62 Have More $ Than Half The World

62 People Have More Wealth Than Half The World, Top 1% Have More Than Everyone Else

Submitted by Claire Bernish via TheAntiMedia.org,

Just 62 individuals now hold the same amount of wealth as 3.6 billion people, the bottom half of the entire planet — a shocking statistic made even more alarming when considering as recently as 2010, that same half of all wealth was held by 388 people. Now, 80 billionaires collectively hold over $2 trillion, while the bottom half has lost $1 trillion of their wealth — in just five years.

A new report published Monday by Oxfam International — tellingly titled, An Economy For The 1% — reveals a number of jaw-dropping figures that illustrate the struggles resultant from such an exponential increase in the stratification of wealth. According to the study:

“The global inequality crisis is reaching new extremes. The richest 1% now have more wealth than the rest of the world combined. Power and privilege is being used to skew the economic system to increase the gap between the richest and the rest. A global network of tax havens further enables the richest individuals to hide $7.6 trillion. The fight against poverty will not be won until the inequality crisis is tackled.”

In only five years, those 62 billionaires saw their wealth grow 44% — an increase of $542 billion — to a whopping $1.76 trillion. And, of course, the flip side of this concentration of money at the top meant “the wealth of the bottom half fell by just over a trillion dollars in the same period — a drop of 41%.” Half of all global wealth accrued just since the year 2000 ended up in the hands of the 1%, while the poorest half of the planet’s population split a meager 1% of that increase. In nearly 25 years, Oxfam further revealed, the income of the world’s poorest 10% has risen by less than a single cent per day — an increase of less than $3.00 each year.

On average, each adult belonging to the richest 1% on Earth has wealth totaling $1.7 million — a figure 300 times greater than the average held by 90% of people on the planet, “although for many people in the bottom 10 percent their wealth is zero or negative.”

But the poverty-fighting group doesn’t stop with simply listing figures; instead, Oxfam issued a scathing explanation of how such wealth and income disparities became reality.

“Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate. Once there, an ever more elaborate system of tax havens and an industry of wealth managers ensures that it stays there, far from the reach of ordinary citizens and their governments. One recent estimate is that $7.6 trillion of individual wealth — more than the combined gross domestic product (GDP) of the U.K. and Germany — is currently held offshore […]

“Economic policy changes over the past 30 years — including deregulation, privatization, financial secrecy, and globalization, especially of finance — have supercharged the age-old ability of the rich and powerful to use their position to further concentrate their wealth […]

“A powerful example of an economic system that is rigged to work in the interests of the powerful is the global spider’s web of tax havens and the industry of tax avoidance, which has blossomed over recent decades. It has been given intellectual legitimacy by the dominant market fundamentalist world view that low taxes for rich individuals and companies are necessary to spur economic growth and are somehow good news for us all. The system is maintained by a highly paid, industrious bevy of professionals in the private banking, legal, accounting, and investment industries.”

Though there exist perfectly justifiable arguments for the elimination of taxation, in the meantime, these elites and über-rich individuals – and often their corporations – exploit the system for personal benefit in a way not possible for the rest of us. By throwing money into political campaigns, think tanks, lobbying firms, and other means of influence, the ultra-wealthy retain the ability to form policy by proxy. Both dark money and overt funding pressure politicians into legislating for the few. As Jared Bernstein of the Center on Budget and Policy Priorities recently pointed out, “There’s this notion that the wealthy use their money to buy politicians; more accurately, it’s that they can buy policy, and specifically, tax policy.”

In fact, in an analysis of 200 top companies, including the World Economic Forum’s strategic partners, as well as picks from some of the world’s largest businesses, Oxfam found nine in ten “have a presence in at least one tax haven” — and with just 50 big banks managing the bulk of “offshore wealth,” havens are unbelievably lucrative. Tax avoidance, in creating strains on world governments’ ability to fund basic social programs — including those meant to aid society’s most vulnerable people — has been termed a “violation of international human rights law” by the International Bar Association.

One crucial finding in the report evidences the systemic disparity in pay between men and women around the globe — in particular, the “acceptability of paying women lower wages … cited as a key factor in increasing profitability.” Money-hungry companies avoid implementing vital fire and safety measures to eke out every possible ounce of profit. Employment of monopolies, intellectual property laws, and industry lobbyists further benefits the few at the expense of the majority.

“The current system did not come about by accident,” Oxfam’s report scolds. “[I]t is the result of deliberate policy choices, of our leaders listening to the 1% and their supporters rather than acting in the interests of the majority. It is time to reject this broken economic model.” Even further, Oxfam asserts, humanity can do better than this, we have the talent, the technology, and the imagination to build a much better world. We have the chance to build a more human economy, where the interests of the majority are put first.”

The question is, will we do it?

Syria 4 Years Post-US-Intervention

Syria 4 Years On: Shocking Images Of A Post-US-Intervention Nation

While US intervention in its various forms has likely been ongoing for decades, March 2011 is often cited as the start of foreign involvement in the Syrian Civil War (refering to political, military and operational support to parties involved in the ongoing conflict in Syria, as well as active foreign involvement).

Since then the nation has collapsed into chaos with an endless array of superlatives possible to describe the economic and civilian carnage that has ensued.

However, while a picture can paint a thousand words, these four shocking images describe a canvas of US foreign policy “success” that few in the mainstream media would be willing to expose…

Mission un-accomplished?

Trump Blasts Merkel’s Immigration Policy

“The Rapes! The Riots!”: Trump Blasts Merkel’s Immigration Policy

Europe’s worsening refugee crisis is in many ways the best thing that could have happened to Donald Trump’s Presidential campaign.

Last summer, the brazen billionaire kicked off his run for the White House by taking aim at America’s broken immigration policy. Trump painted a picture of an impossibly porous Mexican border across which stream hordes of drug dealers and rapists who poison American society and bleed the economy dry.

As luck would have it, the flood of migrants streaming into Western Europe from the Mid-East accelerated just as Trump’s anti-immigrant rants hit the airwaves, affording the Teflon Don a bulletproof PR cover for what might otherwise have been a largely indefensible string of vitriolic rhetoric.

Since then, the GOP frontrunner has used the San Bernardino attacks to justify a call for a “No Muslims Allowed” sign on the US treehouse and now, sure enough, he’s pointing to the wave of sexual assaults in Cologne on New Year’s Eve as evidence of what can happen when you “go off the reservation” and implement an irresponsible immigration policy. More importantly, he suggests the assaults are also evidence of why he, rather than Angela Merkel, should have been TIME’s person of the year.

Here’s the clip. Enjoy.

6 Million Fingerprints Stolen In Hack

In Major Humiliation, Government Admits Nearly 6 Million Fingerprints Were Stolen In OPM Hack

Tyler Durden

What began with an alleged attempt by Kim Jong-un to sabotage Seth Rogen and James Franco for plotting to assassinate his likeness on film, and what reached peak absurdity when Penn State claimed that Chinese hacker spies had taken control of the university’s engineering department, culminated with what’s been variously described as “the largest theft of US government data ever” and an attack “so vast in scope and ambition that the usual practices for dealing with traditional espionage cases [do] not apply.”

Those rather dramatic sounding characterizations refer of course to the alleged breach of the Office of Personnel Management by Chinese hackers.

That attack compromised some 22 million government employees. For its part, Beijing initially called the accusations that the attack emanated from China “irresponsible” and “groundless.”

Amusingly, the counter-hacking system that is supposed to prevent things like this from happening is called “Einstein” and by the US government’s own admission, it’s already obsolete. Unfortunately, Congress’ now famous inability to do what they were elected to do (i.e. legislate) has left the USunable to pass a cyber security initiative that would help the US better protect itself against attacks like that which occurred on the OPM.

In any event, cyber security was back in the spotlight (actually it never really left) last week when the US decided that slapping Chinese entities with sanctions for their alleged role in hundreds of cyber attacks on the US over the course of the last half decade was probably a bad idea ahead of a visit by Chinese President Xi Jinping, who some analysts predicted simply would not make the trip if Washington was unwilling to do Beijing the courtesy of waiting until Xi was back in China before handing down sanctions.

But while the Obama administration did indeed relent on the timing of the cyber sanctions, new revelations regarding the theft of “biometric ID authentication markers” (a.k.a fingerprints) look set to make Xi’s visit a bit more uncomfortable than it otherwise would have been, especially in light of comments he made in a speech in Seattle. Here’s Wired with more:

When hackers steal your password, you change it. When hackers steal your fingerprints, they’ve got an unchangeable credential that lets them spoof your identity for life. When they steal 5.6 million of those irrevocable biometric identifiers from U.S. federal employees—many with secret clearances—well, that’s very bad.

On Wednesday, the Office of Personnel Management admitted that the number of federal employees’ fingerprints compromised in the massive breach of its servers revealed over the summer has grown from 1.1 million to 5.6 million. OPM, which serves as a sort of human resources department for the federal government, didn’t respond to WIRED’s request for comment on who exactly those fingerprints belong to within the federal government. But OPM had previously confirmed that the data of 21.5 million federal employees was potentially compromised by the hack—which likely originated in China—and that those victims included intelligence and military employees with security clearances.

The revelation comes at a particularly ironic time: During the U.S. visit of Chinese president Xi Jinping, who said at a public appearance in Seattle that the Chinese government doesn’t condone hacking of U.S. targets, and pledged to partner with the U.S. to curb cybercrime.

“As part of the government’s ongoing work to notify individuals affected by the theft of background investigation records, the Office of Personnel Management and the Department of Defense have been analyzing impacted data to verify its quality and completeness,” reads OPM’s statement posted to its website. “During that process, OPM and [the Department of Defense] identified archived records containing additional fingerprint data not previously analyzed. Of the 21.5 million individuals whose Social Security Numbers and other sensitive information were impacted by the breach, the subset of individuals whose fingerprints have been stolen has increased from a total of approximately 1.1 million to approximately 5.6 million.”

And while the government was of course in full damage control mode, swearing that “as of now, the ability to misuse fingerprint data is limited,” they better be right, because as Wired goes on to note,“the national security implications of having the fingerprints of high-level federal officials in the hands of hackers who are potentially employed by a foreign government” are far from clear. 

Now all of that assumes that a state actor is indeed behind the attack and frankly, assuming that to be true is to accept the narrative that China, Iran, and Russia have now formed a kind of cyber “Axis of Evil” and that narrative plays right into the hands of policymakers who are desperate to perpetuate the existing juxtaposition of world powers.

What comes next we can’t say but one thing seems abundantly clear: regardless of who’s doing the hacking, the US government is completing inept when it comes to stopping it and on that note, we close with the following from Senator Ben Sasse:

“The American people have no reason to believe that they’ve heard the full story and every reason to believe that Washington assumes they are too stupid or preoccupied to care about cyber security.”

Elite Prepared For Collapse – Are You?

The Elite Have Prepared For The Coming Collapse – Have You?

Submitted by Tyler Durden on 09/07/2015 17:10 -0400

Submitted by Michael Snyder via The Economic Collapse blog,

Why are the global elite buying extremely remote compounds that come with their own private airstrips in the middle of nowhere on the other side of the planet?  And why did they start dumping stocks like crazy earlier this year?  Do they know something that the rest of us don’t?  The things that I am about to share with you are quite alarming.  It appears that the global elite have a really good idea of what is coming, and they have already taken substantial steps to prepare for it.  Sadly, most of the general population is absolutely clueless about the financial collapse that is about to take place, and thus most of them will be completely blindsided by it.

As I discussed the other day, the only way that you make money in the stock market is if you get out in time.  The elite understand this very well, and that is why they have been dumping stocks for months.  This is something that has even been reported in the mainstream news.  For example, this comes from a CNBC article that was published on June 16th

The so-called smart money is pulling back from market risk, with fund managers taking down exposure to stocks, increasing cash holdings and buying protection against a sharp selloff.

About two weeks before that, I discussed the same phenomenon on my website.  The article that I published on May 30th was entitled “Why Is The Smart Money Suddenly Getting Out Of Stocks And Real Estate?

Did the “smart money” know what was about to happen?  Since the peak of the market, the Dow has already lost more than 2200 points.  All of the gains since the end of the 2013 calendar year have already been completely wiped out.

And of course the truth is that you didn’t really need any inside information to see that it was time to get out.  I have been warning my readers for months about what was coming.  The signs have been clear as a bell if you were willing to look at them.  Just consider the following excerpt from a recent piece by Michael Pento

Earlier in the year margin debt had risen over $30 billion or 6.5% to $507 billion and was equal to a record 2.87% of U.S. GDP. This surpasses the previous all-time high of 2.78% set in March 2000 – the top of the last largest stock market bubble in history.

And despite the assurance of every mutual fund manager on TV that they have boatloads of cash ready to deploy at these “discounted” levels, in early August cash levels at mutual funds sank to their lowest level in history, 3.2% (see chart below). As a percentage of stock market capitalization, fund cash levels are also nearing the record low set in 2000 when the NASDAQ peaked andsubsequently crashed by around 80%.

The financial markets are absolutely primed for a major crash, and when that happens many among the elite will be hightailing it to the middle of nowhere.

Earlier this year, the Mirror published an article all about this entitled “Panicked super rich buying boltholes with private airstrips to escape if poor rise up“.  Here is a brief excerpt…

Robert Johnson, president of the Institute of New Economic Thinking, told people at the World Economic Forum in Davos that many hedge fund managers were already planning their escapes.

He said: “I know hedge fund managers all over the world who are buying airstrips and farms in places like New Zealand because they think they need a getaway.”

Keep in mind that these are not just some rumors that Robert Johnson has heard.  These are people that he knows personally and that he interacts with regularly.

And Robert Johnson was not alone in this assessment.  Here is more from the Mirror

His comments were backed up by Stewart Wallis, executive director of the New Economics Foundation, who when asked about the comments told CNBC Africa: “Getaway cars, the airstrips in New Zealand and all that sort of thing, so basically a way to get off.

“If they can get off, onto another planet, some of them would.”

For some reason, the global elite seem to have a particular affinity for New Zealand.  Perhaps it is because of the great natural beauty of the nation combined with the fact that it is in the middle of nowhere.  The following comes from the Daily Mail

New Zealand, which is about the size of the UK, but has a population of just 4.4 million, offers them all the modern luxuries they have come to expect – but miles from any country which may implode into chaos.

The country is 11,658 miles away from the UK, while its closest neighbour is Fiji – 1,612 miles away, more than double the distance between Lands End and John O’Groats.

Homes at the top end of the market come with tennis courts, swimming pools and media rooms – and some even boast their own personal jetties where a family can moor their boat.

But the icing on the cake for those looking to make a quick escape comes in the form of private helipads or, better, your own airstrip.

For most of us, buying a luxury bolthole with a private airstrip in New Zealand is not a possibility.

But we should all be getting prepared.

I have a contact in the food industry that has told me that her company’s sales have “been through the roof” over the past 10 days as people stock up for what is coming.  In fact, she even used the word “panic” to describe what was happening.

And Americans have been buying a record number of guns as well

Newly released August records show that the FBI posted 1.7 million background checks required of gun purchasers at federally licensed dealers, the highest number recorded in any August since gun checks began in 1998. The numbers follow new monthly highs for June (1.5 million) and July (1.6 million), a period which spans a series of deadly gun attacks — from Charleston to Roanoke — and proposals for additional firearm legislation.

For a very long time, I have been warning people to get prepared.

Well, now we are getting so close that panic is starting to set in.

Hopefully you are already well prepared for what is about to happen.  If not, you need to kick your prepping into overdrive.

These next few months are going to change everything.  Get ready while you still can.

Nth Dakota Legalizes Weaponized Drones

North Dakota Becomes First State To Legalize Drones Weaponized With Tasers, Tear Gas, Rubber Bullets & Sound Cannons

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

 It is now legal for law enforcement in North Dakota to fly drones armed with everything from Tasers to tear gas thanks to a last-minute push by a pro-police lobbyist.

With all the concern over the militarization of police in the past year, no one noticed that the state became the first in the union to allow police to equip drones with “less than lethal” weapons. House Bill 1328 wasn’t drafted that way, but then a lobbyist representing law enforcement—tight with a booming drone industry—got his hands on it

– From the Daily Beast article: First State Legalizes Taser Drones for Cops, Thanks to a Lobbyist

You could see the writing on the walls years ago. In an increasingly authoritarian, lawless, surveillance state like America, it was always inevitable that drones would be weaponized. In North Dakota, this is now a reality.

Although I haven’t written much about domestic drones as of late, I published many articles on the topic several years ago. In the 2012 piece, Drones in America? They are Already Here…I warned:

 Like with any new technology, drones can be put to good use or to evil use.  Just like nuclear power can harness energy or destroy humanity altogether, drones could do a lot of good, but the problem is that the government is clearly moving more and more towards a surveillance state so we must be extra careful.  Stay vigilant.

Apparently, North Dakotans weren’t particularly vigilant, and now the state has become the first in the nation to legalize weaponized drones; not a distinction they should be proud of. What started out as a bill to require police using drones for surveillance obtain warrants, turned into a law that puts tasers and tear gas on them. Go ‘Merica.

The Daily Beast reports:

It is now legal for law enforcement in North Dakota to fly drones armed with everything from Tasers to tear gas thanks to a last-minute push by a pro-police lobbyist

With all the concern over the militarization of police in the past year, no one noticed that the state became the first in the union to allow police to equip drones with “less than lethal” weapons. House Bill 1328 wasn’t drafted that way, but then a lobbyist representing law enforcement—tight with a booming drone industry—got his hands on it.

The bill’s stated intent was to require police to obtain a search warrant from a judge in order to use a drone to search for criminal evidence. In fact, the original draft of Rep. Rick Becker’s bill would have banned all weapons on police drones.

Then Bruce Burkett of North Dakota Peace Officer’s Association was allowed by the state house committee to amend HB 1328 and limit the prohibition only to lethal weapons. “Less than lethal” weapons like rubber bullets, pepper spray, tear gas, sound cannons, and Tasers are therefore permitted on police drones

Even “less than lethal” weapons can kill though. At least 39 people have been killed by police Tasers in 2015 so far, according to The Guardian. 

And just in case you’re wondering why North Dakota rolled over so easily. The state is desperate for “economic growth,” even if that growth expands GDP via fascist panopticon surveillance.

Drones in North Dakota are a profitable enterprise in a state hit hard by the oil bust. Companies that market machines for agricultural and commercial use have been popping up in industrial parks on the outskirts of Grand Forks for the better part of the last three years. The university, one of the city’s largest employers, even offers a four-year degree in drones. The Air Force has partnered with the private sector to create a drone research and development park, too.

Drones are overwhelmingly seen as a good thing in North Dakota, which is perhaps why few noticed when HB 1328 passed with a clause allowing them to be armed with non-lethal weapons.

Because it’s imperative to national security that we make this, so much easier…

Screen Shot 2015-08-26 at 10.09.29 AM

Great work North Dakota. Let’s hope the rest of us aren’t so hopelessly stupid.

Debt 7 Out Of 10 Believe “Necessity”

Debt Slaves: 7 Out Of 10 Americans Believe That Debt “Is A Necessity In Their Lives”

Submitted by Michael Snyder via The End of The American Dream blog,

Most of us will spend our entire lives paying off debt.

That is why we are called debt slaves – our hard work makes others extremely wealthy.

Could you live without debt?  Most Americans say that they cannot.  According to a brand new Pew survey, approximately 7 out of every 10 Americans believe that “debt is a necessity in their lives”, and approximately 8 out of every 10 Americans actually have debt right now.  Most of us like to think that “someday” we will get out of the hole and quit being debt slaves, but very few of us ever actually accomplish this.  That is because the entire system is designed to trap us in debt before we even get out into the “real world” and keep us in debt until we die.  Sadly, most Americans don’t even realize what is being done to them.

In America today, debt is considered to be just part of normal life.  We go into debt to go to college, we go into debt to buy a vehicle, we go into debt to buy a home, and we are constantly using our credit cards to buy the things that we think we need.

As a result, this generation of Americans is absolutely swimming in debt.  The following are some of the findings of the Pew survey that I mentioned above…

 *”8 in 10 Americans have debt, with mortgages the most common liability.”

*”Although younger generations of Americans are the most likely to have debt (89 percent of Gen Xers and 86 percent of millennials do), older generations are increasingly carrying debt into retirement.”

*”7 in 10 Americans said debt is a necessity in their lives, even though they prefer not to have it.”

Most of us wish that we didn’t have any debt, but we have bought into the lie that it is a necessary part of life in America in the 21st century.

It has been estimated that 43 percent of all American households spend more money than they make each month, and U.S. households are more than 11 trillion dollars in debt at this point.

When it comes to government debt, that is easy for us to blame on someone else, but all of this household debt is undoubtedly something that we have done to ourselves.

It all starts at a very early age for most of us.  When we are still in high school, we are endlessly told about how important a college education is.  All of the authority figures in our lives insist that we should just try to get into the best school that we possibly can and to not even worry about how much it will cost.

So many of us go into staggering amounts of debt before we even get out into the working world.  We had faith that the “good jobs” that were being promised to us would be there when we graduated.

Unfortunately, in this day and age those “good jobs” end up being a mirage more often than not.

But whether or not we can find a good job, we still have to pay off all that debt.

According to new data that was recently released, the total amount of student loan debt in the United States has risen to a grand total 1.2 trillion dollars.  If you can believe it, that total has more than doubled over the past decade.

Right now, there are approximately 40 million Americans that are paying off student loan debt.  For many of them, they will keep making payments on this debt until they are senior citizens.

Another way that they get you while you are still in school is with credit card debt.

I got my first credit card while I was in college, and nobody ever taught me about the potential dangers.

Today, the average U.S. household that has at least one credit card has approximately$15,950 in credit card debt.

So let’s say that you have that much credit card debt and you are paying an annual interest rate of 17 percent.  If you only pay the minimum payment each month, it will take you 229 months to pay your credit card off, and during that time you will have paid $13,505.82 in interest charges.

In other words, you will almost have paid twice as much for everything that you originally bought with your credit card by the time it is all said and done.

This is why banks love to give you credit cards.  If they can get back nearly twice as much money as they originally give you, they get rich and you get poor.

Most of us get loaded down with even more debt when we go to buy a vehicle.  Instead of saving up and getting what we can afford, many of us end up getting the largest loans that we can qualify for.

In a previous article, I discussed the fact that the average auto loan at signing in America today is approximately $27,000.  In order to get the monthly payments down to a level where we can afford them, many of these auto loans are now being stretched out for six or seven years.  In fact, the number of auto loans that exceed 72 months has hit at an all-time high of 29.5 percent.

It is the same thing with home loans.

In the old days, it was extremely rare for a mortgage to be stretched over 30 years, but today that is pretty much the standard.

Sadly, most people don’t understand how much money this is costing them.

If you take out a $300,000 mortgage at 3.92 percent and stretch it over 30 years, you will end up paying back a grand total of $510,640.

In other words, you will pay for two houses by the time you are done.

Yes, we all need somewhere to live, and there are definitely negatives to renting as well.  But it is very important that we all understand what is being done to us.

And I haven’t even discussed one of the most insidious forms of debt yet.

Have you noticed that most doctors and most hospitals will never tell you how much something is going to cost in advance?

They get us when we are at our most vulnerable.  When there is something wrong with us physically, we are often desperate to get help.  So we don’t ask too many questions and we just go along with whatever they say.

But then later we get the bill and we are often completely shocked by what they have charged us.

If you are completely unethical, it is a great business model.  People that are extremely desperate and needy come to you and you don’t even have to tell them how much your services are going to cost.  And then once they leave, you send them an absolutely outrageous bill for whatever you feel like charging.

Frankly, I don’t know how a lot of people working in the medical field live with themselves.  In their extreme greed, they are ruining the lives of millions of ordinary American families.

One very disturbing study found that approximately 41 percent of all working age Americans either currently have medical bill problems or are paying off medical debt.  And collection agencies seek to collect unpaid medical bills from about 30 million of us each and every year.

Most of us will spend our entire lives paying off debt.

That is why we are called debt slaves – our hard work makes others extremely wealthy.

First They Lie, Then They Arrest You

When It Becomes Serious, First They Lie – When That Fails, They Arrest You

Submitted by Tyler Durden on 03/16/2015 09:05 -0400

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

http://www.zerohedge.com/news/2015-03-16/when-it-becomes-serious-first-they-lie-when-fails-they-arrest-you

When lying is no longer enough to gain compliance, then the organs of security are unleashed on dissent and resistance.

“When it becomes serious, you have to lie.” Jean-Claude Juncker simply gave voice to what the world’s leaders practice on a daily basis, because now it’s always serious.
And why is it now serious? Persuading tax donkeys and debt serfs that everything is going their way is now impossible without lies. Persuading the populace that the leadership is working on their behalf was jettisoned in the wake of the 2008 bailout of bankers and parasites.
Stripped of the artifice that they care about anything other than preserving the wealth of their cronies, global political leaders now rely on propaganda: narratives designed to manage expectations and perceptions, bolstered by carefully tailored official statistics.
Reliance on lies erodes legitimacy. As the rich get richer and the burdens on tax donkeys and debt serfs increase, the gulf between the official happy-story narrative and reality widens to the breaking point, and faith in the narrative and the leadership espousing it declines.
When 20% of the populace no longer believe the lies and begins questioning the state’s enforcement of the status quo, the government devotes its resources to punishing dissenters and resisters. Whistleblowers are charged with trumped-up crimes; those publicly refuting the status quo’s narrative of lies are harassed and discredited, and those who resist state enforcement of parasitic cronyism are set up, beaten, entrapped, investigated, interrogated and arrested once suitably Kafkaesque charges can be conjured up by the apparatchiks of enforcement.
Why 20%? It’s the Pareto Distribution (the 80/20 rule): the 20% of any populace that accepts a new trend, technology or narrative has an outsized influence over the other 80%.
Governments operate on the premise that propaganda and threats will always be enough to cow their populaces into compliance and bribes will induce complicity.When lies, bribes and threats no long work, the state unleashes its full pathological powers on dissent.
The last mass campaign of political suppression in the U.S. occurred in the late 1960s and early 1970s, when resistance to the war of choice in Vietnam reached mainstream proportions.
The U.S. government was accustomed to manipulating and managing the populace with very simple propaganda: Communism is our deadly enemy, we must fight it everywhere on the planet, etc. But when thousands of American service personnel started coming home in body bags from the latest “we must fight Communism everywhere because it’s dangerous to us” war in East Asia, this simplistic justification made no sense: what existential threat to the U.S. did a Communist Vietnam pose?
The U.S. has faced only two existential threats to its sovereignty since 1860: World War II (1941-45) and the potential for a nation-destroying nuclear war with the Soviet Union. The idea that the U.S. was existentially threatened by falling dominoes in East Asia was always ludicrous, and the U.S. status quo (the political leadership, the Deep State, private industry profiting from war, etc.) soon abandoned the absurd justification.
Vietnam was always more of a domestic-politics issue than a geopolitical one: the Democrats feared being perceived as being “weak on Communism” because that impacted the results of elections. Throwing treasure and American lives away in Vietnam was pure domestic politics from 1961-68 (once mired, Democrats feared being tagged as the party that “lost Vietnam”), and thereafter the treasure and lives were sacrificed on the equally contrived Nixon-Kissinger policy of avoiding losing geopolitical face with a withdrawal that amounted to surrender.
Though it is not well known, the Federal Bureau of Investigation (FBI) was ordered to devote essentially all its resources to suppressing dissent in these years. Teams assigned to organized crime were reassigned to track down draft resisters and other political malcontents.
COINTELPRO was a vast program devoted to illegally entrapping, beating up and undermining any and all political resistance to the war and the government’s increasingly heavy-handed oppression of dissent.
Simply put: when lies no longer work, governments freak out and devote their resources not to eliminating wars of choice, cronyism and corruption but to suppressing dissent and resistance to those policies.
The U.S. government has always been free to pursue wars of choice with its professional military, with little risk of widespread political blowback. A variety of “splendid little wars” have been waged, generally for conquest or enforcement of hemispheric hegemony. The government’s success in rallying the nation during World War II instilled a false confidence that merely raising the flag of existential threat would be enough to eliminate dissent and elicit compliance in the masses.
Vietnam was the first time the American public went through the process of buying the usual “threat” justification for war, questioning the threat and eventually rejecting the state’s narrative. The government responded by lashing out at its own citizenry, engaging in a full spectrum of illegal and blatantly immoral actions designed not to right wrongs or fix broken policies, but to suppress dissent and resistance to destructive policies and broken systems.
The U.S. government is not unique in this; on the contrary, all governments, by their very nature as concentrations of coercive power, will pursue the same path. Rather than confess the government is operated by cronies, for cronies, the machinery of the state will increasingly be turned on its citizenry.
Rendering unto Caesar that which is Caesar’s is no longer enough; abiding by the laws of the land are no longer enough. What the state demands is not just compliance with its countless laws and regulations, but absolute obedience to its narratives and policies.
Anyone who withholds obedience is quickly deemed a traitor–not to the nation or its Constitution, but to the state itself, which is ultimately a collection of cronies and self-serving vested interests protecting their fiefdoms at the expense of the citizenry.
When lying is no longer enough to gain compliance, then the organs of security are unleashed on dissent and resistance.This process is well under way in nation-states around the world.
If I had to pick the two key operative dynamics of the next 20 years, I would choose:
1. The over-expansion and implosion of credit/debt bubbles.
2. The over-reach of the central state as it seeks to win the hearts and minds of its people by ruthlessly suppressing dissent.
The two dynamics are of course causally connected. Central states depend entirely on credit bubbles for their financial survival, and on enforcing increasingly untenable official narratives for their legitimacy.
Both are unraveling, and will continue to unravel, no matter how many state resources are thrown at the symptoms of political illegitimacy, rather than at the root causes of that illegitimacy.

 

State Department’s Psaki Smirks About US Policy Supporting Coups

Caught On Tape: State Department’s Psaki Smirks About US Policy Supporting Coups 

Submitted by Tyler Durden on 03/16/2015

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

In case you weren’t aware, Venezuelan authorities recently accused the U.S. of attempts to overthrow its government. In a press conference, U.S. State Department spokeswoman, Jen Psaki, vehemently denied such claims and then went ahead and spouted talking points so ridiculous, only a complete ignoramus could believe them. She said:

 As a matter of long-standing policy, the United States does not support political transitions by non-constitutional means.

Interesting, because it seems to me that the primary role of U.S. foreign policy throughout my lifetime has been specifically to initiate political transitions by non-constitutional means.

The line was simply too much to bear for some members of the press. One guy in particular, incredulously asked her to elaborate on her definition of “long-standing” in light of the historical reality that the U.S. government has been constantly involving itself in coups all over the world, particularly in Latin America.

What’s even more amazing than the fact that the “authorities” remain so willing to publicly spout such easily disprovable propaganda, is her reaction once see realizes she’s been caught. She backpedals and squirms, but the most disturbing thing is you can see a subtle smirk come across her face. She knows how ridiculous the statement is and can’t keep it together once she’s called out. I guess coups are funny to people in power. To those victimized by them, not so much.

Watch the clip below, and pay particularly close attention to Jen Psaki’s face from around the 57 second mark. She’s clever enough to quickly try to cover it up with a joke.

 Shameless!

Bank of England Under Investigation

Martin Armstrong Warns “The Tide Is Turning Against The Banks”

Tyler Durden's picture

Submitted by Martin Armstrong via Armstrong Economics,

The tide is turning against the banks. We will see more and more corporations turn away from the banks as advisory entities. They just cannot be trusted when they are also the market-makers making commissions/spreads on the trading that are totally undisclosed. The day of the banks is coming to an end. It looks more like the next downturn will drive the spike right through their hearts. Just maybe, we may get back to the way its should be – relationship business, not transactional where they have the incentive to manipulate markets for the quick buck and front-run clients.

* * *

The biggest problem we have with central banks is that they are run by academics with ZERO real world experience. This applies not just at the Fed, but most central banks with the lone exception of Bank of China. The greatest danger this presents is that the money-center banks manipulate the central bankers during states of financial panic and they who are so frightened, they will do whatever the money-center banks tell them

In the USA, there is nobody who would investigate the dark corners of the Federal Reserve being manipulated by the NY bankers who walk on water without ice.

 Bank of England Under Investigation for being TOO Friendly with Banks

Bank of England

However, the system is more open in Britain where the bankers do not control the courts as they do in New York City.

Consequently, the Bank of England (BoE) is now being investigated by the Serious Fraud Office (SFO) for being “too” friendly with the money-center banks during the crisis of 2008.

Last year, the BoE was cleared of “improper conduct” in the currency market manipulation allegations of the money-center banks. Nevertheless, major corporations are starting to wise-up to TRANSACTIONAL banking. A light is starting to go on that by no means can you go to these clowns for corporate hedging and advice for they will ALWAYS rig the game to make as much profit on the trading scalping clients until they bleed.

So while in the USA the banks can still bribe Congress to repeal Dodd-Frank and open the gates to money falling once again from heaven, that is not the case OUTSIDE the USA. Even the movie the FORECASTER is being shown around the world except the USA because of the elite control of the bankers who tell the Fed what to do and when, the Justice Department, and New York Federal Judges protect them every chance they get. We haveNOBODY outside of their control to investigate anything.

Britain’s Serious Fraud Office’s investigators are now probing the central bank for possible fraud related to liquidity auctions between 2007 and 2008. During the financial crisis, the BoE invited banks to borrow money from the central bank, in exchange for collateral. This was conducted through a series of “liquidity auctions” where the funds were intended to prevent the banks collapsing. The banks always warn that there will be a complete collapse of the financial system unless their losses are covered.

The SFO is looking into the bankers’ “conduct” that was connected to these liquidity auctions. This is the criminal investigative agency that is conducting the probe of the BoE.Being investigated for “conduct” issues can be a very wide range from price fixing and handing the government the worse collateral possible (FRAUD) to the leaking of confidential information for personal gain.

Ferguson Cop Cleared Of Civil Rights Violations

Submitted by Tyler Durden on 03/04/2015 12:56 -0500

http://www.zerohedge.com/news/2015-03-04/ferguson-cop-cleared-civil-rights-violations

There is no evidence upon which prosecutors can rely to disprove Wilson’s stated subjective belief that he feared for his safety,” states a report from The Justice Department, clearing Ferguson, Mo., police officer Darren Wilson of civil rights violations in the shooting of Michael Brown last year. Although this was somewhat expected, as we noted previously,the DoJ’s report points specifically to some prosecution witness accounts cannot be relied on because their accounts cannot be reconciled with the DNA bloodstain evidence and other credible witness accounts.”

As The NY Times reports,

The Justice Department has cleared a Ferguson, Mo., police officer of civil rights violations in the shooting of Michael Brown, a black teenager whose death set off racially charged and sometimes violent protests last year.

The decision, which was announced on Wednesday, ends a lengthy investigation into the shooting last August, in which Officer Darren Wilson shot and killed Mr. Brown in the street. Many witnesses said Mr. Brown had his hands up in surrender when he died, leading to nationwide protest chants of “Hands up, don’t shoot.”

But federal agents and civil rights prosecutors rejected that story, just as a state grand jury did in November. The Justice Department said forensic evidence and other witnesses backed up the account of Officer Wilson, who said Mr. Brown fought with him, reached for his gun, then charged at him. He told investigators that he feared for his life.

It appears witness accounts were unreliable (and dare we say – biased?)…

 “There is no evidence upon which prosecutors can rely to disprove Wilson’s stated subjective belief that he feared for his safety,” the report said.

Hillary Clinton’s “Personal” Emails To Be Subpoenaed

Submitted by Tyler Durden on 03/04/2015 15:20 -0500

http://www.zerohedge.com/news/2015-03-04/hillary-clintons-personal-emails-be-subpoenaed

In the aftermath of the revelations that Hillary Clinton had exclusively used a personal email account to conduct state correspondence with diplomatic leaders around the globe and pretty much everyone else, it was only a matter of time before the subpoenas started flying. That time is now and as WaPo reports, the “House investigative committee is preparing to send out subpoenas later Wednesday to gather a deeper look into former secretary of state Hillary Rodham Clinton’s nearly exclusive use of personal e-mails to do her official business as the government’s top diplomat, according to people familiar with the probe.”

As a reminder, here is a sampling of some of the emails Clinton had sent to at least one recipient, Sidney Blumenthal, whose email account had been hacked by the infamous Romanian hacker “Guccifer”.

The Committee is asking for all e-mails related to the attack from all Clintonemail.com accounts and any other staff members’ personal accounts.

The subpoenas are expected to go out to the State Department later Wednesday. The move escalates the panel’s conflict with Clinton and could complicate her expected run for president.

Former IMF Head: “I Only Had 12 Sex Parties In Three Years”

Former IMF Head: “I Only Had 12 Sex Parties In Three Years”

http://www.zerohedge.com/news/2015-02-10/former-imf-head-i-only-had-12-sex-parties-three-years

Submitted by Tyler Durden on 02/10/2015 11:28 -0500

Ex-IMF chief Dominique Strauss-Kahn (DSK) – who denies charges of pimping – has told a court in northern France that prosecutors had greatly exaggerated the frequency of his “licentious evenings.” In fact, as The BBC reports, DSK explained (with a straight face) that he took part in only a few rare sex parties – “only 12 parties the last 3 years.”

As The BBC reports,

 Mr Strauss-Kahn is accused of helping procure sex workers for a prostitution ring based at a hotel in Lille.

He has argued that he did not know the women were prostitutes.

Although using prostitutes is not illegal in France, supplying them or assisting in supplying them is. Prosecutors have been quoted as saying Mr Strauss-Kahn, 65, played a pivotal role in facilitating the orgies, describing him as the “party king”.

If found guilty, the one-time potential candidate for the French presidency could face up to 10 years in jail and a €1.5m (£1.13m) fine.

As he took the stand on Tuesday, Mr Strauss-Kahn said: “I committed no crime, no offence.”

“The prosecution gives the impression of unbridled activity,” he told the court. But, he added: “There were only 12 parties in total – that is four per year over three years.”

Mr Strauss-Kahn also denied organising the parties he took part in.

 “I am in no way the organiser of these parties. I did not have the time to organise any party,” he said.

“He did it for fun. We had some lovely evenings,” he told French radio earlier, adding that five or six couples would be involved.

As he arrived in court in Lille earlier, three topless protesters from the Femen activist group jumped on his car, with “pimps, clients, guilty” painted on their chests. They were taken away by police.

Two other cases against him, concerning allegations of sexual assault and gang rape, have already been dropped.

*  *  *

One wonders whether DSK looked away as this happened…

Samsung Smart TV Can Listen To Your Private Conversations

A Very Slippery Slope: Yes, Your Samsung Smart TV Can Listen To Your Private Conversations

Submitted by Tyler Durden on 02/09/2015 20:25 -0500

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

The biggest story in the tech world today is the revelation that Samsung’s Smart TV can and will listen to your conversations, and will share the details with a third party. Yes, you read that right. Here’s the actual language from the privacy policy itself:

 “Please be aware that if your spoken words include personal or other sensitive information, that information will be among the data captured and transmitted to a third party.”

Naturally, this has freaked people out and led to multiple comparisons to 1984 and the ubiquitous Big Brother. It was framed exceptionally well by EFF activist Parker Higgins in the following tweet:

ON TWITTER: “Parker Higgins @xor    Left: Samsung SmartTV privacy policy, warning users not to discuss personal info in front of their TV Right: 1984 pic.twitter.com/osywjYKV3W  8:35 PM – 8 Feb 2015

Screen Shot 2015-02-09 at 11.21.39 AM

While the privacy policy statement is disturbing in its own right, the extent of how creepy it is has to do with the fact that this information will be shared with a “third party.” This begs the question, who is this third party? Corynne McSherry, the intellectual property director at the Electronic Frontier Foundation, has some thoughts. From the Daily Beast:

Full Article:

For related articles, see:

A Very Disturbing and Powerful Post – “Get Your Loved Ones Off Facebook”

Meet the 77th Battalion – The British Army is Mobilizing 1,500 “Facebook Warriors” to Spread Disinformation

Freedom of Speech? Boston Mayor Bans Bad Mouthing of Olympics, as Facebook Will Filter Out “Fake News”

Why You Should Think Twice Before Using Facebook’s Messenger App

Was the Department of Defense Behind Facebook’s Controversial Manipulation Study?

This Man’s $600,000 Facebook Disaster is a Warning For All Small Businesses

Every American Can Fight Terrorism With Just One Finger

How Every American Can Fight Terrorism With Just One Finger

Submitted by Tyler Durden on 12/23/2014 20:14 -0500
http://www.zerohedge.com/news/2014-12-23/how-every-american-can-fight-terrorism-just-one-finger

 

US Treasury Quietly Ordering “Survival Kits” For US Bankers

Why Is The US Treasury Quietly Ordering “Surival Kits” For US Bankers?

The Department of Treasury is spending $200,000 on survival kits for all of its employees who oversee the federal banking system, according to a new solicitation. As FreeBeacon reportssurvival kits will be delivered to every major bank in the United States and includes a solar blanket, food bar, water-purification tablets, and dust mask (among other things). The question, obviously, is just what do they know that the rest of us don’t?

As Free Beacon reports,

 The Department of Treasury is seeking to order survival kits for all of its employees who oversee the federal banking system, according to a new solicitation.

The emergency supplies would be for every employee at the Office of the Comptroller of the Currency (OCC), which conducts on-site reviews of banks throughout the country. The survival kit includes everything from water purification tablets to solar blankets.

The government is willing to spend up to $200,000 on the kits, according to the solicitation released on Dec. 4.

The survival kits must come in a fanny-pack or backpack that can fit all of the items, including a 33-piece personal first aid kit with “decongestant tablets,” a variety of bandages, and medicines.

The kits must also include a “reusable solar blanket” 52 by 84 inches long, a 2,400-calorie food bar, “50 water purification tablets,” a “dust mask,” “one-size fits all poncho with hood,” a rechargeable lantern with built-in radio, and an “Air-Aid emergency mask” for protection against airborne viruses.

Survival kits will be delivered to every major bank in the United States including Bank of America, American Express Bank, BMO Financial Corp., Capitol One Financial Corporation, Citigroup, Inc., JPMorgan Chase & Company, and Wells Fargo.

The agency has roughly 3,814 employees, each of which would receive a survival kit. The staff includes “bank examiners” who provide “sustained supervision” of major banks in the United States.

It is not clear why the Treasury Department is ordering the kits.

One can only imagine what the Treasury department is thinking will happen in the near-future… while it is indeed good to be prepared, the timing as domestic social unrest ramps up, the driver of the recovery is crashing, and the Fed has stepped away is ‘odd’ to say the least.

*  *  *

Full OCC RFP below:

Survival Kits RFP

 

 

Plausible Denial aka The Cancer Of Leadership

Submitted by Tyler Durden on 05/24/2014 

Submitted by Mark St.Cyr,

No matter the headline, no matter the scandal, no matter how few or how many might be involved, one thing will become crystal clear: nobody that should have known – will have known.

There was a time when this art form of creating circumstances as to protect people of influence had its place and was used sparingly and tactfully. However, as of today both the frequency along with how and where it is used has gone from “useful ruse” to a downright childish alibi. No one seems to be accountable today. And I mean nobody!

The phrase plausible denial used to be a generic term with meaning given almost exclusively to the president for matters of state where an offer or position in a cabinet (or other such actions) if turned down by the recipient wouldn’t (or couldn’t) be used by the press as some bludgeoning tool where headlines might read: “Mr. or Mrs. Hornblower tells president to take the offer and stuff it.” This same inspired headline could be (or would be) used when difficult negotiations were taking place between foreign leaders. No one begrudged such use.

The plausible denial ruse is and continues to be an important tool. There is a time and a place for such a thing and sometimes it is the most prudent depending on circumstances. Yet, what we are currently witnessing is a far cry from what we’ve known before. Now everyone is using it. So much so it might be time to ask if this once tried and true tactic has “jumped the shark?”

Currently there seems to be numerous scandals (whether one agrees or disagrees) involving the political class. No matter the press conference, hearing rooms, and more, one thing has become apparent: No one knows anything, and no one was aware such problems existed. Even if they were directly responsible for the organization.

Anything and everything that may have transpired dubious in nature happened without their knowledge even though many of these same people were hired exclusively to fix said problems. Absolutely amazing.

This phenom is not something exclusive to the political class. No, no, far from it. This also permeates through our corporate culture where CEO’s and more seemingly have no clue that potentially illegal or at the least improper actions are taking place within their own corporate structure.

We watch, hear, or read CEO’s of banks take to the media to express outrage when it’s pointed out that their highly profitable (for some most) department or subsidiary is found to have been “cooking the books” or engaging in highly immoral or in complete disregard of fiduciary responsibilities.

Suddenly they are shocked. Shocked! That such could be taking place under their tutelage. A commanding statement is formulated that heads will roll. Yet, the only thing that seems to roll is what we all know rolls down hill. It never seems to be their fault even though that profit entry on the balance sheet was probably heralded on every conference call as to show why they deserve the millions upon millions of dollars in compensation.

I find it ironic how so many so-called “brilliant” CEO’s had no knowledge how these once “profit centers” were raking in that profit. Because now those very same “profits” are costing share holders Billions upon Billions of dollars for legal fines and penalties. Nobody at the C level cared to ask “How in the world are we able to be making this amount of money?”

Nope, they didn’t want to know it seems. And in days gone by that would be seen as a dereliction of duty by any C level executive worth their salt and worthy of dismissal. Today? It seems to be a badge of honor. i.e., They showed if a scandal breaks their fingers will be nowhere near it. That deserves a raise in compensation for if there’s one thing we want in out bankers is to show not only financial brilliance, but brilliance in skullduggery to boot!

Again this isn’t an isolated indecent to just a few sectors. It’s happening across nearly everything and everyone we come in contact with.

Companies farm out their production to countries where it is obvious to any business person that something is awry with how they can make a product so much cheaper than someone else. Forced labor, child labor, environmental disregards, illegal use of unsafe chemicals (just to name a few) are many times the underlying reasons why something can be produced so much cheaper. Yet, as long as they don’t ask – they didn’t know.

We’ll only know if someone gets sick, hurt, or worse – dies. Then we can go back to: “They didn’t know, but now since we do, they’ll change it.”

When something is known to cost $1.00 to produce even within competitive labor environments such as Asia. When someone states they can do it for not just less, but let’s say: a nickel. It has to set off bells all the way up the chain.

Those bells should be seen for what any business person worth their salt  instinctively recognizes them as: Alarm bells! Not bells signalling an all clear to raid the compensation pool.

Leadership is not something left to what many deem as the “elites” of society. No, leadership is something that starts with us and ends with all of  us. For one must remember the person at the top is only a person. And how that person conducts themself and takes ownership of their decisions and/or actions is no different from you or me. The only difference is the size of the stage.

Just imagine where we would be if the people responsible for giving and carrying out the orders to storm the beaches at Normandy played by the so-called accepted rules or premises shown by a great many today.

 

 

 

 

Private Equity Audits Reveal Criminal Behavior

SEC Official Claims Over 50% Of Private Equity Audits Reveal Criminal Behavior

 

Submitted by Tyler Durden on 05/13/2014 11:20 -0400

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

Last week, Yves Smith of Naked Capitalism penned a fantastic piece leveraging a talk by SEC official Drew Bowden. Mr. Bowden heads the SEC’s examinations unit, and at a private equity conference he explained that “more than 50 percent of private equity firms it has audited have engaged in serious infractions of securities laws.” What is so incredible about the talk, is that while Bowden goes into details of shady practice after shady practice, he ultimately admits that the SEC isn’t being particularly aggressive with the private equity industry because “we believe that most people in the industry are trying to do the right thing, to help their clients, to grow their business, and to provide for their owners and employees.”

Yes, go ahead and read that again. The industry regulator is assuming that private equity firms are trying to do the right thing, despite the fact that audits demonstrated to a tune of greater than 50% the opposite to be true.

Private equity managers are some of the savviest people in finance and they know exactly what they are doing. What the SEC is basically admitting, is that private equity firms are also “too big to regulate” and, of course, “too big to jail.” After all, every single person at the SEC is likely angling for a big payday at a PE firm via the revolving door. Of course they aren’t going to regulate.

Meanwhile, if you are just an average citizen, you will be prosecuted to the fullest extent of the law if you commit even the most minor infraction. This sort of behavior led to the death of prodigy Aaron Swartz, the incarceration of political prisoner Barrett Brown, a swat team raid on a young kid in Peroia, Illinois for a parody Twitter account, the firing of a constriction worker for not paying for a $0.89 soda refill. This list goes on and on. Yet private equity crimes, which likely run into the billions collectively, are treated with kid gloves. As I have maintained many times before, this is how the social fabric of a society dies.

From Naked Capitalism:

At a private equity conference this week, Drew Bowden, a senior SEC official, told private equity fund managers and their investors in considerable detail about how the agency had found widespread stealing and other serious infractions in its audits of private equity firms.

In the years that I’ve been reading speeches from regulators, I’ve never seen anything remotely like Bowden’s talk. I’ve embedded it at the end of this post and strongly encourage you to read it in full.

Despite the at times disconcertingly polite tone, the SEC has now announced that more than 50 percent of private equity firms it has audited have engaged in serious infractions of securities laws. These abuses were detected thanks to to Dodd Frank. Private equity general partners had been unregulated until early 2012, when they were required to SEC regulation as investment advisers.

Bowden heads the SEC’s examinations unit, and his rap sheet was based on his two years of experience in auditing private equity firms. As bad as embezzlement and other sharp practices are, at least as troubling is the revelation that the limited partners have been derelict in their duties. They’ve agreed to terms in their relationship with the general partners to make it easy for the general partners to abuse the investors. The general partners can steal from their limited partners because the limited partners are asleep. The LPs have failed to negotiate for contractual protections when they have the most leverage, prior to investing, and they’ve been unwilling or unable to monitor their investments effectively once they’ve handed over their money. Note that the industry was warned about this possible outcome; it corresponds to the worst scenario, ” A Broken Industry,” in a 2011 paper by Harvard Business School professor Josh Lerner.

Bowden pointed out that private equity is unique among the investment advisers the SEC supervises. The general partners’ control of portfolio companies gives them access to their cash flows, which the GPs can divert into their own pockets in numerous ways.

He went on to describe some of the common fee skimming models. For example:

Some of the most common deficiencies we see in private equity in the area of fees and expenses occur in firm’s use of consultants, also known as “Operating Partners,” whom advisers promote as providing their portfolio companies with consulting services or other assistance that the portfolio companies could not independently afford.

Here’s how this scam works. PE firms raise funds by showing prospective investors a strong team of professionals who are going to find attractive companies to buy and manage them. The limited partnership agreement, which is the contract between the private equity firm and the investors, typically says that the private equity firm has to pay for the wages of people working on the fund’s behalf. However, unbeknownst to the investors because it was never disclosed, part of the PE firm “team”, usually the members that work with portfolio companies, are actually being paid as independent contractors. The private equity firm then bills most or all of these sham independent consultants to the portfolio companies with whom they interact.

Most troubling of all is that we have reports from industry insiders that Bowden failed to mention the most egregious forms of stealing, which may cost investors billions of dollars annually. As we understand it, the SEC is on to a couple of large-scale scams perpetrated by some of the biggest firms.

The SEC may be pulling its punches because it may be uncertain about what to do with the rot it has found. Side by side with the the unprecedented, detailed litany of numerous forms of lawbreaking and bad conduct, Bowden was also peculiarly deferential, which gave his speech a schizophrenic feel. For instance:

Some questioned why we would show our hand in this way, to which there’s a simple and sensible answer. We believe that most people in the industry are trying to do the right thing, to help their clients, to grow their business, and to provide for their owners and employees. We therefore believe that we can most effectively fulfill our mission to promote compliance by sharing as much information as we can with the industry, knowing that people will use it to measure their firms and to self-correct where necessary. Put another way, we are not engaged in a game of “gotcha.”

So you see, an average citizen gets locked up for life, yet a private equity partner is given the benefit of the doubt and, at worst, asked politely to change behavior by the SEC.

State legislators need to understand what is going on here. They have granted public pension funds and public endowments across the U.S. the exorbitant privilege of secrecy in private equity investing, even to the point of making these contracts virtually the only ones that are exempt from state-level Freedom of Information Act laws.

State legislators need to understand what is going on here. They have granted public pension funds and public endowments across the U.S. the exorbitant privilege of secrecy in private equity investing, even to the point of making these contracts virtually the only ones that are exempt from state-level Freedom of Information Act laws.

I recently wrote that private equity will deservedly emerge as the financial industry’s major villain in the next crisis. I detailed why in my post, Leaked Documents Show How Blackstone Fleeces Taxpayers via Public Pension Funds, which is a must read in the context of the article above.

Full article from Naked Capitalism can and should be read here.