Outrage(s) Of The Week

by Karl Denninger

So many to choose from this week…. Buffett and BAC (which I already wrote on), Bernanke’s continued mendacity and of course the destruction of real liquidity in the markets due to all the gaming and schemes that the “Wall Street Capitalists” have engaged in over the last few years.

But today’s column is reserved for those topics I haven’t explored this week.  We’ll begin with this:

 The Elko County Sheriff’s Office was notified in July of possible sexual contact between David Ralph Anderson, 61, and a girl younger than 14.

According to Elko Justice Court records, the victim told investigators that on seven to 10 occasions between 2010 and this year, Anderson allegedly taught the victim about various sexual acts and had sexual contact in the form of touching each other’s genitals.

Alleged perverts aren’t anything special, right?  Well, this one is.  The article says he’s a TSA employee.

Still want to go through that security line to fly, do you?  There wouldn’t be anything special about being a TSA employee that might be attractive to an alleged pervert, is there?  Oh yeah, there is – you get to grope the balls of little boys and fondle little girls breasts, and it’s part of your job description.

Why do we allow this as citizens of this nation again?

You can never eliminate as a prospective matter all perverts – by definition until the first time they get caught, arrested, tried and (hopefully) imprisoned you don’t know they’re perverts.  But you can refuse to create government-sponsored and mandated positions where people like this can molest thousands of kids as part of their job!

What sort of sick society have we become that we’re willing to subject not only ourselves but our kids to sexual abuse simply to exercise our constitutional right to travel?  And don’t give me this “privilege” crap – you (as an adult) may be able to consent to being groped (legally) to get on a plane (the difference between sexual assault and simple sex is in fact consent) but the premise of someone being a minor is that they cannot consent as a matter of law and you cannot consent for them.  Arguing that this is acceptable is identical to arguing that a parent should be able to “consent” to their child sleeping with an uncle – or anyone else for that matter.  Disgusted yet?  You should be – with yourself.

In the first runner-up slot for outrage of the week we have this regarding JP Morgan:

The U.S. Treasury Department announced an $88.3 million settlement with JPMorgan Chase & Co. (JPM) for apparent violations of international sanctions programs, including Cuban assets control and anti-terrorism regulations.

The Treasury said that JPMorgan through its correspondent banks maintained prohibited financial transactions with sanctioned entities in countries including Cuba and Iran.

The JPMorgan payment agreed upon by the Office of Foreign Assets Control, known as OFAC, involves “egregious” violations for five years, according to a Treasury Department statement.

JP Morgan, of course, sees it differently and called them “rare incidents”, unrelated and isolated.

Uh huh.  Treasury says they were egregious violations of the law and went on for five years.

We can argue over whether Cuba should have sanctions upon it, or Iran for that matter.  Nonetheless it is the law, and if you so much as move $5 to one of these prohibited entities you’re subject to huge fines and potential imprisonment.

When a big bank does it?  Well gee, we’ll just issue a tiny little fine for five years of misconduct, indict nobody and imprison nobody, despite the fact that real people in real parts of the bank authorized and performed these transfers.

That is, real people broke the law – either intentionally or through willful blindness.

If the penalty for holding up a bank was simply paying a fine equal to the amount you stole, how many times would your corner bank be held up between noon and 4 PM every day?

That’s what I thought.

Then there’s this stupidity on Bernanke and “Fed activism”:

Advice from Ben S. Bernanke, scholar, to Ben S. Bernanke, Federal Reserve chairman: Be bold.

Really?  What’s the record on “being bold”?

I count three successive chairmen who were in fact utter ****ups and trashed our long-run economic prosperity by putting in place economic and monetary theories that are trivially disprovable using nothing more than fifth-grade mathematics.  That one of them received a PhD for advocating even more of the same crap is an outrage and indictment against so-called “higher” education.  They were high all right, but elevation above the crowd in intellectual prowess most-certainly isn’t what is being referred to.

Other Fed chairmen also have been criticized for bold action. Volcker in the early 1980s pushed interest rates to a record 20 percent to target inflation above 13 percent. While prices eventually dropped, the economy fell into a 16-month recession in July 1981 after emerging from a six-month slump in July 1980.

Prices dropped?  The hell they did.  Even the government’s own twisted statistics do not show contraction in prices – that is, reversion to the mean. The Millennials may not remember this but I sure do and so do people older than I. Indeed, what happened was that the modern ponzi economic “expansion” born of the lie that credit growth is in fact economic growth (it is not; output must always grow faster than credit or mathematically you are eventually screwed!) was born, nurtured, fed and then exploded – twice – into full-blown economic crises from which we have not escaped and won’t until we stop running monetary and fiscal policies that have proven bereft of merit.

Not only is the mathematics clear on this but so is the empirical evidence - a 30-year unbroken track record of failure.

Greenspan, after the 2001 recession, slashed the Fed’s benchmark interest rate to 1 percent in late June 2003, the lowest since 1958, and held it there for a year in a bid to fend off what he called a remote chance of deflation. Critics blame him for inflating the housing bubble that burst in 2007 and thrusting the economy into recession by holding interest rates too low for too long.

Even so, Bernanke has presided over even more economic upheaval.

Yeah, and every bit of it was self-inflicted by himself and the two chairsatan before him.

Why doesn’t anyone talk about the 1920-21 deflationary recession?  It would be called a Depression except that it didn’t last long enough to be classified as one.  In terms of the delta on prices (some 37% at the wholesale level – downward!) and collapse in industrial output it was the most-violent that I can find a contemporary record on.  The stock market was cut in half and unemployment soared.

The cause of the collapse was over-exuberant hiring post WWI and the release of a huge number of Army members back into the civilian labor pool.

What’s interesting is that there was a Presidential election and Warren Harding presided over nearly all of this. Harding received counsel to intervene from one Mr. Hoover – yes, that Mr. Hoover, who was at the time Commerce Secretary.

He refused that advice and the market and economy cleared within 18 months, posting the largest single-year industrial output gain ever in the history of the United States.  Not only that but unemployment returned to the full-employment level as well.

Activism by the federal government and federal reserve works and a “hands off” policy of letting those who get in over their head with leverage, overcapacity and debt doesn’t, eh?

Isn’t selective memory – and how it’s used to block out the success of the government refusing to prop up idiots and swindlers alike a funny thing?

Oh, incidentally, there are nations who have figured out that the debt ponzi doesn’t work.  Spain is one of them.

The amendment (to the constitution) calls for public debt not to exceed 60 percent of gross domestic product, though the ceiling may be breached in the case of “natural catastrophe, economic recession or emergencies.” The parties pledged to pass a separate law by June next year that will set a maximum structural deficit of 0.4 percent of GDP to be met by 2020, the same year the debt limit comes into effect.

0.4%, or in essence a balanced budget, and public debt may not exceed 60% of GDP.

The ruling party in Spain is the Socialist party.  Even die-hard redistributionist political actors, if they look at the math and stop lying to themselves and the public, find the truth inescapable and ultimately come to the correct conclusion: You must pay for the government services you wish to receive, all of them, with current tax revenues – not promises to pay tomorrow.

Wake up America; it’s a disgrace that a socialist nation can and does out-think you at a fifth grade level of comprehension.