Looking Forward: The Great American Red Herring

Each time a new administration is installed in Washington, the idea of subjecting the previous administration to any sort of legal scrutiny gets pushed aside in lieu of more pressing demands. While the newly installed administration may have been castigating the previous administration, for years, it’s all chalked up to yesterday’s news. Bygones are cast aside and fresh ideas promise to lift the veil of secrecy that citizens and taxpayers, not necessarily mutually exclusive groups, were screaming for during the previous administration’s floundering. However unveiling a previous administration’s flaws is often avoided because in a two-party nation, such as here in the U.S., such examinations often trip both powerful parties.

Now fearing for his life, Accountant Harry Markopolos grew
suspicious when he attempted to bring Madoff to the attention of SEC

Such is the case here in the U.S. in the 21st Century. Money pouring into the political process has ironically stalled only the Justice system in making progress for the people and for the capitalist enterprise. While Justice at the federal level is supposed to operate independently, and while Presidents are not supposed to take sides in the day-to-day shenanigans of the stock market, Wall Street has ruled the decision making processes of virtually everything that governs our nation. Now on the verge of the next “quantitative easing” – QE3 – of our faltering economy, we see a President with a 71 % disapproval rating, on vacation, and a Congress, with a 9% approval rating, largely out to lunch. With interest rates at zero and with the promise that they may stay like that forever, banks are holding all the cards apparently.

Some are now arguing that bail-outs, such as we’ve seen and will see again, very soon, demonstrate that Marx was right, that capitalism is inherently flawed. Others see it more as a dismal failure of a system that has been corrupted by “lawmakers,” and I use that term loosely, who more and more like playing God with taxpayers money, while lining their own pockets on the government dole. They enjoy taking from the poor hard working folks and giving to banks, which in return seem to enjoy sitting on it, rather than using it to finance business and job growth. Pundits enjoy parsing systems as binary as it makes it easier to manipulate the masses into believing everything is black or white, or, in this case, red or blue. The general public sees things as overwhelming. They believed that they would not have to pay attention as long as their man was in power, and it’s simply too much to expect them to keep up, with so much going on. How can we expect John Q. Public to spend his time examining the actions of the guys he elected when there’s a Kardashian wedding to follow?

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So it should not come to anyone’s surprise when you witness Robert Benmosche, the CEO of AIG, that insurance giant taxpayers bailed out last year, or so, decrying the need on CNBC for working class folks to forgo retirement until 75, for the good, apparently, of Mother Dow Jones. It should come as no surprise, either, that the wily coyote of fraud, Bernie Madoff, is again rearing his snarly grin to prove that, yes, our entire stock market may just be another Ponzi scheme. Otherwise, why would we have learned recently that the Security and Exchange Commission, SEC, is now claiming that much of the evidence we paid them to collect on criminals was destroyed, ostensibly, to, once again, move on to more positive things.

Okay, I know you know all of this, and I know it’s a tad stressful to relive these horrors, especially since you agree that moving on is best. Well hold on there bucko, if you think for a New York second anything has changed, put down that People magazine and quit admiring K.Kardashian’s wedding favors. According to Bart Chilton, a commissioner within the SEC, “We spent hundreds of billions of dollars on a hideous bailout, and now we’re not going to fund reforms to prevent another one.” The budget right now at $1.18 billion sounds bloated enough, until you figure in what the folks at the hedge funds and banks and law firms are spending to cool their heels. Now while the arguments that we need to become more efficient have a nice ring, reality creeps in and, low and behold, we now hear about the chicken-hearted blokes minding the hedonism hens are all about yet another full on cover-up.

From Matt Taibbi at Rolling Stone:

“By whitewashing the files of some of the nation’s worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – “18,000 … including Madoff,” as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.”

Apparently, the SEC screwed their own pooch on this one. “SEC enforcement director Robert Khuzami sent out a mass e-mail to the agency’s staff with the subject line “Lawyers Behaving Badly.” In it, Khuzami asked his subordinates to report any experiences they might have had where “the behavior of counsel representing clients in… investigations has been questionable.” After ordering some examinations of their own, an honest, “conservative,” mid-level lawyer, Darcy Flynn, decided to blow the whole thing up by blowing the whistle on the SEC itself.

In July Congress, led by Chuck Grassley, the ranking Republican on the Senate Judiciary Committee, met with Flynn and are considering what to do next. Not as simple as it seems when you consider that market has rattled the entire global financial world but whether or not this Congress and this administration have the courage to seek change at this stage of the game is up for grabs. Having said that, with the market having its biggest day in years while I type this, all on the heels of the promised next bail-out by you and me, what will it take to get an honest review of the facts and a change we can all live with now and in the future.

If you’re a business man depending on banks for financing your business and growing your staff, be very concerned and be very wary about what is happening. Growth is at stake and the world is watching. I don’t think we can afford to sweep yet another corrupt government agency under the carpet, but I’m not sure if we can afford to ignore what is happening to the American people. We’re tired and sick of it and the consumer that runs our economy may just get smart and decide to take his money elsewhere.

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