A Nation of Princelings and Paupers

Max Keiser has made a simple but absolutely brilliant observation about crony capitalism.

There is a certain prevailing attitude being broadly promoted that if a person can pay for something, then they should have it, and if they cannot pay for it, then they can't have it.

This is a fundamentally valid idea for ordering the discretionary aspects of an economy. Like most principles it is based on a number of assumptions including opportunity, honesty, and fairness of remuneration.

Having spent the better part of my working life traveling the world, flying hundreds of thousands of miles in a year at times. I became used to different classes of travel, and special clubs for frequent and professional travelers. I have no problem with that, even now that I don't travel in that manner much anymore.

But such differentiation has its limits. Evil is not only the absence but often the misapplication of virtue, an excess of zeal and a lack of proportion.

One can easily see how this principle of wealth as differentiation and rationing is now being applied to healthcare. By arguing with extreme examples of 'luxury treatments,' and widening the definition of what is discretionary, in fact basic healthcare can be cut back and even denied to those who cannot afford it, or afford it only with great difficulty, so that even questions of life and death can become a matter of the ability to pay.

What if this principle of the primacy of wealth is applied to the law? To justice? To go about one's business without official harassment?

It has gotten so bad that we have recently seen an instance showing that if you can afford the best lawyers available, you can steal the money of your clients, and you can openly keep that money, and get away with it.

The very principle that made America different, that made America a great beacon of light in history, is the the idea that 'all men are created equal, and that they are endowed by their Creator with inalienable rights.'

America was intended to be a classless society, in which peoples' fundamental value as human beings was to be judged not by gender, or faith, or color of skin, or even their relative ability to spend money on luxury items, but by their fundamental worthiness and rights as citizens, sufficient in itself, because that value was given not by the State, but inalienably by God.

Yes those rights are limited, but they are also sacred and inviolate.  And that does not mean that you have the right to equal protection under the law, to be considered fully a human being, but only if you can pay for it.

This will spread to all aspects of civil interaction as we become a nation of princelings and paupers via financial segregation.
Posted on March 17, 2012 by maxkeiser

■ Pay the TSA $100 and Bypass Airport Security

As the TSA spreads to trains and highways imagine a ‘bypass’ card applied in these instances as well. Pay a fee and drive in separate lanes, sit in separate train carriages, park in reserved parking, even walk on segregated sidewalks.

Financial Jim Crow laws are no longer a theory, they’re here.

How America Avoided A Fascist Coup in 1933

The plot was exposed by a highly decorated Marine Corps veteran and war hero, Major General Smedley Butler.



BBC Documenary on 'The Business Plot' of 1933 in which a powerful group of wealthy Americans attempted to set up an organization patterned on the French fascists and German Storm Troopers and overturn democracy and the Constitution.



If they had succeeded, and formed an alliance with the industrialists and bankers backing the corporatism of Mussolini and Hitler, then the world might appear very differently than it does today.



The Corporatists: Mussolini, Hitler, Mosley

The history of man is the history of crimes, and history can repeat. So information is a defence. Through this we can build, we must build, a defence against repetition.

What connects two thousand years of genocide? Too much power in too few hands.

Simon Wiesenthal

Harvard Business Review: Psychopaths on Wall Street

I think that the salient point in all this, the technical details of percent and depth of psychopathy in the US financial industry aside, is that self-regulation is at best a vulnerable strategy in any human concern involving trust, but is absolute folly in an industry where the emphasis and incentives are based on the ruthless pursuit of performance at any cost, and where such behaviour is lauded.

There is little doubt that strong personality types such as even marginal psychopaths can hijack an organization, a party, or even a sub-culture given the right environment of moral relativism and complacency. And if successful, they bring more of the morally ambivalent and weak-willed along with them.

"I may have made an error in judgement...but one thing is beyond dispute: the man was able to work his way up to leader of a people of almost 80 million... His success alone proved that I should subordinate myself to him."

Adolf Eichmann

The efficient market hypothesis is more a clever cover story than a legitimate scientific observation worthy of consideration in public policy discussions.   Transparency and oversight are absolutely essential in all financial matters.

The financial system, and their amoral enablers in politics and the media, have done enough damage to the world. It is time to have a stop.

Harvard Business Review
Psychopaths on Wall Street
by Ronald Schouten, MD, JD
Wednesday March 14, 2012

Psychopaths are the subject of endless fascination. We tend to apply that term loosely to people who engage in bad acts, ranging from pathological lying and repeated deception to major fraud and serial killing. Psychopaths rival pedophiles in the panoply of those we despise and fear. Given this fascination with psychopathy, and the public's current negative view of Wall Street (see Greg Smith's op-ed column in The New York Times about his resignation from Goldman Sachs), it is no surprise that Twitter, the blogosphere, and traditional media have been buzzing about "The Financial Psychopath Next Door," an article in CFA Magazine by Sherree DeCovny (subscription required).

The headline-grabbing factoid in the article was an estimate that 10% of people in the financial services industry are psychopaths. And that's a conservative estimate, according to Christopher Bayer, a Wall Street psychotherapist cited by DeCovny.

DeCovny describes "financial psychopaths" as individuals who seek thrills, lack empathy, don't care about what others think, are charming and intelligent, and are skilled at lying and manipulation. Citing Richard Peterson, managing partner of MarketPsych (a firm that provides psychological and behavioral finance training for the industry), DeCovny notes that these are some of the traits that also predict success on Wall Street.

To understand the implications of all this, it helps to define psychopathy. It is a psychological condition based on well-established diagnostic criteria. These include glibness and superficial charm, conning and manipulative behavior, lack of remorse and empathy, refusal to take responsibility for one's behavior, and others.

Determining whether a person is a psychopath is generally done using a test like the Psychopathy Checklist-Revised (PCL-R), developed by Robert Hare and his colleagues. People who are "normal" invariably score a few points on such scales. True psychopaths score in the top 25%.

Using formal diagnostic criteria, researchers have estimated that about 1% of Americans — about 3 million people — are psychopaths. Based on statistics alone, there are some true psychopaths on Wall Street, as there are in all walks of life. The odds increase further when we consider the competitive advantage that some of the characteristics of psychopathy, including willingness to take risks, can provide in the field.

Psychopathy is mistakenly regarded as an all or nothing affair: you either are a psychopath or you aren't. If that were the case, saying that 10% of people on Wall Street are psychopaths could actually be somewhat comforting, since it implies that the remaining 90% are not and so shouldn't cause us any concern...

But there is good news. First of all, it is possible to screen out almost and full-blown psychopaths during the hiring process and after. Some of the key indicators are:

Glibness and superficial charm
Lack of empathy
Consistent decisions in their self interest, even where it is ethically questionable
Chronic, sometimes transparent lies, even with regard to minor things
Lack of remorse
Failure to take responsibility for their actions, and instead blaming others
Shallow emotions
Ignoring responsibilities
Persistent focus on gratifying their own needs at the expense of others
Conning and manipulative behavior

The only way to deal with a true psychopath is to get him or her out of the organization as fast as possible. While full-blown psychopaths are not deterred by fear and do not learn from punishment, "almost psychopaths" can get the message that adverse consequences will follow misconduct. As a result, strictly enforced firm policies can be effective in deterring those who may be tempted to engage in illicit conduct. As long as the firm wants to deter them.

Read the entire article here.

What I find most disturbing is that checklist sounds like a screening tool for political candidates.

When the Abuse of Insider Information and Control Grows So Large as to Become the Market

"This is a ‘bubble ready’ financial system, and will continue to produce bubbles until it is reformed. The financial sector is primarily a wealth transference mechanism. And with the productive economy foundering because of gross mishandling over the past twenty years or more, the sector is transferring wealth from the future of the economy in the form of Treasury debt to the monied interests on Wall Street in the form of asset bubbles, bonuses and fees."

Jesse, Enjoying Coffee In the Lodge with Jesse by Ilene

I started to think along these lines a few years ago, during the long stock and housing bubble expansion in the stock market that led up to the financial collapse. And we must certainly thank Mr. Greenspan and his Fed for that, as it is clear they knew exactly what was happening. And rather than fulfill their pledge to stop it, they aided and actually promoted it.

What is shocking is that these are no longer rogue operations, no statistical outliers, no isolated dirty dealings by obscure hedge funds.

The moral hazard and decay has progressed so far, has tainted so much, that the US markets are not even worthy to be called casinos, much less captial management and efficient allocation mechanisms.

They have become abattoirs where the real wealth of the nation is taken and slaughtered. These fellows produce nothing, create nothing, except for fraudulent conveyance to take other people's wealth.

There is no better example of this than MF Global, but you can trust your instinct, that there will be more. The blood feast has only begun.

Wait until the wiseguys start skinning their own, those who think they are going to profit from this because they are smarter and better than the rest, and on board. Then you will real some real howls of outrage. I just wonder if there will be anyone left to care.

"Indeed, the market backdrop has regressed to little more than a “money” game. Speculative dynamics rule, and those that play (or associate with those that play) the game the best attain unimaginable financial wealth. How can one reasonably do analysis these days when so much depends on the extent to which global central bankers will proceed further down the path of unlimited “money” creation?

Do you want to bet that the Fed (and ECB, BOE, BOJ, PBOC, etc.) is largely through its crisis-induced money creation operations? Or is the Fed’s balance sheet on the way to $10 TN? Those provide two altogether different scenarios to contemplate.

Clearly, with central bankers propping up markets with Trillions of liquidity injections, one can toss traditional analysis (and market participant behavior) out the backdoor."

Doug Noland, Credit Bubble Bulletin