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Commentary on The Capital Markets- Category [Corruption]
2017-02-14 09:10 by Karl Denninger
in Corruption , 758 references
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There's a lot of crazy in DC.

Most of the time crazy is the order of the day in that town.

But the Flynn fiasco is not in the crazy train mold.  It's real, and it's trouble.

As a private citizen, and not in possession of classified information, Flynn is entitled to discuss whatever he wants with whoever he wants -- up to a point.  That's this thing called the First Amendment, and it applies to people who advise the President but are not formally part (yet) of a Cabinet or otherwise "in" government.  I remind you that Trump, as President-elect, was not yet President.

The bad news is that there is an actual law on this -- the Logan Act.  It was passed in 1799, believe it or not, and it provides that nobody other than "authorized persons" may discuss policy with foreign governments.  Since the Executive is exclusively charged with conducting foreign policy and Trump was not yet President, nor was Flynn yet a Cabinet member, it certainly applied to him.

There are several problems, however, with the act -- the biggest being this pesky thing called The First Amendment.  I will note that nobody has ever been actually prosecuted for violating this act since it was passed -- and that may be why.  I will note that during Obama's term a bunch of Senators published an open letter to the Iranian government regarding an active and real controversy (Iran's nuclear program) and specifically stating that Obama, of course, had a limited time remaining in office -- never mind the fact that what he negotiated never passed the Senate as a formal treaty.  They were not indicted.

So what's the correct read on this?  Probably not that Flynn broke an actual enforceable law, because I suspect the Logan Act is unconstitutional and the government knows it.  They have never actually tried to lock someone up using it because they're pretty sure it will be challenged and spiked if and when they do.

However, this leads to two more problems.  First is the bludgeoning of people with threats to enforce a known unconstitutional statute.  That sort of thing is itself a crime, under 18 USC 242 (violations of civil liberties under color of law or authority) and also a civil cause of actual (42 USC 1983.)  Yet nobody is ever indicted and prosecuted under that law and the only people who can violate that law are those who are government employees of some sort -- by definition!

The second problem, however, is the lying itself.  That's always a problem.  This incident almost-certainly doesn't rise to any sort of criminal standard, because Flynn was never questioned under oath -- and his post is not subject to Senate confirmation.

There are those who are involved in a screamfest about the fact that "someone" (probably the CIA) monitored the phone call and that this information got out.  Well, the "got out" part may or may not be a problem (in other words, the motivation for that is to be determined, and it sure smells bad) but the monitoring part is both expected and routine in this sort of circumstance.

Conversations across a national boundary in which one or both parties are not US citizens enjoy exactly zero protection against "diplomatic" interception -- and that's a fact.  Not only is it a fact with regard to the United States but it's a fact in regard to virtually every other nation and its spying apparatus as well and this fact is as old as nations are themselves.

So give me a break on the screaming about that which has no reality behind it.

Does this mark "the beginning of the end" for Trump?  I doubt it.

But don't think for a second this doesn't indicate a serious problem -- it does, on two counts.

First, what sort of mental midget has a sensitive conversation on an open, unencrypted channel into a foreign nation with someone in their government -- and especially when that nation is Russia?  You have to be an utter imbecile to not fully expect that conversation to be intercepted and recorded.  The stunning lack of concern for OPSEC is beyond outrageous and reaches right up into Trump and his choice of Flynn.  To top that off you have him lying about it, which means he really thought he got away with it!  Flynn's actions brand him as a ****ing idiot who has no business anywhere near anything sensitive, say much less classified -- period

Second, it does call into question whether there was, or was going to be, a blackmail potential within his advisory chain.  That is a problem, and a very real one, if it exists.

Don't think for a minute that DC doesn't run on that sort of crap.  May I remind you of Dennis Hastert, who was Speaker of the House while concealing the fact that he apparently diddled some boys before entering Congress and then paid off one of the alleged victims later on.  I don't care that he paid off the victim, and I find it amusing that he got busted for structuring financial transactions to try to avoid detection of the payoff.

But there is utterly nothing amusing at all about what appears to be factual, and that is that Hastert was in the position to and did choose what bills came to the House Floor and were passed, and those that were killed, during the time in which material information on his alleged diddling of little boys was hidden from the public but known to certain others who were thus able to use that information to shape American policy and law.

We have no way to know if that did or didn't happen, and I will note for the record that exactly nobody has investigated that series of events to find out exactly what laws were passed, or not passed, as a result of Hastert being blackmailed.  It's possible the answer is "none" -- but the fact there was a very real opportunity and that Hastert later paid off the kid means that the question remains open.

Why hasn't that been looked into?

I'll tell you why not: For the same reason that zero felony indictments have been leveled against the medical industry over what appear to be blatant 15 USC Chapter 1 violations -- a law that carries not only ruinous civil penalties but felony criminal penalties as well.

If you think this lack of indictment activity across nearly 40 years since the US Supreme Court killed the hope of "immunity" from same (in 1979) is some sort of "coincidence" you have an IQ smaller than my shoe size.  The overwhelming evidence is that said lack of indictment is in fact because too many people have ordered a very-illegal pizza, or something similar and equally bad yet it is concealed from public knowledge and thus they can be blackmailed with same and have been.

That, folks, is where you ought to focus your concern and attention when it comes to Flynn, and whether we dodged a bullet by getting rid of him or whether attempts, successful or not, had already been made to use that leverage.

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Oh, so the banks don't just bilk investors and rip off municipalities, they also help Mexican Gangs run drugs?

This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers -- including the cash used to buy four planes that shipped a total of 22 tons of cocaine.

The admission came in an agreement that Charlotte, North Carolina-based Wachovia struck with federal prosecutors in March, and it sheds light on the largely undocumented role of U.S. banks in contributing to the violent drug trade that has convulsed Mexico for the past four years.

That's nice.  Guns and ammunition cost money - lots of it.  Getting that money requires some means of transporting it and "laundering" it.  For that, we turn to the largest financial institutions in the world, who, it turns out, have never been prosecuted for these felonious acts.

Wachovias blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations, says Jeffrey Sloman, the federal prosecutor who handled the case.

Blatant disregard?  Sounds like something you'd say at a sentencing hearing, right?  Well, no....

No big U.S. bank -- Wells Fargo included -- has ever been indicted for violating the Bank Secrecy Act or any other federal law. Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises not to break the law again.

No Capacity to Regulate

Large banks are protected from indictments by a variant of the too-big-to-fail theory.

Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets, says Jack Blum, a U.S. Senate investigator for 14 years and a consultant to international banks and brokerage firms on money laundering.

The theory is like a get-out-of-jail-free card for big banks, Blum says.

Theres no capacity to regulate or punish them because theyre too big to be threatened with failure, Blum says. They seem to be willing to do anything that improves their bottom line, until theyre caught.


Facilitating drug-running is just one small part of it.  There's also ripping off municipal governments, such as the Jefferson County sewer deal in Alabama.  There's bid-rigging in the GIC market.  And, of course, there's laundering money for violent Mexican drug cartels, who used that money to buy automatic weapons (no, not from America - from China, Venezuela and even from corrupt Mexican law enforcement officials!) with which they then shoot civilians and government officials who refuse to be corrupted.

Oh, and it's not just Wachovia accused in this story.  It's also Western Union and Bank of America.

Workers in more than 20 Western Union offices allowed the customers to use multiple names, pass fictitious identifications and smudge their fingerprints on documents, investigators say in court records.

In all the time we did undercover operations, we never once had a bribe turned down, says Holmes, citing court affidavits.

Very impressive.

To make their criminal enterprises work, the drug cartels of Mexico need to move billions of dollars across borders. Thats how they finance the purchase of drugs, planes, weapons and safe houses, Senator Gonzalez says.

They are multinational businesses, after all, says Gonzalez, as he slowly loads his revolver at his desk in his Mexico City office. And they cannot work without a bank.


And we have a banking system that, in the United States, has insulated itself from having to obey the law or be prosecuted for violating the law by threatening the government.

Henry Paulson and Ben Bernanke in 2008, remember?  "Tanks in the streets, martial law"?

Dateline September 21, 2008

Gee, it's not enough to steal from ordinary Americans, it's not enough to rip off state and city governments, it's not enough to rig bids in the municipal bond markets, we must sit still while these institutions literally make possible funding criminal gangs that are committing murder.

There's a name for this folks.

Formally this sort of thing is supposed to be called "Operating A Continuing Criminal Enterprise", or "OCCE":

The FBI defines a criminal enterprise as a group of individuals with an identified hierarchy, or comparable structure, engaged in significant criminal activity. These organizations often engage in multiple criminal activities and have extensive supporting networks. The terms Organized Crime and Criminal Enterprise are similar and often used synonymously. However, various federal criminal statutes specifically define the elements of an enterprise that need to be proven in order to convict individuals or groups of individuals under those statutes.

The Racketeer Influenced and Corrupt Organizations (RICO) statute, or Title 18 of the United States Code, Section 1961(4), defines an enterprise as "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity."

The Continuing Criminal Enterprise statute, or Title 21 of the United States Code, Section 848(c)(2), defines a criminal enterprise as any group of six or more people, where one of the six occupies a position of organizer, a supervisory position, or any other position of management with respect to the other five, and which generates substantial income or resources, and is engaged in a continuing series of violations of subchapters I and II of Chapter 13 of Title 21 of the United States Code.


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