Models

For a long time, people thought our solar system revolved around the Earth. Copernicus (or Galileo to some) came around and proved the planets revolved around our Sun.

Models are important - they are the perspective of an individual's perception of any given event. Models are always biased, but the objective should be to choose a model with the least bias possible.

How is this achieved?

Scrutinize opposing aspects, think critically, and have an open mind.

"All Truth passes through three stages: First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as self-evident."

- Arthur Schopenhauer

Truth is stranger than fiction, but it is because Fiction is obliged to stick to possibilities; Truth isn't.

- Mark Twain


These opinions below may be my own or may belong to the authors whom I reference. They are posted for the benefit of mankind, so that we may collectively achieve a common ground and transition into a new golden era as seamlessly as possible.


Saturday, December 15, 2012

Taibbi, Spitzer Fume Over HSBC Settlement




Outrageous HSBC Settlement Proves the Drug War is a Joke


Assistant US Attorney General Lanny Breuer
Ramin Talaie/Getty Images


An excellent article by an excellent voice for the people – Matt Taibbi




If you've ever been arrested on a drug charge, if you've ever spent even a day in jail for having a stem of marijuana in your pocket or "drug paraphernalia" in your gym bag, Assistant Attorney General and longtime Bill Clinton pal Lanny Breuer has a message for you: Bite me.

Breuer this week signed off on a settlement deal with the British banking giant HSBC that is the ultimate insult to every ordinary person who's ever had his life altered by a narcotics charge. Despite the fact that HSBC admitted to laundering billions of dollars for Colombian and Mexican drug cartels (among others) and violating a host of important banking laws (from the Bank Secrecy Act to the Trading With the Enemy Act), Breuer and his Justice Department elected not to pursue criminal prosecutions of the bank, opting instead for a "record" financial settlement of $1.9 billion, which as one analyst noted is about five weeks of income for the bank.

The banks' laundering transactions were so brazen that the NSA probably could have spotted them from space. Breuer admitted that drug dealers would sometimes come to HSBC's Mexican branches and "deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows."

This bears repeating: in order to more efficiently move as much illegal money as possible into the "legitimate" banking institution HSBC, drug dealers specifically designed boxes to fit through the bank's teller windows. Tony Montana's henchmen marching dufflebags of cash into the fictional "American City Bank" in Miami was actually more subtle than what the cartels were doing when they washed their cash through one of Britain's most storied financial institutions.

Though this was not stated explicitly, the government's rationale in not pursuing criminal prosecutions against the bank was apparently rooted in concerns that putting executives from a "systemically important institution" in jail for drug laundering would threaten the stability of the financial system. The New York Times put it this way:

Federal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system.

It doesn't take a genius to see that the reasoning here is beyond flawed. When you decide not to prosecute bankers for billion-dollar crimes connected to drug-dealing and terrorism (some of HSBC's Saudi and Bangladeshi clients had terrorist ties, according to a Senate investigation), it doesn't protect the banking system, it does exactly the opposite. It terrifies investors and depositors everywhere, leaving them with the clear impression that even the most "reputable" banks may in fact be captured institutions whose senior executives are in the employ of (this can't be repeated often enough) murderers and terrorists. Even more shocking, the Justice Department's response to learning about all of this was to do exactly the same thing that the HSBC executives did in the first place to get themselves in trouble – they took money to look the other way.

And not only did they sell out to drug dealers, they sold out cheap. You'll hear bragging this week by the Obama administration that they wrested a record penalty from HSBC, but it's a joke. Some of the penalties involved will literally make you laugh out loud. This is from Breuer's announcement:

As a result of the government's investigation, HSBC has . . . "clawed back" deferred compensation bonuses given to some of its most senior U.S. anti-money laundering and compliance officers, and agreed to partially defer bonus compensation for its most senior officials during the five-year period of the deferred prosecution agreement.

Wow. So the executives who spent a decade laundering billions of dollars will have to partially defer their bonuses during the five-year deferred prosecution agreement? Are you fucking kidding me? That's the punishment? The government's negotiators couldn't hold firm on forcing HSBC officials to completely wait to receive their ill-gotten bonuses? They had to settle on making them "partially" wait? Every honest prosecutor in America has to be puking his guts out at such bargaining tactics. What was the Justice Department's opening offer – asking executives to restrict their Caribbean vacation time to nine weeks a year?

So you might ask, what's the appropriate financial penalty for a bank in HSBC's position? Exactly how much money should one extract from a firm that has been shamelessly profiting from business with criminals for years and years? Remember, we're talking about a company that has admitted to a smorgasbord of serious banking crimes. If you're the prosecutor, you've got this bank by the balls. So how much money should you take?

How about all of it? How about every last dollar the bank has made since it started its illegal activity? How about you dive into every bank account of every single executive involved in this mess and take every last bonus dollar they've ever earned? Then take their houses, their cars, the paintings they bought at Sotheby's auctions, the clothes in their closets, the loose change in the jars on their kitchen counters, every last freaking thing. Take it all and don't think twice. And then throw them in jail.

Sound harsh? It does, doesn't it? The only problem is, that's exactly what the government does just about every day to ordinary people involved in ordinary drug cases.

It'd be interesting, for instance, to ask the residents of Tenaha, Texas what they think about the HSBC settlement. That's the town where local police routinely pulled over (mostly black) motorists and, whenever they found cash, offered motorists a choice: They could either allow police to seize the money, or face drug and money laundering charges.

Or we could ask Anthony Smelley, the Indiana resident who won $50,000 in a car accident settlement and was carrying about $17K of that in cash in his car when he got pulled over. Cops searched his car and had drug dogs sniff around: The dogs alerted twice. No drugs were found, but police took the money anyway. Even after Smelley produced documentation proving where he got the money from, Putnam County officials tried to keep the money on the grounds that he could have used the cash to buy drugs in the future.

Seriously, that happened. It happens all the time, and even Lanny Breuer's own Justice Deparment gets into the act. In 2010 alone, U.S. Attorneys' offices deposited nearly $1.8 billion into government accounts as a result of forfeiture cases, most of them drug cases. You can see the Justice Department's own statistics right here:
Justice Department

If you get pulled over in America with cash and the government even thinks it's drug money, that cash is going to be buying your local sheriff or police chief a new Ford Expedition tomorrow afternoon.
And that's just the icing on the cake. The real prize you get for interacting with a law enforcement officer, if you happen to be connected in any way with drugs, is a preposterous, outsized criminal penalty. Right here in New York, one out of every seven cases that ends up in court is a marijuana case.

Just the other day, while Breuer was announcing his slap on the wrist for the world's most prolific drug-launderers, I was in arraignment court in Brooklyn watching how they deal with actual people. A public defender explained the absurdity of drug arrests in this city. New York actually has fairly liberal laws about pot – police aren't supposed to bust you if you possess the drug in private. So how do police work around that to make 50,377 pot-related arrests in a single year, just in this city? Tthat was 2010; the 2009 number was 46,492.)

"What they do is, they stop you on the street and tell you to empty your pockets," the public defender explained. "Then the instant a pipe or a seed is out of the pocket – boom, it's 'public use.' And you get arrested."

People spend nights in jail, or worse. In New York, even if they let you off with a misdemeanor and time served, you have to pay $200 and have your DNA extracted – a process that you have to pay for (it costs 50 bucks). But even beyond that, you won't have search very far for stories of draconian, idiotic sentences for nonviolent drug crimes.

Just ask Cameron Douglas, the son of Michael Douglas, who got five years in jail for simple possession. His jailers kept him in solitary for 23 hours a day for 11 months and denied him visits with family and friends. Although your typical non-violent drug inmate isn't the white child of a celebrity, he's usually a minority user who gets far stiffer sentences than rich white kids would for committing the same crimes – we all remember the crack-versus-coke controversy in which federal and state sentencing guidelines left (predominantly minority) crack users serving sentences up to 100 times harsher than those meted out to the predominantly white users of powdered coke.

The institutional bias in the crack sentencing guidelines was a racist outrage, but this HSBC settlement blows even that away. By eschewing criminal prosecutions of major drug launderers on the grounds (the patently absurd grounds, incidentally) that their prosecution might imperil the world financial system, the government has now formalized the double standard.

They're now saying that if you're not an important cog in the global financial system, you can't get away with anything, not even simple possession. You will be jailed and whatever cash they find on you they'll seize on the spot, and convert into new cruisers or toys for your local SWAT team, which will be deployed to kick in the doors of houses where more such inessential economic cogs as you live. If you don't have a systemically important job, in other words, the government's position is that your assets may be used to finance your own political disenfranchisement.

On the other hand, if you are an important person, and you work for a big international bank, you won't be prosecuted even if you launder nine billion dollars. Even if you actively collude with the people at the very top of the international narcotics trade, your punishment will be far smaller than that of the person at the very bottom of the world drug pyramid. You will be treated with more deference and sympathy than a junkie passing out on a subway car in Manhattan (using two seats of a subway car is a common prosecutable offense in this city). An international drug trafficker is a criminal and usually a murderer; the drug addict walking the street is one of his victims. But thanks to Breuer, we're now in the business, officially, of jailing the victims and enabling the criminals.

This is the disgrace to end all disgraces. It doesn't even make any sense. There is no reason why the Justice Department couldn't have snatched up everybody at HSBC involved with the trafficking, prosecuted them criminally, and worked with banking regulators to make sure that the bank survived the transition to new management. As it is, HSBC has had to replace virtually all of its senior management. The guilty parties were apparently not so important to the stability of the world economy that they all had to be left at their desks.

So there is absolutely no reason they couldn't all face criminal penalties. That they are not being prosecuted is cowardice and pure corruption, nothing else. And by approving this settlement, Breuer removed the government's moral authority to prosecute anyone for any other drug offense. Not that most people didn't already know that the drug war is a joke, but this makes it official.




Wednesday, December 12, 2012

The Secret Rulers Of The World: Seven And A Half Things To Know


image: huffpost

Science has determined that people need to know 7.5 things per day, on average, about the world of business. You can't argue with science. Lucky for you, the Huffington Post has an email newsletter, delivered first thing every weekday morning, boiling down the day's biggest business news into the 7.5 things you absolutely need to know. And we're giving it away free, because we love you, and also science. Here you go:

Thing One: Trilateral Bildergerg Grove: They meet in secret to hatch their plans. They speak in a language all their own. The fate of the entire world is at their command. They are ... the MIT-educated central bankers.

The Wall Street Journal's Jon Hilsenrath and Brian Blackstone gave conspiracy theorists the heebie-jeebies this morning with a story about how the world's top central bankers meet in secret regularly to talk about their crazy experiment of pumping money into the global economy to see what happens. The three leaders of this cabal -- the Federal Reserve's Ben Bernanke, the European Central Bank's Mario Draghi and the Bank of England's Mervyn King -- all have spent time at MIT. This thing goes deeper than you can imagine, obviously. We're through the looking glass, man!

Actually, it's not all that surprising that our economies are run by econo-nerds, nor is it all that surprising that they'd talk once in a while. It's also sadly not all that surprising that they are flooding the global economy with cash, taking all sorts of risks, because their politically elected counterparts are so busy working against the global economy, by ratcheting up austerity measures in the U.S., Europe and the U.K. Somebody's got to do something, and that somebody is the econo-nerds.

The leader of this secretive pack, Bernanke's Federal Reserve, ends its two-day policy meeting today. Bernanke will give another of his uncomfortable press conferences later this afternoon, where he will try very hard to explain to mortals what the Fed is doing without saying too much. The Fed is widely expected to add billions more to its latest bond-buying, cash-pumping scheme, despite the fact that most economists want it to stop, according to a WSJ poll.

The economics profession, another secretive cabal, worries about all of the imaginary inflation that the Fed is theoretically creating. But the bond market sees absolutely no sign of it, points out Bloomberg. As another secretive central banker, the Bank of Japan's Masaaki Shirakawa (Universities of Tokyo, Chicago and Kyoto) can tell you, inflation can stay gone for a long, long time, if you're not careful.

Thing Two: Cliff Watch! Twenty-four hours ago, the press was full of hope about fiscal cliff talks. Now, all hope is lost. President Obama and Speaker of the House John Boehner exchanged offers yesterday, but they did little to advance the discussions, according to the Washington Post. The White House wonders if Boehner can even get the votes to approve any deal, The New York Times frets. Meanwhile, small businesses are FREAKING THE HELL OUT over the fiscal cliff, according to a survey by the not-at-all politically hacky National Federation of Independent Business, or NAMBLA for short. Probably because they watch too much CNBC, or spend too much time listening to the NFIB.


Meanwhile, the cliff-deal table is groaning with all the concessions that are being piled up on it. Corporate tax rates are on the table, says the WSJ. Municipal-bond tax breaks are also on the table. A bunch of CEOs walked in yesterday and dropped tax hikes for the wealthy on the table. Not yet on that table are the last-ditch economic-stimulus measures the White House hopes to get passed as part of a deal, report Ryan Grim and Sam Stein of The Huffington Post.

Thing Three: Et Tu, Michigan? The Republican-controlled legislature in Michigan, long a bastion of organized labor in this country, yesterday voted to weaken the power of unions in the state. Though Democrats and unions vowed to strike back in the next election, it was another in a series of blows dealt to organized labor in recent decades, blows that of course have nothing at all to do with this country's stagnant wages and widening income inequality. Nothing at all. Wages are 10 percent lower in right-to-work states, a WSJ story begins -- before quoting some economists, including "an antiunion research group," who shoot holes in that observation. Meanwhile, Rhode Island is now fighting over curbs to public-employee retiree benefits.

Thing Four: The Fed Doesn't Let Banks Have Any Fun: When it's not busy running the world, the Fed is infringing on banks' God-given right to buy other banks, the WSJ writes. Several times this year, the Fed has nixed too-big-to-fail banks' plans to buy other big banks and thus get even bigger and failier, according to the WSJ.

Thing Five: Too Big To Jail: Maybe the Fed is skittish because the banks we already have are not only too big to fail, but also too big to jail, as the government's dainty, kid-glove treatment of HSBC demonstrates. The Justice Department yesterday detailed how HSBC let drug lords and other bad guys launder billions through its branches, but then gave the bank a wrist slap because they were afraid doing more would wreck the global economy. HSBC will spend $700 million to make sure its customers aren't drug lords, though, the Financial Times writes, so that's something.

Thing Six: Small Stakes: While trumpeting its sort-of-profitable exit from American International Group as loudly as possible, the Treasury Department is being more quiet about its not-so-profitable exit from a bunch of smaller banks, the WSJ writes. Treasury still has post-bailout stakes in 229 banks, owing the government about $8 billion, according to the WSJ.

Thing Seven: Big Lots Executives Awesome At Stock-Market Timing: It turns out that all the executives at Big Lots have uncanny timing when selling Big Lots stock, the WSJ reports. Ten of them managed to dump $23 million in stock just ahead of bad news that crushed the company's share price, the WSJ says. This comes after Big Lots CEO Steven Fishman announced his abrupt retirement just before Big Lots announced a government investigation of his trades in Big Lots shares. Some people are just lucky, I guess.

Thing Seven And One Half: Viva Hate: Here is a list of 22 really stupid things that happened in 2012 that absolutely must end in 2013, via Gawker. I can't say I disagree with any of them, particularly the Twitter stuff. And the Instagram stuff. And the toe shoes. Et cetera.

Now Arriving By Email: If you'd like this newsletter delivered daily to your email inbox, then please just feed your email address to the thin box over on the right side of this page, wedged narrowly between the ad and all the social-media buttons. OR, if you are logged into a HuffPost account, you could simply click on this link and tick the box labeled "7.5 Things" (and any other kind of news alert you'd like to get). Nothing bad will happen to you if you do, unless you consider getting this newsletter delivered daily to your email inbox a bad thing.