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Brexit

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By Edward Chancellor June 16, 2016
Tags: BREXIT | EUROPEAN UNION | GOVERNMENT | M&A | UNITED KINGDOM
The author is a Reuters Breakingviews columnist. The opinions expressed are his own. (but obviously shared by me !)

originally posted here

On June 23, Britain votes on whether to remain in the European Union. Being out of the country on that date, I applied for a postal vote. I have marked my ballot paper, with a certain trepidation, in favour of leaving the EU, or Brexit. At first I worried this vote conflicted with my cosmopolitan leanings. On reflection I decided that by rejecting the EU I showed greater fellow feeling for the citizens of Europe, and was more faithful to the continent’s highest ideals than those who wish to remain.

Legions of economists, policymakers and political grandees from around the world have warned of the economic threat of Brexit. These voices lack credibility. None of the Remain economists, to my knowledge, anticipated the global financial crisis. The UK Treasury claims that British incomes will be lower for years after leaving the EU. The same Treasury, however, has consistently had problems forecasting next year’s UK GDP. Not long ago, many politicians and businesspeople argued that Britain would miss out if we didn’t join the European single currency. We now know that the real calamity would have been joining the euro.

In truth, the greatest economic risk posed by Brexit comes from the threat of retaliation by our erstwhile European “partners”. Given that Britain runs a large trade deficit with Europe, a trade war would be irrational. It is a poor reflection on the EU that such a threat should be credible.

Of course, leaving the single market creates uncertainty – a state of affairs which repels the modern breed of policymaker. In the past, developed economies have withstood far greater shocks. The growth of the U.S. economy, for instance, was only temporarily set back by the Great Depression. Nor did it take many years after 1945 for Germany’s output per capita to return to its pre-war trend. It’s inconceivable, in my view, that Brexit could by itself permanently damage Britain’s economic prospects.

Even if the economic arguments are overblown, doesn’t a vote for Brexit reveal an unattractive petty nationalism at odds with modern progressive values? Doesn’t my vote put me in bad company?

I don’t believe so. At university, I read 18th-century European history. The ideals of the Enlightenment – a preference for reason over tradition, for economic individualism over state control, for tolerance over bigotry, and a belief that relationships between nations should be governed by the rule of law – remain close to my heart. The same notions guided the founding fathers of the post-war European project.

The EU has since betrayed those ideals. In 1795, Immanuel Kant, the German philosopher who coined the term “Enlightenment”, wrote “Perpetual Peace: A Philosophical Sketch”. In this essay, Kant showed profound respect for a state’s separate identity: a state “like the stem of a tree has its own root… to incorporate it as a graft on another state, is to destroy its existence as a moral person.” The consequence of bundling states together, even when done peacefully through dynastic alliances, would be that the “subjects of the state are used and abused as things that may be managed at will”.

Kant defined a republican government as one that gained the “consent of citizens as members of the state”. He preferred this to despotism, characterised by “the irresponsible executive administration of the state by laws laid down and enacted by the same power that administers them”. While Kant proposed an international federation of states to avoid war, this “would not have to take the form of a State made up of these nations”. Such a superstate would not allow the existence of a free state, which by definition both made and applied its own laws: “Each state,” wrote Kant, “places its majesty (for it is absurd to speak of the majesty of the people) in being subject to no external juridical restraint”.

Since its inception in the 1950s, the European project has morphed from Kant’s ideal of an international federation into something akin to the late Habsburg Empire – a sprawling and fractious conglomeration of nations struggling against centripetal forces. The EU’s form of government, in Kantian terms, can be described as “despotic”, since the public’s consent has not been gained.

During the interminable years of the euro crisis, unemployment in parts of Europe has exceeded Great Depression levels. The citizens of Greece, Spain and elsewhere have been force-fed austerity by the EU with little prospect of eventual economic recovery. If the EU cared for its citizens, or was properly accountable, substantive reforms would have been enacted. This hasn’t happened. As a result, discontent across Europe is fostering political extremism of the 1930s variety. Sooner or later something must give.

A vote for Brexit, I believe, puts me in the best company. It shows solidarity with the long-suffering European public and complies with the principles of Kant, the greatest of Enlightenment philosophers.

Written by anubis

September 13th, 2016 at 8:17 pm

The Law

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Can’t remember where I got this but reading through it again, it deserves to be posted.

WOE UNTO YOU, LAWYERS !
CHAPTER I
MODERN MEDICINE-MEN

“The law is a sort of hocus-pocus science.” Charles Macklin

In TRIBAL TIMES, there were the medicine-men. In the Middle Ages, there were the priests. Today there are the lawyers. For every age, a group of bright boys, learned in their trade and jealous of their learning, who blend technical competence with plain and fancy hocus-pocus to make themselves masters of their fellow men. For every age, a pseudo-intellectual autocracy, guarding the tricks of its trade from the uninitiated, and running, after its own pattern, the civilization of its day.

It is the lawyers who run our civilization for us – our governments, our business, our private lives. Most legislators are lawyers ; they make our laws. Most presidents, governors, commissioners, along with their advisers and brain trusters are lawyers ; they administer our laws. All the judges are lawyers ; they interpret and enforce our laws. There is no separation of powers where the lawyers are concerned. There is only a concentration of all government power – in the lawyers. As the schoolboy put it, ours is “a government of lawyers, not of men.”

It is not the businessmen, no matter how big, who run our economic world. Again it is the lawyers, the lawyers who “advise” and direct every time a company is formed, every time a bond or a share of stock is issued, almost every time material is to be bought or goods to be sold, every time a deal is made. The whole elaborate structure of industry and finance is a lawyer-made house. We all live in it, but the lawyers run it.

And in our private lives, we cannot buy a home or rent an apartment, we cannot get married or try to get divorced, we cannot die and leave our property to our children without calling on the lawyers to guide us. To guide us, incidentally, through a maze of confusing gestures and formalities that lawyers have created.

Objection may be raised immediately that there is nothing strange or wrong about this. If we did not carry on our government and business and private activities in accordance with reasoned rules of some sort we would have chaos, or else a reversion to brute force as the arbiter of men’s affairs. True – but beside the point. The point is that it is the lawyers who make our rules and a whole civilization that follows them, or disregards them at its peril. Yet the tremendous majority of the men who make up that civilization, are not lawyers, pay little heed to how and why the rules are made. They do not ask, they scarcely seem to care, which rules are good and which are bad, which are a help and which a nuisance, which are useful to society and which are useful only to the lawyers. They shut their eyes and leave to the lawyers the running of a large part of their lives.

Of all the specialized skills abroad in the world today, the average man knows least about the one that affects him most – about the thing that lawyers call The Law. A man who will discourse at length about the latest cure for streptococci infection or describe in detail his allergic symptoms cannot begin to tell you what happened to him legally – and plenty did – when he got married. A man who would not dream of buying a car without an intricate and illustrated description of its mechanical workings will sign a lease without knowing what more than four of its forty-four clauses mean or why they are there. A man who will not hesitate to criticize or disagree with a trained economist or an expert in any one of a dozen fields of learning will follow, unquestioning and meek, whatever advice his lawyer gives him. Normal human skepticism and curiosity seem to vanish entirely whenever the layman encounters The Law.

There are several reasons for this mass submission, One is the average man’s fear of the unknown – and of policemen. The law combines the threat of both. A non-lawyer confronted by The Law is like a child faced by a pitch-dark room. Merciless judges lurk there, ready to jump out at him. (“Ignorance of the law is no defense.”) Cowed and, perforce, trusting, he takes his lawyer’s hand, not knowing what false step he might make unguided, nor what punishment might then lie in wait for him. He does not dare display either skepticism or disrespect when he feels that the solemn voice of the lawyer, telling him what he must or may not do, is backed by all the mighty and mysterious forces of law-and-order from the Supreme Court on down on the cop on the corner.

Then, too, every lawyer is just about the same as every other lawyer. At least he has the same thing to sell, even though it comes in slightly different models and at varying prices. The thing he has to sell is The Law. And it is as useless to run from one lawyer to another in the hope of finding something better or something different or something that makes more common sense as it would be useless to run from one Ford dealer to another if there were no Chevrolets or Plymouths or even bicycles on the market. There is no brand competition or product competition in the lawyers’ trade. The customer has to take The Law or nothing. And if the customer should want to know a little more about what he’s buying – buying in direct fees or indirect fees or taxes – the lawyers need have no fear of losing business or someone else if they just plain refuse to tell.

Yet lawyers can and often do talk about their product without telling anything about it at all. And that fact involves one of the chief reasons for the non-lawyer’s persistent ignorance about The Law. Briefly, The Law is carried on in a foreign language. Not that it deals, as do medicine and mechanical engineering, with physical phenomena and instruments which need special words to describe them simply because there are no other words. On the contrary, law deals almost exclusively with the ordinary facts and occurrences of everyday business and government and living. But it deals with them in a jargon which completely baffles and befoozles the ordinary literate man, who has no legal training to serve him as a trot.

Some of the language of the law is built out of Latin or French words, or out of old English words which, but for the law, would long ago have fallen into disuse. A common street brawl means nothing to a lawyer until it has been translated into a “felony,” a “misdemeanor,” or a “tort” ; and any of those words, when used by a lawyer, may mean nothing more than a common street brawl. Much of the language of the law is built out of perfectly respectable English words which have been given a queer and different and exclusively legal meaning. When a lawyer speaks, for instance, of “consideration” he is definitely not referring to kindness. All of the language of the law is such, as Mr. Dooley once put it, that a statute which reads like a stone wall to the lawman becomes, for the corporation lawyer, a triumphal arch. It is, in short, a language that nobody but a lawyer understands. Or could understand -–if we are to take the lawyers’ word for it.

For one of the most revealing things about the lawyers’ trade is the unanimous inability or unwillingness, or both, on the part of the lawyers to explain their brand of professional pig Latin to men who are not lawyers. A doctor can and will tell you what a metatarsus is and where it is and why it is there and, if necessary, what is wrong with it. A patient electrician can explain, to the satisfaction of a medium-grade mentality, how a dynamo works. But try to pin down a lawyer, any lawyer, on “jurisdiction” or “proximate cause” or “equitable title” – words which he tosses off with authority and apparent familiarity and which are part of his regular stock in trade. If he does not dismiss your question summarily with “You’re not a lawyer’ you wouldn’t understand,” he will disappear into a cloud of legal jargon, perhaps descending occasionally to the level of a non-legal abstraction or to the scarcely more satisfactory explanation that something is so because The Law says that it is so. That is where you are supposed to say, “I see.”

It is this fact more than any other – the fact that lawyers can’t or won’t tell what they are about in ordinary English – that is responsible for the hopelessness of the non-lawyer in trying to cope with or understand the so-called science of law. For the lawyers’ trade is a trade built entirely on words. And so long as the lawyers carefully keep to themselves the key to what those words mean, the only way the average man can find out what is going on is to become a lawyer, or at least to study law, himself. All of which makes it very nice – and very secure – for the lawyers.
Of course any lawyer will bristle, or snort with derision, at the idea that what he deals in is words. He deals, he will tell you, in propositions, concepts, fundamental principles – in short, in ideas. The reason a non-lawyer gets lost in The Law is that his mind has not been trained to think logically about abstractions, whereas the lawyer’s mind has been so trained. Hence the lawyer can leap lightly and logically from one abstraction to another, or narrow down a general proposition to apply to a particular case, with an agility that leaves the non-lawyer bewildered and behind. It is a pretty little picture.

Yet it is not necessary to go into semantics to show that it is a very silly little picture. No matter what lawyers deal in, the thing they deal with is exclusively the stuff of living. When a government wants to collect money and a rich man does not want to pay it, when a company wants to fire a worker and the worker wants to keep his job, when an automobile driver runs down a pedestrian and the pedestrian says it was the driver’s fault and the driver says it wasn’t – these things are living facts, not airy abstractions. And the only thing that matters about the law is the way it handles these facts and a million others. The point is that legal abstractions mean nothing at all until they are brought down to earth. Once brought down to earth, once applied to physical facts, the abstractions become nothing but words – words by which lawyers describe, and justify, the things that lawyers do. Lawyers would always like to believe that the principles they say they work with are something more than a complicated way of talking about simple, tangible, non-legal matters ; but they are not. Thus the late Justice Holmes was practically a traitor to his trade when he said, as he did say, “General propositions do not decide concrete cases.”

To dismiss the abstract principles of The Law as being no more, in reality, than high-sounding combinations of words may, in one sense, be a trifle confusing. Law in action does, after all, amount to the application of rules to human conduct ; and rules may be said to be, inevitably, abstractions themselves. But there is a difference and a big one. “Anyone who spits on this platform will be fined five dollars” is a rule and, in a sense, an abstraction ; yet it is easily understood, it needs no lawyer to interpret it, and it applies simply and directly to a specific factual thing. But “Anyone who willfully and maliciously spits on this platform will be fined five dollars” is an abstraction of an entirely different color. The Law has sneaked into the rule in the words “willfully and maliciously.” Those words have no real meaning outside of lawyers’ minds until someone who spits on the platform is or is not fined five dollars – and they have none afterward until someone else spits on the platform and does or does not get fined.

The whole of The Law – its concepts, its principles, its propositions – is made up of “willfullys” and “maliciouslys,” of words that cannot possibly be pinned down to a precise meaning and that are, in the last analysis, no more than words. As a matter of fact, the bulk of The Law is made up of words with far less apparent relation to reality than “willfully” or “maliciously.” And you can look through every bit of The Law – criminal law, business law, government law, family law – without finding a single rule that makes as much simple sense as “Anyone who spits on this platform will be fined five dollars.”

That, of course, is why a non-lawyer can never make rhyme or reason out of a lawyer’s attempted explanation of the way The Law works. The non-lawyer wants the whole business brought down to earth. The lawyer cannot bring it down to earth without, in so doing, leaving The Law entirely out of it. To say that Wagner Labor Act was held valid because five out of the nine judges on the Supreme Court approved of it personally, or because they thought it wiser policy to uphold it than to risk further presidential agitation for a change in the membership of the Court – to say this is certainly not to explain The Law of the case. Yet to say this makes a great deal more sense to the layman and comes a great deal closer to the truth than does the legal explanation that the Act was held valid because it constituted a proper exercise of Congress’ power to regulate interstate commerce. You can probe the words of that legal explanation to their depths and bolster them with other legal propositions dating back one hundred and fifty years and they will still mean, for all practical purposes, exactly nothing.

There is no more pointed demonstration of the chasm between ordinary human thinking and the mental processes of the lawyer than in the almost universal reaction of law students when they first encounter The Law. They come to law school a normally intelligent, normally curious, normally receptive group. Day in and day out they are subjected to the legal lingo of judges, textbook writers, professors – those learned in The Law. But for months none of it clicks ; there seems to be nothing to take hold of. These students cannot find anywhere in their past knowledge or experience a hook on which to hang all this strange talk of “mens rea” and “fee simple” and “due process” and other unearthly things. Long and involved explanations in lectures and lawbooks only make it all more confusing. The students know that law eventually deals with extremely practical matters like buying land and selling stock and putting thieves in jail. But all that they read and hear seems to stem not only from a foreign language but from a strange and foreign way of thinking.

Eventually their confusion founded though it is in stubborn and healthy skepticism is worn down. Eventually they succumb to the barrage of principles and concepts and all the metaphysical refinements that go with them. And once they have learned to talk the jargon, once they have forgotten their recent insistence on matters-of-factness, once they have begun to glory in their own agility at that mental hocus-pocus that had them befuddled a short while ago, then they have become, in the most important sense, lawyers. Now they, too, have joined the select circle of those who can weave a complicated intellectual riddle out of something so mundane as a strike or an automobile accident. Now it will be hard if not impossible ever to bring them back tot hat disarmingly direct way of thinking about the problems of people and society which they used to share with the average man before they fell in with the lawyers and swallowed The Law.

Learning the lawyers’ talk and the lawyers’ way of thinking – learning to discuss the pros and cons of, say, pure food laws in terms of “affectation with a public contract” – is very much like learning to work cryptograms or play bridge. It requires concentration and memory and some analytic ability, and for those who become proficient it can be a stimulating intellectual game. Yet those who work cryptograms or play bridge never pretend that their mental efforts, however difficult and involved, have any significance beyond the game they are playing. Whereas those who play the legal game not only pretend but insist that their intricate ratiocination’s in the realm of pure thought have a necessary relation to the solution of practical problems. It is through the medium of their weird and wordy mental gymnastics that the lawyers lay down the rules under which we live. And it is only because the average man cannot play their game, and so cannot see for himself how intrinsically empty-of-meaning their playthings are, that the lawyers continue to get away with it.

The legal trade, in short, is nothing but a high-class racket. It is a racket far more lucrative and more powerful and hence more dangerous than any of those minor and much-publicized rackets, such as ambulance-chasing or the regular defense of known criminals, which make up only a tiny part of the law business and against which the respectable members of the bar are always making speeches and taking action. A John W. Davis, when he exhorts a court in the name of God and Justice and the Constitution – and, incidentally, for a fee – not to let the federal government regulate holding companies, is playing the racket for all it is worth. So is a Justice Sutherland when he solemnly forbids a state to impose an inheritance tax on the ground that the transfer – an abstraction – of the right to get dividends – another abstraction – did not take place geographically inside the taxing state. And so, for that matter, are all the Corcorans and Cohens and Thurman Arnolds and the rest, whose chief value to the New Deal lies not in their political views nor even in their administrative ability but rather in their adeptness at manipulating the words of The Law so as to make things sound perfectly proper which other lawyers, by manipulating different words in a different way, maintain are terribly improper. The legal racket knows no political or social limitations.

Furthermore, the lawyers – or at least 99 44/100 per cent of them – are not even aware that they are indulging in a racket, and would be shocked at the very mention of the idea. Once bitten by the legal bug, they lose all sense of perspective about what they are doing and how they are doing it. Like the medicine men of tribal times and the priests of the Middle Ages they actually believe in their own nonsense. This fact, of course, makes their racket all the more insidious. Consecrated fanatics are always more dangerous than conscious villains. And lawyers are fanatics indeed about the sacredness of the word-magic they call The Law.

Yet the saddest and most insidious fact about the legal racket is that the general public doesn’t realize it’s a racket either. Scared, befuddled, impressed and ignorant, they take what is fed them, or rather what is sold them. Only once an age do the non-lawyers get, not wise, but disgusted, and rebel. As Harold Laski is fond of putting it, in every revolution the lawyers lead the way to the guillotine or the firing squad.
It should not, however, require a revolution to rid society of lawyer-control. Nor is riddance by revolution ever likely to be a permanent solution. The American colonists had scarcely freed themselves from the nuisances of The Law by practically ostracizing the pre-Revolutionary lawyers out of their communities – a fact which is little appreciated – when a new and home-made crop of lawyers sprang up to take over the affairs of the baby nation. That crop, 150 years later, is still growing in numbers and in power.

What is really needed to put the lawyers in their places and out of the seats of the mighty is no more than a slashing of the veil of dignified mystery that now surrounds and protects The Law. If people could be made to realize how much of the vaunted majesty of The Law is a hoax and how many of the mighty processes of The Law are merely logical legerdemain, they would not long let the lawyers lead them around by the nose. And people have recently begun, bit by bit, to catch on. The great illusion of The Law has been leaking a little at the edges.

There was President Roosevelt’s plan to add to the membership of the Supreme Court, in order to get different decisions. Even those who opposed the plan – and they of course included almost all the lawyers – recognized, by the very passion of their arguments, that the plan would have been effective : in other words, that by merely changing judges you could change the Highest Law of the Land. And when the Highest Law of the Land was changed without even changing judges, when the same nine men said that something was constitutional this year which had been unconstitutional only last year, then even the most credulous of laymen began to wonder a little about the immutability of The Law. It did not add to public awe of The Law either when Thomas Dewey’s grand-stand prosecution of a Tammany hack was suddenly thrown out of court on a technicality so piddling that every newspaper in New York City raised an editorial howl – against a more or less routine application of The Law. And such minor incidents as the recent discovery that one of Staten Island’s leading law practitioners had never passed a bar examination, and so was not, officially, a lawyer, do not lend themselves to The Law’s prestige.

Yet it will take a great deal more than a collection of happenings like these to break down, effectively, the superstition of the grandeur of The Law and the hold which that superstition has on the minds of most men. It will take some understanding of the wordy emptiness and irrelevance of the legal process itself. It will take some cold realization that the inconsistencies and absurdities of The Law that occasionally come into the open are not just accidents but commonplaces. It will take some awakening to the fact that training in The Law does not make lawyers wiser than other men, but only smarter.

Perhaps an examination of the lawyers and their Law, set down in ordinary English, might help achieve these ends. For, despite what the lawyers say, it is possible to talk about legal principles and legal reasoning in everyday non-legal language. The point is that, so discussed, the principles and the reasoning and the whole solemn business of The Law come to look downright silly. And perhaps if the ordinary man could see in black and white how silly and irrelevant and unnecessary it all is, he might be persuaded, in a peaceful way, to take the control of his civilization out of the hands of those modern purveyors of streamlined voodoo and chromium-plated theology, the lawyers.

Written by anubis

July 16th, 2016 at 8:51 am

Mandate

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This is brilliant.

Posted here

Knock Knock

Yes?

I’m your local X candidate … I hope I can count on your vote …

No … you can’t … voting is against my religion … if it were up to me, I would have you jailed as a Confidence Trickster …

What?? Don’t be ridiculous … I’m not a Confidence Trickster! I’m genuinely trying to get elected!

That’s what I mean … trying to get elected … thus you are a Confidence Trickster and should be jailed.

I don’t know how you can work that out!

It’s easy. You want to become a Local Councillor … is that right?

Well … yes.

And what will you do if you are selected?

I’ll sit as a Local Councillor!

And do what?

Well … whatever I need to do.

Such as?

Well … I don’t know … whatever is necessary …

How would you be entitled to do “whatever is necessary”?

Because I’d been elected!!!

What does “being elected” entitle you to do … that you couldn’t do before?

Well … if I’m elected, then I would have a mandate.

A mandate from whom?

From the people who elected me!

So … the people who voted for you would have given you a mandate … is that right?

Yes … obviously!

Actually, it’s far from obvious … because you can only “give” what you have available to “give” in the first place. So those who gave you this mandate must have had the mandate in the first place ,,, isn’t that true?

I don’t understand.

I’ll repeat it. You can only give something that you possess in the first place. You can’t give what you haven’t got. So if people give you a mandate, then they must have the mandate – in the first place – to give to you. Do you understand that?

Well … yes … I think so.

Good. Well, if those people have the mandate in the first place, then there’s absolutely no need for them to give it to you. They can simply exercise the mandate themselves … since they must have it. Isn’t that so?

Errr … now I don’t understand.

It’s very simple. If I have a car I can drive it. I don’t need to give it to you … to drive it for me. If I can give you a mandate, then I must have that mandate. If I have that mandate, then I can exercise it myself … I don’t need to give it to you. So … why don’t all these people simply exercise their mandate … instead of giving it to you?

Errr … I’m not sure.

I am. The reason those people don’t exercise their mandate is because they don’t – actually – have any mandate to exercise … to … as you put it “Do whatever is necessary”. They can’t “Do whatever is necessary” … so they can’t give you the mandate to “Do whatever is necessary”. Not one voter possesses the ability to “Do whatever is necessary”. Therefore, if you “Do whatever is necessary” you are plucking that ability out of your backside … because no voter has it to give to you. If you pluck the ability out of your backside, then you are acting as a Confidence Trickster … and should be jailed for such criminality! And, if I had my way, you would be jailed, instead of standing on my doorstep. OR … come back when you’ve worked out how to give something you haven’t got.

Written by anubis

April 15th, 2016 at 8:51 am

The Role of Morality…

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Originally posted here

How can the life of such a man
Be in the palm of some fool’s hand?
To see him obviously framed
Couldn’t help but make me feel ashamed to live in a land
Where justice is a game.—Bob Dylan, “Hurricane”

Attorney John W. Whitehead opens a recent posting on his Rutherford Institute website with these words from a song by Bob Dylan. Why don’t all of us feel ashamed? Why only Bob Dylan?

I wonder how many of Bob Dylan’s fans understand what he is telling them. American justice has nothing to do with innocence or guilt. It only has to do with the prosecutor’s conviction rate, which builds his political career. Considering the gullibility of the American people, American jurors are the last people to whom an innocent defendant should trust his fate. The jury will betray the innocent almost every time.

As Lawrence Stratton and I show in our book (2000, 2008) there is no justice in America. We titled our book, “How the Law Was Lost.” It is a description of how the protective features in law that made law a shield of the innocent was transformed over time into a weapon in the hands of the government, a weapon used against the people. The loss of law as a shield occurred prior to 9/11, which “our representative government” used to construct a police state.

The marketing department of our publisher did not appreciate our title and instead came up with “The Tyranny of Good Intentions.” We asked what this title meant. The marketing department answered that we showed that the war on crime, which gave us the abuses of RICO, the war on child abusers, which gave us show trials of total innocents that bested Joseph Stalin’s show trials of the heroes of the Bolshevik Revolution, and the war on drugs, which gave “Freedom and Democracy America” broken families and by far the highest incarceration rate in the world all resulted from good intentions to combat crime, to combat drugs, and to combat child abuse. The publisher’s title apparently succeeded, because 15 years later the book is still in print. It has sold enough copies over these years that, had the sales occurred upon publication would have made the book a “best seller.” The book, had it been a best seller, would have gained more attention, and perhaps law schools and bar associations could have used it to hold the police state at bay.

Whitehead documents how hard a not guilty verdict is to come by for an innocent defendant. Even if the falsely accused defendant and his attorney survive the prosecutor’s pressure to negotiate a plea bargain and arrive at a trial, they are confronted with jurors who are unable to doubt prosecutors, police, or witnesses paid to lie against the innocent defendant. Jurors even convicted the few survivors of the Clinton regime’s assault on the Branch Davidians of Waco, the few who were not gassed, shot, or burned to death by US federal forces. This religious sect was demonized by Washington and the presstitute media as child abusers who were manufacturing automatic weapons while they raped children. The charges proved to be false, like Saddam Hussein’s “weapons of mass destruction,” and so forth, but only after all of the innocents were dead or in prison.

The question is: why do Americans not only sit silently while the lives of innocents are destroyed, but also actually support the destruction of the lives of innocents? Why do Americans believe “official sources” despite the proven fact that “official sources” lie repeatedly and never tell the truth?

The only conclusion that one can come to is that the American people have failed. We have failed Justice. We have failed Mercy. We have failed the US Constitution. We have failed Truth. We have failed Democracy and representative government. We have failed ourselves and humanity. We have failed the confidence that our Founding Fathers put in us. We have failed God. If we ever had the character that we are told we had, we have obviously lost it. Little, if anything, remains of the “American character.”

Was the American character present in the torture prisons of Abu Ghraib, Guantanamo Bay, and hidden CIA torture dungeons where US military and CIA personnel provided photographic evidence of their delight in torturing and abusing prisoners? Official reports have concluded that along with torture went rape, sodomy, and murder. All of this was presided over by American psychologists with Ph.D. degrees.

We see the same inhumanity in the American police who respond to women children, the elderly, the physically and mentally handicapped, with gratuitous violence. For no reason whatsoever, police murder, taser, beat, and abuse US citizens. Every day there are more reports, and despite the reports the violence goes on and on and on. Clearly, the police enjoy inflicting pain and death on citizens whom the police are supposed to serve and protect. There have always been bullies in the police force, but the wanton police violence of our time indicates a complete collapse of the American character.

The failure of the American character has had tremendous and disastrous consequences for ourselves and for the world. At home Americans have a police state in which all Constitutional protections have vanished. Abroad, Iraq and Libya, two formerly prosperous countries, have been destroyed. Libya no longer exists as a country. One million dead Iraqis, four million displaced abroad, hundreds of thousands of orphans and birth defects from the American ordnance, and continuing ongoing violence from factions fighting over the remains. These facts are incontestable. Yet the United States Government claims to have brought “freedom and democracy” to Iraq. “Mission accomplished,” declared one of the mass murderers of the 21st century, George W. Bush.

The question is: how can the US government make such an obviously false outrageous claim without being shouted down by the rest of the world and by its own population? Is the answer that good character has disappeared from the world?

Or is the rest of the world too afraid to protest? Washington can force supposedly sovereign countries to acquiesce to its will or be cut off from the international payments mechanism that Washington controls, and/or be sanctioned, and/or be bombed, droned, or invaded, and/or be assassinated or overthrown in a coup. On the entire planet Earth there are only two countries capable of standing up to Washington, Russia and China, and neither wants to stand up if they can avoid it.

For whatever the reasons, not only Americans but most of the world as well accommodate Washington’s evil and are thereby complicit in the evil. Those humans with a moral conscience are gradually being positioned by Washington and London as “domestic extremists” who might have to be rounded up and placed in detention centers. Examine the recent statements by General Wesley Clark and British Prime Minister Cameron and remember Janet Napolitano’s statement that the Department of Homeland Security has shifted its focus from terrorists to domestic extremists, an undefined and open-ended term.

Americans with good character are being maneuvered into a position of helplessness. As John Whitehead makes clear, the American people cannot even prevent “their police,” paid by their tax payments, from murdering 3 Americans each day, and this is only the officially reported murders. The actual account is likely higher.

What Whitehead describes and what I have noticed for many years is that the American people have lost, in addition to their own sense of truth and falsity, any sense of mercy and justice for other peoples. Americans accept no sense of responsibility for the millions of peoples that Washington has exterminated over the past two decades dating back to the second term of Clinton. Every one of the millions of deaths is based on a Washington lie.

When Clinton’s Secretary of State, Madeleine Albright, was asked if the Clinton’s regime’s sanctions, which had claimed the lives of 500,000 Iraqi children, were justified, she obviously expected no outrage from the American people when she replied in the affirmative.

Americans need to face the facts. The loss of character means the loss of liberty and the transformation of government into a criminal enterprise.

Written by anubis

July 26th, 2015 at 8:11 pm

State of the Union

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Mr. Speaker, Mr. Vice President, members of Congress, fellow citizens:

This summer we will commemorate the 100th anniversary of the start of World War I.

This senseless, destructive war was started and championed by politicians who cared nothing for the 9 million people who lost their lives.

And in doing so, they began a century of warfare which continues to this day.

Our military industrial complex is larger than ever. We have nearly 2 million troops and national guardsmen, plus 3.5 million civilians employed in the defense sector.

With such awesome capabilities, we continue to resort to violence and death to exact political goals which benefit a tiny elite.

All of this has created a police state in the Land of the Free that is a far cry from the country we all grew up in.

Your government has spawned a culture of fear and intimidation. Nearly every federal agency, including the Fish and Wildlife Service, has its own gun-toting police force to pistol-whip citizens into submission.

And we’re stocking up. Your government has recently procured 1.6 BILLION rounds of hollow-point ammunition to supplement our existing supplies.

But frankly, we don’t need guns to harass citizens.

Our tax authorities have become more threatening than mafia warlords. The plunder is so severe that record numbers of Americans are renouncing their citizenship and leaving the country.

There are now dozens of federal, state, and local agencies and courts which have the power to confiscate your assets without any due process.

In addition to your house, your business, and your savings, we also have the authority to take your children away from you as if they are property of the state.

We are here to tell you what you can and cannot put in your own body, or whether you can collect rainwater that falls on own property.

In fact, on any given business day, the federal government issues hundreds of pages of new ‘rules’, proposed regulations, draft bills, executive orders, and/or regulatory notices.

And if you are not compliant with these rules, you may be committing a crime. Whether you know it or not.

When this nation was founded, there were four federal crimes on the books. Today there are THOUSANDS. Plus we have millions of government employees at all levels to enforce the penalties.

All of this, of course, is financed by you the tax slave.

You (plus unborn generations) are the poor suckers charged with paying off the national debt we politicians have created.

Officially the debt is just north of $17 trillion. But if you include Social Security and pension shortfalls, the figure is several times higher.

You’ll never know for sure because we have become masters of deceit regarding official statistics, whether inflation, unemployment, or our liabilities.

But the situation is so dire that the Congressional Budget Office projects the Social Security Administration’s disability insurance trust fund to RUN OUT by 2017.

We get by year after year by increasing the debt. And at well over 100% of GDP, we have truly reached the point of no return.

We are now in a position where we must default. Either we must default on our national debt, or we must default on our obligations to you the citizens.

We may end up stealing your savings. Robbing your Social Security. Taxing you to death. Or simply inflating away the value of our debt.

Naturally, we’re going to screw you in the process somehow… so be prepared for that. Especially the inflationary tidal wave that’s coming.

Our central bank has expanded its balance sheet at an unprecedented pace, creating massive asset bubbles in its wake. These asset bubbles have disproportionately benefited the ultra-wealthy at the expense of everyone else.

Such wanton money printing has also been tremendously destructive to our credibility. Other nations worry about our reckless irresponsibility. That’s why we keep spying on them.

Make no mistake: the consequences of our actions are here. And the days of the United States as the world’s dominant superpower are finished.

As the decline hastens, we will struggle to sell our debt to the world and to ship our dollars abroad. Fewer nations will be interested in our empty promises.

And without the generosity of other nations loaning us money at record low interest rates that fail to keep pace with inflation, you will really be screwed.

When this happens, you can absolutely count on us to clamp down even harder on the economy and control even more of your lives. For your own good, of course.

No, this may not be the country that you all grew up in. But it is the state of our union… whatever remains of it.

And so my fellow Americans, I urge you to grab your ankles and get ready for a little ‘shared sacrifice’.

But don’t worry about me, or my senior staff. We will leave government with cushy pensions, $750,000 speaking fees, board seats on public companies, and top positions in the industries that we have accommodated at your expense.

And of course I will be paid handsomely for the arrogant memoirs I will write in which I deny any responsibility for the shit I’ve gotten you all into.

So when I say “shared sacrifice”, I really mean “your sacrifice”.

Thank you. God bless you, and God bless these United States of America.

Written by anubis

March 29th, 2014 at 6:12 pm

Bad Government

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This is from George Washington’s blog, as linked on Zero hedge.

Preface: I am not so much anti-government as anti-stupid policy. (Moreover, the problem is not bad government or even corrupt corporations. The real problem is the malignant, symbiotic relation between the two.)

Multiple polls show that Americans are more afraid of our own government than of terrorists.

Sure, the government – not Al Qaeda – is taking away virtually all of our Constitutional rights. And that includes reserving to itself the right to assassinate or indefinitely detain American citizens.

But stupid government policy is threatening us in other ways, as well.
The Police

For example, we’ve documented that you are 9 times more likely to be killed by a police officer than a terrorist. (Legal experts say you should never talk to the police).
Financial Crisis

The financial crisis will also lead to quite a few early deaths. The government – together with Wall Street – caused the financial crisis … not Al Qaeda.

Government policy has also redistributed wealth from the average American to the super- rich.

(Indeed, the government and big banks – not Osama – have destroyed free market capitalism in the U.S.)
Suicide

The number of deaths by suicide has skyrocketed recently, and many connect the increase in suicides to the downturn in the economy.

Around 35,000 Americans kill themselves each year. Indeed, Americans are 2,059 times more likely to kill themselves than die at the hand of a terrorist.

And more American soldiers die by suicide than combat (the number of veterans committing suicide is astronomical and under-reported).

The wars that are causing the soldiers so much grief were planned 20 years ago … and are being fought for oil (and here) and gas.
Killer Drugs

According to a 2011 CDC report, poisoning from prescription drugs is one of the leading cause of death. Indeed, the CDC stated in 2011 that – in the majority of states – your prescription meds are more likely to kill you than any other source of injury. So your meds are thousands of times more likely to kill you than Al Qaeda.

After drug companies were busted for using fraudulent data for drug approval, the FDA allowed the potentially dangerous drugs to stay on the market.

And when one of the most respected radiologists in America – the former head of the radiology department at Yale University – attempted to blow the whistle on the fact that the FDA had approved a medical device manufactured by General Electric because it put out massive amounts of radiation, the FDA installed spyware to record his private emails and surfing activities (including installing cameras to snap pictures of his screen), and then used the information to smear him and other whistleblowers.
Contaminated Food

Statistics from the Centers for Disease Control show that Americans are 110 times more likely to die from contaminated food than terrorism. And see this.

Yet the government is working hand-in-glove with the giant good companies to dish up cheap, unhealthy food.

The government’s response to the outbreak of mad cow disease was simple: it stopped testing for mad cow, and prevented cattle ranchers and meat processors from voluntarily testing their own cows (and see this and this).

The EPA recently raised the allowable amount of a dangerous pesticide by 3,000% … pretending that it won’t have adverse health effects.

In response to new studies showing the substantial dangers of genetically modified foods – they’ve already been tentatively linked to obesity, cancer, liver failure, infertility and all sorts of other diseases (brief, must-watch videos here and here – the government passed legislation more or less pushing it onto our plates.

When BP – through criminal negligence – blew out the Deepwater Horizon oil well, the government helped cover it up (and here). As just one example, the government approved the massive use of a highly-toxic dispersant to temporarily hide the oil. The government also changed the testing standards for seafood to pretend that higher levels of toxic PAHs in our food was business-as-usual.
Environmental Poisons

In fact, the government has long covered up environmental risks.

For example, the Centers for Disease Control – the lead agency tasked with addressing disease in America – covered up lead poisoning in children in the Washington, D.C. area.

The Bush administration covered up the health risks to New Orleans residents associated with polluted water from hurricane Katrina, and FEMA covered up the cancer risk from the toxic trailers which it provided to refugees of the hurricane.

And then there’s nuclear power. The American government has:

Wholly subsidized nuclear power (it would never have been built without 100% backing)

Reduced American nuclear safety standards after Fukushima

Controlled Japanese nuclear policy for decades

Covered up the severity of the Fukushima accident, raised acceptable radiation limits and agreed to buy radioactive Japanese seafood

Indeed, the archaic nuclear design used at Fukushima and throughout the United States was chosen solely because it helps to make nuclear bombs.

Sadly, radiation from Fukushima and U.S. reactors will kill some Americans. The National Journal reports:

“Look at what’s going on now: They’re dumping huge amounts of radioactivity into the ocean — no one expected that in 2011,” Daniel Hirsch, a nuclear policy lecturer at the University of California-Santa Cruz, told Global Security Newswire. “We could have large numbers of cancer from ingestion of fish.”

Indeed, one doctor claims that Fukushima had already killed 14,000 Americans 9 months after the accident. We doubt her numbers … but it is clear that even low levels of radiation can damage human health. Whatever the number, this was caused by the government … not Al Qaeda.

(The government also created a computer virus which threatens nuclear plants world-wide.)
Bad Government Policy Is Increasing the Risk of Terrorism

Oh and – by the way – the government’s actions are so idiotic that they are actually increasing the chance of a terrorist attack.

Written by anubis

November 25th, 2013 at 7:52 am

Dealing with Policy Officers – you know them as Police Officers

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As a group, “Peace Officers” do not exist in the DEMOCRACY; only POLICY ENFORCERS do. A peace officer only exists in the Republic. The word ‘peace’ should be your first clue in comparison to the militarized thugs we have today.

You must choose your battles/confrontations wisely. Sometimes, even the calmest of approaches will not quell the blinding rage of POLICY ENFORCEMENT OFFICERS. This I have experienced. Sometimes those dudes/chicas have already had a bad day and your calm can further piss them off. But people and their experiences and emotions can never be 100% predictable, which makes life a bit interesting at times.

I’ve had success with a number of different approaches, one of my faves is to immediately begin the Contract before the COP has the chance.

“What is the Emergency and how can I help?”

Usually get back a confused “Excuse me?” or a simple confess-and-avoid leading to: “License and registration…”

I repeated: “What is the Emergency and how can I help?”

Regardless of whether he answers, I’d qualify like this:

“Is that your patrol vehicle?”
“Aren’t those ‘emergency beacons/flashers/lights’ atop your patrol vehicle?”
“Didn’t you activate/turn on those lights?”

I’ve had it go a couple different directions here and I’ll share one:

COP: “Reason I pulled you over is that your inspection sticker is the wrong color.”
Me: “If an emergency is signaled by beacons where none exists, isn’t that a FEDERAL CRIME?”

Me: “Haven’t people been injured because they rushed to move for an emergency vehicle that signaled a false emergency?”

“Sir, I don’t wish to take you into Federal Court and charge you with an offense that may cost you your livelihood and occupation. Maybe I need to speak to your Sergeant/Shift Supervisor to avoid any more incurred liability on your part.”

COP: “You some kind of lawyer?”
Me: “Would that give my words a bit more GRAVITY for you, sir? And who is the name of your current Shift Supervisor?”

Cop makes to walk toward his cruiser when I ask: “Am I free to go or am I being detained without a declared emergency?”

He quickly got into his car and drove away like he was on mission to save Earth.

Am I saying to replicate this action? No. Hell no. Much of how I’ve handled highway-stops is just to be chill and confident. I pretend I’m dealing with my neighbors recalcitrant children. Yes, they are little tyrants and hellions, but I mean them no harm. I can beat up a little kid, sure, but that’s just WRONG. I can speak some words to them and ask them to go and get their daddy so I can have an adult conversation and get things straightened out.

I can verbally inform them of what consequences they may face if they continue their behavior, making them fear what their daddy would do to them if I report them, so to speak.

The point I’m getting at is that with children and cops you must be very sweet yet unwavering and CONFIDENT. You KNOW you’re the adult when you’re dealing with a child and you have that confidence. Once you KNOW you’re an adult-Creditor when you’re dealing with a bureaucrat, the confidence will simply BE THERE.

Confidence of the quiet-cool nature puts more trepidation into the minds of bureaucrats than any ranting raving threatening slobbering patriot redneck. I say redneck because they abound where I am.

Well before I was aware of Admiralty, I defended my STRAWMAN in court thinking it was I they were trying. And I did better than most with a 75% success record (mostly traffic incidents and minor things).

I once verbally wrangled an NC State Trooper on the stand for the better part of 20 minutes, and although I was anxious, seeing him sweat and stutter and give ‘No I am not qualified’ and ‘I have no idea’ and ‘I don’t know what that statute says or if I’m liable for it.’ testimony, plus seeing the DA’s face wrinkle and pinch, got me confident. So you’re not the only one being nervous on the spot. So relax…we’re all human…allegedly.

I lost that particular “argument” but I got a huge boost from the Judge who held me back while the other ‘Actors’ went their separate ways. He told me I had the right mindset and tenacity and attention to detail, but that I was missing crucial elements of foundational procedure.

I also had the Assistant DA approach me later and ask me which law school I attended, to which I almost threw up in my mouth, but thanked him for his sidelong attempt at “giving props”.

Is praise from an Esquire noteworthy? I don’t know, I just know that they are actors in a Play and I didn’t read the Play, I didn’t know my stage-Presence and Proper Lines that day. That judge gave me a huge swell in confidence which has assisted me ever since in dealing with cops, attorneys, any and every bureaucrat that think they have power and hold sway over me.

Judges and Clerks aka the higher-level bureaucrats are the most polite yet also they are the craftiest. And that’s OK. I like crafty. It’s a challenge. It’s psychological, mostly. It’s a Head Game.

And one thing higher-level bureaucrats do well is ASSESS YOUR ASS. They are very good behaviorists. They know fake confidence over the real thing. You go in with the real thing, they sit and take notice if for nothing else, to return your politeness. This has been my experience alone.

Remember to speak to POLICE OFFICERS with the right Humor, the right Humility, the proper tonality as you would your neighbors wayward children, and like children they’ll grow up to respect you and not harass you. When that happens you get to see the magical transformation of SWAT thug into a true and genuine Peace Officer.

Written by anubis

May 28th, 2013 at 6:02 pm

Terminal State Of Broken

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Originally posted at Monty Pelerin’s World blog,

As markets continue to confound, it is useful to reflect on this quote from Jim Sinclair, particularly the last sentence:

The world has taken on a “virtual reality” with no reference to what really is. This is the biggest market power play of smoke and mirrors in history. It is happening because the financial system is in a terminal state of broken.

I could not agree more. This same view has been expressed since the inception of this website (over three and a half years ago). Mr. Sinclair’s wonderfully clever and colorful phrase,”terminal state of broken,” captures matters well. He used it with respect to financial markets, but it applies to much more.

The terminal state of broken also applies to government and the institutions contained therein. Furthermore, these areas have infected non-governmental institutions, especially those which derive their existence and/or success from a close association with government. These include the educational system, defense industry, highly regulated industries like medicine and finance and a host of others.

The common denominator in all of this is government. It is the modern day equivalent of typhoid Mary, infecting all that it comes in contact with duplicity, dishonesty and corruption. This “brokeness” now infects the very morality and civility of society. Institutional behavior provides the moral guidelines (or lack thereof) for society. Corruption, deceit and theft are not virtues, yet if they are practiced openly they cease to become vices.

Immorality in higher institutions weakens the social and moral fabric of a society. Incivility and coarseness is the least of the problems. Justice Brandeis commented on the “trickle down” effect of institutional behavior, focusing on that of government itself:

In a government of laws, the existence of the government will be imperiled if it fails to observe the law scrupulously. Our government is the potent, the omnipotent teacher. For good or ill, it teaches the whole people by its example. If government becomes a lawbreaker it breeds contempt for law: it invites every man to become a law unto himself. It invites anarchy.

Brandeis’ warning was early enough to head off our current condition, but it went unheeded. Instead, our “omnipotent teacher” chose to ignore ethics and morality as they stood in the way of the desire for power and wealth.

Government increasingly took on the Nockian (Albert J. Nock) description:

Taking the State wherever found, striking into its history at any point, one sees no way to differentiate the activities of its founders, administrators and beneficiaries from those of a professional-criminal class.

Years of misbehavior, favoritism and outright criminal acts produced a view of government officials that ranks below that of used-car salesmen. No other group or institution is held in lower esteem. Government’s survival is no longer based on a functional, moral need. Its continued survival depends upon its ability to distribute largess.

The wealthy and the poor now consider themselves allies with government. The wealthy are provided favors and leeway that free markets would not allow. The poor are bribed with “goodies” that government takes from the productive in exchange for votes.

“Terminally broken” is the exact description for our current situation. Terminally, I interpret, as hopelessly, as in unfixable. Terminally also implies a temporary condition, one that cannot last very long. The unstable equilibrium that now exists is not too different from the eye of a hurricane. Any movement out of this rather small protective area will produce havoc.

Written by anubis

May 23rd, 2013 at 8:16 pm

EU

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A poll last week reported on the devastating drop in the extent to which the peoples of Europe now trust the EU. Organised by the EU’s own polling body, Eurobarometer, this showed that, across the six largest member states, it is no longer trusted by a majority of voters, dramatically reversing their view of only five years ago. In Italy, distrust has risen from 28 per cent in 2007 to 53 per cent today; in Germany from 36 per cent to 59 per cent; and in Britain from below 50 per cent to 69 per cent. The biggest reversal of all is in Spain, where the proportion of those distrusting the EU has soared from 23 per cent to 72 per cent. This is perhaps unsurprising in a country where, with the meltdown of its economy under the euro, unemployment has now hit a staggering 27 per cent, two points higher than in the USA at the peak of the Great Depression in the Thirties.

What makes this evaporation of trust so telling is that the EU is now the government that in many respects rules over our lives, passing most of our laws. The European Parliament website lists 1,301 “legislative acts” from its current session – just as we learn that our own MPs are this year to have two weeks of extra holiday from Westminster, because, we are told, “there aren’t enough laws for them to pass”.

So embarrassing were these poll findings that Eurobarometer has not published them, leaving them to be reported by six Europhile newspapers across Europe that signed up to have the poll carried out. Their own suggestions as to how this crisis of confidence might be repaired range from the idea that the EU should field its own football team, to a proposal that it should devise a “Eur-app” for citizens to download on to their iPhones. If the situation were not so serious, it might be suggested that the next version of the EU’s constitution should include a declaration that every citizen has “the right to life, liberty and the pursuit of app-iness”. That would teach us all to remember just how much the EU is doing to improve our lives.

Written by anubis

May 1st, 2013 at 5:56 pm

Everything Is Rigged…

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Everything Is Rigged: The Biggest Price-Fixing Scandal Ever
The Illuminati were amateurs. The second huge financial scandal of the year reveals the real international conspiracy: There’s no price the big banks can’t fix
by Matt Taibbi
APRIL 25, 2013

From Rolling Stone here

Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world’s largest banks may be fixing the prices of, well, just about everything.

You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that’s trillion, with a “t”) worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it “dwarfs by orders of magnitude any financial scam in the history of markets.”

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world’s largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world’s largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.

Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It’s about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget.

It should surprise no one that among the players implicated in this scheme to fix the prices of interest-rate swaps are the same megabanks – including Barclays, UBS, Bank of America, JPMorgan Chase and the Royal Bank of Scotland – that serve on the Libor panel that sets global interest rates. In fact, in recent years many of these banks have already paid multimillion-dollar settlements for anti-competitive manipulation of one form or another (in addition to Libor, some were caught up in an anti-competitive scheme, detailed in Rolling Stone last year, to rig municipal-debt service auctions). Though the jumble of financial acronyms sounds like gibberish to the layperson, the fact that there may now be price-fixing scandals involving both Libor and ISDAfix suggests a single, giant mushrooming conspiracy of collusion and price-fixing hovering under the ostensibly competitive veneer of Wall Street culture.

The Scam Wall Street Learned From the Mafia

Why? Because Libor already affects the prices of interest-rate swaps, making this a manipulation-on-manipulation situation. If the allegations prove to be right, that will mean that swap customers have been paying for two different layers of price-fixing corruption. If you can imagine paying 20 bucks for a crappy PB&J because some evil cabal of agribusiness companies colluded to fix the prices of both peanuts and peanut butter, you come close to grasping the lunacy of financial markets where both interest rates and interest-rate swaps are being manipulated at the same time, often by the same banks.

“It’s a double conspiracy,” says an amazed Michael Greenberger, a former director of the trading and markets division at the Commodity Futures Trading Commission and now a professor at the University of Maryland. “It’s the height of criminality.”

The bad news didn’t stop with swaps and interest rates. In March, it also came out that two regulators – the CFTC here in the U.S. and the Madrid-based International Organization of Securities Commissions – were spurred by the Libor revelations to investigate the possibility of collusive manipulation of gold and silver prices. “Given the clubby manipulation efforts we saw in Libor benchmarks, I assume other benchmarks – many other benchmarks – are legit areas of inquiry,” CFTC Commissioner Bart Chilton said.

But the biggest shock came out of a federal courtroom at the end of March – though if you follow these matters closely, it may not have been so shocking at all – when a landmark class-action civil lawsuit against the banks for Libor-related offenses was dismissed. In that case, a federal judge accepted the banker-defendants’ incredible argument: If cities and towns and other investors lost money because of Libor manipulation, that was their own fault for ever thinking the banks were competing in the first place.

“A farce,” was one antitrust lawyer’s response to the eyebrow-raising dismissal.

“Incredible,” says Sylvia Sokol, an attorney for Constantine Cannon, a firm that specializes in antitrust cases.

All of these stories collectively pointed to the same thing: These banks, which already possess enormous power just by virtue of their financial holdings – in the United States, the top six banks, many of them the same names you see on the Libor and ISDAfix panels, own assets equivalent to 60 percent of the nation’s GDP – are beginning to realize the awesome possibilities for increased profit and political might that would come with colluding instead of competing. Moreover, it’s increasingly clear that both the criminal justice system and the civil courts may be impotent to stop them, even when they do get caught working together to game the system.

If true, that would leave us living in an era of undisguised, real-world conspiracy, in which the prices of currencies, commodities like gold and silver, even interest rates and the value of money itself, can be and may already have been dictated from above. And those who are doing it can get away with it. Forget the Illuminati – this is the real thing, and it’s no secret. You can stare right at it, anytime you want.

The banks found a loophole, a basic flaw in the machine. Across the financial system, there are places where prices or official indices are set based upon unverified data sent in by private banks and financial companies. In other words, we gave the players with incentives to game the system institutional roles in the economic infrastructure.

Libor, which measures the prices banks charge one another to borrow money, is a perfect example, not only of this basic flaw in the price-setting system but of the weakness in the regulatory framework supposedly policing it. Couple a voluntary reporting scheme with too-big-to-fail status and a revolving-door legal system, and what you get is unstoppable corruption.

Every morning, 18 of the world’s biggest banks submit data to an office in London about how much they believe they would have to pay to borrow from other banks. The 18 banks together are called the “Libor panel,” and when all of these data from all 18 panelist banks are collected, the numbers are averaged out. What emerges, every morning at 11:30 London time, are the daily Libor figures.

Banks submit numbers about borrowing in 10 different currencies across 15 different time periods, e.g., loans as short as one day and as long as one year. This mountain of bank-submitted data is used every day to create benchmark rates that affect the prices of everything from credit cards to mortgages to currencies to commercial loans (both short- and long-term) to swaps.

Gangster Bankers Broke Every Law in the Book

Dating back perhaps as far as the early Nineties, traders and others inside these banks were sometimes calling up the company geeks responsible for submitting the daily Libor numbers (the “Libor submitters”) and asking them to fudge the numbers. Usually, the gimmick was the trader had made a bet on something – a swap, currencies, something – and he wanted the Libor submitter to make the numbers look lower (or, occasionally, higher) to help his bet pay off.

Famously, one Barclays trader monkeyed with Libor submissions in exchange for a bottle of Bollinger champagne, but in some cases, it was even lamer than that. This is from an exchange between a trader and a Libor submitter at the Royal Bank of Scotland:

SWISS FRANC TRADER: can u put 6m swiss libor in low pls?…
PRIMARY SUBMITTER: Whats it worth
SWSISS FRANC TRADER: ive got some sushi rolls from yesterday?…
PRIMARY SUBMITTER: ok low 6m, just for u
SWISS FRANC TRADER: wooooooohooooooo. . . thatd be awesome

Screwing around with world interest rates that affect billions of people in exchange for day-old sushi – it’s hard to imagine an image that better captures the moral insanity of the modern financial-services sector.

Hundreds of similar exchanges were uncovered when regulators like Britain’s Financial Services Authority and the U.S. Justice Department started burrowing into the befouled entrails of Libor. The documentary evidence of anti-competitive manipulation they found was so overwhelming that, to read it, one almost becomes embarrassed for the banks. “It’s just amazing how Libor fixing can make you that much money,” chirped one yen trader. “Pure manipulation going on,” wrote another.

Yet despite so many instances of at least attempted manipulation, the banks mostly skated. Barclays got off with a relatively minor fine in the $450 million range, UBS was stuck with $1.5 billion in penalties, and RBS was forced to give up $615 million. Apart from a few low-level flunkies overseas, no individual involved in this scam that impacted nearly everyone in the industrialized world was even threatened with criminal prosecution.

Two of America’s top law-enforcement officials, Attorney General Eric Holder and former Justice Department Criminal Division chief Lanny Breuer, confessed that it’s dangerous to prosecute offending banks because they are simply too big. Making arrests, they say, might lead to “collateral consequences” in the economy.

The relatively small sums of money extracted in these settlements did not go toward reparations for the cities, towns and other victims who lost money due to Libor manipulation. Instead, it flowed mindlessly into government coffers. So it was left to towns and cities like Baltimore (which lost money due to fluctuations in their municipal investments caused by Libor movements), pensions like the New Britain, Connecticut, Firefighters’ and Police Benefit Fund, and other foundations – and even individuals (billionaire real-estate developer Sheldon Solow, who filed his own suit in February, claims that his company lost $450 million because of Libor manipulation) – to sue the banks for damages.

One of the biggest Libor suits was proceeding on schedule when, early in March, an army of superstar lawyers working on behalf of the banks descended upon federal judge Naomi Buchwald in the Southern District of New York to argue an extraordinary motion to dismiss. The banks’ legal dream team drew from heavyweight Beltway-connected firms like Boies Schiller (you remember David Boies represented Al Gore), Davis Polk (home of top ex-regulators like former SEC enforcement chief Linda Thomsen) and Covington & Burling, the onetime private-practice home of both Holder and Breuer.

The presence of Covington & Burling in the suit – representing, of all companies, Citigroup, the former employer of current Treasury Secretary Jack Lew – was particularly galling. Right as the Libor case was being dismissed, the firm had hired none other than Lanny Breuer, the same Lanny Breuer who, just a few months before, was the assistant attorney general who had balked at criminally prosecuting UBS over Libor because, he said, “Our goal here is not to destroy a major financial institution.”

In any case, this all-star squad of white-shoe lawyers came before Buchwald and made the mother of all audacious arguments. Robert Wise of Davis Polk, representing Bank of America, told Buchwald that the banks could not possibly be guilty of anti- competitive collusion because nobody ever said that the creation of Libor was competitive. “It is essential to our argument that this is not a competitive process,” he said. “The banks do not compete with one another in the submission of Libor.”

If you squint incredibly hard and look at the issue through a mirror, maybe while standing on your head, you can sort of see what Wise is saying. In a very theoretical, technical sense, the actual process by which banks submit Libor data – 18 geeks sending numbers to the British Bankers’ Association offices in London once every morning – is not competitive per se.

But these numbers are supposed to reflect interbank-loan prices derived in a real, competitive market. Saying the Libor submission process is not competitive is sort of like pointing out that bank robbers obeyed the speed limit on the way to the heist. It’s the silliest kind of legal sophistry.

But Wise eventually outdid even that argument, essentially saying that while the banks may have lied to or cheated their customers, they weren’t guilty of the particular crime of antitrust collusion. This is like the old joke about the lawyer who gets up in court and claims his client had to be innocent, because his client was committing a crime in a different state at the time of the offense.

“The plaintiffs, I believe, are confusing a claim of being perhaps deceived,” he said, “with a claim for harm to competition.”

Judge Buchwald swallowed this lunatic argument whole and dismissed most of the case. Libor, she said, was a “cooperative endeavor” that was “never intended to be competitive.” Her decision “does not reflect the reality of this business, where all of these banks were acting as competitors throughout the process,” said the antitrust lawyer Sokol. Buchwald made this ruling despite the fact that both the U.S. and British governments had already settled with three banks for billions of dollars for improper manipulation, manipulation that these companies admitted to in their settlements.

Michael Hausfeld of Hausfeld LLP, one of the lead lawyers for the plaintiffs in this Libor suit, declined to comment specifically on the dismissal. But he did talk about the significance of the Libor case and other manipulation cases now in the pipeline.

“It’s now evident that there is a ubiquitous culture among the banks to collude and cheat their customers as many times as they can in as many forms as they can conceive,” he said. “And that’s not just surmising. This is just based upon what they’ve been caught at.”

Greenberger says the lack of serious consequences for the Libor scandal has only made other kinds of manipulation more inevitable. “There’s no therapy like sending those who are used to wearing Gucci shoes to jail,” he says. “But when the attorney general says, ‘I don’t want to indict people,’ it’s the Wild West. There’s no law.”

The problem is, a number of markets feature the same infrastructural weakness that failed in the Libor mess. In the case of interest-rate swaps and the ISDAfix benchmark, the system is very similar to Libor, although the investigation into these markets reportedly focuses on some different types of improprieties.

Though interest-rate swaps are not widely understood outside the finance world, the root concept actually isn’t that hard. If you can imagine taking out a variable-rate mortgage and then paying a bank to make your loan payments fixed, you’ve got the basic idea of an interest-rate swap.

In practice, it might be a country like Greece or a regional government like Jefferson County, Alabama, that borrows money at a variable rate of interest, then later goes to a bank to “swap” that loan to a more predictable fixed rate. In its simplest form, the customer in a swap deal is usually paying a premium for the safety and security of fixed interest rates, while the firm selling the swap is usually betting that it knows more about future movements in interest rates than its customers.

Prices for interest-rate swaps are often based on ISDAfix, which, like Libor, is yet another of these privately calculated benchmarks. ISDAfix’s U.S. dollar rates are published every day, at 11:30 a.m. and 3:30 p.m., after a gang of the same usual-suspect megabanks (Bank of America, RBS, Deutsche, JPMorgan Chase, Barclays, etc.) submits information about bids and offers for swaps.

And here’s what we know so far: The CFTC has sent subpoenas to ICAP and to as many as 15 of those member banks, and plans to interview about a dozen ICAP employees from the company’s office in Jersey City, New Jersey. Moreover, the International Swaps and Derivatives Association, or ISDA, which works together with ICAP (for U.S. dollar transactions) and Thomson Reuters to compute the ISDAfix benchmark, has hired the consulting firm Oliver Wyman to review the process by which ISDAfix is calculated. Oliver Wyman is the same company that the British Bankers’ Association hired to review the Libor submission process after that scandal broke last year. The upshot of all of this is that it looks very much like ISDAfix could be Libor all over again.

“It’s obviously reminiscent of the Libor manipulation issue,” Darrell Duffie, a finance professor at Stanford University, told reporters. “People may have been naive that simply reporting these rates was enough to avoid manipulation.”

And just like in Libor, the potential losers in an interest-rate-swap manipulation scandal would be the same sad-sack collection of cities, towns, companies and other nonbank entities that have no way of knowing if they’re paying the real price for swaps or a price being manipulated by bank insiders for profit. Moreover, ISDAfix is not only used to calculate prices for interest-rate swaps, it’s also used to set values for about $550 billion worth of bonds tied to commercial real estate, and also affects the payouts on some state-pension annuities.

So although it’s not quite as widespread as Libor, ISDAfix is sufficiently power-jammed into the world financial infrastructure that any manipulation of the rate would be catastrophic – and a huge class of victims that could include everyone from state pensioners to big cities to wealthy investors in structured notes would have no idea they were being robbed.

“How is some municipality in Cleveland or wherever going to know if it’s getting ripped off?” asks Michael Masters of Masters Capital Management, a fund manager who has long been an advocate of greater transparency in the derivatives world. “The answer is, they won’t know.”

Worse still, the CFTC investigation apparently isn’t limited to possible manipulation of swap prices by monkeying around with ISDAfix. According to reports, the commission is also looking at whether or not employees at ICAP may have intentionally delayed publication of swap prices, which in theory could give someone (bankers, cough, cough) a chance to trade ahead of the information.

Swap prices are published when ICAP employees manually enter the data on a computer screen called “19901.” Some 6,000 customers subscribe to a service that allows them to access the data appearing on the 19901 screen.

The key here is that unlike a more transparent, regulated market like the New York Stock Exchange, where the results of stock trades are computed more or less instantly and everyone in theory can immediately see the impact of trading on the prices of stocks, in the swap market the whole world is dependent upon a handful of brokers quickly and honestly entering data about trades by hand into a computer terminal.

Any delay in entering price data would provide the banks involved in the transactions with a rare opportunity to trade ahead of the information. One way to imagine it would be to picture a racetrack where a giant curtain is pulled over the track as the horses come down the stretch – and the gallery is only told two minutes later which horse actually won. Anyone on the right side of the curtain could make a lot of smart bets before the audience saw the results of the race.

At ICAP, the interest-rate swap desk, and the 19901 screen, were reportedly controlled by a small group of 20 or so brokers, some of whom were making millions of dollars. These brokers made so much money for themselves the unit was nicknamed “Treasure Island.”

Already, there are some reports that brokers of Treasure Island did create such intentional delays. Bloomberg interviewed a former broker who claims that he watched ICAP brokers delay the reporting of swap prices. “That allows dealers to tell the brokers to delay putting trades into the system instead of in real time,” Bloomberg wrote, noting the former broker had “witnessed such activity firsthand.” An ICAP spokesman has no comment on the story, though the company has released a statement saying that it is “cooperating” with the CFTC’s inquiry and that it “maintains policies that prohibit” the improper behavior alleged in news reports.

The idea that prices in a $379 trillion market could be dependent on a desk of about 20 guys in New Jersey should tell you a lot about the absurdity of our financial infrastructure. The whole thing, in fact, has a darkly comic element to it. “It’s almost hilarious in the irony,” says David Frenk, director of research for Better Markets, a financial-reform advocacy group, “that they called it ISDAfix.”

After scandals involving libor and, perhaps, ISDAfix, the question that should have everyone freaked out is this: What other markets out there carry the same potential for manipulation? The answer to that question is far from reassuring, because the potential is almost everywhere. From gold to gas to swaps to interest rates, prices all over the world are dependent upon little private cabals of cigar-chomping insiders we’re forced to trust.

“In all the over-the-counter markets, you don’t really have pricing except by a bunch of guys getting together,” Masters notes glumly.

That includes the markets for gold (where prices are set by five banks in a Libor-ish teleconferencing process that, ironically, was created in part by N M Rothschild & Sons) and silver (whose price is set by just three banks), as well as benchmark rates in numerous other commodities – jet fuel, diesel, electric power, coal, you name it. The problem in each of these markets is the same: We all have to rely upon the honesty of companies like Barclays (already caught and fined $453 million for rigging Libor) or JPMorgan Chase (paid a $228 million settlement for rigging municipal-bond auctions) or UBS (fined a collective $1.66 billion for both muni-bond rigging and Libor manipulation) to faithfully report the real prices of things like interest rates, swaps, currencies and commodities.

All of these benchmarks based on voluntary reporting are now being looked at by regulators around the world, and God knows what they’ll find. The European Federation of Financial Services Users wrote in an official EU survey last summer that all of these systems are ripe targets for manipulation. “In general,” it wrote, “those markets which are based on non-attested, voluntary submission of data from agents whose benefits depend on such benchmarks are especially vulnerable of market abuse and distortion.”

Translation: When prices are set by companies that can profit by manipulating them, we’re fucked.

“You name it,” says Frenk. “Any of these benchmarks is a possibility for corruption.”

The only reason this problem has not received the attention it deserves is because the scale of it is so enormous that ordinary people simply cannot see it. It’s not just stealing by reaching a hand into your pocket and taking out money, but stealing in which banks can hit a few keystrokes and magically make whatever’s in your pocket worth less. This is corruption at the molecular level of the economy, Space Age stealing – and it’s only just coming into view.

This story is from the May 9th, 2013 issue of Rolling Stone.

http://www.rollingstone.com/politics/news/everything-is-rigged-the-biggest-financial-scandal-yet-20130425

This is quite funny. It’s not a conspiracy. It’s emergence. A bunch of people who think the same way, all doing the same thing and providing an environment where there is no censure of this behaviour.

It’s trivial I know, but he misses the point about the trader’s comment about day old sushi rolls…it was a joke…. and then goes on to take everything else as evidence of a conspiracy.

What’s going on is a natural progression. Collapse of a civilisation as it starts devouring itself. The reason things were done in the first place is long forgotten and the system is gamed by the players, serving nothing but themselves to the detriment of all. Governments believe themselves responsible for everything but do not have the capability of managing everything. By taking away responsibility from the individual, they weaken society. For it to work, society requires some investment of themselves by the individuals who comprise it, and therefore there must be a good reason for individuals to invest something of themselves.

With the government disempowering and trampling on individual liberties, those reasons evaporate.

The result is what we see.

Written by anubis

May 1st, 2013 at 5:44 pm