Oligarchy in the USSA
The Dollar Vigilante
The US is a
great place to be an oligarch. You are permitted to steal with impunity
from people who are too brain dead to notice they are being robbed.
Additionally, in the US it is inexpensive to gain oligarch status.
In other societies you have to fight your way to the top and vigorously
defend your power. In the US it only takes a few hundred thousand
dollars in campaign donations to buy immunity. Let's take a look
at the differences in treatment between an oligarch and a common
citizen when committing crimes.
At the end
these two men held up a gas station in Arlington, VA. They stole
some cigarettes and the register cash, putting the value of the
total haul at a few hundred dollars. These two were swiftly apprehended
and a trial date was set. The jury was not sympathetic as the sentencing
shows. The two will have 24 years between them in prison to think
about their actions.
In this case,
the US justice system appears swift and thorough. The real problem
for these two guys is they didn't think big enough. In the US, a
small crime gets you a big punishment while a massive crime gets
you a book deal.
a look at the example of former Goldman Sachs CEO, New Jersey Senator
and Governor Jon Corzine. Here is a man who gets the system and
understands how to make it work for him. He is not going to waste
his time robbing a gas station. In fact, he probably would not be
able to locate a gas station considering he likely hasnt driven
himself anywhere in some 30 years. When he pulls a heist he does
same time the previously discussed bandits were committing their
crime, Corzine was wrapping up a $1,600,000,000 heist of his own.
No guns were needed as he made effective use of political bribery
and good politics. Even though in the US it is illegal to speak
of securities without being licensed and fulfilling an endless list
of regulatory requirements, Corzine received a special waiver from
security industry licensing requirements.
So let's take
a deeper look at what went on in the final days of MF Global. When
you open a trading account, cash and certain securities are to be
held in a "Segregated Account". In the event that the
dealer becomes insolvent or runs into other troubles, your assets
are not liable for their behavior.
CFTC, SEC, FINRA, and NASD there are bureaucratic mules of mediocre
intelligence by the thousands tasked with regulating the industry.
Instead of protecting you, they spend all of their time preventing
people from entering the business in order to protect the oligarchs.
MF Global placed
trades in its own account separate from those handled for customers.
This is perfectly legal in a post-Glass-Steagall era. The firm was
leveraged 40:1 on their actual capital meaning that a trading loss
of 3% puts them in the red. Last October the firm was sustaining
serious losses driven by heavy exposure to insolvent European sovereign
debt. JP Morgan called in a large credit line extended to the firm
for trading purposes. There was no money to return so JPM simply
seized the money it was holding in segregated accounts on behalf
of the firm. The lying and deception that shrouded this series of
moves is typical.
Are you surprised
to learn that customers still have not received their cash which
regulators had assured them was sitting in segregated accounts?
They are now hoping for a partial recovery in bankruptcy court.
Does it surprise you that Corzine has not been charged with any
crime and faces no liability for the money lost by innocent and
unsuspecting customers? He has actually rented new office space
on Wall Street and continues to exist as a pillar of finance in
the US. As for the $1,600,000,000 lost, he
is deeply sympathetic.
we woke up to news that the regulators had failed again. This time
only an estimated $200 million in segregated customer money is missing.
lesson here is that in the US there are two sets of laws. If you
rob a gas station you are a felon, but if you rob 36,000 people
you are a distinguished public servant. It seems that Stalin is
credited for a similar quote regarding his brutal behavior in office.
He would enjoy the US system.
As an individual
investor there is action you can take to ensure that your assets
are not easily exposed to this clear pattern of regulatory failure
and blatant fraud. Click
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USD. It may be the best use of your fiat Federal Reserve Notes
you've ever spent. Reprinted
with permission from The
July 12, 2012
Tucker [send him mail]
is a founding principal of KSIR Capital. The firm uses an objective
macro economic thesis to narrow its focus onto sectors of capital
markets where securities prices have overestimated risk. The firm
seeks realization of profits as the marketplace slowly awakens to
emerging conditions. Mr. Tucker is a regular contributor to The
Dollar Vigilante and editor-in-chief of The
Kwan Box, a site designed to share market and socioeconomic
commentary in the hopes that readers will awaken their ability to
© 2012 The