservative views that they ignore or ostracize people off the bat, unfairly. That reinforces conservatives in their role as "victims" of liberal close-mindedness, and they give up on respectability. Eventually, they start playing to the roughest part of the gallery, turn into caricatures of themselves, find that lucrative, and end up settling into the role of class clown and disruptor of all things civil and polite....the train-wreck mode of discourse, as some wag puts it].
Ann Coulter has perfected this strategy of ticking- off the left, fueling the right, and making big money in the process.
And today, she’s also a free-speech martyr.
Now, that’s what I call a business instinct…
** In one notorious remark about John Edwards, Coulter implied that the senator wouldn’t be above using a family tragedy for political advantage. At the time, her remark was (rightfully) denounced, and by none more loudly than the tragic Elizabeth Edwards. But that denunciation sounds poignantly off-base when reread today.
Hitler’s National Security Courts…and Ours..
Jacob Hornberger of the Future of Freedom Foundation notes that when people ask for a national security court in the US, they are unwittingly following in the footsteps of Adolf Hitler:
“Hitler established the People’s Court after the terrorist bombing of the German parliament building, the Reichstag. After a trial in a regularly constituted German court, many of the people charged with that terrorist act were acquitted, which, needless to say, outraged Hitler as much as it would have outraged current U.S. proponents of a national security court. After all, Hitler argued, those people who were acquitted were terrorists — otherwise they wouldn’t have been charged and prosecuted — and, therefore, they deserved to be convicted and punished, not acquitted and released.
To ensure that terrorists and other criminals were never again acquitted, Hitler established the People’s Court. Like the national security court that some Americans are now advocating for the United States, the purpose of the court was to create the appearance of justice while ensuring that terrorists and other criminals were convicted and punished.
Proceedings before the People’s Court would easily serve as a model for U.S. advocates of a national security. The trial of Hans and Sophie Scholl was over in less than an hour. Criminal defense lawyers were expected to remain silent during the proceedings, and did so. Defendants were presumed guilty and treated as such. Hearsay was permitted, as was evidence acquired by torture. There was no due process of law. Confessions could be coerced out of defendants. The judges on the tribunal would berate, humiliate, convict, and then swiftly issue sentences, including the death penalty.”
Hornberger points out that Hitler’s regime also included all those kinds of welfare programs that are admired today in America (public schooling, social security, national health care, public-private partnerships, the military industrial complex, the Interstate highway).
Hornberger doesn’t make the point explicitly, but the two things - popular acceptance of gross violations of law and morality and the rapid expansion of the welfare state - go together. Bluntly, people “sell” their consciences because of the advantages dangled before them.
In “Hitler’s Beneficiaries: Plunder, Racial War, and the Nazi Welfare State,” respected historian of the Third Reich, Goetz Aly of the Fritz Bauer Institut in Frankfurt, suggests that the Nazis had German popular support all through their “final solution” - not because of wide-spread terror or wide-spread anti-Semitism, but because they’d bribed the population with a generous welfare state and “bennies.”
Happy Birthday, Johann Sebastian Bach
Norwegian soprano Sissel Kyrkjebo (also excellent as a cross-over singer) sings Bach’s well-known Wachet auf, ruft uns die Stimme (BWV 645). I originally had a Michelangeli performance of the D Minor Chaconne up here, but though that felt right as a general reflection on the state of the economic world, it was a tad somber for the vernal equinox, March 21, also Bach’s birthday……
[Correction: this year the vernal equinox was actually on March 20, which makes my greeting belated twice over]
…so I exchanged it for one of the great sacred cantatas. I think Bach would approve of Sissel’s upbeat version: Sleepers wake, for night is flying…..
The word “sleepers” is a reference to the parable of the ten virigins in the Bible (Matthew 25: 1-13) .
In a bridal party, ten virgins awaiting the bridegroom fall asleep. Five of them have run out of oil in their lamps and ask the others to give them some at the last minute. The parable is pretty fitting for the times. For “oil,” just substitute savings, hard assets, land, precious metals, undervalued stocks.
….And the foolish said unto the wise, Give us of your oil; for our lamps are gone out. But the wise answered, saying, Not so; lest there be not enough for us and you: but go ye rather to them that sell, and buy for yourselves…..
Rabbi Daniel Lapin On the Morality Of Capitalism, At Loyola University, Baltimore, March 24
Correction: I originally had this as David Lapin..it’s Daniel Lapin (here’s a link to his Mises archive)
Tom di Lorenzo writes:“The next speaker in my Moral Foundations of Capitalism lecture series at Loyola University Maryland is Rabbi Daniel Lapin, whose topic is: “Do The Right Thing: Get Rich.”
Rabbi Lapin is one of the most skilled rhetorical defenders of private property and free enterprise that I have ever encountered. He combines his knowledge of ancient Hebrew wisdom and economics to explain the morality of economic freedom.
Time: 7 PM Wednesday, March 24
Place: Andrew White Center, 4th Floor Program Room, Loyola University Maryland, 4501 N. Charles St., Baltimore
Henry Hazlitt On The Nature Of Credit
Henry Hazlitt in Economics in One Lesson, on the nature of credit:“There is a strange idea abroad, held by all monetary cranks, that credit is something a banker gives to a man. Credit, on the contrary, is something a man already has. He has it, perhaps, because he already has marketable assets of a greater cash value than the loan for which he is asking. Or he has it because his character and past record have earned it. He brings it into the bank with him. That is why the banker makes him the loan. The banker is not giving him something for nothing. He feels assured of repayment. He is merely exchanging a more liquid form of asset or credit for a less liquid form.“
or, to put it another way, even less palatable to modern sensibilities:
“The wicked borroweth and payeth not again” (Psalms. 37:21 a).
Tocqueville On Morals Versus Laws
“The best laws cannot make a constitution work in spite of morals; morals can turn the worst laws to advantage. That is a commonplace truth, but one to which my studies are always bringing me back. It is the central point in my conception. I see it at the end of all my reflections.”
Blair’s “Oily” Deals Greased His Iraq War-Mongering
Turns out Tony Blair had his hand in the oil jar, while he was talking up the Iraq war….and after. The Daily Mail (UK) reports:
Last night Tory MP Douglas Carswell said of Mr Blair’s links to UI Energy Corporation: ‘This doesn’t just look bad, it stinks.
‘It seems that the former Prime Minister of the United Kingdom has been in the pay of a very big foreign oil corporation and we have been kept in the dark about it.
‘Even now we do not know what he was paid or what the company got out of it. We need that information now.
“This is revolving door politics at its worst. It’s not as if Mr Blair has even stepped back from politics, because he is still politically active in the Middle East.
‘I’m afraid I have no confidence at all in the committee that vets these appointments. It’s no good telling us these deals may be commercially sensitive - we are talking about the appointment of our former Prime Minister and the public interest, rather than any commercial interests, must come first.’
Liberal Democrat MP Norman Baker said: ‘These revelations show that our former Prime Minister is for sale - he is driven by making as much money as possible.
‘I think many people will find it deeply insensitive that he is apparently cashing in on his contacts from the Iraq war to make money for himself.’
“The committee said yesterday that Mr Blair had taken a paid job advising a consortium of investors led by UI Energy in August 2008. The exact nature of the deal is unknown, but UI Energy is one of the biggest investors in Iraq’s oil-rich Kurdistan region, which became semi-autonomous in the wake of the Iraq war.
“Mr Blair’s fee has not been disclosed but is likely to have run into hundreds of thousands of pounds.
“The secrecy is particularly odd because UI Energy is fond of boasting of its foreign political advisers, who include the former Australian prime minister Bob Hawke and several prominent American politicians.
“Mr Blair successfully persuaded the committee that the appointment was ‘market sensitive’ and could not be made public.”
Third Point, Goldman Trading Chiefs Exit Together, Madoff Programmers Indicted
A rather odd coincidence.
Two top hedge-fund managers from the purported Wall Street mafia have left the scene, in different ways.
Goldman’s chief hedge-fund manager, Pierre-Henri Flamand (chief of GS Principal Strategies), retired in February after 15 years at Goldman. Flamand was with Principal Strategies from 2002 -2007, and then turned it into a hedge-fund in 2008, is starting his own fund. He’s being replaced by another manager from GSPS. Goldman has been accused of conniving with select hedge-funds to conduct bear raids on banks and governments.
Meanwhile, Adam Sackett, co-chief of trading at Third Point Capital, died on March 11, March 10, Wednesday night, apparently from a sudden bacterial infection. Third Point is one of the hedge-funds accused of colluding with David Einhorn’s Greenlight and SAC’s Steven Cohen in manipulative activities. Sackett had previously worked at Jim Chanos’ hedge-fund Kynikos (suspected by some to be part of that group), according to this death notice in the New York Times.
Note: Bankruptcy examiner Anton Valukas’ report on the demise of Lehman came out on March 11, 2010, the day after Sackett died.
Our condolences to the family.
In a letter to investors, posted at scribd, Daniel Loeb, Sackett’s co-chief at Third Point, called him “brilliant, kind, and funny, ” says the WSJ.
Last year, Third Point lost three senior officers, its chief operating officer, Brian Wilson, chief risk officer, Devin Dellaire, and head of investor relations, Tom Kratky.
And what’s been happening on the Madoff front? According to a long Wall Street Journal piece, he was allegedly beaten up in prison in December by another prisoner serving time for a drug conviction. He’s also been seen socializing with a Colombian crime family boss, Carmine Persico.
(From wiki:
“As of November 2007, Carmine “Junior” Persico still remains the reputed Boss of the Colombo crime family, with current street boss Thomas “Tommy Shots” Gioeli, and former Persico rival, John “Sonny” Franzese as the Underboss, but due to parole violations, Andrew “Andy Mush” Russo is the acting Underboss instead of Franzese, with the Aloi brothers, Vincenzo and Benedetto, as alleged Consigliere.
Carmine Persico has reportedly been running the Colombo crime family since the 1970s, days after Joseph Colombo was shot, and Persico’s name has been mentioned in dozens of murder-cases since then, as he has been in charge of the Colombos for over three decades. During his 50-year-membership with the Colombo crime family, he has survived three internal wars, his life sentence, and allegedly been shot more than 20 times. Persico is also only one of three defendants from the Mafia Commission Trial who received 100 years and is still alive.
Still, Persico remains the Boss of the Colombo crime family. As of March 2009, Persico is serving a life imprisonment at the Butner Federal Correctional Institution (FCI) Medium in North Carolina. His projected release-date is March 20, 2050, effectively a life sentence.[1] It has been reported that Persico socializes with fellow inmate Bernard Madoff.[4])”
Meanwhile, court appointed trustee Irving Picard is suing Madoff’s sons for $198 million, for dereliction of duty as his employees.
The two sons, as well as Madoff’s brother, are being charged with tax fraud.
Altogether five others have been charged in connection with this scheme, two having pleaded guilty and the rest maintaining their innocence.(Lila: I’m not clear from the WSJ piece if the two sons are part of the five or in addition.)
On March 17 (Wednesday) a federal grand jury also indicted Jerome O’Hara and George Perez, two programmers who allegedly developed the software that helped Madoff with his scheme. (More at Daily Finance).
Nana Mouskouri Sings “Liberte” from Verdi
Classically trained Greek popular singer Nana Mouskouri , whose father was part of the anti-Nazi resistance in Athens, sings “Je Chante Avec Toi,” using the music of “Va Pensiero” from Verdi’s opera Nabucco (Nebuchadnezzar).
China Bubble: State Firms Bid Up Land Prices To Record Levels
“In spite of all the government’s tough talk against excessive home price hikes, the record land price for residential housing in Beijing was broken twice on Monday thanks to aggressive bids by State-owned enterprises.
The weeklong postponement of the land auction seemingly served to save policymakers, who were explaining to the National People’s Congress how they would prevent housing bubbles, from trouble.
Yet, the jaw-dropping results only underscored how differently these cash-rich State firms think about housing prices. It seems that all the measures that the government adopted to raise capital requirements and leverage restrictions have so far worked only to discourage private property developers while doing little to restrain the appetite of State firms for a bigger market share.
The record land sales on Monday certainly cast doubts on a previous official claim that not a single cent of the country’s 4-trillion-yuan stimulus package has flowed into the real estate sector. Worse, they fueled expectations of more price hikes to undermine government efforts to prevent housing bubbles.”
Obama Goes After Upper Middle-Class Savers
“Congressional leaders are raising to 3.8 percent their proposed new Medicare tax on investment income in the final health-care overhaul plan, a Democratic leadership aide said.
The rate is higher than the 2.9 percent President Barack Obama proposed in February. Under Obama’s proposal, the new tax would apply to income from interest, dividends, annuities, royalties, capital gains, and rents for individuals who earn more than $200,000 and joint filers reporting more than $250,000.
House Speaker Nancy Pelosi, asked today if the tax applied to capital gains, said it would be imposed on unearned income “whatever category it is.”
It would be the first time Medicare taxes would cover investment income. The current 2.9 percent Medicare levy currently applies only to salaries and is split evenly between workers and their employees.”
My Comment:
No redistribution of the ill-gotten loot of the corrupt mega banks and their government and speculator associates …loot that runs to billions. Instead, the administration goes after middle-class investment income. This is a first, and it sets an unholy precedent for the future. Does this government not get that we need to increase capital formation, not slow it down?
During Boom, Regulators Gave Themselves Bonuses For Superior Work
The Associated Press reports that the banks weren’t the only ones handing out bonuses:
“Banks weren’t the only ones giving big bonuses in the boom years before the worst financial crisis in generations. The government also was handing out millions of dollars to bank regulators, rewarding “superior” work even as an avalanche of risky mortgages helped create the meltdown.
The payments, detailed in payroll data released to The Associated Press under the Freedom of Information Act, are the latest evidence of the government’s false sense of security during the go-go days of the financial boom. Just as bank executives got bonuses despite taking on dangerous amounts of risk, regulators got taxpayer-funded bonuses despite missing or ignoring signs that the system was on the verge of a meltdown.
The bonuses were part of a reward program little known outside the government. Some government regulators got tens of thousands of dollars in perks, boosting their salaries by almost 25 percent. Often, though, rewards amounted to just a few hundred dollars for employees who came up with good ideas.
During the 2003-06 boom, the three agencies that supervise most U.S. banks — the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the Office of the Comptroller of the Currency — gave out at least $19 million in bonuses, records show.
Nearly all that money was spent recognizing “superior” performance. The largest share, more than $8.4 million, went to financial examiners, those employees and managers who scrutinize internal bank documents and sound the first alarms. Analysts, auditors, economists and criminal investigators also got awards.
After the meltdown, the government’s internal investigators surveyed the wreckage of nearly 200 failed banks and repeatedly found that those regulators had not done enough…”
My Comment
How to react to this? Weep….tear your hair out?…..roll on the floor laughing….throw up?
A bit of all.
The salient points:
1. Giving bonuses/incentives for “superior performance” doesn’t work, either in the public or so-called private sector (pseudo-private). The next time anyone makes that argument, rub this article in their nose.
2. Sacking is the key. Every regulator who didn’t sound the alarm over the last decade needs to be demoted and/or sacked. At the very least, the department gets a 25% cut. Or better yet, throw out all the “financial examiners.” Obviously, the job means zip. Hire a team of snake-charmers, dancing bears, or g-stringed pole-dancers……you’d at least get a laugh for your money.
3. The only way to get any real information out of the government is through a Freedom of Information Act request.
4. “Regulatory capture” - the corruption of the government by the people it’s supposed to be regulating - is clearly only one part of the problem. The more intractable problem is bureaucratic empire-building. You don’t need other people to corrupt government officials. They carry the germ themselves, because they aren’t accountable to the market for excesses and mistakes.
5. The underlying problem is the artificial boom. It pushed prices of everything sky high and gave everyone a false sense of prosperity. Naturally, the idiots broke out the champagne and started pinning gold medals for genius on their chests.
6. The mob likes flattery. The boom flattered everyone…
Surreal India
Daily life in India grows more surreal for the ordinary man, says writer Pritish Nandy:
“You can’t afford food? No worries, we will give you a stunning cricket extravaganza with lots of movie stars and pretty cheerleaders.
You feel insecure because Maoists are now in 20 states and have killed more people than the jihadis? Don’t bother, we will buy you a $2.35 billion refurbished old Russian warship.
Your cities are crumbling under the pressure of migration because agriculture’s no longer a sustainable profession? No stress, we will build you fancy bridges and flyovers and walkways where no one will ever walk.
You can’t find a job despite all your education? No sweat, we promise 30% reservations for women in the Lok Sabha.
Increasing terrorist strikes are scaring you? Chill yaar, we will give you the perfect Indo-US nuclear deal.
Public transportation in the cities is on the verge of collapsing? Not an issue, we are building helipads at prominent locations.”
– Pritish Nandy, “The Wonderland That’s India,” Times of India, March 15, 2010
Steve Forbes: Fannie & Freddie Must Go, DDT Must Return
Steve Forbes points out that government subsidies in the housing market weren’t needed for Canadians to become home owners:
“The Bush Administration botched an opportunity in 2008 to put these entities in receivership, with the idea of either liquidating or privatizing them. A winding down of Fannie and Freddie would have led to a birth of new players, well-capitalized and ready and willing to buy, package and sell home mortgages–and subject to failure.
The Obama Administration won’t formally nationalize the current Fannie and Freddie because that would swell the official budget deficit. And it certainly won’t countenance the idea of privatizing them. That will have to wait until we have a Republican President. Fortunately, this individual will have a Congress with enough new members who won’t have been corrupted by Fannie and Freddie the way previous occupants on Capitol Hill were. Certainly public opinion will back privatization. In fact, the two companies should be recapitalized, broken up into at least a half-dozen entities and sent out into the real world, with no ties to Washington.
Studies have conclusively shown that Fannie and Freddie did virtually nothing to boost home ownership. Canada, for instance, has almost none of the props for housing that the U.S. has had, yet the proportion of its population owning homes wasn’t much different from that of the U.S. before the bubble.”
The article then ranges widely, moving from Michael Crichton (best-known, outside his fiction, for his skepticism about anthropogenic global warming) to the ban on DDT, which Forbes blames for a resurgence in malaria world-wide:
“Not only is malaria on the rise because we won’t use DDT to kill mosquitoes but so are other insect-borne diseases, such as dengue fever. “
My Comment:
On the GSE’s I agree with Forbes. But not on DDT, where his argument is one that activists in the field hotly rebut. Water-borne diseases, especially, are largely a product of poor sanitation. And filthy water, they say, is also to blame for the return of malaria.
Forbes then makes the argument that DDT, properly used, doesn’t have the bad effects attributed to it by Rachel Carson, in her seminal book, “Silent Spring.”
The operative word here is “properly used.”
(You could, after all, say as much about Credit Default Swaps. Properly used, they aren’t harmful either).
Anything can be “improperly used.” So where do you draw the line? What’s the proper use of DDT?
Experts say it should be confined to dusting the insides of homes, instead of the large-scale crop-dusting that had a toxic effect on the environment earlier. That sounds fairly reasonable, if the DDT is used along with more sustainable, local practices - draining and cleaning stagnant water and sewers, and, most important of all, improving public hygiene. Without that, chemicals are pointless in the long term.
More than half of India (to take an example) lacks access to toilets and defecates in public. Surely that fact, as well as the problem of wet waste, takes precedence in any discussion of health. That means the root of most diseases in India, including malaria, is poverty and bad habits, the solution to which really isn’t DDT, but economic development and cultural reform.
I did a piece on this called, “Cleaning House” (Alternet, Feb 5, 2004), where I discussed the phenomenon of Not In My Back Yard that prevents community best practices from being implemented on a larger scale.
“When I walk over to my nephew’s house, only a mile and a half away in a rural campus, my journey has a Victorian arduousness to it. I have to pick my way gingerly through the dusty path cutting across the field, alert for dozing vipers, lantana thorns, cantankerous goats tethered to the bushes, and random puddings of animal and human excreta. At first, it is a mystery where these come from because the villages are a good bit away. But distance does not dim the force of the NIMBY (not in my backyard) sentiment, which until recent years has been the motto of Indian civic life.”
Beyond poverty and flawed culture (and often driving them), there’s also the government.
The filth in public spaces is one of the tragedies of the commons. When everyone owns something, no one cares for it. That’s the fate of public space in India, socialist since independence in 1947, with a bureaucracy fattened by years of being a poster-child for poverty on the international aid circuit.
At least in the cases of Africa and Asia, then, the social and political context is absolutely crucial in arguments about economic liberty and technology. And the perspective from the ground, in the case of malaria and other tropical diseases, suggests a different kind of technology from bio-tech, one in which regulation isn’t much of an issue at all.
Jason Gale, Bloomberg, May 2007:
“Nair says modern sewers aren’t the answer for India. The country can’t afford to waste water by flushing it down a latrine. Instead, she’s encouraging airplane-style commodes that are vacuum cleared or toilets that are attached to contained pits rather than systems that pipe the effluent miles away for treatment. In Nair’s world, recycling human excrement for use as fertilizer is preferable.
“We need to invent our own devices which are cost- effective, environmentally sustainable and go with our people,” she says. “We cannot afford the things which are simply things that some civil engineer learned somewhere.”
Converting excreta that have been properly dried for 6-24 months into plant food uses less water than traditional sewage systems and is less likely to pollute waterways, Payden says.
Bartram says composted sewage that’s been handled correctly can be used in agriculture and for other beneficial purposes with negligible risk to human health. The challenge is to sanitize it so that disease-carrying organisms are eliminated.”
If cleaning the streets is more important than spraying DDT, in long-term control of malaria in India, then we’ve by-passed the regulatory problems associated with the chemical altogether.
In this case, as in others, activities that have a direct effect on the eco-system or the human organism (DDT) and activities that don’t (housing subsidies) can’t really be yoked together in analysis without problems. I tend to think that using the same model of reasoning for both, then, doesn’t yield correct answers, because it’s a function of a certain degree of ideological fundamentalism or literalism.
Everything is always a matter of interpretation.
Update:
In much the same way, I’d argue that the corrupt culture in Wall Street has to change before bans on this or that financial instrument are considered (that is, if one were to even concede that bans were necessary). Which is why the market-reform movement and the prosecution of crime come first, before changes in regulation.
Update:
The government of India’s rather optimistic schedule is to achieve its sanitation goals by 2010 and it’s using economic incentives to get there. ($48 for each installed toilet in Haryana).* It isn’t likely to get there that fast, but the program does suggest one area in which you can invest confidently - sanitation technology.
*I’m not endorsing this or any other government program, I’m merely noting it.
Vatican Moves Away from Frankenfoods
The head of the Pontifical Council for Justice and Peace, Cardinal Peter Turkson, has moved away from his predecessor’s support for developing genetically modified food to alleviate hunger in poor countries. Instead, he argues that adoption of the “precautionary principle” is warranted:
“There are a lot of claims that are disputed (like) that GMOs never call for the use of pesticides or insecticides or anything because they are resistant,” he said. Such claims have been challenged, he said, and some say “at a certain point (these crops) require insecticides whose chemicals break up later in the soil and render the soil less fertile.”
Given the disputed claims and doubts, “I think that we should go easy and probably satisfy all of these objections to the full satisfaction of those who raise these objections,” he said.
Because of the companies’ control over the patented seeds, “what is meant to alleviate hunger and poverty may actually in the hands of some people become really weapons of infliction of poverty and hunger,” Cardinal Turkson said.
Previously, opponents of GM carried the burden of proving that some harm was being inflicted. Under the PP, companies that planned on introducing genetic changes into an organism would have to bear the burden of proving that it was safe.
While this might seem counter-libertarian, I would argue it is not.
1. Since changes in genetics are impossible to regulate post facto, they cannot be subject to the usual economic arguments available to libertarians. The potential devastation is so irreparable that the principle of liberty demands that the bar be raised ahead of the event.
2. Biotechnology as an industry is concentrated in so few and such large companies, that free market conditions do not prevail at all in other respects. The companies owe their position in the market to their influence on government regulations and laws, to begin with. That suggests that there will be little in the way of normal market forces to check their natural profit-seeking from turning into rent-seeking based on preferential treatment, captive markets/monopoly, and government enforcement. PP is simply a thoughtful mechanism to prevent profit from careening into plunder.
Bottom line, PP prevents looting or theft.
That makes it libertarian.
Lawrence Reed: Lessons From the Great Depression
LESSONS FROM THE GREAT DEPRESSION - Lecture by Lawrence Reed, Nov. 2, 2009
Economic Liberty Lecture Series: Lawrence Reed from The Future of Freedom Foundation on Vimeo.
Capitalism & Morality Conference, Vancouver, May 8, 2010
Capitalism & Morality
“This idea that the government has services or goods that they can pass on is a complete farce. Governments have nothing. They can’t create anything, they never have. All they can do is steal from one group and give it to another at the destruction of the principles of freedom.”
-Ron Paul“To the masses, the catchwords of Socialism sound so enticing… so they will continue to work for Socialism, helping thereby to bring about the inevitable decline of the civilization which the nations of the West have taken thousands of years to build up.”
-Ludwig von Mises
Please join us in a Seminar to discuss the vital importance of social and economic liberty. We will explore how compromising liberty and morality in search of superficial egalitarianism and seeming security has put the West on a slippery and dangerous path.
Program (Saturday, 8 May 2010):
- 8:30 to 9am: Introduction by Jayant Bhandari
- 9 to 11am: “Character & a Free Society” by Lawrence W. Reed, President, Foundation for Economic Education, USA. As a journalist, Lawrence visited 69 countries; spent time with Contra rebels in Nicaragua; lived with Mozambique rebel forces; traveled with freedom activists in Poland
- 11 to 11:15am: Coffee
- 11:15 to 1:15pm: “Defending the Undefendable,” by Walter Block, Harold E. Wirth Eminent Scholar Chair in Economics and Professor of Economics at Loyola University New Orleans and Senior Fellow with the Ludwig von Mises Institute, USA
- 1:15 to 2:15pm: Lunch
- 2:15 to 4pm: “How Capitalism Tames the Vices,” by Lila Rajiva, author of The Language of Empire (Monthly Review Press, 2005) and the bestselling Mobs, Messiahs and Markets (Wiley, 2007), co-authored with Bill Bonner
- 4 to 4:15pm: Coffee
- 4:15 to 4:45pm: Closing remarks by Paul Geddes, Vice-President, West Coast Libertarian Foundation, Canada
Cost: Early-bird offer; $80 per person, $40 for students; lunch & coffee covered by the admission fee
Date: Saturday, 8 May 2010
Venue:
Event Rooms 1300-1500
Segal Graduate School of Business
500 Granville Street
Vancouver, BC, Canada V6C 1W6
(This is an independent event, not affiliated with the School)“Contrary to the vulgar belief that men are motivated primarily by materialistic considerations, we now see the capitalist system being discredited and destroyed all over the world, even though this system has given men the greatest material comforts”
-Ayn Rand
“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”
-Murray Rothbard“…if we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion.”
-F. A. Hayek“The free market punishes irresponsibility. Government rewards it.”
-Harry Browne“Morally acting man seeks profit; immorally acting man seeks plunder.”
-Jay S. SnelsonREGISTER:
Jayant Bhandari
1502-1189 Melville Street
Vancouver, BC, Canada V6E4T8
Telephone: +1-604-288-7569
Email: contact@jayantbhandari.comLink to the Flyer
Jesse Ventura Censored On Huff Po
You don’t have to be a fan of Jesse Ventura to ask why Huffington Post, a liberal outlet, would be so illiberal as to prevent someone from even questioning the government’s version of what happened on 9-11.
Ventura didn’t say he subscribed to any “conspiracy theory” or alternative explanation. He didn’t claim he knew what happened.
He just questioned the government. That was enough to shut him down. And shut him down not in a conservative, pro-censorship venue, but on a leading “liberal” site. An online site, at that.
What does that say about “liberalism” today?
Pagan Libertarian Ethics
I’ve seen some libertarians describe their ethic as, “Do what you will…but pay the price.”
Frankly, that is not a prescription at all. It simply describes consequences.
In ethical paganism, this would be considered incomplete, as the conclusion of the famous Wiccan Rede demonstrates:
“Where the rippling waters go, cast a stone, the truth you’ll know.
When you have and hold a need, harken not to others greed.With a fool no season spend, or be counted as his friend.
Merry Meet and Merry Part, bright the cheeks and warm the heart.Mind the Three-fold Laws you should, three times bad and three times good.
When misfortune is enow, wear the star upon your brow.Be true in love this you must do, unless your love is false to you.
These Eight words the Rede fulfill:
“An Ye Harm None, Do What Ye Will”
An Ye Harm None.
The simple omission of this phrase has tragic consequences for people’s understanding of ethical practice. Worse yet, they enter a path of solipsism, narcissism, and even criminality, under the delusion that they’ve discovered a new moral law.
Of course, what constitutes harm is debatable….
The Great Missile…er…Engineering Gap…
An article in the Christian Science Monitor, Dec. 20, 2005, suggests that data-manipulation abounds in tech rivalry between countries. Our geeks beat yours, is the 21st century version of saber-rattling:
“India provides the clearest example of how the numbers can be interpreted differently. The 350,000 engineers that it supposedly graduated last year is almost certainly false. After publishing that number in October, the National Academies revised it downward to 200,000 in a note issued last month. The Duke study pegs the number at 215,000, but it also points out that nearly half of those are three-year diplomas - not the four-year degrees counted in the US.
More four-year diplomas than IndiaLast year, the US awarded bachelor’s degrees to 72,893 engineering students, according to the American Society for Engineering Education. But using India’s more inclusive definition, the Duke study finds the US handed out 137,437 bachelor’s degrees last year, more than India’s 112,000. The US number is far more impressive in rela-tive terms, since India has more than three times as many people.
China’s numbers are more problematic because its government does not break them down. In its revised figures, the National Academies reduced the Chinese total from 600,000 to 500,000. The Duke study pegs the total at 644,106, as reported by the Chinese Ministry of Education. But the study also points out that, as with India, the Chinese total includes engineering graduates with so-called “short cycle degrees” that represent three years or less of college training.
“China includes in its count a lot of graduates - including auto mechanics - who would not be included as engineers in the US or many other nations,” says Gary Gereffi, a coauthor of the study and a professor of sociology who directs Duke’s Center on Globalization, Governance, and Competitiveness.
A press spokesman of the Chinese embassy in Washington declined comment, and its education office there did not respond.
China still graduated 351,537 engineers with four-year degrees. That’s 2-1/2 times the US total (although China has four times the US population).
For its part, the National Academies stands by its report, even after its revisions. “I don’t think we believe at all that these new numbers change the ultimate recommendations we have,” says Deborah Stine, of the National Academies. “The US is well behind other countries.”
Back toward 1986 graduation peakThe number of US engineering graduates peaked in 1986, fell back, then has slowly built back up since the late 1990s, says Daniel Bateson, of the Engineering Workforce Commission.
While US numbers don’t approach China’s, some experts say the quality of US graduates remains superior. A McKinsey Global Institute study last summer found that only 10 percent of Chinese engineers and 25 percent of Indian engineers were capable of competing for outsourced work.”
My Comment
We love the land of our birth dearly, but stereotypes have a reason for existing. My countrymen - and I know every variety of them — are not always as self-critical as they should be. Many call them arrogant…
Satyameva Jayate is the national motto: Truth Always Triumphs.
But Satyam (Truth) Computers found that with Big Four Accounting Firm PricewaterhouseCoopers (PwC) signing off on them, cooked books can also triumph…at least until the market collapses.
Indian cricket teams, in terms of sheer talent possibly the best in the world, are nonetheless notorious for snatching defeat out of the mouths of certain victory. They tend to rest on their duffs, when they should keep their heads down and put their money in their shoes.
True, there is a strong professional and entrepreneurial class. But remember, this is a country of a billion and a third, where nearly a billion people live lives of bare subsistence.
There’s universal corruption. The Corruption Perception Index 2009 by Transparency International has ranked India as the 85th most corrupt country, among 180 countries in the world. It is 19th on the bribery index.
There’s mind-numbing bureaucracy The Hong Kong-based political and economic risk consultancy group (PERC) reports that Indian civil servants are the least efficient among 12 Asian counterparts: Singapore, Hong Kong, Thailand, South Korea, Japan, Malaysia, Taiwan, Vietnam, China, Philippines, Indonesia and India.
India, Thailand, and Malaysia face the worst political and social risks, adds PERC.
In some states, the courts and police are feared worse than criminals.
Indian society is often sickeningly color and status-conscious.*
India is a good long-term bet for investment, if you’re careful and monitor your positions. But it’s a sure-fire disaster for cocky, blind-folded speculation.
Update (March 17, 2010):
*I add a quote from an inter-racial couple:
“My partner is white and I am black, facts of which the Indian public reminds us daily. Bank associates have denied me chai, while falling over to please my white friend. Mall shop attendants have denied me attentiveness, while mobbing my partner. Who knows what else is more quietly denied?
“An African has come,” a guard announced over the intercom as I showed up. Whites are afforded the luxury of their own names, but this careful attention to my presence was not new. ATM guards stand and salute my white friend, while one guard actually asked me why I had come to the bank machine as if I might have said that I was taking over his shift.”
Celente: Report Shows JPMorgan, Citi Helped Push Lehman Under
Gerald Celente: JP Morgan and Citi acted like mobs bosses in torpedoing Lehman.
Note: the bankruptcy examiner’s report shows Lehman cooking its books to look less levered than it was, but the Federal Reserve Bank of New York (FRBNY) (Mr. Geithner, that would be you) abetted it. So did the SEC, and JP Morgan and Citi acted like cannibals (or street gangs…or mob bosses), as they tried to wipe out their rival.
Well, we said so at the time, in a post called“Statistics Don’t Back Panic Mongers” (October 2008).
And even before that.
Except for the fact that the Wall Street gang uses money, ratings, and other “adult” world paraphernalia, they’re not much more than hooligans who didn’t get toilet-trained right.
Let’s see:
Finger-pointing: He did, teacher, I didn’t (Politicians to voters, voters to politicians)
Avoiding responsibility: But you told us we could (Wall Street to Main Street, home-owners to lenders, managers to accountants, lawyers)
Succumbing to peer pressure: Everyone does it ( Book-cooking managers, lazy reporters, colluding speculators)
Blaming the victim: He deserved it (Corporate raiders, naked short-sellers, media shills)
Wall Street Meltdown Video
And on a lighter note, here’s the musical version of “The Wall Street Meltdown.” It’s pretty good financial history too. The first part, about 2007, is on youtube as well.
With Law And Church Behind Us…
“Hitler never abandoned the cloak of legality; he recognized the enormous psychological value of having the law (as well as the church) on his side. Instead, he turned the law inside out and made illegality legal.”
- Historian Alan Bullock
The Draconian Senate Bill 3081…
Another terrifying piece of legislation is in the works. The Senate Bill 3081, “Enemy Belligerent Detention, Interrogation, and Prosecution Act of 2010,” has been introduced by Senator Joseph Lieberman (I-CT) and Senator John McCain (R-AZ), says Gary Barnett at Lew Rockwell.
“Sec. 2. Placement of Suspected Unprivileged Enemy Belligerents in Military Custody.
- MILITARY CUSTODY REQUIREMENT.?Whenever within the United States, its territories, and possessions, or outside the territorial limits of the United States, an individual is captured or otherwise comes into the custody or under the effective control of the United States who is suspected of engaging in hostilities against the United States or its coalition partners through an act of terrorism, or by other means in violation of the laws of war, or of purposely and materially supporting such hostilities, and who may be an unprivileged enemy belligerent, the individual shall be placed in military custody for purposes of initial interrogation and determination of status in accordance with the provisions of this Act. (all emphasis mine)
In addition, any individual initially captured or who in any manner comes under effective control of the U.S., may be held, interrogated, or transported by any U.S. intelligence agency and placed into military custody. With the establishment of “Interrogation Groups,” which is authorized by this Act, and composed of personnel in the Executive Branch, each person captured or held may be designated as a “High-Value Detainee.” One of the criteria for determining if one is to be designated as “high value,” should the obvious ones fail is: “Such other matters as the President considers appropriate.” This is of course so broad in nature that virtually anyone can be detained if deemed necessary by just one man’s authority. Any individual who is suspected of being an unprivileged enemy belligerent will not be provided Miranda or otherwise be informed of any rights. In addition, they “may be detained without criminal charges and without trial for the duration of hostilities.” Given that the so-called “War on Terror” may never have an end; this by design, you can see how horrendous this legislation truly is. Add to this other legislation that is already in place, and the probability that with any civil unrest or natural disaster Martial Law could now be not only implemented but “legally” administered; there is a very real and dangerous risk to any of us who won’t submit fully to the state.”
Zerohedge On Regulatory Capture In Lehman’s Demise
Zerohedge points out what seems to be obvious to all but those whose professional interests lie in not being able to find their nose on their faces:
“Let’s get something straight right off the bat. We all know there is a certain level of fraud sleight of hand in the financial industry. I have called many banks insolvent in the past. Some have pooh-poohed these proclamations, while others have looked in wonder, saying “How the hell did he know that?”
Cryptogon On Everbank Gold Story
An odd little story today about well-regarded online bank and metals vendor, Everbank, that I came across at Cryptogon.
Apparently, they unilaterally changed the terms and conditions of their ‘metals select’ program recently. Everbank president, Frank Trotter, responded in a letter to Cryptogon author, Kevin Flaherty, that the changes were subsequently deleted. Still, if you’re a client, you might want to be on top of that. From all I’ve heard, they’re a reliable bank, but banks change hands and terms very frequently these days (for eg. BrownCo to Harris Direct to E-trade).
Doug Casey: No Haven Anywhere
I missed this article from libertarian investor, Doug Casey at Seeking Alpha:
DC: It seems to be going in that direction. Of course, Europe is going to be hurt much worse than the U.S. Europeans are much more heavily taxed and much more heavily regulated. The average European is much more reliant upon the state psychologically as well as economically. So it’s all over for Europe and this doesn’t even count the problems that they’re going to have in the continuing war against Islam, which are much more serious for Europe than they are for the U.S. So, no, Europe is fated to be nothing but a source of houseboys and maids for the Chinese in the next generation.
(Lila: Don’t bombard me with hate mail for this line. I don’t agree with it. I’m simply posting it, since the point of this blog is to publish stuff you won’t hear from the MSM that constitutes an informed alternative view).
John Gatto On State-Controlled Consciousness
Toward the end of this video, John Taylor Gatto, the iconoclastic critic of compulsory education and state schools and ardent advocate of “unschooling,” has an especially memorable passage.
He points out that while the state can violently coerce a few people at a time (through arrest and shooting), there’s no way (outside war or genocide, I presume) to coerce large masses of people over time, except through controlling their minds.Or more accurately, through creating the habits and attitudes that make them obedient to puppet strings in their own minds.
Compulsory schooling by the state, he argues, is a way to colonize the minds of children to make them their own police-force, eager to report other deviants.
[Preparing them to become tax snitches, as I blogged earlier, or political informants, or supporters of biometric ID legislation].
In “Dumbing Us Down”, Gatto argues that state schooling causes the following in a child’s mind:
1) Confusion, with its jumbled ensemble of tests, memorized and then forgotten
2) Dependence on class position
3) Indifference/apathy
4) Emotional dependency
5) Intellectual dependency
6) Provisional self-esteem that needs the assurance of experts to maintain
7) Habituation to constant surveillance and the denial of privacy
Bastiat On The Virtues Of Misers
In my view, the moral problem at the root of socialism is actually not envy, as many libertarians contend. I grew up among socialists, and they were, by far, motivated by honorable concerns: a sense of injustice, grief for the poor, compassion.
(I’m not talking here about political activists, some of whom do, in fact, have much baser motives).
The principal flaw in the socialist world view, as I see it, is a too great concern with appearances and an inability to see cause and effect in any complex way. It’s not the ‘materialism’ of dialectical materialism I object to. It’s the lack of ‘mind’ in the materialism. The reasoning is limited, superficial, and inaccurate. It lacks sufficient particularity, as Michael Oakeshott argued in “Rationalism in Politics” (1962).
And as Oakeshott argued there, that can be a problem in Hayek, as well.
Libertarian theorist, Frederic Bastiat, makes much the same point in his acute analysis of the superiority of the miser over the spendthrift, an analysis that would be iconoclastic from the point of view of traditional religious morality, where the miser’s avarice would usually be condemned and the spendthrift’s generosity praised:
Reader Dan Scott sends this:
Are You Scheduled For Government Interrogation If Senate bill 3081 Is Passed?
On March 4, 2010, Sen. John McCain introduced S. 3081, The “Enemy Belligerent Interrogation, Detention, and Prosecution Act of 2010.”
Under S.3081, an “individual” need only be Suspected by Government of “suspicious activity” or “supporting hostilities” to be dragged off and held indefinitely in Military Custody. Government will have the power to detain and interrogate any individual without probable cause. Government need only allege an individual in detention, is an Unprivileged Enemy Belligerent suspected of; having engaged in hostilities against the United States or its coalition partners; or has purposefully and materially supported hostilities against the United States or its coalition partners. The obvious question: how does one prove to Government they did not purposely do something? Definition for Unprivileged Enemy Belligerent: (Anyone Subject to a Military Commission)
At least under the Patriot Act, law enforcement generally needed probable cause to detain a person indefinitely. Passage of S.3081 will use mere suspicion to curtail an individual’s Constitutional Protections against unlawful arrest, detention and interrogation without benefit of legal counsel and trial. According to S.3081 Government is not required to provide detained individuals U.S. Miranda Warnings or even an attorney.
Similar to fascist laws in other countries, S.3081 if passed will frighten Americans from speaking out. S.3081 is so broadly written, it appears any “individual” who writes on the Internet or verbally express an opinion against U.S. Government or its coalition partners might potentially be detained on the basis he or she is an “unprivileged enemy belligerent”, “supporting hostilities against U.S. Government.”
See McCain Senate bill S.3081:
http://assets.theatlantic.com/static/mt/assets/politics/ARM10090.pdf
FYI: below is enclosed a copy of “Hitler’s Discriminatory Decrees signed February 28, 1933.” Although the Nazi Decrees are written differently than S.3081 they bring America to the same place trashing free speech and personal liberty. Note how the Nazi Government similar to U.S. S.3081 has in Section (1) and (4) suspended personal liberty and shutdown Free Speech, to intimidate Citizens speaking out against Government:
See Section 1
“Sections 114, 115, 117, 118, 123, 124, and 153 of the Constitution of the German Reich are suspended until further notice. Thus, restrictions on personal liberty, on the right of free expression of opinion, including freedom of the press, on the right of assembly and the right of association, and violations of the privacy of postal, telegraphic, and telephonic communications, and warrants for house-searches, orders for confiscations as well as restrictions on property, are also permissible beyond the legal limits otherwise prescribed.”
Similar to McCain’s S. 3081, but using different wording the Nazi Government in Section (4) see below, suspended Constitutional rights ordering the arrest of Citizens for any Act that might incite or provoke disobedience against state authorities. McCain’s S. 3081 instead mentions detaining and prosecuting Individuals for “supporting hostilities” against U.S. Government. S.3081 is so broadly written anti-war protesters might be arrested and detained just for attending demonstrations.
See Section 4
Whoever provokes, or appeals for or incites to the disobedience of the orders given out by the supreme state authorities or the authorities subject to then for the execution of this decree, or the orders given by the Reich Government according to Section 2, is punishable—insofar as the deed, is not covered by the decree with more severe punishment and with imprisonment of not less that one month, or with a fine from 150 up to 15,000 Reichsmarks.
Some members in the Obama Government appear bent on curtailing Citizens’ rights especially Free Speech and Opinions. In the run up to Sen. McCain’s introduced S. 3081, it was reported Top Obama Czar Cass Sunstein Proposed Infiltrating all ‘Conspiracy Theorists’ in a paper prepared in 2008—that apparently expressed: Government should infiltrate and spy on Americans, their groups and organizations to obstruct Free Speech, disrupt the exchange of ideas and disseminate false information to neutralize Americans that might question government. See news story: http://www.wnd.com/?pageId=121884
Also in 2008 perhaps coincidence: “The Violent Radicalization and Homegrown Terrorism Prevention Act”, was introduced by Rep. Jane Harman. The bill appeared to mirror a number of Czar Cass Sunstein’s spying proposals on lawful Citizens and interrupting groups without evidence of wrongdoing. Harman’s bill called for investigating and tracking Americans and groups that might be prone to supporting or committing violent acts of domestic terrorism. Harman’s bill had the potential of driving lawful political and other activists underground. Perhaps creating the domestic terrorists Bush II said Americans needed to be protected from. Rep. Harman’s “Violent Radicalization and Homegrown Terrorism Prevention Act” when closely examined, defined “homegrown terrorism” as “any planned act” that might use force to coerce U.S. Government or its people to promote or accomplish a “political or social objective.” No actual force need occur. Government would only need to allege an individual or group thought about it. Rep. Harman’s bill was often called the “Thought Crime Bill.”
McCain’s S.3081 like Harman’s bill, mentions “non-violent acts” supporting terrorism in the U.S. and or emanating from America against a foreign government or “U.S. ally.” “Non-violent terrorist acts” are covered in the Patriot Act to prosecute Persons that support “coercion to influence a government or intimidation to affect a civilian population.” However U.S. activists and individuals under S.3081 would be much more vulnerable to prosecution, being (charged with suspicion) of “intentionally providing support to an Act of Terrorism”, for example American activists cannot control what other activists might do illegally they network with domestically and overseas. Under the Patriot Act, law enforcement generally needs probable cause to detain or prosecute someone. But under S.3081, law enforcement and the military can too easily use “hearsay” or informants to allege “suspicious activity” to detain an individual. Since 9/11 federal government established across the nation a large number of Fusion Centers. Fusion Centers were originally established to improve the sharing of anti-terrorism intelligence among different state, local and federal law enforcement agencies. (But since expanded to pursue all crimes and hazards); considering that, it is problematic under S.3081 that detained individuals not involved in terrorism or hostile activities, not given Miranda Warnings or allowed legal counsel will be prosecuted for ordinary crimes because of their alleged admissions while in military custody.
Fusion Centers now pursue for analysis not just criminal and terrorist information, but any information that can be derived from police, public records and private sector data about Americans. Fusion Centers increasingly involve components of the U.S. Military in addition to other government entities to spy on Citizens. “The centers heavily rely on local “informants” for information that is shared with Local, State, and Federal police agencies.); historically it is foreseeable under S.3081 erroneous informant information will be used under S.3081 to detain innocent Individuals. Other governments have used lying informants to imprison their political opposition. Recently the Department of Homeland Security began sharing more classified Military information with local Fusion Centers, perhaps a mistake, not all local police keep secrets.
Fusion Centers circumvent Fourth Amendment Constitutional protections that prohibit illegal search and seizure, by taking advantage of ambiguous lines of authority to manipulate differences in federal, state and local laws to maximize information collection. Increasingly (private security companies and their operatives) work so closely with local/federal law enforcement and Fusion Centers—providing and exchanging information about Americans, they appear to merge with police. That is what happened in Germany during the 1930’s when a private-Gestapo merged its operations with German Federal Police. Subsequently Germany in 1939 placed all German Police agencies including the Gestapo under the control of the “Reich Main Security Office” the equivalent of U.S. Homeland Security. Notably, McCain’s S.3081 mandates merging Federal, State and local police and subsequently the U.S. Military to detain and hold Individuals in the U.S., even without probable cause. Interestingly a Rand Report prepared for the Army, recently made public, appears to suggest that U.S. Government develop a Local, State and Federal U.S. “National Police Stabilization Force merging State law enforcement with the Feds. What would happen to State Rights and what laws and Jurisdiction would be used to charge state Citizens arrested by a National Police Stabilization Force? A National Police Force could potentially be sent by the President into any State with the approval of its governor, against the wishes of its Citizens? To clarify the Rand Corporation report visit:
http://www.wnd.com/index.php?fa=PAGE.view&pageId=122533
It should be expected under S.3081 that government would use an individual’s phone call and email information to allege without probable cause “suspicious or hostile activity.” It does not appear U.S. Government will slow down wiretapping Citizens’ electronic communications. Just recently Pres. Obama’s signed Executive Order EO 12425 that put INTERPOL above the United States Constitution. Obama’s Executive Order authorized INTERPOL to act within the United States without being subject to 4th Amendment Search and Seizure laws. It would appear INTERPOL may now tap American phones and emails without a warrant. And that U.S. Police can use INTERPOL to circumvent the Fourth Amendment to arrest Americans and or forfeit their property by bringing INTERPOL into a criminal or civil investigation. Government can too easily take an innocent person’s hastily written email, fax or phone call out of context to allege a crime or violation was committed to cause an arrest or Civil asset forfeiture.
DECREE OF THE REICH PRESIDENT FOR THE PROTECTION OF
THE PEOPLE AND STATE
Note: Based on translations by State Department, National Socialism, 1942 PP. 215-17, and Pollak, J.K., and Heneman, H.J., The Hitler Decrees, (1934), pp. 10-11.7
In virtue of Section 48 (2) of the German Constitution, the following is decreed as a defensive measure against Communist acts of Violence, endangering the state:
Section 1
Sections 114, 115, 117, 118, 123, 124, and 153 of the Constitution of the German Reich are suspended until further notice. Thus, restrictions on personal liberty, on the right of free expression of opinion, including freedom of the press, on the right of assembly and the right of association, and violations of the privacy of postal, telegraphic, and telephonic communications, and warrants for house-searches, orders for confiscations as well as restrictions on property, are also permissible beyond the legal limits otherwise prescribed.
Section 2
If in a state the measures necessary for the restoration of public security and order are not taken, the Reich Government may temporarily take over the powers of the highest state authority.
Section 4
Whoever provokes, or appeals for or incites to the disobedience of the orders given out by the supreme state authorities or the authorities subject to then for the execution of this decree, or the orders given by the Reich Government according to Section 2, is punishable—insofar as the deed, is not covered by the decree with more severe punishment and with imprisonment of not less that one month, or with a fine from 150 up to 15,000 Reichsmarks.
Who ever endangers human life by violating Section 1, is to be punished by sentence to a penitentiary, under mitigating circumstances with imprisonment of not less than six months and, when violation causes the death of a person, with death, under mitigating circumstances with a penitentiary sentence of not less that two years. In addition the sentence my include confiscation of property.
Whoever provokes an inciter to or act contrary to public welfare is to be punished with a penitentiary sentence, under mitigating circumstances, with imprisonment of not less than three months.
Section 5
The crimes which under the Criminal Code are punishable with penitentiary for life are to be punished with death: i.e., in Sections 81 (high treason), 229 (poisoning), 306 (arson), 311 (explosion), 312 (floods), 315, paragraph 2 (damage to railroad properties, 324 (general poisoning).
Insofar as a more severe punishment has not been previously provided for, the following are punishable with death or with life imprisonment or with imprisonment not to exceed 15 years:
1. Anyone who undertakes to kill the Reich President or a member or a commissioner of the Reich Government or of a state government, or provokes to such a killing, or agrees to commit it, or accepts such an offer, or conspires with another for such a murder;
2. Anyone who under Section 115 (2) of the Criminal Code (serious rioting) or of Section 125 (2) of the Criminal Code (serious disturbance of the peace) commits the act with arms or cooperates consciously and intentionally with an armed person;
3. Anyone who commits a kidnapping under Section 239 of the Criminal with the intention of making use of the kidnapped person as a hostage in the political struggle.
Section 6
This decree enters in force on the day of its promulgation.
Reich President
Reich Chancellor
Reich Minister of the Interior
Reich Minister of Justice