Financial Scams

[Typhoon]

RS | The Scam Wall Street Learned From the Mafia

Boys, I just realized something terrible. We joined the wrong gang.

~ Meyer Lansky, after touring the NYSE

[YMix]

I'm getting jaded.

But as the weeks passed, I started to get a feel for the defense strategy, which made a kind of demented sense. The lawyers for Carollo, Goldberg and Grimm didn't even bother trying to argue the facts of the case. Instead, in one cross-examination after another, they kept hitting the same theme. Despite the fact that the rigged bids resulted in lower returns, wasn't it true that the cities and towns still received, technically speaking, the highest bid? If a town received a 5.00 percent return on a $219 million bond instead of 5.04 percent, who's to say that wasn't a good price?

John Siffert, the gray-faced and unlikable attorney for Steve Goldberg, put it this way in his cross-examination of CDR executive Stewart Wolmark. Asking about the Allegheny deal, he boomed: "Isn't it fair to say that you believed that by lowering... Steve's bid to 5 percent, Steve's bid was still a fair price to pay?"

Wolmark's answer was both quick and sensible: "I don't determine the fair price," he replied. "The market does." GE was supposed to pay the highest price the market would pay. It wasn't a competitive auction, as required by law.

But Siffert had made his point, and his rhetoric got right to the heart of the defense, which was going to center around the definition of the word "fair." The men and women who run these corrupt banks and brokerages genuinely believe that their relentless lying and cheating, and even their anti-competitive cartel­style scheming, are all legitimate market processes that lead to legitimate price discovery. In this lunatic worldview, the bid­rigging scheme was a system that created fair returns for everyone. If a bunch of Pennsylvanians got a 5.00 percent return on their money instead of 5.04 percent, and GE and CDR just happened to split the extra .04 percent, that was a fair outcome, because that's what the parties negotiated. True, the Pennsylvanians had no idea about the extra .04 percent, and true, they had hired CDR precisely to make sure they got that extra 0.4 percent. But hey, it's not like they were complaining: Until someone told them they were being brazenly cheated, they were happy with their bond service. And besides, it's not like ordinary people understand this stuff anyway. So how is it the place of some busybody federal prosecutor to waltz in here and say what's a fair price?

Siffert tried to lay this outrageous load of balls on the jury using a faux-folksy analogy. "When your refrigerator breaks down, if you're not mechanically inclined, you're at the mercy of that repair person," he told the jury. "And if he repairs the refrigerator, makes it work well, charges you a fair price, you're likely to call on him again when the stove breaks." What he was essentially telling jurors was: This lavender is complicated, so best just to leave it to the experts. Whether they're fixing a fridge or fixing a bond rate, they get to set the price, because we're all morons who are dependent on them to make our world work. Siffert, in his scuzzy way, was actually telling us an essential economic truth: You're at the mercy of that repair person.

This incredible defense, which the attorneys for all three defendants led with, perfectly expresses the awesome arrogance of the modern-day aristocrats who run our financial services sector. Corrupt or not, they built this financial infrastructure, and it's producing the prices they genuinely think are fair for us – and for them. And fair to them is the customer getting the absolute bare minimum, while they get instant millions for work they didn't do. Moreover – and this is the most important part – they believe they should get permanent protection from the ravages of the market, i.e., from one another's competition. Imagine Jack Nicholson on the witness stand, dressed in a repairman's uniform and tool belt. Who's gonna fix those refrigerators? You? You, Lieutenant Weinberg? You can't handle the truth!

That, ultimately, is what this case was about. Capitalism is a system for determining objective value. What these Wall Street criminals have created is an opposite system of value by fiat. Prices are not objectively determined by collisions of price information from all over the market, but instead are collectively negotiated in secret, then dictated from above.

"One of the biggest lies in capitalism," says Eliot Spitzer, "is that companies like competition. They don't. Nobody likes competition."

Yeah. I know.

[Enki]

RS | The Scam Wall Street Learned From the Mafia

Boys, I just realized something terrible. We joined the wrong gang.

~ Meyer Lansky, after touring the NYSE

I wonder to what degree Lansky joined that gang after seeing all that.

[Mr. Perfect]

I watched Taobi and some other gal on Moyers a day or two ago on this, and the sheer ignorance of them made me laugh for a good 20 minutes but then it made me cry. Such enormous ignorance can't possibly be good for the universe, the entertainment I receive can't possibly offset the ignorance they inject into the body politic.

[Typhoon]

I watched Taobi and some other gal on Moyers a day or two ago on this, and the sheer ignorance of them made me laugh for a good 20 minutes but then it made me cry. Such enormous ignorance can't possibly be good for the universe, the entertainment I receive can't possibly offset the ignorance they inject into the body politic.

Would be more interesting and useful if you took apart the article in question, rebutting specific sections.

Unsupported assertions have little, if any, value no matter how convinced the author may be of their veracity and merit.

[Mr. Perfect]

One could say that you, or Tabbi, or whoever should be asked to support all the assertions made herein, but generally nobody says that despite the equal demands of justice. Tabbi is not right until proven otherwise. It's up to him to prove his case, not to me to disprove it.

I'm really struggling with this. A few years ago I used to do these really long posts that refute theses sorts of things but they went over most people's heads and therefore made no impact. What I do now is bide my time until I can find the little pin to pull out and have the whole thing fall apart, but sadly sometimes it still takes time and work to figure it.

The moyers interview I think had a some really big weak spots that would be easier to demolish, less effort on my part, if we can find the transcript.

[Typhoon]

One could say that you, or Tabbi, or whoever should be asked to support all the assertions made herein, but generally nobody says that despite the equal demands of justice. Tabbi is not right until proven otherwise. It's up to him to prove his case, not to me to disprove it.

I'm really struggling with this. A few years ago I used to do these really long posts that refute theses sorts of things but they went over most people's heads and therefore made no impact. What I do now is bide my time until I can find the little pin to pull out and have the whole thing fall apart, but sadly sometimes it still takes time and work to figure it.

The moyers interview I think had a some really big weak spots that would be easier to demolish, less effort on my part, if we can find the transcript.

Bill Moyers & Company | Matt Taibbi and Yves Smith on the Follies of Big Banks and Government

[Full transcript is available on the web page]

[Mr. Perfect]

Very nice, thanks CS. I will say this, this will provide an interesting litmus test for how things go in the future. I get the complaint occasionally that I don't do "substance", but really I have and it gets ignored. So I use other methods to get my point across, because all that typing isn't worth it to get ignored. I can blog to myself in my head and save the time. So if any of my opponents want in engage in an honest discussion this would be your chance.

First off this whole mafia thing is centuries old, so these dumb but think they're smart Jon Stewart types think they have a clever insight but it is offensive to human intelligence to entertain it as anything but crayon coloring. So it starts on stupid and goes from there.

So, from memory, Tabbu made a list of "crimes" by banks, a good percentage of which I imagine are not the way he portrayed them if you looked into it, but let's say he's mostly right about the crimes committed by various "bankers".

Now Tabbi readers are noted for being rather rabid "anti-bankers" and regularly call for "regulation", or bank nationalization, with lots of robber baron anti-capitalist sentiment. Tabby always struck me as so stupid to not warrant reading much, so in all honesty I would not be able to tell you exactly what his proscription is, but if you were to find a one paragraph summary I'm sure I would not be surprised to find out what it is.

So, my recollection of the interview was several 'baaaad, baaaaad, baaaaad bankers!" stories, followed up with this:

YVES SMITH: Banks, more than any other business, more than military contractors, live off the government. They depend on government backstopping. They exist only by way of government issued licenses, which if you had open entry you'd see much lower fees. And they get some confidence from the public from the fact that they are regulated. Oh, and the most important thing is they have access to--

MATT TAIBBI: The Federal Reserve.

YVES SMITH: --the Federal Reserve.

MATT TAIBBI: They're getting huge amounts of free money.

YVES SMITH: Well, not just the free money. The Federal Reserve basically guarantees the payment system. You know, that's the really critical architecture that banks control is that, you know, we write checks to each other. We have credit cards. They clear through banks.

But the fact that banks can exchange money with each other confidently is because the Fed stands behind that. So there's a much-- there's another layer of Fed backstopping beyond what we think of the way they step in in a crisis or the way they're now intervening to help the banks. So the fact that these institution really depend in a very fundamental way on government support means they don't have any right to the upside.

I mean, they should really be paid like public servants. I mean, I'm not kidding. I mean, and if they had been, if the pay had been ratcheted down after the crisis, I would have had a lot more sympathy for them, even if they just behaved for a couple of years. You know, they were bailed out. And then in 2009 the industry went and paid itself record bonuses, higher than 2007 instead of rebuilding their balance sheets. I mean, this was just a slap in the face for the public.

So full stop. Any person with an operative brain would now know we are dealing with a table full of retards. Pure, unadulterated retards. She did not know she was going to do it, but she did it, and she didn't even know what she was doing.

THESE ARE NOT CAPITALISTS. THESE ARE NOT BUSINESSES. THESE ARE GOVERNMENT AGENTS. THIS IS THE GOVERNMENT. WE ARE TALKING ABOUT THE GOVERNMENT DESTROYING HUMAN LIVES. THESE ARE PEOPLE THAT SERVE AT THE PLEASURE OF THE GOVERNMENT. THIS IS THE GOVERNMENT, DEMOCRATS, SCREWING HUMANITY WITH ABANDON. "BANKS" AS THEY ARE COMMONLY REFERRED TO ARE NOT BUSINESSES BUT PUPPETS OF GOVERNMENT POLICY. THEY DO NOTHING AT ALL THAT THE GOVERNMENT DOES NOT WANT THEM TO DO.

WHEN YOU SEE CITI/GS/JPMORGAN/BANKOFAMERICA ETC ETC DO NO THINK BUSINESS, OR COMPANY, OR CAPITALIST YOU HAVE TO THINK GOVERNMENT AGENT. THEY ARE EXTENSIONS OF GOVERNMENT. THEY CARRY OUT GOVERNMENT POLICY. YOU CANNOT POINT TO THE SPOT WHERE ONE BEGINS AND THE OTHER ENDS. YOU CAN'T DO IT.

So these blabbering baboons spill the beans all over the table, cut their own eyes out and don't even know it.

THIS IS A GOVERNMENT PROBLEM. EVERYTHING THAT EXPLODED IN THE ECONOMY THAT PEOPLE SUFFER WITH IS TOUCHED DIRECTLY BY GOVERNMENT. BANKS/FREDDIEFANNIE ARE EXTENSIONS OF GOVERNMENT, SUBPRIME MORTGAGE MARKETS WERE ENTIRELY CREATED BY POLITICAL ACTIVITY.

NO CREDIT MARKET FAILED EXCEPT THE ONE CREATED BY GOVERNMENT. NO DERIVATIVES MARKETS FAILED THAT WERE NOT BASED ON GOVERNMENT CREATED MARKETS. NONE!!!! THIS IS ALL GOVERNMENT HORSE$#!T!!!!!

THE SOLUTION IS TO SLASH AND BURN GOVERNMENT!!!!!!!!!!!!!!! NOT CAPITALISM!!!!!!!!!! CAPITALISM HAS NOTHING TO DO WITH ANY OF THIS!!!!!!!!!!! NO FREE MARKET FAILED ANYWHERE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

So on to the next problem...

YVES SMITH: Matt mentioned the toxic swaps. Jefferson County isn't the only example.

There have been a whole series of, you know, since Jefferson County and other municipalities blew up by deals they did before the crisis, there have been a series of swaps done after the crisis with transit authorities, where they are losing a tremendous amount of money. You can look at the way JPMorgan has serviced mortgage loans.

MATT TAIBBI: There's $228 million fine that they paid last year for municipal bond bid rigging. There was another $153 million fine that they paid for failure to, for fraud in CDO trades. I mean, there are case after case after case that involve these criminal charges. And what I thought was amazing about these hearings is that nobody brought any of those things up.

So what do we have here? MORE GOVERNMENT SCREWING PEOPLE!!!!!

Time after time from Tabby we have government agents SCREWING OVER OTHER GOVERNMENT AGENTS and numbskulls across America BLAMING CAPITALISM. THIS IS THE SALEM WITCH TRIALS ALL OVER AGAIN TO THE TENTH POWER.

Time after time Tabu brings forth examples of MUNICIPALITIES blowing billions and billions into horse$#!t government schemes.

So people, we have to ask ourselves. Time after time municipalities fall prey to these bond rigging schemes that Tabubu lays out for you. Do any of you stop and ask yourselves why municipalities fall for this and not loads and loads of private businesses? Anybody ask that? Why is that? Why is it that example after example of municipality-gets-screwed-by-government-grifters doesn't make any of you stop and wonder WTF is happening here?

Why are you guys entrusting billions and billions of dollars to used car salesmen (aka state level politicians)? Why are people who lie cheat and steal to get into power then entrusted with billions and billions of your dollars to build a sewer that "accidentally" gets them in a whole for a few billion. What kind of moron sets out to build a sewer and then loses a few billion in the process? Are you guys putting this together yet?

How dare any of you say one bad thing about capitalism when you have a completely government operated horse$#!t factory being operated by frikking Harvard Democrat bastard covered bastards with bastard filling?

When you have a tumor you cut out the tumor, you don't try to reform it into a healthy tumor. You cut it out and incinerate it.

We are years into this horse$#!t and the vast majority of you haven't even figured out the problem yet.

Most of you aren't very far off from this:

BILL MOYERS: When you come back, I want you to take the whole hour and explain to me what a derivative is and how it works. Okay? Is that a promise?

Now there are load of other problems in this interview but we must start somewhere.

[YMix]

THESE ARE NOT CAPITALISTS.

Of course they are. They operate their companies based on the principle of capital accumulation and the means of production are privately owned.

THESE ARE NOT BUSINESSES.

Yes, they are.

THESE ARE GOVERNMENT AGENTS. THIS IS THE GOVERNMENT. WE ARE TALKING ABOUT THE GOVERNMENT DESTROYING HUMAN LIVES. THESE ARE PEOPLE THAT SERVE AT THE PLEASURE OF THE GOVERNMENT. THIS IS THE GOVERNMENT, DEMOCRATS, SCREWING HUMANITY WITH ABANDON. "BANKS" AS THEY ARE COMMONLY REFERRED TO ARE NOT BUSINESSES BUT PUPPETS OF GOVERNMENT POLICY. THEY DO NOTHING AT ALL THAT THE GOVERNMENT DOES NOT WANT THEM TO DO.

Ah, so the government is some kind of borg, assimilating anything it signs a contract with. But what if it's the other way around and the businesses have assimilated the government?

WHEN YOU SEE CITI/GS/JPMORGAN/BANKOFAMERICA ETC ETC DO NO THINK BUSINESS, OR COMPANY, OR CAPITALIST YOU HAVE TO THINK GOVERNMENT AGENT. THEY ARE EXTENSIONS OF GOVERNMENT. THEY CARRY OUT GOVERNMENT POLICY. YOU CANNOT POINT TO THE SPOT WHERE ONE BEGINS AND THE OTHER ENDS. YOU CAN'T DO IT.

Your basic argument, one that Simple Minded also likes to put forward, is that (almost) everything you don't like is "government". You want to keep the idea of "business" pure and clean, but, of course the world doesn't work like that. Some government officials are corrupt. Some businessmen are thieves. So it goes. Just because some thieves found a way to steal with the eager help of some government officials, doesn't make them less businessmen.

[Enki]

Wow, Mr. Perfect sounds like an Occupier.

But YMix perfectly illustrates Mr. Perfect's semantic error. He thinks that I and others are making an equal and opposite error, letting government off the hook. Not so. We recognize that it is corporate/governmentcollusion that is the problem.

[Typhoon]

When the entitled elect themselves the party accelerates and the brutal hangover is inevitable.

1CLhqjOzoyE

[Mr. Perfect]

Wow, Mr. Perfect sounds like an Occupier.

But YMix perfectly illustrates Mr. Perfect's semantic error. He thinks that I and others are making an equal and opposite error, letting government off the hook. Not so.

No, you still aren't listening. See below.

We recognize that it is government that is the problem.

Fixed.

[Mr. Perfect]

Of course they are. They operate their companies based on the principle of capital accumulation and the means of production are privately owned.

No no no no no, you are stil brainwashed ymix. The government wants a closed shop to control the money supply and they want a piggy bank to fund their political fantasies (eg subprime mortgages) and campaigns. They operate no differently than the government as a taxing body and accumulate wealth just as taxes do. Since the government taxes money and gives some of it back to you does it make it not the government and a business instead? I think not. The government accumulates capital but that does not make it a business.

Yes, they are.

Not in the sense that they have to enter the market and earn business. The government excludes other companies so that it can have money to play with and the power that comes with it. The banks creat off budget wealth they can do things with they could never do with tax dollar.

Ah, so the government is some kind of borg, assimilating anything it signs a contract with. But what if it's the other way around and the businesses have assimilated the government?

Tell me ymix, which markets failed outside of the government created subprime mortgage market? Name one please. Just one.

However to definitively answer your question, you can tell who assimilated who when in 2008 the banks were dead and the government was not. If the banks were some kind of predatory leech the gov't would have let them die. But they didn't. They brought them back to life, FOR NO REASON. The banks had no money to influence/buy off anybody, they were mostly insolvent. But the politicians wanted their cash cow brought bank on line and did what they did. Sorry, but the government is the root cause here.

Your basic argument, one that Simple Minded also likes to put forward, is that (almost) everything you don't like is "government".

Not at all. I really like the military. I like government in it's proper bounds, and fiercely oppose it outside of it's proper bounds. I hope you feel the same way.

You want to keep the idea of "business" pure and clean, but, of course the world doesn't work like that.

No I just want the truth. The truth is that the banks are appendages of government, they do the bidding of government, they carry out government policy, they exist and operate at the discretion of the government. You perhaps want the government to be pure and clean. It does not work like that.

Some government officials are corrupt. Some businessmen are thieves. So it goes. Just because some thieves found a way to steal with the eager help of some government officials, doesn't make them less businessmen.

It does if they exist by sanction of numerous government licenses and execute federal reserve policy and deal in government created and insured paper of all kinds. No different than a security contractor, they are simply government puppets carrying out government policy in an arrangement more conducive to government. Get the government out of all of these practices (FM/FM, the fed, FDIC etc) these banks go away and virtually all other businesses resume normal activity in practically every way.

Now let's be clear. The situation we are in is nearly 90-95% the creation of Democrats, and government is the root cause. But as I have said before, Tinker never would have let this happen. Tinker would never let a corporation have this much wealth flowing through it, particularly to these kinds of people. Tinker would have corporations be eliminated or severely castrated, to the point that it would never occur to anyone to set this up.

Conversely, I would never give the government the power to control who was in the banking business, or create a federal reserve, or create a credit market that would not otherwise exist. I would never let used car salesmen/municipalities manage so much money. Neither one of us would do that. This exists because of moderates, who want a little bit of soclalism, a little bit of capitalism, so we get this Frankenstein. This is not a sustainable set up. If this was Europe you would start taking apart corporations or what have you (notice they aren't though?) but this is America, so the answer is to destroy these government programs, FM/FM, the fed, FDIC and so forth.

[Simple Minded]

Your basic argument, one that Simple Minded also likes to put forward, is that (almost) everything you don't like is "government". You want to keep the idea of "business" pure and clean, but, of course the world doesn't work like that. Some government officials are corrupt. Some businessmen are thieves. So it goes. Just because some thieves found a way to steal with the eager help of some government officials, doesn't make them less businessmen.

Ymix,

You are missing the point.

Collusion between government and businessmen to rig the rules of the game is not capitalism, it is corruption. It is not a free market. Tinker actually gets this right every once in a while. Note how well the "regulators" choose to either not enforce regulation, or only regulate those who do not grease their palms, to protect their funding.

Where regulation does not exist, rigging the game via regulation is not possible. Money is spent on productive assets (some of whom are people) rather than purchasing political favor.

Did the people with the money corrupt the people with the guns or did the people with the guns extort the people with the money?

"The public sector is the coercive sector, the private sector is the voluntary sector." Even in the evil capitalist society that is America, I would bet more than 99.999% of all transactions are voluntary. Both the buyer and the seller think they are getting the better deal, or the transaction does not happen.

Arguing about how "pure" capitalism or "pure" socialism should be implemented, in the presence of humans is eternally pointless. The angelic beings one wishes to have as neighbors, or manage either corporations or governments do not exist.

You do not seem to understand free markets. One system responds faster to the will of people than the other. The dark side is that people often desire things that are self-destructive. Some aspects of government are necessary. How much do you want someone to regulate "you" or "others" for your own good or their own good is the question. Those who wish to avoid personal responsibility for the results of their chosen behavior desire lots of regulation/supervision.

IMSMO, far too many adults desire a benign dictator with special mojo to provide them with free lunches and square circles, insulate them from life, and absolve them of personal responsibility. Back in the olden days, we called these people "children."

The good news is these people eventually collapse the impossible systems they desire. The other good news is the resultant pain effects self-correction.

In short, personal responsibility.

[YMix]

No no no no no, you are stil brainwashed ymix. The government wants a closed shop to control the money supply and they want a piggy bank to fund their political fantasies (eg subprime mortgages) and campaigns.[...]Not in the sense that they have to enter the market and earn business. The government excludes other companies so that it can have money to play with and the power that comes with it. The banks creat off budget wealth they can do things with they could never do with tax dollar.

So a lot of people are in it for the money and the power. That was quite clear.

They operate no differently than the government as a taxing body and accumulate wealth just as taxes do. Since the government taxes money and gives some of it back to you does it make it not the government and a business instead? I think not. The government accumulates capital but that does not make it a business.

Then all companies involved in finances and banking are government because they act like taxing bodies. The majority shareholder who, having long since recouped his initial investment, just takes the money and gives some back to the employees has turned into government.

However to definitively answer your question, you can tell who assimilated who when in 2008 the banks were dead and the government was not. If the banks were some kind of predatory leech the gov't would have let them die. But they didn't. They brought them back to life, FOR NO REASON. The banks had no money to influence/buy off anybody, they were mostly insolvent. But the politicians wanted their cash cow brought bank on line and did what they did. Sorry, but the government is the root cause here.

The banks and the government go together. What the government resurrected is a very willing partner in every caper.

Not at all. I really like the military. I like government in it's proper bounds, and fiercely oppose it outside of it's proper bounds. I hope you feel the same way.

No, I don't feel the same way. I don't like your military, nor my own country's. As for the "proper bounds", the definition is still up for debate.

No I just want the truth. The truth is that the banks are appendages of government, they do the bidding of government, they carry out government policy, they exist and operate at the discretion of the government. You perhaps want the government to be pure and clean. It does not work like that.

The truth is that a bunch of people are colluding to make money. It doesn't seem to matter which one is working for the government and which one is working for the bank.

It does if they exist by sanction of numerous government licenses and execute federal reserve policy and deal in government created and insured paper of all kinds. No different than a security contractor, they are simply government puppets carrying out government policy in an arrangement more conducive to government. Get the government out of all of these practices (FM/FM, the fed, FDIC etc) these banks go away and virtually all other businesses resume normal activity in practically every way.

What we call corruption IS a normal way of doing business. Has been for thousands of years and will not go away any time soon.

Now let's be clear. The situation we are in is nearly 90-95% the creation of Democrats, and government is the root cause.

Ideological statement. It's crap like this that kills the conversation.

Conversely, I would never give the government the power to control who was in the banking business, or create a federal reserve, or create a credit market that would not otherwise exist. I would never let used car salesmen/municipalities manage so much money. Neither one of us would do that. This exists because of moderates, who want a little bit of soclalism, a little bit of capitalism, so we get this Frankenstein. This is not a sustainable set up.

No set up is sustainable in the long run.

If this was Europe you would start taking apart corporations or what have you (notice they aren't though?) but this is America, so the answer is to destroy these government programs, FM/FM, the fed, FDIC and so forth.

Europe is not a single country.

[YMix]

Collusion between government and businessmen to rig the rules of the game is not capitalism, it is corruption. It is not a free market.Tinker actually gets this right every once in a while. Note how well the "regulators" choose to either not enforce regulation, or only regulate those who do not grease their palms, to protect their funding.

Collusion to rig the game is a business model. Of course it's not a free market. That was the whole point of rigging the game.

Where regulation does not exist, rigging the game via regulation is not possible.

Regulation is inevitable in a society made of members with conflicting interests.

Money is spent on productive assets (some of whom are people) rather than purchasing political favor.

Or on a scam. Or in a useless manner by incompetent people. lavender happens.

Did the people with the money corrupt the people with the guns or did the people with the guns extort the people with the money?

Does it matter who was the first to corrupt the other? They are now in business together and, as Mr. Perfect pointed out, their MOs are not that different.

"The public sector is the coercive sector, the private sector is the voluntary sector."

New rule: Almost every man who has the power to coerce another man, will do so if he can get away with it. Thus, the focus of interest shifts to getting away with it and more and more complex structures spring up to address "market demand", as it were.

Arguing about how "pure" capitalism or "pure" socialism should be implemented, in the presence of humans is eternally pointless. The angelic beings one wishes to have as neighbors, or manage either corporations or governments do not exist.

Yes, I know. That's why I'm getting jaded.

You do not seem to understand free markets. One system responds faster to the will of people than the other. The dark side is that people often desire things that are self-destructive. Some aspects of government are necessary. How much do you want someone to regulate "you" or "others" for your own good or their own good is the question.

Yes, I know that, too.

Those who wish to avoid personal responsibility for the results of their chosen behavior desire lots of regulation/supervision. IMSMO, far too many adults desire a benign dictator with special mojo to provide them with free lunches and square circles, insulate them from life, and absolve them of personal responsibility. Back in the olden days, we called these people "children."The good news is these people eventually collapse the impossible systems they desire. The other good news is the resultant pain effects self-correction.In short, personal responsibility.

I also know what your SM opinion is because you somehow manage to put it in almost every post and I'm losing patience with it. While your steadfast support of personal responsibility is something I'd take my hat off to if I had a hat, the fact remains that free lunches are a human goal.

Let's put it this way: humans cannot produce their own life-sustaining energy and are thus bound to take it from some other animal or plant. In order to obtain energy, a human being must spend energy. Thus, a human being must at least break even in order to stay alive. Therefore:

Neutral outcome: Break even (energy obtained equals energy spent)
Good outcome: Profit (energy obtained exceeds energy spent)
Excellent outcome: Free lunch (energy spending is the barest possible minimum, profits are off the fuckin' chart)
Awesome outcome: Monopolistic position (free lunches for as long as the position is held).

This is human nature and personal responsibility will not intrude.

[Enki]

Free-Market ideology doesn't recognize that the government exists as a mechanism to manage conflicts of interest. It is completely and totally corruptible, but a planet ruled by gangsters who dump poisonous sludge into the groundwater with absolutely no accountability whatsoever is the outcome of 'no government'. Government works imperfectly, but it's religious belief to think that it never works at all.

At the end of the day, I have SOME stake in government, I have the ability to impact it somewhat. A private corporation who I am not a shareholder in at all, that's not the case. So the Free-Marketeer wants me to give up what little power I do have to allow juggernauts free reign over a landscape that renders me powerless.

Government is an unwieldy and poorly balanced sword, but it's the only sword I've got. I see the direct effects of Government every day. Things like running water, sewers, trash collection, etc... I cannot really fathom how someone can not understand the absolutely necessary conditions that government brings about to facilitate those same markets. In an absence of government most of those corporations operating in the so-called 'free-market' simply would not exist at all.

If it were not for the copyright regime in place, Facebook could not exist. If it weren't for Patent Law, Microsoft, Apple and Google could not exist. If it were not for DARPA, the internet would not exist. If it were not for the interstates, we would not be able to drive cross country as easily as we do.

The direct effects of government are ready and apparent. Whether particular aspects of them are good or bad is another thing. Regulatory capture is not a reason not to have regulations, it's a reason to wrest control of the captured regulators away from those being regulated.

[monster_gardener]

Just heard on Public Television NBR.........

Barclay's Barclay's admits Manipulating the LIBOR Rate

WHEN a trader asks a colleague to submit false information in order to boost his profits, the correct answer is not “donefor you big boy”. This response was one of a host of exchanges involving 14 Barclays traders that were revealed this week as part of a probe by Britain’s Financial Services Authority (FSA) and American agencies including the Commodities Futures Trading Commission (CFTC) and the Department of Justice (DoJ).

The probe relates to LIBOR, the London inter-bank offered rate. LIBOR is supposed to be a trusty financial yardstick, measuring the costs banks face when they borrow from one another. Set each day, LIBOR determines the prices of loans and derivatives contracts worth several multiples of global GDP. The flaw in the system is that banks can estimate their own LIBOR rates. Although these estimates are supposed to be calculated by a team that is ringfenced from other parts of the bank, the probe shows that they were influenced at the behest of Barclays’ traders.

http://www.economist.com/node/21557748

Fined $450 Million..........

The Financial Services Authority is now looking into other banks.

http://www.bbc.co.uk/news/business-18612279

Seems the game is rigged...........


IIRC LIBOR was involved in the Rolling Stone Tabibbi article where the Banksters were ripping off Birmingham Alabama and other Cities to the point of financial disaster.....

Previously have read that it is to the point that now sewer rates are IIRC ~ $200/month to pay for the mess in Birmingham and poor people have gone off the City Water service because water usage calculates sewer charges....... Are surviving on bottled water and renting Porta Potties............

http://www.bbc.co.uk/news/magazine-16037798

[Mr. Perfect]

This is as big test for you Tinker. Whether you can be taken seriously again rides on this.

Free-Market ideology doesn't recognize that the government exists as a mechanism to manage conflicts of interest.

No Tinker. That is but one theoretical aspect of government.

In the reality based universe Government is Cuba, and North Korea, and the KSA, the European powers that created the African slave trade, and Richard Nixon, and Barack Obama, Ronald Reagan, and Adolf Hitler, and Chairman Mao, and Rudy Guliani.

That is government. That is what we're dealing with here. Do any of the above seem like they got up in the morning and started worrying about managing our conflicts of interest? Or do you think they had other appetites?

The reason your thinking doesn't get off the ground is because you are in denial of these kinds of realities.

It is completely and totally corruptible, but a planet ruled by gangsters who dump poisonous sludge into the groundwater with absolutely no accountability whatsoever is the outcome of 'no government'.

Actually Tinker in parts of the world, even in America, it is the government that actually dumps poisonous sludge in the groundwater. Do you realize that? Do you realize the impact that has on your belief system? Can you acknowledge it and integrate it into your thinking or will you just be denialist about it? You have to address this, it is a major flaw in your belief system.

Government works imperfectly, but it's religious belief to think that it never works at all.

At the end of the day, I have SOME stake in government, I have the ability to impact it somewhat. A private corporation who I am not a shareholder in at all, that's not the case. So the Free-Marketeer wants me to give up what little power I do have to allow juggernauts free reign over a landscape that renders me powerless.

\
The largest corporation in the world controls, I don't know, 1% of GDP or so.

Government in total controls nearly a third.

The largest corporation in the world today was not 10 years ago, and the largest one 10 years ago was not 10 years before than, and so on and so on. And the government chugs on.

See the difference? See who the real juggernaut is?

Government is an unwieldy and poorly balanced sword, but it's the only sword I've got. I see the direct effects of Government every day. Things like running water, sewers, trash collection, etc...

See the things you mention here are like 2-3% of government activity. What you appear to be saying, and what I really do think you're saying, is since sewers, then single payer. Uh no, no way.

You often claim libertarians are chaotic anarchists yet your own stated beliefs provide nothing that would stop us from turning into North Korea. I have never seen you say one thing that would lead me to believe that you could stop a North Korea.

Since sewers, then redistribution of wealth. Since sewers then nationalized agriculture. Since sewers then nationalized banks. Since sewers then political education agencies. Since sewers then low performer go to work camps.

By your rationale any power can be given to government. You have provided no rationale to curb the government in any way.

Do you realize that?

I cannot really fathom how someone can not understand the absolutely necessary conditions that government brings about to facilitate those same markets. In an absence of government most of those corporations operating in the so-called 'free-market' simply would not exist at all.

I cannot fathom how you, who can read and write, cannot understand that the right believes in limits on government, not no government.

Back when you were trying to fuse libertarians with progressives, you would describe libertarian beliefs, libertarians would say no you have it all wrong and you just wouldn't listen. I cannot tell if this is a tactic on you part or you simply can't understand what people are saying to you.

Limits. It could be that you don't believe in limits, and therefore really can't understand that other people do believe in it. So far, you have never described any way, set any standard by which the government could be limited. I've never seen it. So the issue is, can you conceive the the debate is not about government or no government, but about government limits?

If it were not for the copyright regime in place, Facebook could not exist. If it weren't for Patent Law, Microsoft, Apple and Google could not exist. If it were not for DARPA, the internet would not exist.

Right. Well within the proper powers of a limited government. The protection of property rights.

If it were not for the interstates, we would not be able to drive cross country as easily as we do.

Traditionally the left has said that the interstates were giant giveaway to car companies, and I cant say that they don't have a point.

The direct effects of government are ready and apparent.

Yes, wars, death, famine, deprivation, oppression. ENORMOUS waste and poverty. Is that what you were referring to?

Whether particular aspects of them are good or bad is another thing. Regulatory capture is not a reason not to have regulations, it's a reason to wrest control of the captured regulators away from those being regulated.

You don't hire a chicken to pull a plow. You don't let John Hagee officiate a Gay Marriage. You don't roast a pig in a coffee maker. You don't put sand in an engine oil pan. You don't hire Barack Obama to close Gitmo. You don't introduce your hot wife to John Edwards.

Similarly, you don't put people in charge of money who's careers are completely dependent on short term political sentiment.

Does that make sense?

Government is not designed to do everything. It can't do everything, and we can talk about why, arguably there are very few things it can do, and therefore should be restricted to that.

So none of this is new, but you talk with regularity as if you've never heard of it before, and we need to find out why.

[Typhoon]

RS - Taibbi | Notes on Wall Street's Bid-Rigging Scandal

Bloomberg | How Wall Street Scams Counties Into Bankruptcy

[Typhoon]

Taibbi | A Huge Break in the LIBOR Banking Investigation

On Wednesday, Barclays won the race to reach a deal with U.S. and British regulators, beating UBS, which was reportedly the first bank to begin cooperating with international antitrust authorities.
Barclays agreed to pay at least $450 million to resolve government investigations of manipulation of Libor and the Euro interbank offered rate (or Euribor): $200 million to the U.S. Commodity Futures Trading Commission, $160 million tothe criminal division of the U.S. Department of Justice and $92.8 million to Britain's Financial Services Authority.

[Typhoon]

AP | Countrywide won [US Congressional] influence with discounts

And in other news: water is wet.

[Typhoon]

From a friend:

Quantifying the bank bailout

One year of econopocalypse would pay for a civilization's worth of science.

The UK has spent more money bailing out its banks in the past 12 months than it has spent on science since the time of Christ.

[Alph]

The total value of all existing capital is something like $150 trillion, according to the IMF. Zillow says the value of all US real estate is $25 trillion or so. Let's say the US represents one sixth of the value of all real estate in existence. So, the total value of all long term savings, capital, real estate and investment is $300 trillion.

The total value of the world economy, our yearly production, is $63 trillion. (And now you see how much of that we spend on things that don't last.) The total value of world financial transactions, which is moving that $300 trillion of capital around with some of that $63 trillion, is about $300 trillion per year.

The US has, so far, committed itself to spending about $29 trillion on the bailout. (Most of it as loans and things it expects to hopefully break even on, or to central bank swaps and such.) But still, this is money that the US is throwing around.

It's not just that what we are spending to tread water so that certain people (all of us to a certain extent, certain powerful people or groups people who have been promised things for political favors more than the average) don't have to feel the pain is more than a civilization worth of science. It's that it's enough to build vast sums of real capital. (As is the case with the US committing to various causes more money than all the real estate in their nation is worth.)

We are such a wealthy and powerful civilization. We have more money available for investment than previous civilizations could have imagined. It's time to throw off the shackles of past inefficiencies, invest in the new, and move forward into the light of a new day.

[Typhoon]

. . .

So full stop. Any person with an operative brain would now know we are dealing with a table full of retards. Pure, unadulterated retards. She did not know she was going to do it, but she did it, and she didn't even know what she was doing.

THESE ARE NOT CAPITALISTS. THESE ARE NOT BUSINESSES. THESE ARE GOVERNMENT AGENTS. THIS IS THE GOVERNMENT. WE ARE TALKING ABOUT THE GOVERNMENT DESTROYING HUMAN LIVES. THESE ARE PEOPLE THAT SERVE AT THE PLEASURE OF THE GOVERNMENT. THIS IS THE GOVERNMENT, DEMOCRATS, SCREWING HUMANITY WITH ABANDON. "BANKS" AS THEY ARE COMMONLY REFERRED TO ARE NOT BUSINESSES BUT PUPPETS OF GOVERNMENT POLICY. THEY DO NOTHING AT ALL THAT THE GOVERNMENT DOES NOT WANT THEM TO DO.

WHEN YOU SEE CITI/GS/JPMORGAN/BANKOFAMERICA ETC ETC DO NO THINK BUSINESS, OR COMPANY, OR CAPITALIST YOU HAVE TO THINK GOVERNMENT AGENT. THEY ARE EXTENSIONS OF GOVERNMENT. THEY CARRY OUT GOVERNMENT POLICY. YOU CANNOT POINT TO THE SPOT WHERE ONE BEGINS AND THE OTHER ENDS. YOU CAN'T DO IT.

So these blabbering baboons spill the beans all over the table, cut their own eyes out and don't even know it.

THIS IS A GOVERNMENT PROBLEM. EVERYTHING THAT EXPLODED IN THE ECONOMY THAT PEOPLE SUFFER WITH IS TOUCHED DIRECTLY BY GOVERNMENT. BANKS/FREDDIEFANNIE ARE EXTENSIONS OF GOVERNMENT, SUBPRIME MORTGAGE MARKETS WERE ENTIRELY CREATED BY POLITICAL ACTIVITY.

NO CREDIT MARKET FAILED EXCEPT THE ONE CREATED BY GOVERNMENT. NO DERIVATIVES MARKETS FAILED THAT WERE NOT BASED ON GOVERNMENT CREATED MARKETS. NONE!!!! THIS IS ALL GOVERNMENT HORSE$#!T!!!!!

THE SOLUTION IS TO SLASH AND BURN GOVERNMENT!!!!!!!!!!!!!!! NOT CAPITALISM!!!!!!!!!! CAPITALISM HAS NOTHING TO DO WITH ANY OF THIS!!!!!!!!!!! NO FREE MARKET FAILED ANYWHERE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Well, this is a bit disappointing. I was expecting an incisive rebuttal rather than a ideological UPPERCASE rant.

1/ Your argument is analogous to the debates I've have with Marxist-Leninists, known as pinko commies to you, regarding the nature of communism.
Like you and capitalism, they claim that communism is a perfect system whose real life implementations, Stalinist Russia and Maoist China, were flawed.
In your case, it is the United States in it's current form.
Both ideologies ignore the spanner in the works: human nature.

2/ There has never been and will never be a system of pure capitalism, so-called. This is as an unrealistic and naive goal as is pure communism.
Why? Because both make major assumptions about human nature that are contrary to evidence, experience, and history.
People will simply not behave as you would like them, or need them, to behave.

People will collude, bribe, cheat, steal, and attempt to gain advantage regardless of system in which they operate.
Just as some businessmen and politicians have done in the current US system.

3/ Successful capitalism, like communism, leads to an every increasing concentration of wealth and power.
There are plenty of historical examples, including the trusts of the Gilded Age in the US or the to-big-to-fail financial institutions of today.
In communism, power is concentrated in the ruling party factions, in capitalism power becomes concentrated in the clique of successful cartels.
Both set up barriers to entry. One method employed in capitalism is to buy influence in government.

4/ It is the ongoing tension between the private and public sectors, not unlike the church and kings in historical Europe, that ensures that neither gets the upper hand.
Problems arise when one or the other becomes too powerful. Or when both collude to screw the middle class.

5/ The history of capitalism, in practice rather than theory since the days of the Rialto, is the history of booms and busts: history of financial crises

6/ Calling people idiots, for ideological reasons, do not make them so. Rather, you have yet to present a compelling argument as why I should stop reading Taibbi.