These are Dishonest People Who Knowingly Break the Law

When talking about Bernie Madoff Eric Falkenstein made the following observation:

People who meticulously avoid email should not be trusted, because it is simply too calculating, as if they know they are regularly committing crimes. A phone conversation can always be disavowed, you just say you were talking about last weekend's bar mitzvah.

Now we see what appears to be a rather anodyne article about how many of the movers and shakers on Wall Street meticulously avoid email as well:

In an age when most bankers use keyboards to communicate with each other, a small group of the Wall Street elite refuses to say anything substantive in an email, text or chat, and some will not communicate digitally at all.

This group, which includes top bankers like JPMorgan Chase & Co Chief Executive Officer Jamie Dimon and powerful investors like Carl Icahn and Berkshire Hathaway Inc's Warren Buffett, were eschewing electronic communications long before the probe of U.S. presidential candidate Hillary Clinton's emails and the recent hacks of her campaign manager's account made headlines.

Some on Wall Street are nostalgic for a time when in-person conversations or phone calls were the norm, but others believe the words they type and send can come back to haunt them. Prosecutors have built insider trading, mortgage fraud and rate-rigging cases on embarrassing emails over the past several years, and they are often the most memorable part.

You really do not want to trust these guys with your money.

I Have a New Rule for Finance and Fraud

The first was coined by Eric Falkenstein:

People who meticulously avoid email should not be trusted, because it is simply too calculating, as if they know they are regularly committing crimes. A phone conversation can always be disavowed, you just say you were talking about last weekend's bar mitzvah.

The 2^nd rule, which I call Saroff's Rule:

If a financial transaction is complex enough to require that a news organization use a cartoon to explain it, its purpose is to deceive.

Well, now I have another rule, if your business plan requires an extraterritorial location not subject to any national law, it is because the principals involved intend to be lawless:

A company named Blueseed is a year away from offering entrepreneurs an inexpensive place, near Silicon Valley, in which to develop their products.

"Blueseed will station a ship 12 nautical miles from the coast of San Francisco, in international waters. The location will allow startup entrepreneurs from anywhere in the world to start or grow their company near Silicon Valley, without the need for a U.S. work visa. The ship will be converted into a coworking and co-living space, and will have high-speed Internet access and daily transportation to the mainland via ferry boat. So far, over 1000 entrepreneurs from 60+ countries expressed interest in living on the ship."

No Civil Rights Act, no Equal Employment Opportunity Commission, no Fair Labor Standards Act, no Securities Exchange Act, no RICO statute, no consumer protection laws, no laws against slavery or indentured servitude, and indeterminate tax jurisdiction.

If you get an offer from these people, run the other way.

H/t Naked Capitalism.

Eric Falkenstein's Rule Suggests that Janet Napolitano is Corrupt

I have discovered that Janet Napolitano has eschewed email as a matter of policy:

The woman in charge of U.S efforts to make email secure doesn’t use it herself.

Department of Homeland Security Secretary Janet Napolitano on Friday copped to keeping her own communications off the grid.

“I don’t have any of my own accounts,” she told a cybersecurity conference hosted by National Journal. “I’m very secure.”

Asked if her reasons for sticking to other forms of communication had to do with concerns about email security, she hedged and said she avoids email for “a whole host of reasons.”

I have, on a number of occasions used the rule of thumb that people who do not are note to be funded:

As Eric Falkenstein observes:

People who meticulously avoid email should not be trusted, because it is simply too calculating, as if they know they are regularly committing crimes. A phone conversation can always be disavowed, you just say you were talking about last weekend's bar mitzvah.

I applied this to Hank Paulson, and it seems to me that it's only fair to apply it to Ms. Napolitano as well.

Catch Phrases II

This is Not Star Trek. In Startrek, the Evil Spock has a goatee. In our world the evil James O'Keefe is clean shaven, and the good James O'Keefe is chief cat-herder for the Massachusetts Pirate Party, whilst sporting a goatee.

This is why I call Barack Obama the worst constitutional law professor ever.

As Eric Falkenstein observes:

People who meticulously avoid email should not be trusted, because it is simply too calculating, as if they know they are regularly committing crimes. A phone conversation can always be disavowed, you just say you were talking about last weekend's bar mitzvah.

This could very well be the stupidest person on the face of the earth. Perhaps we should shoot him.^{* *}What, you've never seen Ruthless People? Great movie.

condi quote with link:

Trust me, she is no expert on the Soviet Union
I actually saw this ditz in action. She came to Berlin and was giving all the strategic intel troops in Europe a speech about the Eeeeevil Empire :shudder: and how they were so numerically and militarily superior to our troops, how they had Super Weapons That Could Shoot Through Fifty Feet of Concrete...and all this time, I'm looking over at my guys like "we're talking about the same Soviets, right? The ones we have can't shoot, can't march, are underfed, can't run..." We're passing notes between the Berlin contingent, the Augsburg contingent, the Bad Aibling contingent, the human-intelligence guys, the Spetsnaz analysts...and we all came to the same conclusion: the Soviet Army Condi Rice was working was a hell of a lot better than the one we were.

Finally my colonel looked at me and said, "Jim, I've had about enough of this shit." He actually stood up and said, "Ms. Rice, one question. What are the true-unit designators and honorifics of the units you are describing?" Condi Rice's response was classic: "What is an honorific?" If you do not know what an honorific is you are no expert on the Soviet Army, and Condi Rice didn't know. (We didn't tell her either; we all left at that point.)

All Soviet units had a true-unit designator and an honorific. The TUD was easy enough to understand: your unit is the 1st Guards Army or the 20th Motorized Rifle Division. (The title Guards was awarded at the end of WWII to units who fought with great valor.) Each Soviet unit was organized in honor of a famous communist--maybe you were the 144th "Feliks Dzherzinsky" Guards Artillery Battalion. Feliks Dzherzinsky was your unit's honorific. They'd hang Feliks' picture in your unit dayroom and everything you did was to impress ol' Feliks.

IOW, the colonel was telling Condi to put up or shut up; we knew their guys weren't half as good as Condi was telling us.

Condoleezza Rice was an expert on Ronald Reagan's Soviet Army, the unstoppable bogeyman raised to justify the runaway military spending of the Reagan era. But Reagan's Sovs and my Sovs were two completely different armies. Condi's Sovs were absolute masters of the art of land warfare; my Sovs trained for five months, rotated a quarter of the company, and did the exact same five-month training schedule again. (Later, after reunification I went to a Soviet Army base on an open-house tour and saw a genuine Soviet Army company training schedule. It was painted on a sheet of plywood and bolted to the wall.)

Levels of Tzedaka

Click for full size pop up

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Another day, another shooting

Good news everyone!

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I invented a device that makes you read this in your head using my voice!

You have problem with Corporate Capitalist ^™®©, comrade?^*

Well, Now We Know Why Louis Freeh Is the Preferred Agent of Choice for a Coverup

Because he is a thoroughly dishonest ratf%$#, and the tell on this is that he refuses to use email:

As Eric Falkenstein observes:

People who meticulously avoid email should not be trusted, because it is simply too calculating, as if they know they are regularly committing crimes. A phone conversation can always be disavowed, you just say you were talking about last weekend's bar mitzvah.

If his behavior as MF Global bankruptcy trustee, where he is refusing to turn over information to regulators about where customer account money went, (He's making a bogus claim that the evidence of theft is covered by attorney client privilige) is an indication, he's going to be a little boy rapist's best friend at Penn State, where he is in charge of the coverup investigation.

Between his incompetence and his corrupt hackery, it's a wonder that anyone hires him.  It's like hiring John Dillinger to be in charge of your bank's security.  Bernie Madoff has more credibility.

Not Enough Bullets…

Here are two bullet points for the presentation

• While he was Secretary of the Treasury, Hank Paulson Tipped off Wall Street to the bailout of Fannie Mae, which allowed them to profit from this decision:

On the morning of July 21, before the Eton Park meeting, Paulson had spoken to New York Times reporters and editors, according to his Treasury Department schedule. A Times article the next day said the Federal Reserve and the Office of the Comptroller of the Currency were inspecting Fannie and Freddie’s books and cited Paulson as saying he expected their examination would give a signal of confidence to the markets.

A Different Message

At the Eton Park meeting, he sent a different message, according to a fund manager who attended. Over sandwiches and pasta salad, he delivered that information to a group of men capable of profiting from any disclosure.

Around the conference room table were a dozen or so hedge- fund managers and other Wall Street executives -- at least five of them alumni of Goldman Sachs Group Inc. (GS), of which Paulson was chief executive officer and chairman from 1999 to 2006. In addition to Eton Park founder Eric Mindich, they included such boldface names as Lone Pine Capital LLC founder Stephen Mandel, Dinakar Singh of TPG-Axon Capital Management LP and Daniel Och of Och-Ziff Capital Management Group LLC.

After a perfunctory discussion of the market turmoil, the fund manager says, the discussion turned to Fannie Mae and Freddie Mac. Paulson said he had erred by not punishing Bear Stearns shareholders more severely. The secretary, then 62, went on to describe a possible scenario for placing Fannie and Freddie into “conservatorship” -- a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets.

Stock Wipeout

Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So too would the various classes of preferred stock, he said.

The fund manager says he was shocked that Paulson would furnish such specific information -- to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information.

I think that the next two paragraphs, while appearing to exonerate those involved, actually reveal the criminality:

There’s no evidence that they did so after the meeting; tracking firm-specific short stock sales isn’t possible using public documents.

And law professors say that Paulson himself broke no law by disclosing what amounted to inside information.

I understand where the reporter is coming from: He knows what could be done with information, and what probably was done with the information, but his legal department said that he could not connect the dots.

This is Wall Street and the "Vampire Squid" we are talking about.  Of course they would use this information to profit.  It's what they do.

As to the morality of Hank Paulson, I will refer you to the fact that he does not use email, and "People who meticulously avoid email should not be trusted, because it is simply too calculating, as if they know they are regularly committing crimes."

And this guy was the f%$#ing Secretary of the F%$#ing Treasury of the United States of America

• And as to bullet point 2, we discover, courtesy of Senator Bernie Sanders, that the Federal Reserve bailed out the banks to the tune of 16 trillion dollars (H/t DC at the Stellar Parthenon BBS):

The first ever GAO(Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill(HR1207), so that a complete audit would not be carried out. Ben Bernanke(pictured to the left), Alan Greenspan, and various other bankers vehemently opposed the audit and lied to Congress about the effects an audit would have on markets. Nevertheless, the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sander’s webpage earlier this morning: http://sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3

What was revealed in the audit was startling: $16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious — the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.

To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is “only” $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is “only” $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.

Seriously, if we don't start prosecuting these folks, this is never going to end, and by these folks, I mean Hank Paulson, and any member of the Federal Reserve who did anything beyond jaywalking.

We need to start throwing asses in jail, serious time in serious prisons, because if we don't, they are just going to keep looting.

How is Hank Paulson Like Bernie Madoff?

Well, Eric Falkenstein has the following take on Bernie Madoff:

Clearly, he understood phone calls are best. People who meticulously avoid email should not be trusted, because it is simply too calculating, as if they know they are regularly committing crimes. A phone conversation can always be disavowed, you just say you were talking about last weekend's bar mitzvah.

And Felix Salmon, who has one of the sharpest minds in finance, notes a parallel with Hank Paulson in his exchange with Representative Jackie Speier:

Jackie Speier (D-Calif): Do you use email?

Hank Paulson: Do I use email? No, I don’t use it, personally.

JS: You don’t use it personally, or professionally?

HP: Yeah, I just don’t. So I’ve never used it for any business communications. Just never use it.

JS: So while you were secretary of the Treasury you never used email?

HP: No.

JS: How did you communicate with people?

HP: Telephone.

This does not prove that he is a dishonest person, though being a former head of Goldman Sachs certainly implies it, and as someone born in 1946, I understand how this might be a generational thing, but as someone who worked in finance, the value, and risks, of having a clear and incontrovertible copy of his discussions had to be clear to him.

If I were a betting man, I'd go with the fact that he knew that he broke the law regularly, and wanted deniability.