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Generational Dynamics Web Log for 19-Nov-2012
19-Nov-12 World View -- Israeli delegation goes to Cairo for peace talks

Web Log - November, 2012

19-Nov-12 World View -- Israeli delegation goes to Cairo for peace talks

Farcical MF Global decision excuses Jon Corzine and employees from guilt

This morning's key headlines from GenerationalDynamics.com

Farcical MF Global decision excuses Jon Corzine and employees from guilt
The Metastasis of Corruption
Israel fires artillery into Syria for the third time
Israeli delegation goes to Cairo for peace talks

Farcical MF Global decision excuses Jon Corzine and employees from guilt

Jon Corzine

Jon Corzine

In November 2011, the hedge fund firm MF Global went bankrupt. The company had intermingled customer funds with company funds, when the two were supposed to be segregated. As a result, $1.6 billion in customer funds were missing. Those investors who had simply trusted MF Global to hold their money safely lost their money.

The company's chairman and CEO was Jon Corzine, former Democratic party U.S. senator and Democratic governor of New Jersey and one-time chairman of Goldman Sachs. When Corzine was asked by a congressional committee where the money was, he said that he had no idea which of his subordinates was responsible for losing it. "I simply do not know where the money is," he said, adding that he was "stunned" to learn it was missing.

Well, since Corzine is a Democrat, the Obama administration and Eric Holder's Justice Department refused to investigate. This is because the Obama administration accepts millions of dollars in political contributions, and would much rather let these mega-criminals go free than do something that would protect American citizens from crooks.

And so, the Republicans in the House of Representatives decided to investigate, in the Financial Services Committee. But we have to remember that the Republicans ALSO receive fat contributions from financial mega-criminals, so they don't want really want to investigate either, but the political pressure was so great that they had to do an investigation.

The full committee report was published on Thursday. Here's the major conclusion, on page 78 of the report:

"As MF Global’s chief executive, Corzine was responsible for ensuring that the company maintained integrated systems and controls for managing the company’s liquidity and protecting customer funds. However, under Corzine’s tenure, the company’s cash management, liquidity monitoring, and regulatory compliance functions remained fragmented among several of the company’s departments. MF Global lacked any formal liquidity management framework, and the company could not fully assess and anticipate its liquidity needs. Under Corzine’s leadership, the company failed to address concerns raised in an internal audit suggesting that MF Global’s liquidity tracking and forecasting capabilities lagged behind the firm’s evolving business needs.
Consequently, MF Global was unable to coordinate its activities during the liquidity crisis in its final days of operation. As the company struggled to find additional liquidity, company employees identified excess company funds held in customer accounts. However, because they did not have an accurate accounting of the amount of customer funds the company held, they withdrew customer funds as well as company funds. Prosecutors and MF Global’s regulators will determine whether the company or its employees violated laws or regulations when these withdrawals were made. However, the responsibility for failing to maintain the systems and controls necessary to protect customer funds rests with Corzine. This failure represented a dereliction of his duty as MF Global’s Chairman and CEO."

Please note the following:

Corzine wasn't really at fault, because he didn't understand what was going on.

The people who worked for Corzine aren't at fault, because Corzine didn't understand what was going on.

This is a farcical piece of crap, but it's typical of Washington and Wall Street these days. But if you think that there's no more to the farce, then you're wrong.

The piece of crap was prepared by the staff of Republican Randy Neugebauer, who is chairman of the committee.

But get this: Even though the report barely assigns any blame to Corzine, the Democratic co-chair of the committee, Michael E. Capuano, refused to sign off on the report. I assume that Capuano is in bed with Corzine or, if not, a lot of other Democratic financial types. Washington Post and House Financial Services Subcommittee on Oversight and Investigations

The Metastasis of Corruption

As I've been pointing out for years, there has not been a single conviction from the financial crisis, even though the evidence is overwhelming that investment banks purposely and knowingly created trillions of dollars in fraudulent subprime-mortgage backed synthetic securities, and then purposely and knowingly defrauded thousands of investors. (See my April, 2010, article "Financial Crisis Inquiry hearings provide 'smoking gun' evidence of widespread criminal fraud.") And yet, the Obama administration adamantly refuses to prosecute these criminals, because they helped get Obama reelected with huge campaign contributions.

(It would have been very interesting to see whether a Romney Justice Department would have acted any differently, but I guess we'll never know.)

The way that the fraud was committed is now well known. Gen-Xers poured out of business schools in the 1990s with Masters degrees in "financial engineering," which gave them the skills to create this fraud. After the Nasdaq crash in 2000, many of them lost money and they blamed it on the hated Boomers. They went into financial institutions with the intent to get even, and they did. They committed these crimes under the noses of their Boomer bosses, just as Corzine's employees did at MF Global.

As I've also said for years, since crimes aren't being prosecuted, the same people are in the same jobs, finding new ways to commit fraud.

Today we have huge sums of money pouring out of the Fed or the European Central Bank into the hands of the same banks that caused the financial crisis in the first place. They no longer have to be subtle about committing fraud, since the central banks are now just letting them defraud the taxpayers legally.

This is a new phenomenon. Whereas the fraud began in a specific way, with Gen-Xers purposely defrauding Boomers, the fraud has metastasized so that everyone in Washington and Brussels and on Wall Street are now part of it. Those huge sums of money are flowing into the coffers of politicians and into the multi-million dollar bonuses of banksters and into big contracts with favored companies like Solyndra and General Electric, but almost none of it is flowing into the hands of ordinary people or small businessmen. And don't get me started (again) on the catastrophic financial corruption in things like climate change and Obamacare.

Hannah Arendt, in her 1949 book "Origins of Totalitarianism," described a similar phenomenon in Germany in the lead-up to the Holocaust. She described Bertolt Brecht's famous play The Three-Penny Opera as presenting "gangsters as respectable businessmen and respectable businessmen as gangsters." I will at some later date quote a lot more from Arendt's book to show how 1930s Germany was similar to America today, but for now I simply want to make Arendt's point that it was massive financial corruption that preceded the Holocaust.

I've written about the comparison between today and 1930s Germany many times. In the 1930s, the younger Lost Generation hated the previous Missionary Generation just as much as today's younger Gen-Xers hate the previous Boomer Generation. (See "The Legacy of World War I and the Holocaust") The attitudes and behaviors of today's Gen-Xers are the same as the attitudes and behaviors of 1930s Lost Generation Germans.

Ordinary Lost Generation Germans blamed Jews for Germany's humiliation in the Great War, and for Germany's financial problems. In 1934, the German government passed only fairly simple discriminatory laws against the Jews. This corresponds to the actions of "financial engineers" in the 2004-2007 time period.

However, these simple laws metastasized into greater and greater discrimination, with a turning point being reached with Kristallnacht in 1938, where Nazi gangs destroyed Jewish property across the country, with "fashionably dressed women clapping their hands and screaming with glee, while respectable middle-class mothers held up their babies to see the 'fun.'" After that, Lost Generation criminals were fully in charge of Germany's government. By 1942, the criminal activity had metastasized completely in the concentration camps and the Holocaust.

Today we're seeing same metastasis in Washington and Wall Street, as Gen-X criminality spreads to everyone, Gen-Xers and Boomers alike.

I've had dozens of conversations with Gen-Xers in the last few years as they twist themselves into pretzels giving me tortured explanations why the Obama administration should not investigate and prosecute financial engineers who engineered the financial crisis. I've seen several of them act just as gleefully as the fashionable women of Berlin did in seeing Jewish property destroyed. "They were victims of their Boomer bosses," is the moronic argument I always hear, just as German war criminals justified their actions in exactly the same way after the war.

Interestingly, what I've heard at least a dozen times is: "I'm not opposed to people going to jail. For example, I'd like to see Jon Corzine go to jail." However, they never mention Corzine's employees going to jail as well.

Well, isn't that hilarious. The Republicans investigated Corzine for a year, and came to the farcical conclusion last week that Corzine was guilty of nothing more than innocent confusion, as were his employees. So you can see why the Gen-X argument I just quoted really is truly moronic.

The 1930s Holocaust was not just caused by the few Germans who ran the trains and the concentration camps, in cooperation with the mainstream media. It was caused by millions of German businessmen and politicians who refused to acknowledge that crimes were being committed, or to do anything about them. Today's Gen-Xers have exactly the same attitudes and behaviors as ordinary 1930s Germans.

I would like to send a message to President Barack Obama, to AG Eric Holder, to Republican Randy Neugebauer, to Democrat Michael E. Capuano, and to all the other Gen-Xers and Boomers who refuse to acknowledge criminality because they benefit from it:

You are the Rudolph Hess, the Hermann Göring, the Ernst Kaltenbrunner, the Albert Speer of today.

If you've ever wondered how the Holocaust was even possible, then you should know that if you had lived in the 1930s rather than today, then you would would have been the ones sending Jews to their deaths in concentration camps. You have the same attitudes and behaviors as those men did in the 1930s, and you are just as much criminals as they were. If you've ever stopped to wonder how the Holocaust could have happened, now you know.

Israel fires artillery into Syria for the third time

Syria's conflict may be "last week's war," but the Gaza conflict hasn't affected it, except to remove it from the front pages. On Sunday, Israel shelled Syrian fighters in Syria, after soldiers in Syria fired gunshots into the Golan Heights. According to the Israeli military, the Israelis scored a hit, though they don't know whether the hit was on supporters of Bashar al-Assad or the opposition. Irish Times

Israeli delegation goes to Cairo for peace talks

Negotiators from Israel and Hamas are arriving in Cairo Egypt to begin peace talks to end the Gaza war. Sunday was the deadliest day of the war for Gaza, but so far there's no sign that an Israeli ground invasion is imminent.

Israel's objectives in the war are to destroy as much of Hamas's missile launching capability as possible. Israel's objectives in the peace talks are to get guarantees that there will be no more rocket attacks.

Hamas's objectives in the war and in the peace talks are to loosen the blockade around Gaza, and to permanently open the crossing into Egypt, so that goods and people can flow back and forth unhindered.

Israel will disagree with Hamas's objectives, saying that they will permit Hamas to import a new supply of rockets and other weapons to be used against Israel.

Hamas will not be capable of guaranteeing that there will be no more rocket attacks, since Hamas is unable to control Islamic Jihad and other Shia militant groups. As I've pointed out in the past, the average age of the people in Gaza is 17 (contrasted to 37 for the United States), meaning that Gaza is a region made up of little children running around with guns and missiles. AP

(Comments: For reader comments, questions and discussion, see the 19-Nov-12 World View -- Israeli delegation goes to Cairo for peace talks thread of the Generational Dynamics forum. Comments may be posted anonymously.) (19-Nov-2012) Permanent Link
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Generational Dynamics Web Log for 19-Nov-2012 19-Nov-12 World View -- Israeli delegation goes to Cairo for peace talks

Farcical MF Global decision excuses Jon Corzine and employees from guilt

The Metastasis of Corruption

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