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We invited Bill Black to return to explain whether the level of systemic risk due to fraud in our financial markets has improved or worsened since the dire situation he painted for us in early 2012. Sadly, it looks like abuse by the big players has only flourished since then.
The Banks Have Blood On Their Hands Adam Taggart peakprosperity.com July 15, 2013 We invited Bill Black to return to explain whether the level of systemic risk due to fraud in our financial markets has improved or worsened since the dire situation he painted for us in early 2012. Sadly, it looks like abuse by the big players has only flourished since then. In the U.S., our regulators have publicly embraced a "too big to prosecute" doctrine. We are restraining, underfunding, and dismantling regulatory oversight in the interest of short-term stability for the status quo. Which, as a criminologist, Black knows with certainty creates an environment where bad actors will act in their self-interest with assumed (and likely real, at this point) impunity. If you can steal with impunity, as soon as you devastate regulation, you devastate the ability to prosecute. And as soon as that happens, in our jargon, in criminology, you make it a criminogenic environment. It just means an environment where the incentives are so perverse that they are going to produce widespread crime. In this context, it is going to be widespread accounting control fraud. And we see how few ethical restraints remain in the most elite banks. You are looking at an underlying economic dynamic where fraud is a sure thing that will make people fabulously wealthy and where you select by your hiring, by your promotion, and by your firing for the ethically worst people at these firms that are committing the frauds. And so you have one of the largest banks in the world, HSBC, being the key ally to the most violent Mexican drug cartel, where they actually did so much business together that the drug cartel designed special boxes to put the cash in that they were laundering that fit exactly into the teller windows so that there would be no delay. This is the efficiency principle of drug laundering. So these banks figuratively have the blood of over a thousand people on their hands. They are willing to fund people that murder and torture and behead folks. And they are willing to do that year after year, despite warnings from the regulators that they are doing this. And the regulators are not willing to actually take serious action until there has been “true devastation.” And as time passes, our ability to bring effective justice – should we want to – atrophies: I will tell you one of the things from being a former enforcement specialist: If you do not bring cases for year after year after year, it would be like a tennis player who stopped playing tournaments for ten years and never practices, and then he or she goes onto the court. What is going to happen? They will get crushed by the opposition. So once you have given up enforcing the laws, I can tell you this with my lawyer hat on and former enforcement hat: You fear bringing these cases because you have allowed your skills to deteriorate so badly. Given the sorry statements from officials like Lanny Breuer, who stepped down as the DOJ Criminal Division Chief earlier this year (he headed up the investigation of the banks and mortgage companies), we may already be at this stage. Black sees a natural end to this systemic rot: a day where the bad actors no longer trust one another, and the system implodes upon itself: I can tell you as a criminologist and as a former financial regulator, this is what you need to know about fraud: Fraud involves me, the fraudster, getting you to trust me. And then I betray your trust for my financial gain. And so there is no more destructive asset against trust than elite fraud. So yes, we have been running a system under which the fraudsters get incredibly wealthy. And now they get incredibly wealthy and they do not even get prosecuted. And if there is a civil case – actually, they get the worst of all worlds. It sounds large for propaganda purposes, but all of us in finance know it is trivial. It is often literally a week of income, where their income is massively increased by the frauds. The statistics show that there has been a general withdrawal of less sophisticated investors, in particular, from the marketplaces -- and it's because people do not trust the markets anymore. Here is what people forget: After Lehman Brothers goes, the run that occurred was not Ma and Pa. The run that occurred that, for example, broke the buck in the money market mutual funds: that was a massive run of the most sophisticated financial players, where they were taking out hundreds of millions – or even tens of billions, in some cases – of money, in some cases, literally, in microseconds. In other words, bankers no longer trusted other bankers. And when that happens, markets do not simply become inefficient; they actually lock up. And that is what happened thousands of times after Lehman collapsed, because bankers would no longer trust other bankers’ evaluation of the assets. And we have not even discussed derivatives to this point. Which is the not-800-pound gorilla, but the $8-trillion-ton-gorilla that is out there. So we already have the insanity of derivative trades in which both of us book a gain because we have different evaluations for the asset. So we have phenomenal paper gains that cannot be true. When the markets no longer trust each other, then those kinds of transactions do not work anymore, and there is no liquidity, and you are in the equivalent of trying to sell minority shareholder interest in a privately held corporation. How is that going to work out for you? Ever tried to do that? So all across the globe, all across history, minority shareholders get completely screwed in that circumstance, when liquidity dries up. Well, the same thing can happen to much broader markets, including in particular the derivatives markets. And if it does, when trust is interrupted, much less eroded, in the ways I have talked about it in the derivatives market, liquidity completely dries up. Anything that functions like a market- maker collapses, and you get whole financial systems that grind to a halt. And they do not happen just a few times. It can happen in thousands of markets roughly simultaneously. You asked me earlier about Dodd Frank, and I said it had no coherent strategic vision. And a couple of the areas in which it had no coherent strategic vision we have talked about. It did not deal with the international competition-in-laxity. It did not deal with “too big to fail.” And it did not deal with derivatives. So I would say that was strike one, strike two, strike three. The Banks Have Blood on Their Hands VIDEO BELOW http://www.peakprosperity.com/podcast/82364/bill-black-banks-blood-their-hands CIA Will Now Openly Propagandize Americans Kurt Nimmo Infowars.com July 15, 2013 Smith-Mundt Act “reformed” this month allowing CIA to disseminate propaganda Operation Mockingbird, the CIA’s long term effort to control the news, has shifted into overdrive. On July 2, a little noticed “reform” passed in January went into effect. The Smith-Mundt Modernization Act of 2012, passed as part of the 2013 National Defense Authorization Act, will allow the CIA to flood America with more government propaganda. The Smith-Mundt Act, passed as the national security state was taking shape in 1948, authorized the State Department to unleash a tidal wave of propaganda outside the United States while supposedly forbidding its dissemination inside the country. The law set the stage for Frank Wisner, who headed up the CIA’s covert action division in the early 1950s, to build his “mighty Wurlitzer,” described by none other than the New York Times as “the means for orchestrating, in almost any language anywhere in the world, whatever tune the CIA was in the mood to hear.” In the years since, the establishment media has worked hand in glove with the CIA. This cozy relationship was revealed by Frank Church and the Select Committee to Study Governmental Operations with Respect to Intelligence Activities in 1975 and, a few years later, by reporter Carl Bernstein. “Among the chief executives who helped the CIA were William Paley of CBS, Henry Luce of Time, Arthur Sulzberger of the New York Times, Barry Bingham Sr. of the Louisville Courier-Journal, and James Copley of the Copley News Service,” write Amy Goodman and David Goodman in Unreality TV, The Mighty Wurlitzer, Hijacking Public Media, a chapter from the book Static: Government Liars, Media Cheerleaders, and the People Who Fight Back. “The leading TV networks, including ABC and NBC, and the wire services-AP, UPI, Reuters, along with Hearst Newspapers, Scripps Howard, Newsweek, the Miami Herald, and the Saturday Evening Post all had dealings with the spy agency. The CIA’s most valuable associations were with the New York Times, CBS, and Time Inc.” This media penetration by the CIA is not merely a baseless conspiracy theory as some might argue, but is backed up by CIA office memos released under FOIA revealing the placement of “important assets” inside every major news organization in the country. “It was not until 1982 that the Agency openly admitted that reporters on the CIA payroll have acted as case officers to agents in the field,” writes Alex Constantine. “Most consumers of the corporate media were – and are – unaware of the effect that the salting of public opinion has on their own beliefs,” Constantine continues. “A network anchorman in time of national crisis is an instrument of psychological warfare in the MOCKINGBIRD media. He is a creature from the national security sector’s chamber of horrors. For this reason consumers of the corporate press have reason to examine their basic beliefs about government and life in the parallel universe of these United States.” Despite the promise of the Smith-Mundt Act – that a firewall stands between foreign and domestic propaganda – the CIA, the bastard child of Wall Street lawyers, has never honored its charter (prohibiting domestic operation) and has consistently utilized the corporate media as a propaganda machine. Enactment of the Smith-Mundt Modernization Act underscores the fact the CIA no longer pretends to honor its charter and refrains from flooding the media with government propaganda. “The evaporation of Smith-Mundt and other provisions to safeguard U.S. citizens against government propaganda campaigns is part of a larger trend within the diplomatic and military establishment,” ace reporter Michael Hastings wrote in May, 2012, more than a year before his assassination. In fact, this “larger trend” has been in effect since the imposition of the National Security Act in 1947 and the establishment of the National Security Council, the principal forum used by the financial elite and their intelligence apparatus to dictate policy to the president of the United States and the State Department. INFOWARS.COM BECAUSE THERE'S A WAR ON FOR YOUR MIND
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