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Author Topic: The myth of the "rule of law"  (Read 2976 times)

goatroper

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The myth of the "rule of law"
« on: August 17, 2012, 09:45:25 am »
Prefacing this with a couple of comments from the "We has Paul Ryan" thread -- new started as this goes off the original topic.

I hear politicians frequently talk about the "rule of law" and how it's such a noble thing.  On the other hand, there's this MF Global thing, and I don't hear them saying much of anything about it; the MSM is pretty much silent, too.

On the Ryan thread Thernlund said:

"You can't pull the rug out from under people like that, right or wrong.

Unless you're the sort that just wants to see the world burn, in which case...  "


It appears the fire has been lit already.  One theft unpunished usually leads to another.

And Coronach said:

"Right or wrong, people have organized their lives, and by extension we have organized extensive parts of our economy, around these programs. Cutting them off all at once voluntarily would be almost as destructive as the government collapsing and cutting them off all at once involuntarily."

If this kind of blatant theft can be allowed to stand -- and if, as I would expect, others follow -- it all will crash sooner rather than later, as the trust part of our economic foundation has been removed.  Entitlements may ultimately be the least of our worries.

From:  http://bayourenaissanceman.blogspot.com/2012/08/the-rule-of-law-in-our-financial-system.html

(Go to original at above link for supporting links.)


The rule of law in our financial system is effectively over

Readers will remember that last year, after the MF Global bankruptcy, Ann Barnhardt famously closed her brokerage firm and advised all her clients to exit the markets, saying that "The rule of law is non-existent, instead replaced with godless, criminal political cronyism".  She put it as strongly as this:

    A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.


There's more at the link.

Gonzalo Lira took matters further, explaining the background to the MF Global bankruptcy and applying its lessons to international financial institutions.  He said:

    Now, what does this mean?

    It means that nobody’s money is safe. It means that regulators care more about protecting the so-called “Systemically Important Financial Institutions” than about protecting Ordinary Joe investors. It means that, when crunchtime comes, central banks and government regulators will allow SIFI’s to get better, and let the Ordinary Joes get f****d.

    . . .

    As I write this, a lot of investors whom I know personally — who are sophisticated, wealthy, and not at all the paranoid type — are quietly pulling their money out of all brokerage firms, all banks, all equity firms. They are quietly trading out of their paper assets and going into the actual, physical asset.

    Note that they’re not trading into the asset — they’re simply exchanging their paper-asset for the real thing.

    Why? MF Global.

    “The MF Global scandal has made it clear that the integrity of the system has disappeared,” said a good friend of mine, Tuur Demeester, who runs Macrotrends, a Dutch-language newsletter out of Brugge. “The banks are insolvent, the governments are insolvent, and all that’s left is for the people to realize what’s going on — and that will start a panic.”


Again, more at the link.

Now it looks like Ms. Barnhardt and Mr. Lira were right.

    Authorities are winding down their criminal investigation of the failed brokerage firm, MF Global, and despite the lack of oversight and the loss of more than $1 billion in customer funds, it now seems unlikely that anyone at the firm will face criminal charges.

    The New York Times is reporting this morning that ... there isn't even enough evidence to charge any of the firm's executives in a criminal probe. The company may have failed spectacularly when it came to oversight and risk management, but the losses cannot be chalked up to outright fraud.

    The company placed a grossly outsized bet (more than $6 billion worth) on the health of the European debt market last year and when it went south, the firm "borrowed" money from the accounts of its customers to try and salvage its own losses. Most of the blame for those trades fell on its CEO (and ex-New Jersey governor) Jon Corzine, and while his reputation and firm are ruined, it seems he will escape any legal sanction.


There's more at the link.

The inimitable Karl Denninger puts it in a nutshell, particularly in the light of the recent Sentinel decision.

    The problem, of course, is that once you ignore property rights then you've ignored them.  It's the principle of the thing more than the details; whether you get personally boned with "this" particular violation isn't the question.  Rather, the question is this, for each and every one of you:

    "What assurance do you have that any property of yours that is not in your personal, immediate and physical possession, is actually protected by the rule of law if someone attempts to steal it?"

    The answer?  You have none.

    Let that sink in folks, because it does not just apply to futures traders, to people daytrading stocks, or even to people with 401ks and IRAs.  It applies to each and every one of us with a bank account.

    That's right folks -- it applies to anyone with any property held by any person other than you, in your personal control within reach of your fingers.  If it is stolen by a wealthy and powerful person they will be found to have conveyed it "within the law" and you will not get your property back.

    The customers of MF Global keep being told this lie:

    After 10 months of stitching together evidence on the firm’s demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case.

    Money doesn't disappear.  The investigators know where every single penny went.  They know precisely who has it.  And under long-standing and essentially inviolate legal principle, they also know damn well that whoever has it does not have title to it and cannot acquire title as the entity who granted possession (MF Global) didn't have title to those funds and thus could not convey what it did not have.

    No matter; your money is gone.

    Your money in any brokerage account can be just as easily gone.

    Your money in a bank or credit union can be just as easily gone.  The FDIC, incidentally, has a tiny fraction of the total deposit base available; it cannot cover your deposits in any real failure of the system, as it doesn't have it (and neither does Treasury.)

    Any property, in short, that you do not personally possess within reach of your fingers..... can be and will be, if a rich and politically powerful person steals it, gone.

    One final question: Are you awake yet?


Again, more at the link.  I strongly urge you to go read the whole thing - it's important.

People, I don't know how to put the warnings any more strongly than Ann Barnhardt, Gonzalo Lira and Karl Denninger have put them.  I can only highlight them in a single sentence, like this:


IF YOU RELY ON THE US FINANCIAL SYSTEM
TO PRESERVE YOUR ASSETS, YOU MUST
UNDERSTAND THAT THOSE ASSETS MAY
NOW BE STOLEN VIRTUALLY AT WILL.



That's the reality of these decisions, folks.  The courts have come out flat-footed in favor of the rich and powerful, and declared that as far as the rest of us, our bank accounts and financial assets are concerned, in terms of the most recent case law and precedents, we have no legal protection or recourse.

Don't believe me?  Go read all the linked resources in the article above, and the links they provide . . . then tell me that to my face.

VirginiaGoatroper

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    ksuguy

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    Re: The myth of the "rule of law"
    « Reply #1 on: August 17, 2012, 11:40:56 am »
    He mentions Karl Denninger in the article.  His Market Ticker blog is worth reading.

    http://market-ticker.org/
    Kansas

    TommyGunn

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    Re: The myth of the "rule of law"
    « Reply #2 on: August 17, 2012, 01:45:29 pm »
    Quote from: goatroper
    That's the reality of these decisions, folks.  The courts have come out flat-footed in favor of the rich and powerful, and declared that as far as the rest of us, our bank accounts and financial assets are concerned, in terms of the most recent case law and precedents, we have no legal protection or recourse.
    't'was always thus.    >:(


    I don't think any of this is really new.  It's just a LOT more blatant.  If you don't have to fear being caught you might as well raid the cookie jar in broad daylight so you don't have to worry about tripping over the mousetraps........
    "Through ignorance of what is good and what is bad, the life of men is greatly perplexed." ~~ Cicero.

    coelacanth

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    Re: The myth of the "rule of law"
    « Reply #3 on: August 17, 2012, 01:46:29 pm »
    I agree that anyone who cares to look at the situation long and hard enough to actually form their own opinion usually comes away with the conviction we are well and truly screwed.   Fiat currency is the same  shell game it has always been.   Piracy is still the best way to counteract it.

    The fact that the pirates these days wear three piece Savile row suits and Patek Phillipe chronographs and are chauffuered from one "important" meeting to another just puts a glamorous face on it.   The fact that they employ legions of attorneys and direct the actions of countless bureaucrats does not change the nature of their character one iota. 

    The points made in the Paul Ryan thread are cogent and probably correct in the narrow sense of electoral politics and stated public policy but the fact remains that government agencies are stockpiling small arms ammunition at an alarming rate.  I think we still have some room to turn this around if we choose the correct path but I also think our window of opportunity is closing rapidly.
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    mwcoleburn

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    Re: The myth of the "rule of law"
    « Reply #4 on: August 17, 2012, 02:24:02 pm »
    If you wanted real change to the system two things could go a very long way.

    One, no private money for campaigns. You collect enough signatures, you are on the ballot. Here's your money. It levels the playing field and stops special interests from buying elections and thus politicians.

    Two, elected government officials are forced to sign "no compete" agreements that prohibit them from working for firms that are evolved in government contracts and lobbying.
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    Avenger29

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    Re: The myth of the "rule of law"
    « Reply #5 on: August 17, 2012, 03:57:13 pm »
    If you wanted real change to the system two things could go a very long way.

    One, no private money for campaigns. You collect enough signatures, you are on the ballot. Here's your money. It levels the playing field and stops special interests from buying elections and thus politicians.

    Two, elected government officials are forced to sign "no compete" agreements that prohibit them from working for firms that are evolved in government contracts and lobbying.

    I was thinking tar and feathering would be another excellent incentive, too...

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    goatroper

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    Re: The myth of the "rule of law"
    « Reply #6 on: August 17, 2012, 09:25:49 pm »
    He mentions Karl Denninger in the article.  His Market Ticker blog is worth reading.

    http://market-ticker.org/

    BRM quotes Denninger fairly often; by following his links, I've learned to respect Denninger's opinions.  He's been raising red flags on the general economic situation for some time.
    VirginiaGoatroper

    akodo

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    Re: The myth of the "rule of law"
    « Reply #7 on: August 18, 2012, 03:15:03 am »
    If you wanted real change to the system two things could go a very long way.

    One, no private money for campaigns. You collect enough signatures, you are on the ballot. Here's your money. It levels the playing field and stops special interests from buying elections and thus politicians.

    Two, elected government officials are forced to sign "no compete" agreements that prohibit them from working for firms that are evolved in government contracts and lobbying.

    While I am fine with condition 2, I do object to condition 1.

    It's my money.  If we live in a free society I should be able to give my money to whoever I want, including a politician to allow him to buy more air time.

    If people are swayed by a barrage of advertisement, then we don't need to stop the advertisement, we need to get a smarter class of people.   Limiting advertisement due to how it affects those who don't take the time to research the truth for themselves or who are just plain dumb is more nanny state.  It's just as wrong as all the other nanny state stuff.

    Coronach

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    Re: The myth of the "rule of law"
    « Reply #8 on: August 18, 2012, 04:45:09 am »
    To be clear, yours truly, T and the rest of the people that were saying that the excesses of the entitlement/subsidy state should not be cut cold turkey were NOT disagreeing with the idea that these shenanigans need to end. They do. We wholeheartedly agree that the government should not be pulling money from one group to bequeath to another based upon social justice, nanny statism, the need to buy votes, the need to pick winners and losers, the need to Make Everything All Right, or any other justification that the left and right can drum up. It needs to end. We agree with this. We are disagreeing with HOW to end it.

    What was said is that the programs should end, cold turkey. They can't. They can't end that way for practical and for political reasons. The practical reason is that, for example, farmers plan their finances, their crop rotation, their land and equipment purchases, their seed purchases, around a market distorted by subsidies. Stop the subsidies immediately, and Very Bad Things Happen. Same with people on "disability", pensioners, state and local governments, etc etc etc. It's all intertwined, for good and for ill. The only way to unwind that position is to zero out the offending programs gradually.

    Absolutists don't like that. Things must end now. Well, whether they end now or end 20 years from now with steady and sustained 5% annual reductions, in two decades they're still gone, and if we're actually reducing them we will be backing away from the fiscal cliff the whole time. That's perfectly fine with me, especially because, in addition to achieving the same end-state, you avoid crushing the whole system in the process. The short term outcome is better, and I think the long term outcome is, too.

    The problem, of course, is that we live in a society where a decrease in the rate of increase is met with wails of "YOU'RE KILLING THE CHILLLLLDRUUUUUN", so the actual thought of a two decade string of sustained 5% annual cuts is something akin to thinking the Browns can win the Superbowl. So, we're instantly skeptical, and we call for massive cuts, right now. Which brings me to...

    the political consideration. This is very simple. If you believe that we can't get a consensus to actually perform gradual cuts, there is NO WAY WE WILL GET A CONSENSUS TO IMMEDIATELY ZERO OUT AN ENTITLEMENT PROGRAM. If you can't convince me to dial back 5% each year for 20 years, you'll never get my vote to do 100% in 1.

    We got here through creeping incrementalism. It isn't sexy, but the way out is also creeping incrementalism.

    Mike
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    TommyGunn

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    Re: The myth of the "rule of law"
    « Reply #9 on: August 18, 2012, 12:39:11 pm »
    Radio commentator Neal Boortz likened the problem of shutting down the entitlement society to a old building that has every water spigot on, and was in danger of collapsing due to water damage.... but you couldn't turn off all the valves at once because that would spike the pressure and explode the pipes, and bring down the building.
    An analogy that is sort of inline with what Coronach said above.
    I wanted to add this to Boortz's analogy;
    Same situation exactly, except if you don't get the water off in five minutes the building is GONE.
    If you DO get it off in five minutes, there's only a fifty per cent chance of saving the building.
    The Good news is there's two people to help you.
    The BAD NEWS is they're Harry Reid and Nancy Pelosi. :neener
    Have fun with that one. :rotfl :rotfl :rotfl ;) ;)

    On the more serious side of things I think we deo need to do it gradually....I "get it" ..... But I doubt the powers that be have the discipline to follow through.   
    I dunno......  But it does make me thank my lucky stars I never had any kids ....... :facepalm
    "Through ignorance of what is good and what is bad, the life of men is greatly perplexed." ~~ Cicero.

    goatroper

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    Re: The myth of the "rule of law"
    « Reply #10 on: August 18, 2012, 01:35:19 pm »
    To be clear, yours truly, T and the rest of the people that were saying that the excesses of the entitlement/subsidy state should not be cut cold turkey were NOT disagreeing with the idea that these shenanigans need to end. They do.

    Just want to make clear (I probably should have made the effort to do that at the beginning) that I didn't start this new thread to disagree with anything you, T, or anyone else said.  I agree with you about how programs people depend on need to be changed by degrees so nobody gets dumped -- and I applaud Ryan for being serious enough about our situation to actually come up with a plan.  I don't see anyone on the other side of the aisle who has done so.

    My concern is that, if we don't all wake up to the looting of the treasury that is going on and take steps to make the looters pay, there may not be enough of an economy left to do anything with.

    Your point is serious and I have no argument with it.
    VirginiaGoatroper

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    Re: The myth of the "rule of law"
    « Reply #11 on: August 18, 2012, 01:56:29 pm »
    While I am fine with condition 2, I do object to condition 1.

    It's my money.  If we live in a free society I should be able to give my money to whoever I want, including a politician to allow him to buy more air time.

    If people are swayed by a barrage of advertisement, then we don't need to stop the advertisement, we need to get a smarter class of people.   Limiting advertisement due to how it affects those who don't take the time to research the truth for themselves or who are just plain dumb is more nanny state.  It's just as wrong as all the other nanny state stuff.

    As for part one, I completely agree, however, as long as corporate personhood is allowed, those same rights extend to business that have interest in BUYING politicians, not helping get their message out but flat out buying them off (just look at how much Goldman Sachs gave to Big O, and how many former Goldman employees are in cabinet level positions) So yeah I will support that statement fully as soon as corporate personhood is repealed.

    As for part 2, yeah, that will never happen. I have no faith that the next society will be anymore intelligent that those before it unless something major happens. Not 911 major but foreign armies walking in the streets major.
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    Gunnguy

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    Re: The myth of the "rule of law"
    « Reply #12 on: August 18, 2012, 03:31:26 pm »
    That is why the Founding Fathers debated heavily and supported the First and Second amendments.
    It gives us the right to air our grievances against a tyrannical Government.
    And if we are not heard or headed we have the right to change that government by force if necessary.
    Of what I speak is true.
    Sad, but true.

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