Posts Tagged ‘Trust’
Despotism or Tyranny?

Much of the developed world will descend into despotism. The failure of mainstream policies will fatally weaken mainstream politicians, parties and institutions. People will turn to the extreme left or the extreme right to restore their declining living standards. Vested interests benefiting from the status quo and those opposed to these extremes will fight to retain what they have, democracy be damned. Advocates of the left, right and status quo will all believe they are acting “for the good of the people” as they destroy our democracy and trash our way of life.

It matters little to the millions of dead whether they died in a NAZI concentration camp, Soviet Gulag or Cambodian killing field. They are just as dead. Treated as dispensable slabs of meat, to be used and abused so someone could create their version of a better tomorrow. Falling for the left to stop the right or for the right to stop the left is simply succumbing to the rhetoric of potential despotic tyrants. Psychopathic ideologues will deprive you of your life, liberty and property as readily as they always have. We denizens of the West have not escaped histories bloody embrace.

But the descent into tyranny is not inevitable. It is just the most likely outcome given how much the worldview of the spineless curs in positions of power diverges from reality. Churchill could have accepted the inevitability of a German victory in World War II. He did not do so. Instead he rallied the people, not by telling them to go shopping, not by claiming things were going well when they were not. But by telling the people what a hard time they had before them:

We have before us an ordeal of the most grievous kind. We have before us many, many long months of struggle and of suffering.

We too have dark days ahead. At this stage it is economic rather than military Armageddon we face. The latter may well come, but in the near term it is a lower probability outcome than one of debts being defaulted on and expectations not being met. For many the economic adjustment will be a disaster. People led their lives and made their plans according to a false set of societal operating assumptions. Our leaders need to explain this fact to prepare us for the hard times ahead. The money diverted to financial vested interests is money needed to feed, clothe and provide warmth to the poor. Our experiment in crony capitalism must end.

Churchill in telling people of the hard times ahead, knew just how bad they would be:

For the first time, the people had hope but Churchill commented to General Ismay: “Poor people, poor people. They trust me, and I can give them nothing but disaster for quite a long time.”

The march of the extremes into the mainstream is  but the first step in the unraveling of  our politically correct Joseph Goebbels like big lie:

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”.

Politically correct Western states are losing the ability to shield their people from the effects of the big lie. The shock of the adjustment will be large. We need to prepare people for it. Otherwise the shock may shatter our societies, enabling extremists or existing vested interests to seize control. But the mainstream media’s reiteration of politically correct perspectives amplifies the big lie. It befuddles much of our richer, better educated and empowered population segments. This has created a leadership class unaware of the need to prepare for the tough times ahead. Their ignorance and denial is effectively paving the way for the extremes and existing vested interests to seize the State.

Denizens of the developed world may think they have stepped out of history. Wars, famines, pestilence and mass poverty do not happen to us. They exist in history books or happen to other peoples. It’s natural for those in poor countries to slave away making trinkets and material items for our amusement. It’s natural for the majority of our “children” to spend the first quarter of their life studying and the last quarter in retirement. The half of our lives spent  working is punctuated by frequent holidays. The working day is not too long or onerous.

Well history has started again. States can not make good on their promises to their people. Governments are trying not to admit this. In so doing they are putting off the inevitable, at the cost of making it worse. Their policies can not work:

My Speech Delivered at the New York Federal Reserve Bank:  The noose is tightening on your organization, vast amounts of money printing are now required to keep your manipulated economy afloat. It will ultimately result in huge price inflation, or, if you stop printing, another massive economic crash will occur. There is no other way out.

Again, thank you for inviting me. You have prepared food, so I will not be rude, I will stay and eat.

Let’s have one good meal here. Let’s make it a feast. Then I ask you, I plead with you, I beg you all, walk out of here with me, never to come back. It’s the moral and ethical thing to do. Nothing good goes on in this place. Let’s lock the doors and leave the building to the spiders, moths and four-legged rats. – Read the whole speech.

The failure of mainstream policies will undermine the standing of all institutions associated with them. The appearance of corruption and rampant fraud will destroy the trust on which our society is built. Once gone it will be sorely missed. Without trust we will soon be poor. It is more than the value of the dollar in our pocket that is dependent on it. It is the foundation of civil society. Without it there will not be much innovation or affluence. Recreating widespread trust once lost could be a task of decades or generations. Its loss is worth resisting.

It may not be too late to avoid a period of persecution, anarchy and mass impoverishment.  But the only hope of doing so it to restore integrity. Integrity to our institutions, our budgets, our leaders and our laws. Without this, all roads lead to misery and tyranny.

Graphic courtesy of Zerohedge – read the post.

Killing cultural capital

A casual glance around the net reveals how much of our cultural capital has been destroyed. Trust is integral to our way life and is being undermined in so many ways. Take MF Global for instance, which involves outright theft of customers money. Much has been written on it, but Janet Tavakoli has the best lines:

Too Big To Fail and Too Connected To Jail.

MF Global was the eighth largest bankruptcy in the US, with thousands of customers victimized by theft, and yet one hardly ever hears about it…

I have heard that they will attempt to drag this investigation out until after the national elections in November, but if it comes out before that it will be wrapped up in a “don’t ask don’t tell admit no guilt” settlement….

“Our government…teaches the whole people by its example. If the government becomes the lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy.”  Louis D. Brandeis

Corzine is a powerful figure in the Democratic funding machine, and JPM is the biggest kid on the Street.

On MF Global don’t forget:

Feds Key In on $325 Million Wire Transfer Made in Last Hours of MF Global: Keep in mind that customers who had requested their money DAYS before the 31st were sent checks instead of the customary wire transfers which they had requested, and those checks were not honored. And I have heard of at least one instance where a customer’s wire tranfer was reversed a day later by the banks, which I had thought was not even possible.

Barry notes problems with the foreclosure settlement:

As I noted oh so many times before, once we bailed out failing banks, there is a strong incentive to protect rather than police them. This deal is a perfect example.

Here’s an excerpt from the column:

“Before the settlement, we learned that nearly every aspect of the robosigned documents was false. None of the details were ever reviewed. The signatures attesting to the review of the documents were fabricated — made by someone other than the person whose name was on the document. Neither person — the supposed signatory to the document nor the hired forger — ever validated the facts of each case. All of the safeguards put in place to make sure foreclosures were done correctly and legally were bypassed. Even the notary stamps were bogus — they were not real, and not signed by a notary to validate that the signer and the signature matched.

How did this happen? Instead of a careful review, people were hired to rubber-stamp hundreds of foreclosure documents an hour. Former burger flippers were paid $8 to $10 an hour to violate the law, file false affidavits and commit perjury. Some of the information was correct, but much of it was wrong — and none of it was verified for court purposes.

We commented at the time that eroding accounting standards was an assault on part of the bedrock of our capitalist system. Barry has posted to similar effect on the FASB action:

In the height of the financial crisis, the Financial Accounting Standards Board were pressured to pass FASB 157 (“Fair-value accounting”)….

Derided as “Mark-to-Make-Believe” it leads to this unfortunate situation: The same models that led to the unfortunate money-losing purchase decision in the first place are now being used to actually value these holdings. regardless of the obvious flaw in the model in the first place.

As these bad buys plummet in price, investors in banks have no insight into the loss potential — they are hidden from view, along with the true financial condition of the company. This sort of accounting f..kery would never be tolerated in a nation where investors mattered more than insiders and bankers. Instead, it rewards the incompetent and allows near insolvent banks to pretend they are solvent, thereby allowing the granting of huge bonuses.

Almost three years later, we see the results of the Accounting Board’s move. The large bailed out banks remain weakened. Like all wounded animals, they are very dangerous. They have institutionalized fraud, made forgery a business expense. ZIRP exists for the primary reason of allowing these banks to rehabilitate their faulty balance sheets. Savers get punished.

The same could have been accomplished much more quickly and cheaply through prepackaged bankruptcies. That would have required an uncorrupted Congress, an honest Accounting board and a willingness to allow capitalism in America. Instead, we had foisted upon us a convoluted form of Socialism for Financiers.

Socialism for financiers is proving to be no better for society than was socialism for everyone else.

The problem is becoming abundantly clear to all:

The foreclosure fraud settlement has shown a breakdown in the ability of regulatory agencies to deal with the aftermath of fraudulent conduct. They simply have no ability to offer a regulatory response that’s commensurate with the behavior. If the behavior does lead to a negotiated settlement, then it comes with unsatisfying “neither admit or deny” statements that judges have continued to question.

It is good that our views are spreading. A few years earlier and we might now be on the way to recovery. As it is much of the developed world is going to have to hit bottom before it can start to get better. A bit like some alcoholics. Not surprising really as the West has been drunk on debt.

The extent of the regulatory capture is mind blowing. Again the blogs tend to be fulfilling the role vacated by the fourth estate:

The OCC doesn’t want anyone digging too deeply into the solvency of the major banks or into the mess they’ve made of the mortgage paperwork system. Well, now there’s evidence that this is exactly what’s going on. The interview with this whistleblower is well worth reading. Put this one in the suspension of belief category:

Supervisors told his entire group that “Wells Fargo had submitted over 10,000 files to Promentory. Only 4 were found to be in question, and upon final review by Wells, no harm was found.” So, 10,000 homeowners submitted their complaints and all 10,000 were deemed to be models of perfection.

It will be interesting to see the final figures on the reviews…if the OCC releases them.

It appears the entire regulatory and political infrastructure of the US has been captured by vested interests. The nation is living off its cultural capital. While there is a lot of ruin in a nation, it is not infinite.

It is time to return to integrity. In fact it is well past the time. The current devouring of all that made us what we are can not continue. The sooner we face up to reality and start laying down more cultural capital the better. Not every nation needs to hit bottom. Anarchy is best avoided. The US, Canada, Australia and NZ may yet avoid it. I fear there are dark days ahead for UK, irrespective of what it now does.