The Banksters Pretend That Prosecuting Wall Street Crime Will Blow Up The Economy Washington’s Blog May 3, 2014
Wall Street Criminals Threaten that Economy Will Blow Up If They’re Prosecuted The Department of Justice is “considering” initiating criminal charges against 2 banks. In response, the normal cast of characters is saying – as they have for years – that prosecuting banks will cause a meltdown of the economy. The U.S. attorney for the Southern District of New York recently mocked the silly claims of gloom and doom: “Companies, especially financial institutions, will do almost anything to avoid a tough enforcement action and therefore have a natural and powerful incentive to make prosecutors believe that death or dire consequences await,” he said. “I have heard assertions made with great force and passion that if we take any criminal action, the skies will darken; the oceans will rise; nuclear winter will be upon us; and the world as we know it will end.” As we’ve repeatedly noted, this is wholly untrue. Indeed, prosecuting the individual Wall Street executives who knowingly committed criminal fraud won’t harm the economy. After all, the main driver of economic growth is a strong rule of law. And numerous Nobel prize winning economists have said that prosecuting Wall Street white collar is necessary for a prosperous economy. In response to the sky-is-falling spouting banking apologists, professor of law and economics – and chief S&L prosecutor – William Black explains: First, no banker is “too big to jail.” They are easily replaceable and removing a fraudulent bank CEO from power is the single most productive act that regulators and prosecutors can accomplish. [The Department of Justice's chief of criminal prosecutions] Breuer and
Attorney General Eric Holder were involved in a con when they claimed that their failure to prosecute the senior bank officers leading the frauds was in any way related to “too big to fail.” Hilariously, they even applied the “rationale” for non-prosecution to former bank officers – as if a bank would fail “because” its former officers were prosecuted. It is a testament to the weakness of the reportage that this claim was not treated with ridicule. Second, valid fraud prosecutions do not “cause” a business to fail. The fraud causes them to fail. They should fail when their “profits” arise from fraud. In particular, they should fail in the case of accounting control fraud because their “profits” are the fictional product of accounting fraud. The markets and the economy are greatly improved when fraudulent enterprises are destroyed. *** Third, very little is actually “destroyed,” when we place a fraudulent bank in receivership, fire the crooked CEO, and sell the bank to an acquirer of integrity and competence. The new bank will, net, be greatly improved because it has been freed from control by the fraudulent leadership that was “looting” the bank (George Akerlof and Paul Romer, 1993, “Looting: The Economic Underworld of Bankruptcy for Profit”). Fourth, there is rarely a need to prosecute a bank. In virtually every case in which the bank’s frauds cause serious harm senior officers of the bank will have led the fraud and profited from it. Everyone in law enforcement realizes that any effective deterrence will come from prosecuting those officers and not only removing their fraud proceeds but also imposing fines that will leave the officers bankrupt. Fifth, the bank’s controlling officers are in an immense conflict of interest when their frauds are detected. They control the bank and its resources. Their first priority is to prevent their own prosecution. Their second priority is to prevent any substantial “claw back” of their compensation. Their third and fourth priorities are to do the same for less senior officers. This isn’t altruism (though it certainly has an aspect of class-based affinity). Fraudulent CEOs realize that it is risky to allow the prosecutors to gain any leverage over more junior officers who may “flip” and testify against the CEO. The fraudulent officers controlling the bank, therefore, will gladly trade seemingly huge fines in exchange for obtaining their top four priorities. [Finally, the government's policy of not prosecuting Wall Street criminals] produceswhat Akerlof and Romer warned was the “sure thing” of CEO “looting” through accounting control fraud plus the assurance that the CEO will not be prosecuted, forced to surrender his fraud proceeds, or forced to pay fines that bankrupt him.Unsurprisingly, the result has been unprecedented accounting control fraud by elite banksters.*** None of this explains why they don’t prosecute bankers (much less ex bankers) Indeed, the whole if-y0u-prosecute-the-economy-dies scam is like the 2008 bailouts. As we wrote at the
time: Congressmen Brad Sherman and Paul Kanjorski and Senator James Inhofe all say that the government warned of martial law if Tarp wasn’t passed. *** As Karl Denninger wrote yesterday: [S]ounds like “Bail me out or I will crash everything.” Isn’t that analagous to walking into a bank, opening one’s coat to reveal an explosives-laced belt, and saying “gimme all the money or everyone dies!” I noted in November: In the 1974 comedy Blazing Saddles, Cleavon Little plays the new sheriff in an old Western town. The sheriff is African-American, and when he rides into town for the first time, the [racist] townspeople pull out their guns and are about to shoot him. But he quickly puts a gun to his own head, pretends he’s scared of his own gun, and says “BACK OFF OR THE AFRICANAMERICAN GUY GETS IT!!!” The townspeople are dumb and fall for it, suddenly terrified that he’ll kill himself. Here’s the scene. That’s what Wall Street is doing with the bailout. The fat cats on Wall Street are saying “give us a lot of money, and buy all of our bad debt for a lot more than its worth, or Wall Street will get it and we’ll go into a depression!” Are Americans stupid enough to fall for it? In a recent interview, William K. Black uses the exact same Blazing Saddles sheriff-bank analogy. *** Any way you look at it, the too big to fails are not needed and they are dragging our economy into a black hole. Like the sheriff in Blazing Saddles … they are playing us for fools. [Yves Smith] shared another analogy with me: a man with 15lbs. of Semtex strapped to his waist. She says “any surprise people in the vicinity are very attentive to his desires?” Indeed, it’s the old protection racket.
It’s An Illusion: Here Are The Real Unemployment Numbers Mac Slavo SHTF Plan May 3, 2014
Mainstream financial pundits are falling over themselves today following a report from the Labor Department indicating that the national unemployment rate has fallen yet again, this time to just 6.3%. The Associated Press, whose report on the new rate is being distributed to news services around the country, says this is “the strongest evidence to date that the economy is picking up.” They cite numerous economic experts, claiming that the U.S. economy is now experiencing vigorous job growth, which they say is confirmation that the economic health of our nation is bouncing back from a rough winter. In fact, they mention bad “weather” and “winter” eight times in a single article just to make sure we understand that the problems we’ve seen over the last few months were seasonal. But, as is generally the case with mainstream assessments and government statistics as of late, the devil’s in the details. The drop in the unemployment rate from March’s 6.7 percent came as the agency’s survey of households showed the labor force shrank by more the 800,000 in April. The participation rate, which indicates the share of working-age people in the labor force, decreased to 62.8 percent, matching the lowest level since March 1978, from 63.2 percent a month earlier. Thus, while U.S. companies added some 288,000 jobs last month, three times as many people were dropped from the official unemployment statistics and are no longer counted in the labor pool. At this rate we’re well on our way to achieving the Communist dream of 0% unemployment before the end of the President’s term.
Karl Denninger looks even deeper into the report at Market Ticker and points out that, while jobs were created last month, the claims of vigorous job growth are not even close. Uh oh. Yes, that headline number looks good. But April is usually good, and that’s where the rubber meets the road; on an annualized basis we actually saw deceleration. Funny how that works, isn’t it?
That’s right. That little down-hook in the above chart says it all. We’re creating jobs at a slower pace now than at the same time last year. Contrarian economist John Williams suggests the the government’s numbers are not even close. At his web site ShadowStats.com Williams calculates the rate of employment using the same methods that were used prior to 1994 when they were officially defined out of existence by bureaucrats looking to pad the numbers. According to those numbers, we’re looking at an unemployment rate of over 23%.
As the above chart shows, nearly one in four Americans are without work. That’s quite a
disconnect considering the government’s numbers are off by about 265%! Moreover, how is it possible that our economy is officially growing, while everyone in 20% of all American family households is unemployed? According to shocking new numbers that were just released by the Bureau of Labor Statistics, 20 percent of American families do not have a single person that is working. So when someone tries to tell you that the unemployment rate in the United States is about 7 percent, you should just laugh. One-fifth of the families in the entire country do not have a single member with a job. On top of that, nearly 50 million people are actively receiving food assistance – fully one in six Americans. Yet, the stock market hit all time highs just this week. Something isn’t right, especially if you take a look at the following chart which shows that America’s leading companies showed nearly zero earnings growth in the first quarter of 2014:
So, while the experts from the government and private business bloviate over the rigorous health of our economy and the success of President Obama’s policies, it’s important to keep in mind that they are doing their damnedest to bury the real story. That’s because reality isn’t a fairy tale and as we have noted on numerous occasions it will end with the total detonation of the U.S. economy and financial markets, likely leading to a variety of serious issues that include a collapse of our currency and widespread impoverishment of the majority of people in this country. What will follow will be nothing short of a total collapse of our way of life, so much so that Richard
Duncan, author of The New Great Depression, suggests our entire civilization is in serious trouble: If this credit bubble pops the depression is going to be so severe that I honestly don’t think our civilization can survive it. When it does finally buckle, as noted by well known investor Doug Casey, it will be unstoppable and the speed of it will leave most people waking up to the danger after it has already happened. How long the illusions will continue is anybody’s guess, but it should be clear that what we’re seeing from our government and their propaganda arm in the media is nothing but conjecture. When the trick is finally revealed a whole lot of people are going to feel quite foolish.
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