The SEC Attempts To Paper Over Its 'Rakoff Problem': Rolling Out The Big Guns--Press Releases!!

OS spent Saturday late morning doing the weekly grocery-pharmacy-dry cleaner-liquor store shopping run with the sainted Mrs. OS. Jet lag began to catch up to him, rather delayed after attendance at a fabulous Westminster Choir College concert last night. More about that another time, if the spirit moves. However, if any of OS's readership are in Mississippi, Alabama, Georgia, eastern Tennessee, or West Virginia these next few days, it's worth the drive to hear these young people--a completely inspirational evening of music.

In the parking lot, the humorous moment of the morning: A car, owned by a Tea Party member, with the window display announcing 'You can't cure stupid, but you can vote it out of office.'

It did provide a grin, and food for thought as OS shopped for groceries.

At the next election, this country desperately needs to elect grown-ups, people who will demand (and make happen) certain basic truths take hold, such as Judge Rakoff is insisting upon: Banks who defraud investors, customers and the country at large, walking away with $700 million, cannot be asked to settle for pennies on the dollar with no admission of wrongdoing. The defrauded never are compensated, and the truth is never known. The government becomes complicit with the criminals, and essentially charges 'protection tax' to keep the whole corrupt game in play. It's a recipe for tragedy, sooner or later.


Mish, Heaven bless 'im, continues to track the Rakoff v. Citigroup and it ally, the SEC, who has decided to issue press releases to douse the fires of public disdain.

He points out that the last person prosecuted and jailed for securities fraud by the SEC was (drumroll please...) Martha Stewart.

Really.

While essentially ignoring billions of dollars in repeated fraud allegations against Citigroup, the SEC brought full weight down on Martha Stewart over (drum roll please) ... $45,673.

Martha Stewart went to prison and was fined $30,000. Since then, no one has gone to prison or even been criminally indicted in $trillions of dollars of fraud in the global financial crisis. And unless someone does admit criminal action, the SEC reserves the right to do more whitewashing without seeking admission of guilt.

OS continues to follow and harp on this and the MF Global scandal, because they strike at the heart of this country's ability to function. If the Martha Stewarts and those more humble go to jail, and firms like Citigroup and individuals like Corzine go free after surrendering their pocket change, we will one day reach a tipping point, where the citizenry decides to either simply sit on its hands and refuse to participate in a fixed game--which may already be occurring--or it (more ominously) blows up, or some combination of the two in sequence.

Neither option is desirable, each leads to poverty, despair, decline. It is not the kind of world we wish for our children and theirs. Unlike some more nihilistic souls, OS spends his energies begging that these things not happen.

One thing that struck OS on his vacation in England was that much of the peaceful and prosperous way of life he witnessed there, and enjoys here, is due to a robust system of banking. Currency gets exchanged, card transactions complete within seconds, goods get imported and exported and onto the shelves while fresh, and at reasonable cost. Cash and credit, borrowed and paid back, lubricates the intricate machine. If the banking system is crippled, everyone loses, the farmer, the merchant, the employer, the employee, the school, the church, the charity, on it goes. It's happening already, in ways great and small.

The Citigroups and the Corzines, the SEC, the Fed, and all the lawyers and politicians will end up blowing the system to bits. It will never operate perfectly, but it doesn't need to in order to work wonderfully well. It needs to operate in a culture that assumes honest dealing underpins the system.

You can't cure stupid, and you can't rid the world of all the Corzines--but you can vote for grown-ups, and insist they insist on governance where virtue is rewarded and crime punished. 

It's not that much to ask of them. If they do that one thing, a lot of the other problems will sort themselves.


 

Finally, A Judge Locates His Huevos, And Asks The Obvious Question

'If Citibank steals some 700 million dollars, why does it only have to pay 160 million back?'


Well, hot-damn, ya'll!  If that's the case, under the Citibank Rule, OS should give up his honest attempts at labor, and start sticking up local convenience stores, liquor stores, and jewelry shops! He gets to keep everything, except for 23%! Such a deal!! He doesn't even have to admit to any wrongdoing, and he always walks out to make it home by dark.

So, what's wrong with this logic?

(HT Mish)

The Ruins Of The Detroit Train Station, In 360 Degree Panorama

Mish Shedlock just posted the link to this shocking tour of what has become of one of the great landmarks of the United States.


Click here to begin the photo tour.

It is not for the faint of heart, and if you wish to shield the kids from profanity, wait until they are in another room. The graffiti is vulgar in the extreme. (Remember all those self-impressed academic asses who tried to convince us that graffiti is an art form??? Rubens was an artist. The rabble who invade this architectural gem and spray it with their filth are vandals.)

OS had to hold back the tears as he viewed the photo gallery, and abandoned it after a few minutes. Too much else to be doing, and he doesn't need his mind clouded with the grief and anger.

This is what Socialism, banksters, and rule by the Democrat Party for decades, has produced. They all have to go. Firmly, politely, legally, non-violently--they must all be shown the door.

Less Is More: Four-Day School Weeks, And Everyone's Life Improves

Hmmm...

In contrast to the unconvincing 'it's all about the children' rap from this morning's conversation on Fox Business, school districts that go to a four-day week are seeing both student performance and faculty morale improve.

Hmmm...

When the teachers unions try to lay on that guilt 'It's all about the children', remember it's not. And the less time invested with these people, the better.

Home-school, anybody?

HT to Mish.

Food-Stamp Nation

Mish Shedlock, as always, knows how to paint the picture accurately from both the macro to micro level. He understands that the economy is not about numbers, but about people, culture, behavior, ethics. Look to your right on this page, and allow him to enlighten you.

This post is especially telling.

Quoting below:

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Food stamp usage is up again except the program is now called SNAP Supplemental Nutrition Assistance Program.

Inquiring minds are looking at a SNAP Participation Table that shows a record 39,430,724 receive SNAP benefits, a 22.4% increase from a year ago.

Biggest State Increases

Arizona - 32.9%
Colorado - 32.9%
Florida - 38.6%
Idaho - 45.7%
Nevada - 46.9%
Rhode Island - 42.4%
South Dakota - 32.6%
Utah - 37.3%
Wisconsin - 38.9%
Wyoming - 40.0%

Those numbers are as of January 2010

Households

Household SNAP participants increased from 12,728,981 in Fiscal Year 2008 to 15,232,105 in fiscal year 2009, a 16.4% increase. For comparison purposes, watch the growth in household participation.

SNAP Household Participation

FY 2005 - 11,197,377
FY 2006 - 11,734,491
FY 2007 - 11,789,594
FY 2008 - 12,728,981
FY 2009 - 15,232,105

Cost of SNAP Program

FY 2005 - $31.07 Billion
FY 2006 - $32.91 Billion
FY 2007 - $33.19 Billion
FY 2008 - $37.66 Billion
FY 2009 - $53.63 Billion

Household and cost numbers are as of March 30, 2010.

Clearly the recession took its toll, and will continue to do so until there is a dramatic decrease in the unemployment rate.


[end copy]

Since Uncle Sam spent far less in the aggregate of the years cited on keeping people fed than on keeping firms like Freddie, Fannie, AIG, GMAC, Chrysler and GM on life support in 2008 and 2009, (and let's not forget the banks), let's not quibble about numbers. People in large groups who don't have enough to eat or feed their children do desperate and unpleasant things, and listen to people who advocate desperate and unpleasant things.  Ask Marie Antoinette...

Still, we have constructed a culture that begins to look a bit like Louis XVI: Massive wealth and luxury flowing to fewer and fewer people connected to the court in Paris, small family business enterprise increasingly bled dry, a large proportion just barely hanging on beneath them (because small business can't expand and hire), and an intellectual/political elite out of touch with reality.

Stir gently, add a tablespoon of accelerant, heat slowly.

We don't want this to happen.

The glorious revolution of the 1790's was followed by the Napoleonic bloodbath, which was followed by...which was followed by...

Running On Fumes And Goodwill

'Dean Dad' at Inside Higher Ed is a community college dean, happy to have found his place in the world in a role he never expected to play. He has a sense of humor and humanity, as one commenter notes.  OS enjoys his posts, because they are as likely to be about the joys of marriage and parenthood as they are about his challenges on campus, which are many.  Dean Dad doesn't whine, and he doesn't participate in that arrogant elitism that infects so many campuses.

So, his account of a recent budget meeting deserves consideration.

He concludes here:

I try to stay positive in public, since part of my job involves setting a tone, and campus morale is a real, if fuzzy, issue. So I'll use pseudonymity here to tell the truth. We simply can't keep doing what we're doing. We're running on fumes and goodwill, and you can't do that forever. The funding increases necessary just to get to 'sustainable' -- let alone 'exemplary' -- are unimaginable. Several areas of the college are still functioning only because a dwindling number of staffers are doing heroic work, and you just can't keep doing that. When heroism becomes the budgetary baseline, even getting to 'sanity' takes substantial increases. In many of the 'support' areas of the college, that's the dilemma now.

As so many, especially Mish, have noted before, the various infusions of federal cash (borrowed from the Fed or the Chinese) have only delayed the inevitable day of reckoning, and Dean Dad acknowledges that fact. The tough days yet lie ahead for his world, as the taxpayer pot has run dry. A state legislature cannot spend what does not exist, and can't print money, although California has attempted to at times.


So, in these years of running on fumes, perhaps it is time to concentrate on building good will. Last week's angry marches by undergraduates demanding non-existent money are counterproductive, because they are viewed by people with high-school or vo-tech educations paddling as hard as they can to keep their own little micro-businesses above water and their families intact, while paying taxes on everything they earn or consume. Wimmen's Studies majors smashing store windows and blocking highways don't build good will with the public. College students tutoring young kids in reading and math in every county school do.

OS is an optimist, who thinks that real solutions will be worked out by good people like Dean Dad and his team, one corner of the culture at a time. The process will be accelerated if the Federal government allows it to happen, by turning off the spigot of funny money, and by the students who see free higher education as an entitlement spending their time in the library.

Or tutoring young kids in reading and math.

Black Humor Monday From Mish

Mish is soooo happy The Great Recession has ended.

And he has the charts to prove it!

Could be, ThePeopleInChargeOf SuchThings aren't accurately conveying the true situation to the citizenry.

A Little Peek Ahead

A few posts ago, I passed along some information for Mom, Dad, and Junior about the future of college admissions.

Once again, thanks to Inside Higher Ed, another peek into the future: borrowing for higher ed has spiked 25% in the past year. Which means that the day when the class of 2014 will be able to climb out from under student debt and purchase that first home will be postponed for some years now.

Mom, Dad, Junior: The best use of junior's time on the time/money scale will be spent on making certain academics and selected extra-curriculars(such as classical music study)are in excellent shape. If Junior is out earning cash, every dollar he socks away is a dollar not borrowed for college, i.e. each of those saved teenage dollars looks more like five dollars by the time he's thirty. He may look cool in the new car with the high insurance payments, but he'll need the purchasing power for that new car fifteen years from now.

Another good use of Junior's time will be to visit daily with Mish Shedlock, who patiently explains what is happening to the economy, and what it well may mean for Junior's adulthood.

Hats Off To Mish

Mish Shedlock proves his worth once again.

If my obscure corner of the avalanche of opinion serves to direct a few more people to his page, then I've performed a public service.

He documents unemployment numbers that the 'official' reports don't mention.

The truth is ugly, but we need the truth told in order to make our way out of this mess.

His final paragraph bears quoting here:

Look at the average age of baggers in grocery stores or greeters at Walmart. These people are not working because they want to; they are working because they have to. Demand for jobs is at an all time high while the number of available jobs and the pay scales of those jobs have both collapsed. The employment situation is not only an unmitigated disaster, things are about to get even worse with pending state cutbacks.

What I've noticed here, anecdotally: I make deposits at two banks at least once a week. Often, mine seems to be the only customer car in the parking lot. The employees, who by the way are lovely folks, seem to be looking for things to do.

My little town was hit hard in the wake of 9/11, and began to climb back out. A major fire subsequently hit the downtown business block, and the lot now stands vacant, as the insurer has gone to the wall to avoid paying any claim on the loss. The local radio station ceased broadcasting last fall. The local paper seems to be shrinking in both size and scope of coverage. The district congressman sends in op-eds to tell us that voting for massive spending will cure the massive federal deficit.

So, we're in for a long ride. Let's work on the culture in the meantime.

And, let's listen to Mish.